Macau Business Daily, Dec 8, 2015

MOP 6.00 Closing editor: Luís Gonçalves

One City, two realities

Year III

Number 703 Thursday January 8, 2015

Publisher: Paulo A. Azevedo

After Shanghai, Shenzhen also wants a link with HK stock exchange | PAGE 8

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t feeds 80 pct of the economy. And over 90 pct of all government taxes. But according to a recent study by Shih Chien University in Taiwan, about a third of Macau residents have never gambled in a casino here. Over a quarter of respondents see the industry in a negative light. For most people in Macau, though, gambling is “no big deal”. Locals believe that booming casinos mean high inflation. But stress the industry has put the city on the map PAGE 4

We are sailing Soon to be a reality. ‘Free travel’ yachting between Macau and Zhongshan City in Guangdong will be a reality by mid-2015. Both administrations plan the first mainland Chinese marina in the latter’s Shenwan Town. The scheme enables yachts from Macau to berth at the marina in Zhongshan. And facilitates simpler customs clearance procedures for yacht owners and crew members

Jacobs wins first round against Adelson PAGE 7

All in Pay sign agreement with econtext Asia PAGE 2

PAGE 2

Parisian shopping area almost fully booked PAGE 6

HSI - Movers January 7

Name

Under the hammer

Galaxy Entertainment

4.52

Cathay Pacific Airwa

3.79

Gaming growth stalling

Tencent Holdings Ltd

3.67

China Mobile Ltd

3.38

Lenovo Group Ltd

3.37

HSBC Holdings PLC

-1.05

Another month, another drop. Gaming take plunges relentlessly continue. Yesterday, Wells Fargo predicted a drop in January casino revenues ranging from 16 to 19 pct.

It’s the usual suspects: anti-graft campaign, visa restrictions and a softer Chinese economy

Hengan International

-1.34

China Resources Ente

-1.48

Li & Fung Ltd

-1.52

Bank of Communicatio

-2.13

www.macaubusinessdaily.com

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Transparency the new norm? In a meeting with Secretary for Administration and Justice Sonia Chan Hoi Fan, media representatives asked for more transparency. And a better communication system with the gov’t.

Local journalists also requested the more timely release of official information PAGE

Source: Bloomberg

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More transparency, please It’s auction time. Two plots of land in Hengqin New Area are reserved for Macau bidders only. Starting price for the two lots is 294 million yuan (MOP378 million). The areas are planned for commercial and office use with a lease of 40 years

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2 | Business Daily

January 8, 2015

Macau

‘Free travel’ yachting by mid-2015 Administrations of Macau and Zhongshan have announced that they are working on the berthing facilities and easier customs clearance to accommodate an ‘individual visit scheme’ for yachts by mid-year Stephanie Lai

sw.lai@macaubusinessdaily.com

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oth the administrations of Macau and Zhongshan City in Guangdong are planning to have the first mainland Chinese marina in the latter’s Shenwan Town open for the berthing of Macau yachts by the first half of this year – a move that was to be realised faster than the local government’s earlier initiative to work on yacht tourism co-operation with Nansha New Area.

Following a meeting with Macau’s Chief Executive Fernando Chui Sai On and a delegation of top officials on Tuesday, the Party Secretary of Zhongshan City, Mr. Xue Xiaofeng, has confirmed his expectation that the so-called “individual visit scheme” for yachts travelling between Macau and Zhongshan should be ready by the first half of this year.

The scheme enables yachts from Macau to berth at the marina in Zhongshan, and implements a plan by both mainland and local governments to facilitate a simpler customs clearance procedure for their yacht owners and crew members, Macau’s Marine and Water Bureau explained to us.

“Basically, Macau is open to yachts from outside to berth – in current cases mostly from Hong Kong – where the clearance procedures are quite simple”, a Bureau spokesperson explained. “But on the mainland’s side, currently their ports are not open for Macau yachts to berth, and their yachts cannot freely travel around the waters here”.

The Bureau spokesperson further noted that Macau and Zhongshan authorities are working on the policy of mutual recognition of a simpler customs check process, and yacht crew certification.

If the “individual visit scheme” for the yachts works out smoothly for both parties by the first half of this

year, Shenwan Town marina will be the first of its kind on the mainland to open to local yachts – even sooner than Nansha New Area in Guangdong initially mulled by both the mainland and local government.

As early as 2012, the Macau and Guangdong Government had reached an intent for co-operation in yacht tourism, whereby both parties had already mentioned the implementation of an “individual visit scheme” for yachts and the construction of a yacht pier in Nansha New Area. But no concrete measures were subsequently announced.

Speaking on Tuesday, Zhongshan Party Secretary Xue noted that the immigration building at the yacht pier in the city is now under construction in

order to facilitate the yacht travel scheme.

The yacht berthing facilities in Shenwan Town are actually part of an integrated residence and marina project developed by Keppel Land Ltd, the property arm of Singapore’s Keppel Group. The completion of the first phase of the integrated project will see 145 berths available for yachts; while upon full completion, another 500 berths will be in place, Chinese-language media has reported.

