Macau Business Daily, Dec 12, 2014

MOP 6.00 Closing editor: Luis Gonçalves Number 687 Friday December 12, 2014

Publisher: Paulo A. Azevedo

Money can’t buy happiness for Macau residents

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Year III

he more you have, the more dissatisfied.

According to the Happiness Index Study on Macau Residents 2014. Apparently, people earning more are the saddest. And locals earning more than MOP70,000 a month are the unhappiest of all. Traffic jams, inflation and housing are the culprits that blight lives. The happiest, the study finds, are those who make MOP20,000 to MOP30,000 a month. Don’t worry; people are becoming progressively happy PAGE

Credit where credit’s due

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CSI Properties’ profit down 72 pct PAGE 4

Credit. The lifeblood of business. The Chinese Government is releasing a batch of measures stimulating credit flow from banks. Yesterday, the People’s Bank of China raised banks’ lending limits - and reduced the reserve on deposits.

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No taxis on HK-Zhuhai-Macau Bridge PAGE 2

Macau Water wants subsidy increase PAGE 7

Anti-Bribery law almost finished PAGE 7

A chip off the old block Macau Pass SA isn’t letting the grass grow under its feet. The city’s stored-value card issuer has just announced the launch of a new mobile phone app. For users with smartphones running on Android systems. Top up your value, read your balance and transaction records. And report a lost card via simple scanning

HSI - Movers December 11

Open Air Museum The preservation of local culture. Ung Vai Meng has made it his life’s work. And as president of the Cultural Affairs Bureau he’s in a position to drive awareness and proactive programmes. The city’s 20 museums make it “very high” density compared to the rest of the world, he says. The Bureau now wants to transform Macau into an open-air museum

www.macaubusinessdaily.com

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Name

%Day

China Mengniu Dairy

2.24

Cathay Pacific Airwa

1.97

Link REIT/The

0.41

Power Assets Holding

0.40

Hang Seng Bank Ltd

0.24

CNOOC Ltd

-1.57

China Resources Land

-1.70

Cheung Kong Holdings -1.92 China Resources Powe

-2.88

Kunlun Energy Co Ltd

-3.48

Source: Bloomberg

A Galaxy not too far away

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GEG’s Hengqin project breaks ground next year. Francis Lui, deputy chairman of Galaxy Entertainment Group confirmed it’s a goer. Galaxy Hengqin is set to be a Maldives-style leisure resort built in three phases. And likely completed in 2022.

Meanwhile, Galaxy Phase II is on track to open in the first half of 2015

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2 | Business Daily

December 12, 2014

Macau New Executive Council cabinet announced The government announced the new cabinet of the Executive Council for the coming term yesterday.

These members are Chan Hoi Fan, Leong Heng Teng, Liu Chak Wan, Ma Iao Lai, Leonel Alberto Alves, Cheang Chi Keong, Chan Meng Kam, Ho Sut Heng, Eddie Wong Yue Kai, Lam Kam Seng Peter and Chan Chak Mo. Nine of these 11 members have sat in the Council during this term. Meanwhile, incumbent Secretary for Administration and Justice Florinda da Rosa Silva Chan will be replaced by her successor Ms. Chan Hoi Fan for the next five years. Another new member, legislator Chan Chak Mo, is replacing current member Leong Vai Tac, who is to assume the post of Secretary for Economy and Finance.

Macau Pass launches new card-reading mobile app The eventual goal for Macau Pass users to make small payments via a smartphone only could be achieved next year with a new application Stephanie Lai

sw.lai@macaubusinessdaily.com

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he city’s stored-value card issuer Macau Pass SA announced yesterday the launch of a new mobile phone application for users with smartphones running on Android systems and a near field communication (NFC) function, which allows them to top up their value, read the remaining balance of their card as well as transaction records, and report a card loss.

The smartphone app should be ready for free download from the Google Play Store ‘within days’, the company said.

The card reading functions via the smartphone application cover the existing types of Macau Pass stored-value cards, and also the new chip stored-value cards launched just yesterday.

The top-up value function via the smartphone application, however, is only applicable to those that have bought the Macau Pass chip cards, to which they can add value from a payment off their credit card accounts. This function was ready for holders of credit cards issued by OCBC Wing Hang Ltd (Macau) from yesterday, while for those using credit cards issued

by Bank of China Credit Card (International) Ltd, the value top-up function should be ready by January next year.

“For this function, we’re cooperating with all the banks in Macau. Very soon we’ll be announcing the second batch of cooperating banks,” George Zhang, managing director of Macau Pass, told media yesterday.

The next stage for the

Macau Pass smartphone app to cover will be supporting the payment of bills and purchase of e-coupons, as the company will be updating their application after a few months.

“In future, the more convenient payment mode is that you don’t even need the [Macau Pass] card, but that you’ll have it stored in your smartphone with which you can make online and mobile payments,” said Mr. Zhang, who noted that this new payment format, without any need to insert an audio jack, could be realised in the coming year.

“Customers’ demands are different: some would still need the [Macau Pass] card to make payments while some others wouldn’t, so for them we’ll accommodate their needs,” he added.

“In the coming year we’ll

put forward two to three new functions [for the smartphone app] to the market.”

Aside from paying for bus fares here, Macau Pass, for which the maximum stored value is 1,000 patacas (US$125), is also applicable for settling payment in about 2,400 retail outlets in the city – including supermarkets and convenience stores.

So far, Macau Pass SA has issued about 1.5 million stored-value cards.

Speaking to media yesterday, Zhang noted that his company is aiming to see all existing Macau Pass cards be replaced by the new chip cards within three years.

The chip card, which can support online and mobile payment in future, is sold at 130 patacas - the same value as the existing Macau Pass stored-value card.

“The payment method we have now is quite simple but the advantage is that we can see the experience of the more mature electronic commerce [in other regions] and adapt it to here,” said Mr. Zhang when asked whether Macau Pass would work on any new projects with China’s online shopping giants like Alibaba Group or Taobao.com.

“We’re not taking too much of a risk. But for sure we have an ongoing process with the cross-border, mainstream and popular e-commerce partners to launch new services,” he said without elaborating.

Last week, the online payment platform of the Alibaba Group Alipay launched a new service whereby Alipay users can purchase a Macau Pass card in advance before travelling here.

No taxis on HK-Zhuhai-Macau Bridge

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ublic transport vehicles, including taxis, will not be permitted to use the Hong Kong-Zhuhai-Macau Bridge (HZMB) as they are not considered cross-boundary vehicles, according to the Secretary for Transport and Housing of Hong Kong, Anthony Cheung Bing-leung, in his reply to the interpellation of Hong Kong legislator the Hon. Frederick Fung.

‘Concerning the regulation of cross-boundary vehicles, the scope of the study and discussion among the three governments does not cover local public transport vehicles, including taxis. Local public transport vehicles, which are confined to local operation, are not cross-boundary vehicles. They are therefore not allowed to use the Main Bridge of HZMB which is situated within Mainland waters for access to the boundary crossing facilities in Macau and Zhuhai’, Mr. Cheung wrote.

Business Daily tried to clarify with the Transport Bureau (DSAT) whether the situation will be the same in Macau - that no local public transportation can use the bridge

crossing to Zhuhai and Hong Kong.

However, there was no reply from DSAT before this story went to press.

The three governments of Macau, Hong Kong and Guangdong have

set up a Co-ordination Group on cross-boundary matters, such as on the related policy studies and crossboundary transport arrangements for the bridge. According to

Mr. Cheung, the policy studies and discussion among the three governments are still in progress.

HKZB is slated to open in 2016.

K.L.

Business Daily | 3

December 12, 2014

Macau

Don’t worry, be happy On a scale ranging from 0 to 10 on the Happiness Index Study of Macau Residents 2014, locals scored 6.99, a value that places the SAR in terms of happiness above the average of OECD countries. People earning more are the saddest, it claims João Santos Filipe

Jsfilipe@macaubusinessdaily.com

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acau residents with the highest monthly income are the saddest, the Happiness Index Study on Macau Residents 2014 revealed yesterday at the Gaming Teaching and Research Cente of Macau Polytechnic Institute.

On a scale ranging from 0 (unhappy) to 10 (happy), Macau residents with an income of higher than MOP70,000 per month scored 6.67, condemning them to be the unhappiest. In terms of the saddest residents, people with a monthly income of from MOP40,001 to MOP50,000 are the second unhappiest (6.75), followed by residents with a monthly income ranging from MOP15,001 to MOP20,000 (6.77).

According to the joint research

by Macau Polytechnic Institute and Macau Economic Association, residents earning less than MOP5,000 a month are only the fourth unhappiest, scoring 6.83.

On the other hand, people earning MOP20,001 to MOP30,000 a month are the happiest (7.07), followed by those on MOP60,001 to MOP70,000 (7.00). Residents earning between MOP10,001 and MOP15,000 are the third happiest (6.99).

Traffic jams, inflation and housing are the main problems affecting Macau residents’ lives.

“Macau residents are quite satisfied with economic development, their neighbourhoods and their relationships within the family.

However, there are some issues, like traffic jams, inflation and housing that people are not quite satisfied with”, the Chairman of the Executive Board of the Macau Association of Economic Sciences, Lao Chui Ngai, said. “The problem related to housing is the price of property in Macau”.

On a scale of 0 to 10, Macau residents scored 6.99 in terms of happiness, an increase of 0.01 in relation to last year. This study has now been conducted for five years, with the level of happiness always increasing since 2011. The highest score of 7.03 points was recorded in 2010.

“The findings are relatively stable in relation to the previous year. However, if we compare the Happiness Index in Macau to other countries, the results are not bad. In relation to countries that are members of OECD [Organisation for Economic

Co-operation and Development] Macau is performing above average”, Dr. Lao Chui Ngai explained.

“The fact that you have rapid economic growth does not mean that people will be happier. When the economy is growing faster and faster it may lead to an increase in the pressure on people’s daily lives, such as the price of grocery products, rents, property”, he said. “You have to use the growth of GDP to enhance

the happiness of local residents.

Otherwise, it would be meaningless to develop the economy”.

Overall, public transport and traffic (4.37), cost of living (4.66) and living environment (5.42) are the areas most negatively affecting the happiness of Macau residents. On the other hand, family members (7.81), health (7.32) and social relationships (7.11) are the aspects that make residents happier.

At the end of the presentation of the results, Dr. Lao praised the government’s efforts in tackling social problems. However, he suggested they speed up the construction of roads and improve the transport network. He also said that with relation to the cost of living, the price of goods could be more controlled if prices were more transparent and if there were more sourcing channels and competition.

In relation to property, it was said that the administrative procedures to deliver public houses should be faster. It was noted, however, that the population perceived the 24-hour crossing border announcement very positively.

4 | Business Daily

December 12, 2014

Macau Brought to you by

CSI Properties’ profit plunges 72 per cent

HOSPITALITY Changing winds Last October, the number of trips made by Macau residents and arranged via travel agencies produced a figure of just below 140,000 trips. Including both excursions and individually made trips, that number represents an overall growth of 13 per cent compared to the same month in 2013. Most of the trips take place within Greater China.

The corresponding share has been rising over time, from just over 40 per cent in 2008 to just below 60 per cent last year. Of the other destinations, the most immediately significant are Japan, South Korea and a few countries located in South East Asia. Their combined share in the third quarter, this year dropped by more than 9.5 percentage points relative to the same period in 2008. Their profiles are, however, quite different, both seasonally and over the years. Note that due to differences in reporting by the statistics department, the figures for Malaysia and Singapore were adjusted, taking into account trips made by excursionists visiting both countries.

The travel patterns for all countries show strong seasonal variations, with peaks around the traditional holiday periods. That seasonality is especially strong among excursionists. A major exception is the Philippines, which very few visit on excursion – hardly more than 600 people did so in the last two years to October. Overall figures also seem to be declining. The Manila hostage crisis, in 2010, and the diplomatic spat that ensued, seem still to cast a long shadow over the travel patterns. South Korea, on the other hand, seems bound to become the destination of choice in Asia, with numbers growing steadily year after year. It comes at the expense of Thailand, where political instability is also taking its toll on tourism.

27.8%

rise in Macau residents’ trips to South Korea, October, on previous year

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ong Kong-listed CSI Properties Ltd registered a 72 per cent plunge in interim profits amid contracted sales of properties in the period, although the property investment company said that the Macau market still represented profitable growth prospects.

For the six months ended September 30, CSI Properties’ interim profit dropped by year-on-year 72 per cent to HK$168.73 million (US$21.8 million), the company said in a filing with the Hong Kong Stock Exchange after trading hours on Wednesday.

The company’s revenue in the period, generated from sales of properties, rental income and hotel operation, amounted to HK$362.04 million, some 83 per cent less than the same period last year. The company’s sales of properties, the major source of its income, had shrunk by 87 per cent from HK$2 billion a year earlier

to HK$270 million.

While CSI Properties noted that it has met challenges in the property market in Hong Kong and mainland China, it reported successful sales in the Macau market that helped realise ‘significant profit’ in the period.

The company was referring to a strata sale of 32 shops on the basement floor of the Ginza Plaza, located in the tourist destination of S. Domingos district in downtown Macau, which netted HK$288 million.

In the period, the company also purchased two floors of the small shopping complex Broadway Centre on Rua do Campo, also located in downtown Macau. By early 2015, CSI Properties will see the complete refurbishment of the centre’s lobby and façade, the company said in the filing.

Outside the interim period, a company held 51 per cent by CSI

Properties has entered into a legally binding letter of intent with the Hong Kong-listed gaming services firm China Star Entertainment Ltd to buy the four plots of land adjacent to Hotel Lan Kwai Fong. The deal was for an initial consideration of HK$2.23 billion, China Star Entertainment said in a filing on November 21.

In CSI Properties’ interim report, the company noted that it has completed a placement exercise through Jefferies Hong Kong Ltd and JP Morgan Securities (Asia Pacific) Ltd to raise about US$60 million in September, which it said was to help strengthen its balance sheet and provide funds for ‘necessary acquisition of commercial and residential properties, especially for Macau’.

CSI Properties’ ratio of total debt to total assets was 33.4 per cent for the interim period.

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China Overseas Land within reach of annual sales target

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tate-owned developer China Overseas Land & Investment Ltd, known for its upmarket housing project the Paragon and the Carat in NAPE district, informed the Hong Kong Stock Exchange on Wednesday of its strong property sales performance for the eleven months ended November 30.

The developer said in its unaudited results that its accumulated contracted property sales for the eleven months ended November 30 amounted to approximately HK$134 billion (US$16.78 billion), which made up 95.7 per cent of the HK$140 billion annual sales target

the company set earlier.

The accumulated corresponding gross floor area (GFA) sold was about 8,848,600 square metres.

China Overseas also pointed out that as at November 30 2014, the company had recorded subscribed property sales of approximately HK$8.63 billion, which are expected to be turned into contracted property sales in the following months.

In November alone, the contracted property sales of the company reached HK$15billion, with 1,126,800 square metres of gross floor area sold.

In the regional breakdown, in

the first eleven months of this year, while the Hong Kong and Macau market only contributed 2,250,000 square metres of contracted area sold, around 0.25 per cent, the money generated stood at around HK$5billion and accounted for 3.8 per cent of all contracted property sales.

In addition, the company disclosed that it had acquired two new land parcels in Beijing and Kunming last month, with aggregate attributable gross floor area of around 627,654 square metres; the land premium payable by the company amounted to some RMB6.3 billion.

Business Daily | 5

December 12, 2014

Macau Macau transforming into open-air museum Ung Vai Meng, president of the Cultural Affairs Bureau, says the territory has more than 20 museums, a “very high” density vis-a-vis the rest of the world

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acau’s endeavour to preserve cultural heritage has paid off and the territory is becoming an open-air museum, according to Ung Vai Meng, president of the Cultural Affairs Bureau of the Macau Special Administrative Region (SAR).

In an interview with Xinhua ahead of the SAR’s celebration of the 15th founding anniversary, Ung said the best thing that had ever happened to him was that he had the chance to witness Macau’s significant changes from a declining city to a flourishing “cultural heritage capital”.

Ung, 56, embarked upon his career as a historical building draftsman in 1983. He and his colleagues tried hard to promote the concept of historical site preservation among Macau people but were often frustrated at the beginning as most people had no idea of cultural heritage preservation at that time. “The residents were confused. They asked why such shabby houses should be protected from being torn down”, Ung said.

Things began to change after Macau’s return to China in 1999.

The Macau people’s cultural selfconsciousness was gradually raised with the improvement of their livelihood amid fast economic growth. For Ung and his colleagues, their cultural heritage preservation efforts culminated in July 2005 when the Historic Centre of Macau was inscribed on the World Heritage List. The Historic Centre of Macau occupies some 1.32 square kilometers, accounting for 13 per cent of the Macau Peninsula.

“Macau is a densely populated city with nearly 600,000 residents and so has many cultural heritage sites and museums. Therefore, we came up with the idea of turning Macau into an open- air museum as a whole”, Ung said. The concept of an “open-air museum” was proposed

by Macau’s Cultural Affairs Bureau around the year 2010, and was well received by Macau residents, he said.

Together with the Macau Government Tourist Office, the Cultural Affairs Bureau devised four walking tour routes – ‘A Tour of Historical Trails’, ‘A Tour of Nature and Creativity’, ‘A Tour of East Meets West’ and ‘A Tour of Arts and Culture’ via which the essence of Macau’s historical sites can be showcased to visitors.

Numerous traditional performances such as lion dances, Cantonese Opera performances and Chinese martial arts are staged on the walking tour routes, adding charm to this cultural heritage capital. “The Macau people have stepped on a development road of their own to deal with conflicts between

preservation and development, Ung said, adding, “There’s much scope for continued perfection of the open-air museum programme”.

Macau, occupying a total area of more than 30 square kilometers, has more than 20 museums, which Ung said manifests a “very high” density in the world. Macau’s museums have now established a close connection with museums in the Chinese mainland and overseas.

Since 1999, The Macau Museum of Art and China’s Palace Museum have held a joint exhibition every year.

A great many prestigious museums such as the Shanghai Museum and Nanjing Museum from the mainland,

Local judicial system improved since handover, court chief says

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he judicial system of the Macau Special Administrative Region (SAR) has been improved and perfected since Macau’s return to China in 1999, president of the Court of Final Appeal Sam Hou Fai said.

“An independent judicial system commensurate with the SAR’s condition has been established under the ‘One country, two systems ‘ policy and the Basic Law of Macau”, Sam told Xinhua on the eve of the 15th anniversary of Macau’s return to the motherland on December 20.

Sam, 52, became president of the Court of Final Appeal in 1999.

Prior to the return, Macau’s judicial system, a sub-judiciary district of the Portuguese legal system, was affiliated to the Judiciary District of Lisbon, according to the court chief.

To build an independent judicial system in Macau, China’s National People’s Congress, the Preparatory Committee of the Macau SAR, the

Chief Executive and the Legislative Assembly of the SAR have made great efforts, resulting in the emergence of a three-level court system, Sam recalled. They also endeavoured to draft laws on the judicial organisation framework and judicial officials, and form panels to select and train legal staff and professionals, and offered financial and administrative support.

“The measures have ensured that the SAR’s judicial system accords with the principle of ‘One country, two systems’ and ‘Macau people governing Macau’ with a high degree of autonomy,” Sam said.

One of the major tasks for Macau’s judicial system following its return is to accurately interpret and apply the Basic Law of Macau in order to fully implement the ‘One country, two systems’ policy, he said. In June 2004, the Court of Final Appeal ruled that international treaties and conventions are applied in the Macau SAR under the

Basic Law rather than the Civil Code.