Additional berths According to the Marine and Water Bureau, the government is also working to provide 50 provisional berths for yacht berthing at the Shizimen Waterway near Coloane Pier.

All In Pay, econtext Asia collaborate to tap cross-border shopping China’s payment service provider All In Pay has teamed up with Japanese online shopping mall operator econtext Asia in promoting cross-border payment services

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he Shanghai-based All In Pay Network Services Co. Ltd. has announced a collaboration with fellow payment solution provider econtext Asia Ltd. to promote crossborder payment services to key regions where the latter operates, including Japan, Hong Kong, Macau, Taiwan, Indonesia, India and Vietnam.

The announcement came from All In Pay’s statement released yesterday on its official website, where the company noted that its advantage in the yuan trade settlement would facilitate consumers in using yuan to pay for goods purchased from its

partner’s online shopping website outside China.

‘This collaboration provides a better way for merchants to enter the Chinese market, while providing a more diversified payment service for Chinese consumers to use for global purchases’, All In Pay said in its statement.

The mainland-based All In Pay provides electronic payment solutions such as offline point of sale payment, call centre-based payment, Internet payment and payment on other automatic terminals.

The Hong Kong-listed econtext

Asia Ltd. is an intermediate holding company under Japan’s Digital Garage Group that provides purchasing, payment and cross-border logistics services to Chinese consumers who favour Japanese products.

In Japan, econtext Asia operates a large online shopping mall targeting Chinese consumers, ‘Buy-J.com’ , as well as the overseas purchasing service for the price comparison website in the country, ‘Kakaku.com’.

The collaboration of All In Pay and econtext Asia has tapped the expanding market for cross-border shopping business amongst Chinese

The provisional berths should be ready for operation by the middle of this year, the Bureau told us. It also noted that the management of the yacht berthing may be outsourced to private yacht clubs or companies.

Bureau director Susana Wong Soi Man said last month that the provisional facilities were needed in order to accompany the special yacht travel scheme as the number of existing berths at Macau’s piers at Lam Mau near the Inner Harbour and Macau Fisherman’s Wharf were insufficient.

Currently, there are 57 berths at the Lam Mau pier on Macau Peninsula, which are managed by Macau Yacht Club; there are 22 berths at Macau Fisherman’s Wharf.

consumers. This shopping habit was relatively rare in China, where only 26 per cent of online shoppers reported making international purchases, Bloomberg reported on November 20 quoting research by PayPal and Ipsos. The research has investigated the online and cross-border shopping habits of more than 17,500 consumers in 22 countries.

However, 52 per cent of Chinese online consumers said they planned to begin shopping cross-border or increase their cross-border shopping in the next 12 months, giving China the third largest projected growth behind Mexico (59 per cent) and Russia (54 per cent).

Citing a third-party estimate, econtext Asia said in a press statement that the number of crossborder shoppers in China has already reached 18 million in 2013, with purchases valued at more than 200 billion yuan (US$33 billion). The size of the business could reach 1 trillion yuan by 2018 when crossborder shopping becomes a common practice by Chinese Internet users, econtext Asia claims.

S.L.

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January 8, 2015

Macau Maria Remédios César appointed new trade head in Lisbon The Chief Executive has assigned Maria Gabriela dos Remédios César as the new director of the Macau Economic and Trade Office in Lisbon, Portugal and the director of the Macao Economic and Trade Office to the European Union in Brussels, Belgium. The dispatch was signed by Chief Executive Chui Sai On on 18 December 2014 and was published yesterday in the government’s Official Gazette. Ms. Remédios César succeeds the newly incumbent Secretary for Transport and Public Works Raimundo Arrais do Rosário after 15 years of his service in the posts. Ms Maria Gabriela dos Remédios César formerly served as deputy director of these offices.

Local media demands more transparency from administration Media representatives urge more transparency by the administration and a better communication system as well as a more timely manner of releasing information from the government at a meeting with the Secretary for Administration and Justice Joanne Kuai

joannekuai@macaubusinessdaily.com

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he Secretary for Administration and Justice Sonia Chan Hoi Fan met with local media representatives from the Chinese, Portuguese and English media outlets yesterday afternoon at Macau Tower, many of whom urged more transparency from the administration and a better communication mechanism with the government.

During the session for Portuguese and English media, Director of TDM Canal Macau Joao Francisco Pinto pointed out that the local government has set up a spokesperson system in order to better communicate with the media and convey messages to residents yet most of the time the efficiency of the system is questionable as the government’s reply to media enquires is inevitably late.

Paulo Azevedo, Publisher of Business Daily, also indicated that local government officials can be very difficult to reach, not only now but for a long time in the past. He cited the example of the neighbouring Special Administrative Region, saying that principal officials from Hong Kong always use different media platforms to deliver their messages to residents and conduct dialogues with the public on a regular basis. Mr. Azevedo stressed the need for more transparency by the administration, saying that the delay or absence of information may lead to the public losing trust in the media whilst undermining the image of the administration.