In July 2007, the court decided in a ruling that the Chief Executive can issue executive orders with the authority vested in him by no other than the Basic Law. “We have won the deserved place and respect for the judicial system in Macau over the past 15 years because we’re always trying to seek fair justice as an ultimate goal in our judicial practices and reforms,” said Sam. According to the court chief, judicial efficiency has also improved over the years.

“We’ve been making efforts to realise high efficiency while handling court cases by creating special tribunals, recruiting more judicial professionals and simplifying the lawsuit proceedings”, he said. The three levels of court in Macau now have 45 judges and 234 court staff versus 23 judges and 100 staff in 1999. Those courts dealt with some 19,535 cases last year, more than

and the Louvre Museum and Centre Georges Pompidou of France have also exhibited in Macau.

After years of hard work, Ung said he now rarely hears objections from local citizens about cultural heritage preservation unlike thirty years ago, and they have ideas and suggestions to promote the preservation programmes.

“Macau is a very attractive city.

For centuries, a great amount of wonderful architecture, plazas and lanes have been left over during the cultural interflow between East and West. If you’re interested in what I said, I’ll take that as a driving force for our future work”, Ung said.

Xinhua

double the figure in the first year of Macau’s return to the motherland.

“Before Macau’s return in 1999, all the court procedures were conducted in the Portuguese language. But a large part of our court clients cannot speak Portuguese”, said Sam, adding that through years of effort, Chinese has become an important language used in the courts.

The number of interpreters or translators employed by the courts has grown to more than 40 from just 12 in 1999. The Chinese language or both Chinese and Portuguese are used in 75 percent of primary courts in the Macau SAR. Meanwhile, Macau has been engaged in judicial cooperation with the mainland and the Hong Kong SAR, Sam said. With the signing of three arrangements on judicial cooperation in civil and commercial proceedings, a legal framework for judicial assistance has been created between the Macau SAR and the mainland.

The return of Macau to the motherland has put an end to the existence of non-Chinese judges in China’s territory, Sam said. “The Chinese people finally exercise effective jurisdiction over all their territory”.

Xinhua

6 | Business Daily

December 12, 2014

Macau

Construction of Galaxy Hengqin project starts next year Francis Lui, the deputy chairman of GEG, has announced to Chinese media that the construction of the Hengqin project will be finished in some 7 years’ time.

Meanwhile, Galaxy Phase II will open in the first half of next year on schedule Kam Leong

kamleong@macaubusienssdaily.com

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he deputy chairman of Galaxy Entertainment Group, Francis Lui Yiu Tung, has confirmed that the Group’s project in Hengqin, which will be divided into three phases, will begin construction next year. The construction is expected to take from seven to eight years to complete.

Mr. Lui said in an interview with Chinese-language newspaper Macau Daily published yesterday that the Group’s project in Hengqin will feature Maldives-style leisure resorts to supplement the high-end, high-density entertainment projects in Macau that the Group is creating.

The deputy chairman perceives that Hengqin is one of the Mainland Chinese regions where Macau can seek development given the SAR’s lack of land, according to the newspaper.

“Hengqin is a place that Macau people should cherish as its future law, tax as well as culture will be similar as those in Macau. [Hengqin] will offer more opportunities for development, which young people in Macau should grab”, the newspaper reported regarding Mr. Lui’s perspective on the island. In addition, he reckons that the coming implementation of the 24-hour Hengqin border crossing is a good thing.

Following six consecutive months of declining gaming revenues, Mr. Lui says the Group’s phase II project will be unveiled during the first half of next year as scheduled, claiming it had not slowed its pace of investment despite gaming revenues dropping. In fact, he believes the situation regarding declining gaming revenues is only temporary. He does not think that it will lead to any important changes in the structure of the gaming industry.

Francis Lui, deputy chairman of GEG

Neptune’s Cheung investigated for money laundering

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uthorities in Hong Kong are investigating leading owner of junket Neptune Group Ltd Cheung Chi Tai for money laundering.

Neptune Group is an investor in casino VIP promoters in Macau. The report was published in the Wall Street Journal as well as Business Insider, and according to which Cheung’s assets have been frozen along with that of seven of his ‘closely held companies’.

According to the Wall Street Journal, people familiar with the investigation said that the order from Hong Kong police, a notice for which was published in a local newspaper on November 30, was related to a continuing probe into possible money laundering.

Cheung’s Neptune is one of three Macau junkets that have been allowed to bring high rollers to Las Vegas, something Nevada regulators have been watching with mounting concern, according to a report from Business Insider.

In April of this year, the wife of Cheung Chi Tai was detained in Hong Kong along with HK$200 million (US$25.8 million), local media reported at the time. Cheung Chi Tai was named as an alleged triad member at the money laundering trial of Carson Yeung, the former owner of English soccer club Birmingham City.

Neptune reported a net profit of HK$148.8 million for the 12 months ended on June 30, 2014. That’s 93.8 percent down from that a year earlier.

Saying that the exact date of the opening of Phase II will be announced in January, Mr. Lui also revealed that the Group is to hire some 7,000 to 8,000 employees for the Phase II operation. Besides claiming the current remuneration of the Group is satisfactory following a recent hike, he is confident his company can successfully recruit the expected number of staff, as the Phase II project is the first of the [competitive] new projects to open.

In addition, Mr. Lui said that Galaxy has been following the target that the government, as well as central government, have set for Macau – transforming it into a World Tourism and Leisure Centre, claiming that as the gaming industry may have developed too fast [Galaxy] will expand the development of nongaming elements in the future as well.

He also perceives that increased non-gaming elements make for a healthier development of the market, claiming the middle class in the city, whom he thinks will be the future main sources of the industry, are also demanding diversified development as they do not want to be limited to gaming elements.

On the other hand, Mr. Lui expressed his opinions about the newly designated government Secretaries. According to Macau Daily, he trusts that each of the new chiefs has independent ability.

However, he hopes that they will listen more to opinions from different classes of society in order to be able to create a blueprint for the future development of Macau so that consensus can be created in society, including employers and employees in the city.

Business Daily | 7

December 12, 2014

Macau Chan Chak Mo: Macau’s casinos empty as China Anti‑bribery law in Macau stock bets jump to record basically completed

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he Second Standing Committee of the Legislative Assembly has signed the position paper on the draft on anti-bribery in foreign trade, which is expected to be passed by legislators within this year, said the head of the committee, Chan Chak Mo. He added that the Macau anticorruption law on the private sector and public sector and soon in foreign trade are basically all completed and he believes that the government will continue to comply with the United Nations Convention Against Corruption, whilst evaluating if there is a need for additional legislation.

The latest revised draft changed several wordings and clarified the text.

It also suggests the adoption of the penalty as listed in Article 339 of Macau’s Penal Code for any briber that offers interests to civil servants,

which is a maximum three-year imprisonment or equivalent fine.

The bill, which is based on compliance with the United Nations Convention Against Corruption, states that the city’s graft watchdog – the Commission Against Corruption - will be the authorised unit to investigate any corrupt acts related to external trade, where public officials and officials of public international organisations outside Macau are the bribed party.

The United Nations Convention Against Corruption came into effect in China in February 2006, and similarly apply to Hong Kong and Macau. But it was only this year that the legalisation process for compliance with the Convention began. As of December this year, there are 140 signatories to the United Nations Convention Against Corruption.

he shares of Macau´s two largest casino operators are heading for their first annual losses in more than four years as Chinese gamblers cut spending amid an anti-graft campaign and record bets on the stock market. Casino revenue in Macau slumped last month to MOP24.3 billion patacas (US$3 billion), the lowest level since September 2012, while trading on the Shanghai and Shenzhen stock exchanges reached a high of 1.24 trillion yuan (US$200 billion) yesterday.

Sands China and Galaxy Entertainment have lost at least 30 per cent this year as the city´s casino revenue has so far dropped six straight

months. The two stocks surged more than 500 per cent in the previous four years as an influx of mainland tourists helped Macau become the world´s largest gambling hub. Citic Securities Ltd. and Haitong Securities Ltd. have jumped more than 38 per cent this year amid a world-beating rally in Shanghai shares, even after a market sell-off yesterday.

“Customers who used to wager on casino tables are probably now sitting at home betting on stocks,” said Tai Hui, Hong Kong-based chief Asia market strategist at JP Morgan Asset Management. “Investors are levering up on margin trading, or `using a small knife to cut a large tree’.”

Bloomberg

Macau Water seeks subsidy increase

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acau Water Supply Co Ltd wants the government to increase the water supply fee in 2015 to help stem increasing operational costs.

The company’s executive director, Fan Xiaojun, said a fee increase of at least the same percentage as that of inflation would suffice. Mr. Fan is quoted by local media as saying that costs related to human resources and the different types of outsourcing services, in tandem with the costs involved in the purchase of raw materials, have increased by between 30 per cent and 50 per cent, with some of these increasing more than just once.

“Honestly speaking, we don’t have very high expectations. We would be satisfied if it [the subsidy increase] can keep up with the inflation rate or [be] a little bit higher”, Mr. Fan was quoted as saying.

The city’s sole water distributor saw its profits rebound last year by 8.4 per cent over the previous year after

the government granted a 5.92 per cent rise in payment for its services.

But in April this year the government was still considering a further request from Macau Water Supply Co Ltd, asking for another hike this year.

Macau Water’s 2013 profit after tax totalled MOP53.6 million (US$6.7 million), growing by 8.4 per cent from MOP49.4 million in 2012. The profit generated by its core business – water supply services – was MOP48 million last year, the company announced earlier this year.

Currently, the government pays Macau Water MOP4.65 per cubic metre of water it supplies to the city, against MOP4.39 before the nearly 6 per cent rise. This rise does not translate into the increase in water tariff paid by the public.

Earlier this year, however, the company applied for another 16 per cent increase in government payment, which is analysing the request and has not responded.