The Secretary for Administration and Justice said that media plays an important role in building a bridge between the government and the

public. She expressed her gratitude for the local media’s continuous effort in delivering government information as well as explaining government policies to the public. She vowed that the local administration would take a more proactive role in releasing information, decisions and policies, and adopt a more timely manner in doing so.

TDM Portuguese radio journalist Isabel Castro despaired at the lack of good Portuguese translation provided by the government not only at media events or official occasions but in the daily lives of those in the SAR; this, she said, despite the fact that Portuguese is one of the official languages of Macau with Chinese.

Sonia Chan acknowledged that Macau lacks bilingual talent but pledged to enhance the situation by putting more effort into it as well as urging

the institutions under her secretariat to address the issue.

English media outlets representatives also voiced their hope that the government would pay more attention to delivering messages in English as Macau is aspiring to become a more international tourism destination. Secretary Chan said that for the time being the policy still mandates only Chinese and Portuguese as the official languages in the SAR and that these would be the usual languages for the government to deliver information. Depending on the target of the announcements, however, the administration may use English in appropriate circumstances.

Secretary Chan also said that the administration welcomed the media exercising supervision of the government and reiterated that the newly-inaugurated fourth term of

the SAR would uphold the policy of “people-oriented, scientific decision-making”. In the area of administration and justice, Ms. Chan vowed to make “streamlining public administration, continuously improving public services, enhancing the execution capability and credibility of the government, promoting the construction of the legal system” as the key policy.

Ms. Chan said her priority upon taking office was to review the procedure of legislation. In March, the administration will deliver its policy address and the plans of the administration for the following year at the Legislative Assembly. After the session, more communication with the media and the public will be conducted. She also pledged to host this kind of meeting with the media on a more regular basis.

4 | Business Daily

January 8, 2015

Macau Brands

Trends

Local Time Raquel Dias newsdesk@macaubusinessdaily.com

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hy not start 2015 by counting time with a different touch? The Chinese Timekeeper is a brand that introduces local traditions to the world of fine watchmaking. As its name suggests, the brand is deeply inspired by Chinese heritage, and, for the first time, they present elegant pieces in a 38mm case. Crafted by the best watchmakers in Hong Kong, the timepieces feature red jade as the wow factor.

Naturally, diamonds have not been forgotten, but it is the rare and fiery red jade that catches the eye. The gemstone is said to stimulate vitality, strength and passion, and is associated with love and creativity.

There’re only 38 of the Red Jade Automatic around, so interested parties will have to scramble like fighter pilots. Like all Chinese Timekeeper pieces, 12 o’clock pays tribute to Su Song, the father of Chinese timekeeping. Along with its red jade dial, the Red Jade Automatic comes with a red alligator-print leather strap with red stitching and a second strap in white alligator-print leather with white stitching.

With a price tag of HK$24,800, The Red Jade Automatic is possibly a good investment, considering the brand is taking its first steps.

For an alternative that’s easier on the pocket the CTK 100 is priced at HK$13,800.

One third of Macau residents have never gambled in casinos About one-third of the residents of Macau have never been in a casino to gamble according to a study by Shih Chien University in Taiwan. The results of a survey also revealed that 27.9 per cent of the Macau population negatively perceives the gaming industry João Santos Filipe

jsfilipe@macaubusinessdaily.com

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ore than a third of the Macau population has never been in a casino to gamble, a survey conducted by two academics from Shih Chien University in Taiwan concluded. ‘The social, economic, and environmental impacts of casino gambling on the residents of Macau and Singapore’ is the name of the study undertaken by Shou-Tsung Wu and Yeong-Shyang Chen. It examines the viewpoints of the Macau and Singapore population towards the gaming industry and its impact on both regions.

The sample for the study comprised 416 respondents from the Chinese Administrative Region, of whom 34.1 per cent (142) said that they have never been in a casino to gamble.

Meanwhile, 12.3 per cent (51) said that they gamble frequently and the majority (56.3 per cent /223) admitted to gambling occasionally.

According to the results of the survey, which was conducted from March to June 2013, 27.9 per cent (116) of the residents of Macau have a negative view concerning the gaming industry. Of these, 94 persons said that their attitude towards gambling was “unwelcoming” while 22 defined gambling as “disgusting”. By contrast, 5.5 per cent (23) said gambling was “welcome”, while 28.9 per cent (120) said it was “acceptable”. The most

common trend, however, was for people in Macau (37.7 per cent/157) to consider gambling as “not a big deal”.

The research also examined the availability for residents to work in the gaming industry. According to the findings, 58.4 per cent (243) of Macau residents surveyed said that they would like to work in the gaming industry, while 41.6 per cent (173) said they would not like to work in this field.

Casinos causing rising rents?

In terms of the economy, the gaming industry is perceived as trigging inflation, resulting in rising home rents and the higher cost of goods. Despite stressing these negative factors, however, the respondents said they do not believe that the gaming industry would cause the bankruptcy of small and medium enterprises or narrow the job opportunities for young people.

One of the most important consequences of the gaming industry for Macau respondents was its role of promoting the popularity of the city. Singaporean residents also stress the importance of the gaming industry in promoting the popularity of their region.

As for the benefits of the industry,

Macau residents also highlighted that it would result in enhancing tourist sites and infrastructure.

Contrary to what might be expected, the residents of the Chinese Administrative Region did not consider that gaming causes serious environmental pollution.

‘The residents of Macau accept every benefit of casino gambling but unavoidably encounter its negative impact. Therefore, the development of casino gambling definitely triggers intricate emotions in the minds of local residents’, the study stresses.

As Shou-Tsung Wu and YeongShyang Chen compare the cases of Macau and Singapore as gaming hubs, the researchers explained that despite the increasing importance of gaming, Singapore had managed to create a lot more non-gaming attractions, differentiating it from the former Portuguese enclave. For the academics, Singapore is more a family tourism destination, while Macau is a hardcore gaming destination.

‘Non-gaming attractions allow Singapore to differentiate itself from Asia’s casino capital of Macau by strategically developing Singapore as a family tourism destination rather than Macau’s heavy dependence on the exclusive revenues of gambling or gambling-hotel complexity’, it concluded.

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January 8, 2015

Macau Lionel M. Ni appointed vice rector for academic affairs by UM The University of Macau (UM) has appointed Lionel M. Ni as vice rector for academic affairs, the institution announced yesterday. Prof. Ni is a computer scientist who formerly headed the Department of Computer Science and Engineering, and was dean of the Fok Ying Tung Graduate School at the Hong Kong University of Science and Technology. “I’m excited to have the opportunity to work with an excellent senior management team to realise the vision and mission laid out by the University Council”, said Prof. Ni of his appointment. The rector of the University of Macau, Wei Zhao, praised Mr. Ni after the announcement, saying, “I’m very confident that Professor Ni’s intellectual prowess and his rich administrative experience will intellectually and administratively strengthen all aspects of our academic programmes, and set the University of Macau on the road to becoming a world-class university”.

Two plots of Hengqing land reserved for Macau bidders Two plots of land in Hengqin New Area have been listed at auction.

Reserve price for the two lots totalled 294 million yuan (MOP378 million).

The areas are planned for commercial and office use with a lease of 40 years Joanne Kuai

joannekuai@macaubusinessdaily.com

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oth plots of land at auction are located in the Guangdong Macau Collaborative Industrial Park and are reserved for Macau bidders, as announced this Monday by the Zhuhai Public Resources Trading Centre, which was commissioned by the Land and Resources Bureau of Zhuhai.

According to the notice published online by the Bureau, the land - serial number 2014-30 under Zhuhai Hengqin Land and Resources occupies a gross floor area of around 31,602 square metres. It is planned for commercial and office use with a lease period of 40 years. The initial price for each square metre is 3,140 yuan (MOP4,037), which means the reserve price for the whole plot totals 204 million yuan (MOP262 million).

Another plot - serial number 201420 - occupies a gross floor area of around 17,200 square metres. This land is dedicated to commercial and office use as well as hotels and the cultural and creative industry. The initial price for each square metre is 2,380 yuan (MOP3,060) thus the total reserve price for the land stands at 90 million yuan (MOP115 million).

According to the Hengqin New Area Industrial Development Guideline, this specific plot of land will primarily focus on developing the cultural and creative industry and commercial and business services sector.

The Zhuhai authorities also said that according to the Framework Agreement on Co-operation between Guangdong and Macau, any eligible Macau enterprise that wants to enter the Hengqin Guangdong Macau Collaborative Industry Park can bid for the land, although individual buyers or joint ventures will not be accepted. The bidder that successfully acquires the land will have to wholly own a company that is registered in Hengqin New Area in Zhuhai within six months.

The Zhuhai Land and Resources

Bureau also said in the notice that the bidding process will be accomplished online. Interested parties must submit their bid as soon as possible. The auction starts at 9:00am on January 28, 2015 and will last until 3:30pm on February 6.

Prioritising Macau The notice published by the Zhuhai authorities regarding the auction of the land also mandates that if the properties are to be sold no less than 50 per cent of the area can only be sold to Macau enterprises, Macau people, other social organisations or enterprises that are owned by Mainland Chinese but registered in Macau.

An industrial source quoted by the Southern Metropolis Daily that is published in Guangzhou said Hengqin as a free trade zone has attracted much attention from both domestic and foreign investors and that the initial price of these two plots of land is very low. The reason for this cheap price, according to the industrial source, is because the Hegnqin New Area would really like to attract better enterprises and projects, and the bidders will have to go through certain scrutiny. Only if they can meet certain criteria would they sustain the competition which means the land deal would have a relatively high chance of being closed at the base price.

The Chinese language newspaper also reported that the Mayor of Zhuhai, He Ningka, said that the principle of developing and building up the Hengqin New Area is to “prioritise Macau”, no matter by land concession, infrastructure building, or developing industries.

In the planning of Hengqin, more than 50 per cent of the useable land will be reserved for Macau use. It is also an objective that more than 30 per cent of Hengqin’s future resident population will come from Macau.