Corporate

CTM supports Walk for a Million Local telecommunications company CTM has donated MOP150,000 to the Charity Fund from Readers of Macau Daily News ahead of the annual charity event ‘Walk for a Million’ to be held this Sunday, December 14. According to CTM CEO Vandy Poon, the company has been fulfilling its philosophy to support charitable works. This year, CTM will again team up with nearly 400 staff and family members to participate in the ‘Walk for a Million’, a company statement said. Aside from the donation, CTM continued to join hands with the Charity Fund to set up donation channels through Internet and Mobile, aiming at expanding the fundraising network. All proceeds will go towards the Charity Fund from Readers of Macau Daily News, the company pledged.

8 | Business Daily

December 12, 2014

Greater China

Securities commission unexpectedly approves 12 IPOs The move signals the potential acceleration of the pace of IPOs in China

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hina’s securities regulator unexpectedly approved 12 initial public offerings late on Wednesday, a move which could cool a blistering rally in the country’s stock markets which has seen the benchmark CSI index surge over 30 percent in two weeks.

The IPO approvals, reported by state media yesterday morning, include budget carrier Spring Airlines’s 1.76 billion yuan (US$285 million) listing.

The move signals the potential acceleration of the pace of IPOs in China, which would be good news for investment bankers, underwriters and the hundreds of companies queued to list.

But it may be negative for stock indexes as analysts suspect the timing of the announcement is aimed at cooling the mainland’s red-hot market.

The CSI300 index has rallied in record volume amid speculation that the central bank will further ease monetary policy to shore up the cooling economy.

That rally, which has attracted billions of fresh investor money into shares, has now given the regulator the space to accelerate the pace of IPO approval without over-diluting valuations of existing shares, especially given than many firms have seen their price-earnings valuations double in recent weeks.

But the rally has also encouraged the exuberant use of leverage as investors

borrow to buy into the market, a worry for financial regulators.

Analysts said the latest round of approvals, made by the China Securities Regulatory Commission on Wednesday, came earlier than expected. Approvals are typically announced around the 20th of each month, so the news was seen as a potential precursor to an upcoming flood of offerings.

The 12 firms included Spring Airlines Co Ltd, medium-sized Chinese brokerage Guosen Securities as well as a textile maker and environmental technology services provider.

Spring Airlines said in its prospectus on Thursday it will start to offer shares on December 22 on the Shanghai Stock Exchange to raise 1.76 billion yuan (US$285.18 million). It did not specify a reason why it had reduced a previous fundraising target of 2.5 billion yuan made in April.

The firm, China’s largest budget carrier, said the funds will be used to buy up to nine Airbus A320 jets and three A320 flight simulators, as well as supplement its working capital.

Guosen Securities said it aimed to issue up to 1.2 billion shares on China’s southern Shenzhen Stock Exchange to raise funds to supplement its working capital. It did not say how much proceeds it aimed to raise.

An Airbus tail with Spring Airlines logo.

The company is one of the 12 firms that received approval for going public

Reuters

China tells banks to step up lending The People’s Bank of China is also allowing banks to lend more than 75 percent of their deposits

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hina has told its banks to issue more loans in the final months of 2014 and has relaxed limits on their loan-to-deposit ratios to help hit a record new lending target as the government steps up efforts to lift flagging economic growth.

Two sources with knowledge of the matter said China’s central bank would now allow banks to lend an unprecedented 10 trillion yuan (US$1.62 trillion) for all of 2014, up from what Chinese media have said was a previous target of 9.5 trillion yuan.

Bank lending is a crucial part of China’s monetary policy as the government tells commercial banks how much to lend and when to lend each year.

The People’s Bank of China is also allowing banks to lend more than 75 percent of their deposits, injecting flexibility in a rule that was meant to control lending activity.

So far, Chinese banks have disbursed 8.23 trillion yuan worth of loans between January and October, so they will have to quicken the pace in November and December if they are to meet the new 10 trillion yuan target.

The central bank was not immediately available for comment.

The move comes a day after China’s inflation slipped to a fiveyear low, raising expectations that Beijing would move more

Reuters

KEY POINTS Increases loan target to 10 trillion yuan for 2014 Relaxes enforcement of loan-to-deposit ratios Banks have to increase pace of lending to hit target

aggressively to head off the risk of deflation.

As recently as November 21, the PBOC also made a surprise cut in interest rates in an attempt to reenergise the world’s second-largest economy, where annual growth could sag to its lowest in 24 years as cooling domestic investment and a slowing housing market hurt

activity.

It described the move as being neutral for monetary policy and said it was intended to lower real interest rates, having said for months that China did not need to adopt “strong” stimulus to spur its economy.

China had not officially announced its lending target for 2014, though Sheng Songcheng, the head of the

statistics department at the central bank, was quoted by local media in July as saying that banks were lending more to the housing market to support the cooling sector.

Sheng said banks were displaying “forceful” support for the slowing real estate market and said then that they were likely to issue 9.5 trillion yuan in new loans.

Business Daily | 9

December 12, 2014

Greater China Rate swap climbs as central bank refrains from reverse repos Reverse repos, which add funds to the financial system, haven’t been used since January

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hina’s benchmark interestrate swap climbed by the most since March and moneymarket rates increased as the central bank refrained from offering reverserepurchase agreements in yesterday’s auction window.

The People’s Bank of China conducted no open-market operations yesterday for the fifth auction window in a row, having last offered repurchase agreements on November 18.

Borrowing costs are climbing in China after an interest-rate cut last month, the first since 2012, ignited a stocks boom that sucked in cash from the bond market.

The PBOC is caught in a dilemma as the rate cuts led to “side effects” such as a surge in stocks and a decline in bonds, analysts led by Chen Kang at Shenyin Wanguo Securities Co. wrote in a note yesterday. The consequences may prompt policy makers to favour targeted easing rather than broadbased measures such as a lowering of lenders’ reserve requirements, the analysts wrote.

The seven-day repurchase

The market was waiting for a RRR cut, but there wasn’t one, so there might be some disappointment Zhou Hao economist, Australia & New Zealand Banking Group

rate, a gauge of interbank funding availability, rose as much as 15 basis points to a four-month high of 3.80 percent, a weighted average compiled by the National Interbank Funding Centre shows.

Shenying Wanguo noted there were reports that the PBOC injected 400 billion yuan (US$64.8 billion) yesterday via China Development Bank. Cai Feng, a strategist at Guoyuan Securities Co., also said there was talk of such a move.

Factory-gate deflation deepened and consumer prices climbed at the slowest pace since 2009, data showed yesterday, fuelling speculation the PBOC will ease monetary policy further. Lenders’ reserverequirement ratios were last lowered in 2012.

“The market was waiting for a RRR cut, but there wasn’t one, so there might be some disappointment,” said Zhou Hao, a Shanghai-based economist at Australia & New Zealand Banking Group Ltd. “There also wasn’t a reverse repo yesterday.”

The yield on China’s sovereign bonds due September 2024 rose 10 basis points to 3.80 percent, prices from the National Interbank Funding Centre show. A basis point is 0.01 percentage point.

The company has said it will close about 30 of roughly 400 Chinese stores

A

pressure to meet earnings targets, resorted to temporary mark-ups of inventory as an accounting move that can burnish profits without any added sales of merchandise.

Extensive investigation After employees “recognized inventory pricing discrepancies” in 2011, the company’s senior leadership in the U.S. and China ordered an extensive investigation that led to

Fiscal expenditure in November inched up 0.8 percent from a year earlier to 1.28 trillion yuan (US$207.30 billion), the Ministry of Finance said yesterday.

That reversed from a 5.7 percent drop in spending in October. China’s fiscal revenue in November rose 9.1 percent from a year earlier to 995.3 billion yuan, the ministry said in a statement on its website, www.mof.gov.cn.

Momo’s CEO accused of theft before IPO A day ahead of its IPO a popular Chinese dating app backed by Internet giant Alibaba was yesterday facing accusations by its CEO’s previous employer that he stole technology and abused his position. NetEase, one of the most popular web portals in China, accused Momo chief Tang Yan of stealing information and technological resources in violation of Chinese labour law. NetEase also said Tang used his former position with it to award lucrative contracts to his wife’s company. Momo is going public in New York on Friday.

IOI doesn’t want to manage Taipei 101

Bloomberg News

Wal-Mart report found inflated profit in China fter years of heralding China as one of its best markets, Wal-Mart in August said its performance there was among the worst in its major countries. A management shake-up and job cuts have followed. Although the reversals seem abrupt, cracks in the foundation of Wal-Mart’s retail business in China have been developing for years, hidden by questionable accounting and unauthorized sales practices, according to employees and internal documents reviewed by Bloomberg.

The practices -- including bulk sales to other retailers and some sales allegedly booked when no merchandise left the shelves -- made business appear strong even as retail transactions slowed and unsold inventory piled up, these people and documents say. Wal-Mart said in August that it was unhappy with inventory growth internationally.

Stores in China continue to make bulk sales, sometimes unprofitably and without required management authorizations, according to employees who’ve left the company this past month. Concerns about bulk sales, raised as far back as 2011 in an internal report, have been the subject of inquiries in China by WalMart’s legal team as recently as May, according to an internal company e-mail and an employee interviewed by lawyers.

The report and interviews with current and former employees say Chinese Wal-Mart stores, under

November fiscal spending rose

“various leadership changes and disciplinary actions,” strengthened compliance measures, training, and regular audits, Wal-Mart Stores Inc. said in a statement.

The bulk sales provided at least 1.6 billion yuan (US$243 million) in sales, and the mark-ups accounted for 4 percent of gross profits in 2010 alone at 98 hypermarket stores examined

by Stanford Lin, who conducted the internal review.

Bloomberg News

Malaysian real estate firm IOI Properties Group Bhd said yesterday it had no plans to manage the owner of the Taipei 101 skyscraper it wants to buy into, after the Taiwan government said it opposed foreign control of the landmark. IOI Properties, controlled by Malaysian billionaire Lee Shin Cheng, last week said it was planning to buy a stake in Taipei Financial Centre Corp (TFCC) for about US$790 million. Taiwan’s investment regulator, however, said they would give the deal a strict review.