6 | Business Daily

January 8, 2015

Macau Parisian shopping area almost fully booked Roughly 85 per cent of the shopping area available at the Parisian is already booked, the senior vice president of retail of Sands Retail, David Sylvester, said yesterday in an interview with the Portuguese language newspaper Tribuna de Macau. Mr. Sylvester also stressed that retail sales are increasing in Macau and that he does not believe in a strong correlation between gaming and sales. The Parisian is the fourth property by Sands China at Cotai Strip and it is expected to open in late 2015. It will have 3,000 rooms and suites, gaming space, a retail mall and a replica Eiffel Tower.

The total cost of the project is estimated at US$2.7 billion (MOP21.6 billion).

Gaming industry’s Barclays: December gaming revenue decline due agony to drag on through January to table reclassification Gaming operators must endure another month of negative growth, as the American bank Wells Fargo predicts that gaming revenues will drop from 16 to 19 per cent in the first month of the new year João Santos Filipe

jsfilipe@macaubusinessdaily.com

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aming analysts at Barclays warned clients that December’s record revenue plunge in Macau, especially for the mass market, should be read with caution and should look beyond President Xi Jinping’s visit here last month.

Barclays says that the reclassification of mass tables to VIP in order to accommodate the new smoking ban played a major role on the slump of revenues in December, more so than the President’s visit or the visa restrictions.

The new rules – introduced on October 6 - only permit smoking in VIP rooms. This led some operators to move some mass premium tables to the high rollers segment in order to retain the smoking-dependent gamblers.

‘We believe the biggest reason for the significant decline is operators’ continued reclassification of tables from mass tables into VIP tables for the potential to allow for smoking (but with no negative impact on EBITDA margins)’, wrote the UK bank in a note to clients. ‘There are now two operators who reclassified most of their premium mass tables into VIP tables, and other operators have been selectively reclassifying certain areas’ tables as VIP tables as well’.

The softness of the mass segment in December was one of the main surprises for investors. The revenues generated by these gamblers dropped 27.6 per cent year-on-year, more than two times November’s (a 13 per cent decline).

HKEx seeks to reassure investors over Shanghai trading link

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ells Fargo expects gaming revenues to drop from 16 to 19 per cent year-on-year during January, the American bank announced, based on its checks up to January 4. This prediction is in line with the finance institution’s earlier report, which expected revenues to shrink 18 per cent during 2015.

According to the Wells Fargo report, Average Daily Revenue (ADR) will range in January from MOP725 million to MOP 750 million, after an average of MOP950 million in the first four days of the month. The later value, however, is considered extraordinarily high due to New Year’s Day and weekend days.

The bank highlights that the Central Government’s policies will continue to negatively affect the growth of Macau gaming industry during 2015.

“We remain on the sidelines

regarding the Macau market, as we believe China’s policy settings are negatively affecting growth. In particular, we see: visa restrictions, the anti-corruption drive, a pullback in credit and a softening housing market/economy all contributing to a slowdown in Macau”, the report, written by analysts Cameron McKnight, Rich Cummings and Tiffany Lee, posits.

If the prediction of negative growth proves correct, the Macau gambling market will be shrinking for the first time for eight consecutive months.

This negative sequence started in June last year with a drop of 3.7 per cent year-on-year.

In relation to 2014, the bank expects gross gaming revenue to drop 18 per cent year-on-year, which assumes a drop of 17 per cent in the VIP segment and a fall of 21.5 per cent in the mass market

he Hong Kong Stock Exchange has rebuffed claims that its landmark Shanghai trading link is being hampered by overseas regulatory hurdles, amid growing pressure to address investor protection concerns that have dampened trading volumes.

Hong Kong Exchanges and Clearing said in a statement late Tuesday evening that it has been working with overseas investors and regulators to familiarise them with the mechanics of the Hong KongShanghai Stock Connect.

‘Relevant overseas regulators have gained a clearer and better understanding of Stock Connect.

HKEx understands that they do not have particular concerns’, the Exchange said.

HKEx and mainland China regulators have come under pressure to address technical and legal aspects of the link that have made it difficult for U.S. and European Union-regulated funds to participate.

These include settlement rules and uncertainty about the enforceability of shareholder rights under Chinese law.

The HKEx statement followed the release of new data on Tuesday by the Hong Kong Investment Funds Association (HKIFA). The investor group said only 13 of 41 asset managers that responded to a survey indicated they had invested through Hong Kong-Shanghai Stock Connect.

‘In general, we had a positive response from our members on the potential opportunities of using Stock Connect in the long term’, Bruno Lee, chairman of the HKIFA told a news conference in Hong Kong on Tuesday.

‘But we do need more details before firms can fully leverage the scheme’.

The HKIFA said a key concern cited by funds was uncertainty about whether investors are assured legal entitlement to Shanghai shares held on their behalf by HKEx’s clearing house.

Shares and bonds bought by mutual funds are typically held by custodians on behalf of the investor, a concept known as beneficial ownership.