Nine firms added to shipyards OK list China has added nine shipyards to its “white list” of firms deemed worth of favourable policy support, as it attempts to tackle overcapacity that has weighed on the global shipping market. In September, it published a list of 51 yards which it later cut to 50.

These yards, which it says are judged to comply with requirements such as ship emissions, are expected to get favourable policy support, such as bank credit and export tax rebates.

Nestle to set up R&D centre in HK The company plans to open 10 skin care research centres worldwide, deepening its investment in a faster-growing market for healthcare products. The first of the new research hubs, dubbed Nestle Skin Health Investigation, Education and Longevity Development (SHIELD) centres, will open mid 2015 in New York, followed by Hong Kong and Sao Paolo, and later others in North America, Asia and Europe, Nestle said.

10 | Business Daily

December 12, 2014

Greater China

Hong Kong works to maintain Islamic finance momentum The Hong Kong Monetary Authority is working to increase awareness of Islamic finance within the territory Bernardo Vizcaino

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ong Kong’s government is trying to maintain the territory’s momentum toward becoming an Islamic finance centre, as other potential sukuk issuers show little enthusiasm.

In September, Hong Kong made the first U.S. dollar-denominated sukuk issue by an AAA-rated government, a US$1 billion deal that put it on the map in the global competition among banking centres to attract Islamic finance business.

Since then, however, there have been few if any signs of other sukuk issuers emerging in Hong Kong demonstrating that however hard governments try, they may struggle to develop Islamic finance sectors if a strong economic rationale is absent.

Hong Kong is a top centre for conventional finance, serving China and many customers elsewhere in Asia. Because of its fiscal strength, its sovereign sukuk issue attracted a massive order book of US$4.7 billion, including many investors from the Middle East.

But that does not necessarily mean other borrowers in Hong Kong will choose to issue sukuk instead of conventional bonds, which tend to be more familiar and less complex, and therefore cheaper to structure and sell.

And for regional borrowers that do want to use sukuk, it is not immediately clear why they should choose Hong Kong instead of Kuala Lumpur, which has the world’s most active Islamic bond market, or the Gulf, where most big Islamic investors are based.

In the past, several firms in Hong Kong have been linked to possible sukuk issuance, including the Airport Authority, metro operator MTR Corp

and Hong Kong Mortgage Corp (HKMC). So far, there is no sign of these firms following the government’s lead, however.

The Airport Authority said through a spokesperson that it had no further updates on its funding plans or the subject of sukuk financing. MTR Corp declined an interview request, saying it had no funding plans.

HKMC considered sukuk when the government first started to promote the sector, but a preliminary study found it difficult to proceed since HKMC’s assets are not shariacompliant mortgages, said treasury manager Rita Yeh. “Nevertheless, we will continue to monitor the market development and be open-minded on any favourable funding options for the Corporation.”

Paving the way In a written response to Reuters questions, the Hong Kong Monetary Authority (HKMA) said September’s sukuk sale had demonstrated that the territory’s legal, regulatory and taxation framework could support domestic issuers, paving the way for public and private sector firms to come to market.

In July 2013, Hong Kong amended its tax laws to provide a level playing field for some of the most common types of sukuk transactions - ijara, musharaka, mudaraba and wakala and lawmakers passed a bill in March this year to allow the government to issue its own sukuk.

“Whether more government sukuk will be launched in the future will very much depend on the additional benefits of such future issuances from a market development perspective.

We will continue to keep this under

review,” the HKMA said.

For years, proponents of Islamic finance in Hong Kong have dreamed of making the territory a bridge to Chinese buyers of sukuk.

So far, however, there have been few issuers of yuan-denominated sukuk, and these have opted to tap the Malaysian market instead, via locally

Whether more government sukuk will be launched in the future will very much depend on the additional benefits of such future issuances from a market development perspective. We will continue to keep this under review Hong Kong Monetary Authority

domiciled special purpose vehicles.

They include Malaysia’s state investor Khazanah Nasional, which made a three-year, 500 million yuan (US$81 million) sukuk issue in 2011, and mobile phone operator Axiata Group, which conducted a two-year, 1 billion yuan issue in 2012.

To help Hong Kong win such business, the HKMA is working to increase awareness of Islamic finance within the territory. Last December it launched a forum on Islamic finance with Malaysia’s central bank, and it has organised seminars and workshops.

“We will also share our experience in sukuk issuance with enterprises which have funding needs, with a view to encouraging them to participate in the local market,” the HKMA said.

Meanwhile, Hong Kong’s Financial Secretary John Tsang led a business delegation to the Middle East this week, with visits to Saudi Arabia and the United Arab Emirates.

“We welcome more sukuk to be marketed, listed and executed in Hong Kong. And we invite more Islamic financial institutions to establish a presence in Hong Kong,” Tsang said in a speech to an audience in Riyadh on Sunday.

Islamic fund management has been one bright spot for Hong Kong this year. Maybank Asset Management, a unit of Malayan Banking, said in October it would tie up with Hong Kong-based Bosera International to jointly develop Islamic investment products.

Malaysia’s RHB Asset Management launched its first Islamic fund in the Hong Kong market in June, with plans for two more such funds next year.

Reuters

Business Daily | 11

December 12, 2014

Asia

Bank of Korea holds rate despite weak yen Tumbling oil prices and the yen’s slide are increasing uncertainty for an economy that’s shown signs of weakness in exports and industrial production in recent months Jiyeun Lee and Cynthia Kim

T

he Bank of Korea kept its benchmark rate unchanged for a second month, opting to gauge the impact of recent cuts on an economy that faces headwinds from a weak Japanese yen.

The central bank held the sevenday repurchase rate at a four-year low of 2 percent, it said in Seoul yesterday, after cuts in August and October. The decision was forecast by 17 of 20 analysts surveyed by Bloomberg News, while the rest predicted a reduction to a record low of 1.75 percent.

The won appreciated to a sixyear high against the yen this week, increasing pressure on South Korean exporters that compete with Japanese companies.

“Data released after the November rate decision wasn’t positive, but the BOK will wait another month to make a firmer judgment on the economy and lower interest rates,” Chang Jaechul, a Seoul-based economist at Citigroup Inc., said before the decision. “Concerns are growing over disinflation and the won’s relative strength against the yen, and a rate cut can boost economic sentiment.”

All economic fundamentals point to the need to lower the interest rate. I’m very concerned about the risk of falling into a deflationary trap Raymond Yeung economist Australia & New Zealand Banking Group

The economy will gradually improve in the coming months, although foreign exchange volatility and a delay in the recovery of investment and consumer sentiment are destabilizing factors, the central bank said in a statement after the decision.

Exports from Asia’s fourthbiggest economy fell 1.9 percent in November from a year earlier.

Industrial production contracted 3.2 percent in October from the same month last year, the biggest decline since January, according to figures released November 28.

The BOK has room to cut its benchmark rate to fend off any deflationary risk, the Korea Development Institute wrote in a November 25 report. The nation can’t rule out a chance of deflation as price gains have stayed low for a long time and growth has slowed due to weak demand, the state-run think tank said.

Low inflation Consumer prices rose 1 percent in November from a year earlier,

trailing the central bank’s target range of 2.5 percent to 3.5 percent since June 2012. One of the BOK’s seven board members said at last month’s rate meeting that policy makers should prioritize overcoming low inflation, minutes released Dec. 2 showed, while another said low inflation expectations can suppress actual prices gains.

“Consumer price inflation is expected to remain low for a considerable period of time, owing chiefly to the declines in international oil prices,” the bank said in a statement.

The recent drop in oil prices may exacerbate South Korea’s low inflation and excessive currentaccount surplus trend, the finance ministry’s December 9 monthly economic report showed.

“My out-of-consensus call is to prescribe what the BOK ought to do,” Raymond Yeung, a Hong Kongbased economist at Australia & New Zealand Banking Group Ltd. who forecast a cut at yesterday’s meeting, said before the rate decision.

Bloomberg News

Ailing finances unlikely to threaten Aussie AAA As Australia has one of the lowest levels of government debt among Western nations

Prime Minister Tony Abbott had to scale back or abandon some budget cutting measures

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ustralia is likely to keep its triple-A ratings even as a looming budget review from the Liberal-National government is set to show a marked deterioration in its finances, two ratings agencies said on yesterday.

The conservative government has faced a slide in tax revenues as plunging prices for key commodity exports, in particular iron ore, eat into company profits.

Prime Minister Tony Abbott has also had mixed fortunes in pushing proposed budget cuts through a sceptical Senate, with some measures having to be scaled back or abandoned.

A mid-year budget review is due at any time and will likely show the budget deficit for the financial year to end June 2015 had blown out by around A$5 billion (US$4.2 billion) to nearly A$35 billion.

Analysts suspect shortfalls for the following three years could as much as A$10 billion larger per year and the goal of reaching a budget surplus will have to be delayed again.

Yet, ratings agencies see no reason to change the nation’s top notch credit ranking and its stable outlook.

“We don’t see any immediate pressure, provided the government remains committed to improving budget performance and getting back to a broadly balanced budget,” said Craig Michaels, an analyst at Standard & Poor’s.

Australia has one of the lowest levels of government debt among Western nations at a gross A$348 billion, while net debt amounts to only 12 percent of gross domestic product compared to an average of over 50 percent for the developed world.

Underpinning the agency’s triple-A ratings was a strong institutional framework and economy, as well as a large export potential from its abundant natural resources.

Hess, however, did highlight a reliance on offshore capital as one vulnerability. While Australia’s national savings rate is relatively high by international standards, investment spending is even larger and much of that is funded from offshore.

Reuters

12 | Business Daily

December 12, 2014

Asia Malaysian factory output up Malaysia’s industrial production in October grew a faster-than-expected 5.0 percent from a year earlier, data from the Statistics Department showed yesterday. A Reuters poll of 12 economists had forecast factory output would grow 4.1 percent in October, as weaker commodity prices weighed on mining production. It rose 5.4 percent in September. October’s factory output was sustained by growth in the manufacturing, mining and electricity sectors. During October, exports fell 3.1 percent from the year-earlier level.