Industry insiders say legal opinion is divided over whether investors could enforce their rights to shares held under beneficial ownership in China should HKEx’s clearing house go bust.

On Tuesday, HKEx reassured investors they retain ownership rights under such circumstances.

“We understand that the market needs time to get used to the idea of beneficial ownership...in the context of mainland law”, said Christine Wong, HKEx’s Chief Counsel and Head of Legal Services in the statement.

“We are committed to making this and other concepts adopted in Stock Connect properly understood by investors and other stakeholders”.

Reuters

Business Daily | 7

January 8, 2015

Gaming

Nevada Court gives Jacobs green light to use secret report against Adelson

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evada District Judge Elizabeth Gonzalez, at a hearing yesterday in Las Vegas, has ruled that Steven Jacobs, ousted in 2010 as former chief executive officer of the China unit of Las Vegas Sands, can use the reports while ordering that they be treated as confidential information, meaning they may not become public. Sands had asked for them to be treated as highly

confidential, meaning only attorneys and the judge could see them.

“In some cases, they would call this blackmail”, J. Randall Jones, a lawyer for Sands China, said of Jacobs’s effort to use the information. The case has been bogged down over the question of whether Jacobs can sue the Chinese subsidiary in Nevada. Sands says the unit doesn’t do business in the U.S. Mr. Jacobs, fired from Sands China in

Boston sues commission to block Wynn casino

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oston sued the Massachusetts state gambling regulator to block a planned Wynn Resorts Ltd. casino near the city, arguing residents should get to vote on the $1.6 billion project because they will bear the brunt of the environmental impact and traffic congestion.

The Gaming Commission should nullify the casino license it awarded to the city of Everett, which is adjacent to Boston, and name Boston as the development’s formal host, according to a complaint filed today in state court.

“It has always been our belief that Boston is a host community” for the casino, Boston Mayor Martin Walsh said in a statement today. “Our priority is to protect the people of Boston and ensure the safety of our neighborhoods.”

Wynn Resorts, the company founded by Steve Wynn, was awarded the sole license in September to operate a casino in the Boston area,

beating a plan from the Mohegan Tribal Gaming Authority. The resort is planned on the site of a former chemical plant.

Michael Weaver, a spokesman for Las Vegas-based Wynn Resorts, declined to comment on the lawsuit.

The planned casino has already hit legal snags. In October, federal and state prosecutors in Boston said Wynn Resorts had unwittingly planned the development on land linked to organized crime, making the claim in charging three men with lying to the company and state gaming regulators about the connection.

The men were arrested after being indicted by a federal grand jury on charges of hiding financial links between one of the men -- an associate of the New England Family of La Cosa Nostra criminal group -- and land being sold to Wynn Resorts.

Bloomberg

2010, has been locked in a four-year battle with Chairman Sheldon Adelson over the right to use the report on the probe in his wrongful-termination lawsuit. Jacobs contends he was ousted from the China unit of Las Vegas Sands Corp. because he clashed with Adelson over demands he collect information on Macau officials – through a secret investigation made by Sands China - to exert “leverage” on them.

Jacobs claims the report by a Hong

Kong risk consultant, and two others with alleged ties between Sands China associates and Chinese organised crime, will expose the company to “serious political and legal problems”.

Sands argued that Jacobs “stole” the documents when he was fired, and that they should be legally off-limits for use in the lawsuit.

Jones said Jacobs wants to use the reports’ “sensitive information” as leverage against Adelson to gain a financial advantage. Gonzalez rejected Jones’ request to hold a separate evidentiary hearing on whether the reports are relevant to the question of the case belonging in Las Vegas. She set a hearing for April 20 to consider whether Las Vegas is the proper location.

Todd Bice, a lawyer for Jacobs, told the judge that the reports are relevant because they demonstrate who was really in charge in Macau, namely the Las Vegas-based parent company. The company has conceded that at least two of the reports were commissioned

by Las Vegas Sands Corp.

“These documents substantiate what Mr. Jacobs said was going on in Macau”, Bice said. Sands wants to keep them under wraps because they are embarrassing and contradict Adelson’s public statements, Bice said.

Jacobs, who has repeatedly accused Sands of stalling, said in a December 24 court filing that the company’s legal manoeuvres “have tied this matter in knots for four years and brought this case to a standstill”.

Bloomberg

Malaysian minister involved in Phua investigation

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alaysian Home Minister Ahmad Zahid Hamidi is facing questions after he wrote to the United States Federal Bureau of Investigation (FBI) in order to help the former Macau casino promoter Paul Phua Wei Seng, Singaporean newspaper The Straits Times reported yesterday.

Paul Phua is a former casino junket operator in Macau who was arrested in Las Vegas last year, and subsequently charged with illegal bookmaking during the World Cup Football tournament that took place in Brazil.

Ahmad Zahid Hamidi is said to have written on December 18 a letter at the request of Phua’s lawyers saying that Phua was not a member of the Hong Kong-based 14K triad. The member of the Malay Government also stressed that Phua had assisted the government of Malaysia on projects affecting national security.