Vietnam’s 2014 crude oil increasing Vietnam is expected to produce more than 17 million tonnes of crude oil this year (341,000 barrels per day), beating its annual target by at least 5 percent, state oil and gas group Petrovietnam said. As of Tuesday, the group had pumped 16.21 million tonnes of crude and 9.5 billion cubic metres (cbm) of natural gas, meeting annual targets set by the government, the Hanoi-based group said in a statement. Vietnam, the third-largest holder of crude oil reserves in Asia, produced 16.71 million tonnes of crude oil in 2013.

Origin, Santos struggle against oil price slide Origin Energy Ltd and Santos Ltd took steps yesterday to shore themselves up against a 50 percent slide in oil prices as they both race to complete huge gas projects in Australia in 2015. Origin, on track to start exporting liquefied natural gas (LNG) from the Australia Pacific LNG project in mid-2015, took on more debt, increasing its loan facilities to A$7.4 billion (US$6.2 billion), but extended repayment deadlines to 2018 and 2019 and cut its interest rate margin by 0.3 percent.

Russia-India to revive relationship

Japan machinery orders tumble weakening Abe’s campaign The 6.4 percent on-month fall in core machinery orders suggests business investment will struggle to underpin a rebound in the economy Tetsushi Kajimoto

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ecession-hit Japan suffered a fresh blow yesterday as data showed a key gauge of capital spending tumbled in October - a worrying sign for its recovery given that business investment was a big drag on the economy in the third quarter.

The machinery order data is a stark reminder of the challenges facing Prime Minister Shinzo Abe, who heads into an election on Sunday seeking a fresh mandate for his economic-revival strategy that critics have panned as a failure.

Abe is expected to win the election comfortably, but doubts about his “Abenomics” recipe of aggressive

monetary stimulus, fiscal spending and pro-growth reform have sharpened since Japan unexpectedly slipped into a recession in the third quarter.

The slump was triggered by a sales tax hike in April, which chilled consumption, while capital expenditure also carved out a big slice off output, sliding a biggerthan-expected 0.4 percent in the third quarter.

The 6.4 percent on-month fall in core machinery orders, a highly volatile data series seen as an indicator of capital spending in the coming six to nine months, suggests business investment will struggle to underpin a rebound in the economy.

The figure issued by the Cabinet Office was far worse than a 2.4 percent fall forecast by economists in a Reuters poll, and followed a 2.9 percent month-on-month gain in September.

“Firms’ activity in domestic output is unlikely to gather strength until they get rid of inventory” that piled up after the tax hike, said Kenta Ishizu, economist at Mizuho Securities.

“I don’t think capital spending will be accelerating ahead. As long as the economy remains weak, companies will continue to revise down their spending plans.”

The government sees capital spending picking up, though some

Australia adds jobs, unemployment still hits decade high Notably, job advertisements rose for a sixth straight month in November to reach their highest in 23 months Wayne Cole

Russian President Vladimir Putin started a visit to India yesterday in an attempt to revive a historic friendship that has faded over the years, seeking to improve cooperation in energy, defence and nuclear power. He flies to New Delhi for his first summit with Prime Minister Narendra Modi. Possibly the most ambitious area for cooperation will be in nuclear energy, where Putin is pushing for state-owned Rosatom to increase the number of nuclear reactors it could supply to as many as 25.

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ustralian employment rose by much more than expected in November but most of the jobs were part time and the jobless rate still hit a decade high, making for a mixed message on the economy.

The Australian dollar added a quarter of a U.S. cent after employment rose 42,700 in November, handily topping forecasts of a 15,000 increase.

However, all but 1,800 of those positions were for part-time work.

The jobless rate also rose a tenth to 6.3 percent, the highest since late 2002 and likely to be another blow to fragile consumer sentiment.

“It’s a hell of a lot better than expected but the devil is always in the detail. The unemployment rate ticked

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

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Business Daily | 13

December 12, 2014

Asia NZ central bank stands pat

KEY POINTS Oct core machinery orders -6.4 mth/mth pct vs -2.4 pct f’cast Data suggests capex, economy slow to recover from recession

The central bank said the economy had been growing above trend, boosted by strong construction activity, high immigration, and low rates Gyles Beckford

Abe, BOJ count on capex to drive sustainable growth

analysts say sluggish domestic demand after April’s sales tax hike will continue to drag on business investment.

The Bank of Japan’s tankan showed firms’ positive stance on investment. But companies have so far been slow to implement their spending plans and remain wary of boosting wages, highlighting the challenges Abe and the BOJ face in nursing the economy to sustainable growth and meeting the central bank’s 2 percent inflation goal.

Core orders are seen slipping 0.3 percent in the current quarter after bouncing to a 5.6 percent gain in July-September.

up so I think the market will still be of the view that the employment is pretty weak,” said Michael Workman, a senior economist at Commonwealth Bank.

“It’s enough for the market to think, in the bigger scheme of things, maybe the risks are biased towards a rate cut early next year.”

The Australian Bureau of Statistics’ jobs survey has been plagued with problems in recent months which shook market confidence in the series.

The bureau believes it has ironed out the problems but it will take a while for analysts to be sure.

As a result the market reaction was relatively limited. The Australian dollar edged up to US$0.8362 but largely because investors were cutting back on long U.S. dollar positions ahead of year-end.

Interbank futures barely budged as the market continued to wager on at least one rate cut from the Reserve Bank of Australia (RBA).

Recent sharp falls in prices for some of Australia’s major commodities, combined with a global slowdown in inflation, have revived the risk of an easing.

Indeed, investors priced in a chance of more than one move in the wake of disappointing data out last week that showed the economy grew a meagre 0.3 percent in the third quarter.

Futures show around a one-in-four probability of a cut at the RBA’s next policy meeting in early February and are almost fully priced for a move to 2.25 percent by April.

Still, most leading indicators of the labour market suggest employment is growing moderately at perhaps 1.0 to 1.5 percent a year, enough to keep up with growth in the workforce though not enough to pull down the jobless rate.

Reuters

They would need to grow 3.3 percent each in November and December in order to prevent a quarter-on-quarter decline in the final three months of 2014, a Cabinet Office official said.

Abe’s strategy to spark durable growth in the world’s third-largest economy and cast off 15 years of grinding deflation has had only partial success. The stock market has rallied sharply since Abe came to power in December 2012, while the yen’s sharp slump has allowed export companies to reap windfall profits, though very little of these have been ploughed into new investment or wage increases.

The BOJ is likely to cut its inflation forecasts next month, making its 2 percent inflation goal look ever more ambitious, just few months after its shock decision on October 31 to expand its already massive asset purchases.

Reuters

N

ew Zealand’s central bank held its benchmark rate steady yesterday, and struck a relatively hawkish policy tone by signalling modest rate rises over time that propelled the local dollar higher.

The Reserve Bank of New Zealand said that while inflation was low, the economy was growing strongly and expected to do so for the next two years.

“Some further increase in the OCR (official cash rate) is expected to be required at a later stage,” RBNZ Governor Graeme Wheeler said in a statement accompanying the decision to keep the cash rate at 3.50 percent for a third consecutive review.

“Further policy adjustments will depend on data emerging over the assessment period.”

“The statement is not as dovish as some were expecting. There had been thoughts the RBNZ would shift to a clear neutral stance, but instead it kept the tightening bias intact,” said Su-Lin Ong, senior economist at RBC Capital Markets.

The RBNZ said inflation was at low levels because of the high NZ dollar, modest house price inflation, and subdued wages, but was expected to pick up gradually.

A Reuters poll taken after the latest statement had a majority view that the RBNZ will pause at least until the third quarter next year, in line with the central bank’s bill forecasts. The poll sees the OCR at 3.75 percent by year end.

“The economy can sustain growth around 3 percent a year,” Wheeler told a parliamentary committee, but said that a prolonged fall in dairy prices could significantly impact growth.

The prices of dairy exports, the nation’s biggest earner, are down about 50 percent this year.

It said there seemed to be some softening in major economies apart from the United States, and it expected monetary policy in all major economies to be supportive for longer.

Reuters

South Korea-ASEAN summit opens in Busan After meeting with some 570 businessmen, South Korean President will hold back-to- back meetings with ASEAN leaders

S

outh Korean President Park Geun-hye yesterday launched a special summit with 10 leaders of the Association of Southeast Asian Nations (ASEAN) in the country’s southeastern city of Busan.

The 2014 ASEAN-South Korea commemorative summit will run for two days through Friday, the presidential office said. Opening the special summit, the CEO summit with business leaders was held first at the Busan Exhibition & Convention Centre, or BEXCO. Park said in a keynote speech that South Korea and the ASEAN have developed a mutually-beneficial cooperative relationship, stressing the need for further efforts to foster their economic partnership a leap forward.

The ASEAN, including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam, emerged as a key trade partner of South Korea since the two sides launched dialogue in 1989.

The two sides signed a free trade agreement (FTA) in May 2006, which more than doubled trade volume between them. Trade between South Korea and the ASEAN rose from about 61 billion U.S. dollars in 2006 to more than 130 billion dollars in 2013.

The ASEAN is the No.2 trade partner of South Korea, following China, and the third-largest investment destination of South Korean companies.

To boost bilateral economic partnership, Park made three proposals during the CEO summit, including further cooperation in the

South Korean President Park Geun-Hye (R) talks with Vietnamese Prime Minister Nguyen Tan Dung (L) prior to their meeting ahead of the ASEAN-Republic of Korea Commemorative Summit in Busan. The South Korean President announced a Free Trade Pact with Vietnam.

services industry, further liberalization through bilateral FTAs and active participation of small companies in “global value chain.”

US$130 billion 2013 South KoreaASEAN trade

After meeting with some 570 businessmen, Park will hold back-toback meetings with ASEAN leaders.

The special summit will be hosted by Park on Friday.