Last Monday, it was reported that

the letter was withdrawn after the Malaysia Government objected to its use in court. However, the move failed to deflect the spotlight from the connection between Malaysia leaders and underworld figures.

“The time has come for Zahid to answer openly on this secret letter of support to end public speculation”, said Mr Fahmi Fadzil, communications director for the opposition People’s Justice Party (PKR), on Tuesday.

The director also questioned the Strait Times on the nature of the “national security projects” mentioned by the local Home Minister in his letter, saying that the opposition will take this issue up in Parliament.

According to US prosecutors, Phua, who was arrested in Macau last June and later released on bail, operated an illegal sports gambling business that collected bets worth “hundreds of millions”.

J.F.S.

8 | Business Daily

January 8, 2015

Greater China

Shenzhen studies implementing SHG-HK link alike A trading link with the Shenzhen exchange would allow foreign investors access to some of the nation’s most dynamic companies

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ong Kong is taking steps to increase trading through the Shanghai exchange connect as officials discuss setting up a separate link with Shenzhen.

Shenzhen and Hong Kong will seek regulatory approvals once their plans are “mature,” the mainland city’s stock exchange said in a one-sentence statement on its microblog. Hong Kong Exchanges & Clearing Ltd. said it will offer new trading accounts to fund managers as soon as March, enabling them to overcome the main hurdle stopping them from selling Shanghai-listed shares.

A trading link with the Shenzhen exchange would allow foreign investors access to some of the nation’s most dynamic private companies in the technology and healthcare industries. The ChiNext index of smaller companies, which is listed in Shenzhen, has more than doubled over the past two years as investors speculate they will benefit most from the nation’s move toward an economy driven by domestic consumption rather than investment and exports.

The Shanghai and Hong Kong stock connect, which started in November amid much fanfare, isn’t generating much interest among investors. Foreign buyers have filled about 25 percent of the quota to buy mainland shares and 6 percent of the quota for Hong Kong stocks, according to data compiled

by Bloomberg.

approve the project before it can go live.

HKEx Rally

Link obstacles One problem is that Chinese regulations compel international investors to deliver securities to their broker before 7:45 a.m. in Hong Kong on the day they plan to sell the shares on the mainland. Many asset managers have compliance rules that prevent them from transferring equities before they have sold the securities.

HKEx will register the new trading accounts with Hong Kong Securities Clearing Co., one of its subsidiaries. That will allow China Stock Connect -- the gateway for investors wanting to trade Shanghai

shares -- to verify the money managers’ holdings without forcing them to transfer the equities to a broker, according to a HKEx presentation posted on its website.

The Hong Kong exchange expects to start testing the new system in February before launching it as early as March. Hong Kong’s Securities & Futures Commission needs to

Shares of HKEx have rallied 42 percent over the past year, compared with a 4 percent gain for Hong Kong’s Hang Seng Index. The Shenzhen Composite Index has jumped 39 percent, while the Shanghai Composite Index surged 63 percent.

The design of the stock link is scalable and replicable, and can be expanded to cover other markets or asset classes, Lorraine Chan, a spokeswoman for Hong Kong Exchanges, said in an e-mail on Jan. 5. The bourse operator has “excellent working relationships with the Shenzhen exchange,” and will inform the market if there are material developments, she said.

The State Council hasn’t yet endorsed the link and it will take at least six months to complete preparations after cabinet approval, Caixin said yesterday, citing unidentified people closed to the Shenzhen Stock Exchange.

Bloomberg News

A slower GDP growth to say goodby Growth of 7.2 pct in October-December would be the weakest since Q1 2009, when the Kevin Yao

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hina’s annual economic growth likely slowed to 7.2 percent in the fourth quarter, the weakest since the depths of the global crisis, a Reuters poll showed, which would keep pressure on policymakers to head off a sharper slowdown this year.

The expected slowdown in growth of the world’s second-largest economy, from 7.3 percent in the June-September quarter, means full-year would undershoot the government’s 7.5 percent target and mark the weakest expansion in 24 years.

Fourth-quarter GDP data will be announced on January 20.

The poll of 31 economists showed bank lending, fixed-asset investment and factory output growth may have steadied in December, but factory price deflation likely worsened and consumer price inflation hovered near five-year lows.

“We expect the upcoming December data to show a still frail economy, tepid production momentum, and mounting deflationary pressures,” economists at UBS wrote in a note.

Banks may have extended nearly 853 billion yuan (US$137.3 billion) in new loans in December, flat from November’s level, which showed a 56 percent jump from the previous month.

KEY POINTS 2014 full-year pace seen as lowest in 24 years Q4 GDP, activity data due on Jan 20 Dec investment, lending seen steadying on policy support Factory price deflation likely worsened in Dec-poll Inflation data due Jan 9 Trade data due Jan 13, no fixing time Credit data due any time between Jan 10-15 The People’s Bank of China (PBOC) unexpectedly cut interest rates in November for the first time in more than two years to lower borrowing costs to support growth. Later, it loosened loan restrictions to encourage banks to step up lending.