On Wednesday, Park announced an effective conclusion of the FTA negotiations with Vietnamese Prime Minister Nguyen Tan Dung at a hotel in Busan.

The FTA negotiations, launched in August 2012, came to a conclusion in 28 months, becoming the fifth FTA deal reached under the Park Geunhye administration.

Vietnam agreed to liberalize 92.2 percent of all goods imported from South Korea in terms of import value. South Korea’s liberalization rate was 94.7 percent.

Xinhua

14 | Business Daily

December 12, 2014

International South Africa to sign fuel deals South Africa will increase diesel and gas imports and sign a private sector coalfired power plant deal as it seeks to stem chronic electricity shortages, the cabinet said yesterday. South Africa has suffered its worst power shortages since 2008 this month due to creaking infrastructure, power plant failures and emergency maintenance. State utility Eskom warned that if it didn’t continue to implement rolling blackouts, the entire grid could collapse as it lost up to a third of its 42,000 megawatt power generation capacity.

Norway cuts rates in surprise move Norway’s central bank unexpectedly cut interest rates yesterday to prop up the economy as lower oil prices weigh on growth, and said there was a chance of a further cut. The central bank lowered its benchmark rate by 25 basis points to 1.25 percent, its lowest since 2009, saying Norway’s growth prospects had weakened due to falling offshore investments, lower oil prices and weak growth in Europe. The move surprised financial markets and sent the Norwegian crown to a six-year low against the dollar at 7.2825 crowns.

NY regulator probing bank’s FX algorithm

The New York banking regulator is investigating if Deutsche Bank and Barclays Plc. used algorithms on their trading platforms to manipulate foreign exchange rates, a source with direct knowledge of the matter told Reuters. Benjamin Lawsky, the head of New York’s Department of Financial Services (DFS), has ordered a monitor to be installed at Deutsche Bank and already has one in place at Barclays - a move that will allow him to collect greater evidence of alleged manipulation, said the source who did not want to be named.

U.S. Congress ignores IMF reforms request Finance chiefs from around the world had given the United States until January 1 to ratify the reforms, and have threatened to move forward without it if it fails to do so Anna Yukhananov

T

he U.S. Congress is preparing to leave town for the holidays without passing reforms to give emerging markets greater say at the International Monetary Fund, a step the Obama administration has warned could undermine Washington’s international influence.

The White House signed off on the reforms in 2010, but U.S. lawmakers need to back changes in how the IMF is funded before they can be put into place, given Washington’s position as a controlling shareholder in the global lender.

But a must-pass US$1.1 trillion U.S. spending bill unveiled late on Tuesday omits the IMF voting reform provision, dooming prospects that it will get passed by a year-end deadline.

The changes would double the fund’s resources and hand more IMF voting power to countries such as Brazil, Russia, India, China and South Africa, also known as BRICS. It would also revamp the IMF’s board to reduce dominance of Western Europe.

Some outside observers believe the lack of reforms was the impetus behind the decision of the BRICS nations to launch their own currency

reserve pool and development bank earlier this year, intended as a challenge to Western dominance in global financial institutions.

China also launched a proposed US$50 billion Asian Infrastructure

Without these reforms, emerging economies may well look outside the IMF and the international economic system that we helped design Nathan Sheets, U.S. Treasury Undersecretary

Investment Bank, seen as a direct rival to the Western-dominated World Bank and Asian Development Bank.

Twice this year, BRICS nations threatened to veto a renewal of the IMF’s crisis funds as a sign of their displeasure over the lack of reforms, according to several sources close to the IMF board.

The crisis fund, known as the New Arrangements to Borrow, was meant as a temporary credit line. But the IMF has been forced to rely more heavily on the NAB and bilateral lending to fund bail-outs of countries like Ukraine and Jamaica while it waits for U.S. ratification of the reforms, which would double its main accounts.

Some Republicans have complained the IMF changes would cost too much at a time of big budget deficits in Washington. They are also critical of how efficiently the IMF was helping struggling economies in Europe and the risks attached to billion-dollar IMF loans to countries like Greece.

The Obama administration last made a big public push to include the IMF reforms in a broader funding package for Ukraine in March, but U.S. Senate Democrats dropped the language to ensure smooth passage of the bill.

This time around, the administration appears to have run a quieter campaign, meeting numerous times with lawmakers on Capitol Hill over the past few months, according to a source familiar with the discussions who was not authorized to speak publicly. Sheets and U.S. Treasury Secretary Jack Lew also brought up the IMF issue during meetings with lawmakers, the source said.

But three congressional aides, who requested anonymity, said the administration had not mounted a forceful push.

“They haven’t really put their shoulder into it, at all, in the last nine months,” said one source familiar with IMF legislative issues.

Reuters

UK ‘Google tax’ will target inter-company payments

Ukraine cries for funds The tax would avoid legal challenges to prevent default with countries such as Ireland Ukrainian Prime Minister Arseny Yatseniuk yesterday called for a conference of international lenders to be held to provide Ukraine with extra funds to head off a default. “In order to survive, in order to prevent a default, we need an international donor conference, the adoption of a Ukrainian recovery plan at this conference and the help of our Western partners,” Yatseniuk told parliament.

Strong demand seen for Argentine dollar bond Argentina launched its first dollar-denominated bond sale since its latest default, and will likely meet strong demand from investors seeking big positions in high-yielding Argentine debt, local market players said. A successful placement of Bonar24 bonds worth up to US$3 billion would cushion low foreign reserves from a surge in debt servicing costs in 2015. Buenos Aires has also offered holders of bonds due in 2015 to take early payment or swap their notes for Bonar24s due in 2024. Results for all three operations are expected late Friday.

Tom Bergin and William James

A

British tax on companies that shift profits out of the country and into tax havens will target inter-company fees for services such as the use of intellectual property, according to draft legislation.

Companies will also be required to report their potential liability to the new tax, which will sit outside the existing corporate tax system, under the changes outlined by finance minister George Osborne last week.

Such a move could avoid legal challenges under existing tax treaties with countries such as Ireland, a major conduit for shifted profits.

Recouping cash is important to Osborne as Britain’s public finances have become a major issue in the run-up to national elections in May. Osborne said last week that he wanted to raise a further 5 billion pounds by tightening rules on tax avoidance.

Chas Roy-Chowdhury, head of tax at accounting group ACCA, said the 1 billion pounds (US$1.6 billion) expected to be raised by the new tax over the next five years was modest given the size of the UK operations of the firms likely to be affected.

George Bull, a senior tax partner at accountancy firm Baker Tilly, was also surprised by the low amount.

“Perhaps (Britain’s tax department) has deliberately downplayed these figures so that the move is seen less as a ‘money spinner’, and more about leading the reform of the taxation of international corporates?” he said in a statement.

An opinion poll published on Wednesday showed the announcement was popular among voters, with 59 percent of respondents in a survey by polling firm ComRes for ITV News saying they were in favour of the tax.

The Treasury said the 25 percent

25 pct Tax effective from April on conduit structured companies

tax would be effective from April 1, 2015, and would target conduit-type structures, such as the “double-Irish” used by Google.

In that manoeuvre, Google denies having a taxable presence in its main business in Britain and reports its annual UK revenue of more than US$5 billion in Ireland.

Reuters

Business Daily | 15

December 12, 2014

Opinion Business

wires

The profitability of trust

Leading reports from Asia’s best business newspapers

THE JAKARTA POST The Indonesian Credit Card Association (AKKI) has called on Bank Indonesia (BI) to extend the deadline for the application of a sixdigit personal identification number (PIN) on credit card transactions, saying many credit card holders are not yet ready to use their PINs. AKKI general manager Steve Marta said that the banking industry had requested an extension of the deadline as most credit card holders had not activated their PINs. According to Steve, technologically speaking, banks are ready to realize the PIN requirement.

Klaus Schwab

Founder and Executive Chairman of the World Economic Forum

THE STAR The three listed specialpurpose acquisition companies (SPACs) that have yet to make their qualifying acquisition (QA) are trading below their “intrinsic cash values” and hence offer a unique opportunity to investors, according to Hong Leong Investment Bank Research. SPACs are firms that raise money from the market for the purpose of making acquisitions in specific industries. All these three SPACs aim to invest in oil and gas exploration and production assets.

The intrinsic cash values of SPACs are based on the cash kept in the trust account.

TAIPEI TIMES The controversy over Chang Hwa Bank’s board election continued on Wednesday, as the Ministry of Finance (MOF) denied allegations of breach of trust, insisting that a 2005 pledge is no longer valid or binding. Taishin Financial Holding Co, which filed a lawsuit against the ministry on Tuesday at a district court in Taipei, has alleged that the ministry is being inflexible about board seat arrangements and therefore breaking the terms of a contract signed in 2005. In the suit, Taishin Financial is seeking NT$10 billion (US$320.47 million) in damages for losses linked to investments in Chang Hwa Bank.

THE TIMES OF INDIA Tata Power, the power generator led by Cyrus Mistry, is buying a 540-megawatt (MW) thermal power plant in Maharashtra to ramp up capacity, highlighting how a lot of India’s recent merger and acquisition (M&A) deals are being driven by the power sector. Tata Power’s move comes close on the heels of JSW’s purchase of a 1,391-MW unit (from Jaypee), Adani’s acquisition of 1,200-MW and 600-MW plants (from Lanco and Avantha respectively) and GDF Suez’s deal for a 1,000-MW facility (from a Hyderabad-based infra company).

T

he effects of the most devastating financial crisis in decades have begun to fade. But debate about the fundamentals of the global economy is far from over. Indeed, there has been a new wave of heated discussion about whether companies should put profits or the common good first.

Milton Friedman, a leading proponent of the profitoriented approach to corporate management, famously declared that “the business of business is business.” Indeed, from this standpoint, there is no contradiction between profit maximization and the common good. The pursuit of profit itself is a socially beneficial goal.

A conceptual basis for the opposing perspective, to which I adhere, lies in the Harvard economist Michael Porter’s theory of shared value creation.

In fact, my own publications promote the stakeholder concept as the framework for a modern understanding of socially responsible corporate management.

The theoretical debate could continue indefinitely. But, in terms of practical company management, such ideological polarization is not particularly useful. If managers had to choose between fulfilling the expectations of shareholders and meeting their social and ethical responsibilities, their companies would probably collapse.

Instead, successful managers recognize that any company is both an economic and social entity, and thus that no stakeholder can be neglected. As I wrote more than four decades ago, a company, “like an organism… depends on several arteries,” all of which it must nurture if

it hopes to survive and grow.

That sounds straightforward.

But it can be very difficult when the demands of, say, the company’s shareholders conflict with the interests of its employees, customers, or local communities. The good news is that, in any such conflict, there is one clear, unifying goal: ensuring the company’s longterm success.

This requires, first and foremost, that the company is profitable.

But profitability should not be an end in itself; it is a tool to help managers determine the most effective use of their resources and gauge the company’s competitiveness and vitality.

So instead of just paying out dividends, companies should use their profits to bolster their long-term viability.

Profitability, growth, and safeguards against existential risks are crucial to strengthening a company’s longterm prospects. But if these three factors constitute a company’s “hard power,” firms also need “soft power”: public trust and acceptance, won by fulfilling a company’s social responsibility.

Only when a company has gained the public’s confidence – its

“license to operate” – can its management create longterm value for all stakeholders, including shareholders.

In short, the real conflict is not between profit maximization and social responsibility, but rather between short- and long-term thinking. This, in a sense, is an easier conflict to resolve. After all, a short-sighted approach not only undermines companies’ prospects; it also threatens the entire economy. Indeed, managers’ irresponsible focus on advancing shareholders’ immediate interests, thereby maximizing their own bonuses, contributed significantly to bringing the global financial system to the brink of collapse in 2008.

In order to enable a company’s management to accommodate the long-term interests of all stakeholders, corporate decisionmaking must account for the four prerequisites of a company’s survival: profitability, growth, risk protection, and public trust.

Given that satisfying one of these prerequisites often comes at the cost of the others, such a system would entail continuous adjustment and compromise.

We are emerging from a

Profitability should not be an end in itself; it is a tool to help managers determine the most effective use of their resources and gauge the company’s competitiveness and vitality

period when companies, under pressure to meet shareholder expectations, favoured profitability and growth, even if it meant taking undue risks and losing public confidence. Companies now need to work on minimizing risk and building trust by meeting the legitimate expectations of all their stakeholders, including reducing their activities’ adverse impact on the environment and creating high-quality employment opportunities.

But corporate social responsibility is not limited to how a company does business. Firms should use their core competencies to help find solutions to today’s most pressing social problems.

In other words, beyond serving its own stakeholders, a company should accept its own role as a stakeholder in our collective future – a sort of quid pro quo for its license to operate.

Fortunately, companies are increasingly acting with a sense of social responsibility. By working with governments, international organizations, and civil society, companies are addressing major challenges like social integration, and creating the necessary systems to provide education and health care to those who need it most. These companies are implementing the stakeholder concept on a micro and macro level, answering to the demands of their employees, customers, and communities, and thus strengthening their brands.

In doing so, such companies offer a powerful response to the question of what their role in society should be. More important, they are showing the rest of the corporate sector that the business of advancing the common good is a worthy one.

Project Syndicate

16 | Business Daily

December 12, 2014

Closing Downward pressure on China’s economy relatively big

UNESCO designates 3 Chinese cities in its Creative Network

Downward pressure on China’s economy is relatively big, Xinhua said yesterday, citing a statement released by the government after its Central Economic Work Conference. The statement also said China will keep its monetary policy prudent next year as it pursues a pro-active fiscal policy stance. The annual conference, which is usually held in December, outlines the government’s growth blue-print for the world’s second-largest economy in the following year. The economy is expected to grow at its slowest pace in nearly a quarter of a century this year softening investment and high levels of debt.

Three Chinese cities have been designated as part of the UNESCO (United Nations Educational, Scientific and Cultural Organization) Creative Cities Network, the Ministry of Education said yesterday. Suzhou and Jingdezhen in east China’s Jiangsu and Jiangxi provinces are designated as “Cities of Crafts and Folk Art”. Shunde (pictured) in south China’s Guangdong Province was name part of the “Cities of Gastronomy.” As of present, eight Chinese cities have been listed in the network, including Beijing, Shanghai, Shenzhen, Hangzhou and Chengdu.

A total of 69 cities from 32 countries worldwide have been listed in the network.

Hong Kong police haul away protesters from rally site Thousands gathered on Wednesday night for one final mass rally at the site, but the numbers had already dwindled to hundreds by yesterday morning

H

ong Kong police began dismantling the city’s main prodemocracy site yesterday, clearing away tents and barricades after more than two months of rallies, and hauling off a hard core of protesters who nevertheless vow that their struggle lives on.

Hundreds of police moved in from all sides of the Admiralty camp in the heart of the business district sweeping away tents and barricades before swooping on a core group at the centre of the site, including student leaders and lawmakers.

The dozens making a last stand were the remnants of what once numbered tens of thousands of people at the height of the protest movement, before public support waned.

Some were carried by groups of four officers while others were led off on foot.

Those who remained lay on the road shouting, “We are peaceful”, “We will not resist” and “I want true democracy”.

The call for free leadership elections has underpinned the demonstrations, and

Chalk graffiti is seen on the road at the Admiralty camp, occupied by pro-democracy supporters of Occupy Central and the Umbrella Movement for over two months, as seen on the final day before the Hong Kong police and bailiffs intend to clear the major six lane highway back to normal

protesters have vowed the clearance operation will not end a campaign they say has redefined the city’s vexed relationship with Beijing.

“This is not the end of the movement. The political awakening amongst the young is irreversible and we will fight on,” pro-democracy lawmaker Claudia Mo told AFP.

Mainland takes major share of HK’s DI outflow

T

Police had announced a “lockdown” after a 30-minute window allowing protesters to voluntarily leave the site -- an encampment of tents, supply stations and art installations sprawling along a kilometre of a multi-lane highway through the Admiralty district.

Some managed to leave after the deadline, but were

asked to give their identity details to police.

Thousands gathered on Wednesday night for one final mass rally at the site, but the numbers had already dwindled to hundreds by yesterday morning.

Before the police operation, bailiffs descended with cutters and pliers to take down

barricades and load them into trucks to enforce court orders taken out by transport companies frustrated at the long-running disruption.

While many protesters had packed up their tents and left, others said they intended to stand their ground.

Some in Admiralty expressed a sense of failure Thursday morning, after the authorities in Hong Kong and Beijing refused to give any concessions on political reform, but said the occupation had changed Hong Kong for good.

Authorities had warned they would take “resolute action” against those who resist the clearance which they say is being carried out to restore public order and reopen roads to traffic.

There had been fears that radical splinter groups would dig in for a final stand, following violent clashes outside government headquarters in Admiralty at the end of last month.

But many said they did not want a confrontation and there were no clashes as police swept through.

Fidel Castro wins ‘Confucius Peace Prize’

Philippines wins Moody’s Upgrade

F

T

he Chinese Mainland was the most important destinations for Hong Kong’s outward direct investment (DI) in 2013, receiving about US$396.9 billion, which accounts for 41.1 percent of Hong Kong’s outward DI at the end of 2013, according to the latest Hong Kong statistic report.

The Census and Statistics Department of Hong Kong Special Administrative Region (HKSAR) government released Hong Kong’s DI statistics for 2013 yesterday.

The statistics said The British Virgin Islands (BVI) was Hong Kong’s second largest destination of investment, accounting for 39. 1 percent of the total position of Hong Kong’s outward DI at the end of 2013.

Hong Kong’s total outward DI stood at HK$646.3 billion, smaller than that of 683.4 billion in 2012. In the same year, the total DI inflow amounted to HK$596.1 billion, larger than that of 580.9 billion in 2012. Taking the inflow and outflow together, a net outflow of 50.3 billion was recorded in 2013.

BVI was the major source of Hong Kong’s DI inflow in 2013.

idel Castro has been awarded China’s version of the Nobel Peace Prize, reports said yesterday, with a paper close to the ruling Communist Party hailing the former Cuban leader’s “important contributions” to world peace.

Castro bested more than 20 nominees including South Korean President Park Geun-Hye, UN Secretary General Ban Ki-moon, and the Shanghai Cooperation Organisation, a regional group led by Moscow and Beijing, to win this year’s “Confucius Peace Prize”, the state-run Global Times reported.

The Cuban revolutionary icon was selected by nine judges out of a group of 16 experts and scholars, the paper said.

The shadowy Confucius prize emerged in 2010, when it was suddenly announced by the panel two days before jailed Chinese dissident Liu Xiaobo was awarded the Nobel to Beijing’s anger, sparking speculation it was set up with the government’s guidance.

A Cuban exchange student received this year’s award on Castro’s behalf at a ceremony on Tuesday, one day before Malala Yousafzai and Kailash Satyarthi accepted their Nobel Peace Prize in Oslo.

Xinhua

AFP

AFP

he Philippines won a second rating upgrade from Moody’s Investors Service in just over a year, even as the central bank highlighted growth risks in refraining from raising interest rates yesterday.

Moody’s raised the Philippines’s sovereign rating to Baa2 from Baa3 and said the outlook is stable. Bangko Sentral ng Pilipinas kept the rate it pays lenders for overnight deposits at 4 percent, as predicted by all 17 economists in a Bloomberg News survey.

The Philippines stands to benefit from a prolonged period of lower oil prices and has favourable prospects for strong economic growth, Moody’s said. The central bank cut its estimates for inflation through 2016, while saying global conditions remain challenging.

Consumer prices rose 3.7 percent in November from a year earlier, the slowest pace in 12 months.

The economy expanded 5.3 percent last quarter from a year earlier, the weakest since 2011, with the International Monetary Fund predicting growth of about 6 percent every year at least through 2019.

Bloomberg News