China’s imports may have declined 7.4 percent in December from a year earlier

In the poll, M2 money supply is seen growing 12.5 percent in December from a year earlier, up from November’s 12.3 percent rise.

Fixed-asset investment, a key growth driver, probably grew 15.8 percent in the whole of 2014, matching the pace in the first 11 months as the government approves more investment projects to offset

the impact from a cooling property market.

The National Development and Reform Commission, the nation’s top planning agency, approved infrastructure projects with total investment value of 1.77 trillion yuan in 2014, with the bulk in the fourth quarter, according to Reuters calculations based on NDRC announcements.

Business Daily | 9

January 8, 2015

Greater China Regulator to strengthen food and drug safety control

Taiwan could open stocks to Chinese

The government has struggled to restore confidence in its US$1 trillion food processing industry since six infants died in 2008

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ood and drug safety in China is “grim” and will get stronger oversight, the food and drug regulator said yesterday, after a series of scares last year hit the reputations of global firms such as McDonald’s Corp and Wal-Mart Stores Inc. The China Food and Drug Administration has struggled to control a string of high-profile scandals over the years, from donkey meat products tainted with fox, heavy metals in baby food and allegations of expired meat sold to fast-food chains.

Safety scares have affected the reputations and China sales of global companies from U.S. fast-food chains McDonald’s and Yum Brands Inc. to retailers such as Wal-Mart and France’s Carrefour SA. China will increase “active” regulation to prevent food and drug safety scares, with more onsite inspections, random tests and unannounced visits, the regulator said. The quality of personnel, legal structures, management methods and technological aspects were all currently insufficient, it said.

Regulators overseeing the country’s food industry are thinly stretched, company executives told Reuters, and inspectors often struggle to deal with China’s fragmented food supply chains.

Taiwan’s financial regulators yesterday said they are studying plans to allow individual Chinese investors to trade local stocks via Taiwan’s offshore securities units, in the latest sign of warming ties with the mainland. Financial Supervisory Commission Chairman William Tseng told reporters that details would be available in June and implementation would begin in the third quarter. “We hope to attract big Chinese investors to stock-related products,” he said. Business and financial ties across the Taiwan Straits have gathered steam since President Ma Ying-jeou took office in 2008.

China signs pact with Costa Rica

We must soberly recognise the current foundations of China’s food and drug safety are still weak, with new and old risks together creating a grim situation China Food and Drug Administration statement

The regulator said China would look to attract more personnel, standardize training methods and promote greater cooperation between regions.

The government has struggled to restore confidence in its US$1 trillion food processing industry since six infants died in 2008 after drinking adulterated milk, creating a space for imported goods which are often seen as safer and of higher quality.

Food safety laws are incomplete and responsibility to enforce them is unclear, making it difficult for regulators to do their jobs, Gao Guan, deputy secretary-general of the China Meat Association, told Reuters last year.

Reuters

ye to a dismal 2014 economy grew 6.6 percent as the worst of the global crisis passed

China and Costa Rica have signed a partnership agreement that could give Chinese firms a foothold in the country, the Costa Rican government said in a statement, another sign of expanding Chinese influence in Central America. The statement, sent from China, said that during a trip to Beijing, Costa Rican President Luis Guillermo Solis said the Central American country aspires to become a “permanent, longterm partner” with China, and will explore the possibility of creating a “Special Economic Zone” for Chinese companies to operate in Costa Rica.

Malpractice behind accidents probed China’s top prosecuting body is investigating multiple cases of alleged malpractice, which occurred over the past ten days, including a warehouse blaze in northeast China that killed five firemen. The Supreme People’s Procuratorate vowed to bring those responsible to task in a statement released yesterday. The incidents include the collapse of scaffolding at a construction site at Tsinghua High School in Beijing, which left ten dead and four injured on December 29, and a factory blast in Foshan, in south China’s Guangdong Province, which killed 18 and injured over 30 on December 31.

US$5.3 billion credit line to Ecuador for a meeting of Asia-Pacific leaders in Beijing.

Policy easing

But analysts say it could take quite some time before construction of planned railways, roads and other projects starts as local governments are burdened by piles of debt.

December factory output likely grew 7.4 percent from a year earlier, quickening slightly from 7.2 percent in November, when many polluting factories in north China were shut

The PBOC is widely expected to cut interest rates further or lower reserve requirement ratios (RRR) for all banks, although some analysts believe it may be pausing on policy easing to wait for recent actions to take effect and lift growth.

“The central bank needs time to observe economic operations before taking further easing measures, so the possibility of a near-term cut in interest rates or RRR is not big,” Lin Hu, an economist in Beijing for Guosen Securities said in a note.

China’s reform-minded leaders have shown greater tolerance for slower growth, but further slowdown in the economy could fuel job losses and undermine public support for changes.

A property slump is expected to last well into 2015, companies will continue to struggle to pay off debt and export demand may remain erratic, leaving the services sector as the economy’s lone bright spot.

UBS expects China’s GDP growth to slow further to 6.8 percent in 2015, and rising

deflationary pressure will spur the central bank to cut benchmark lending rates by at least 50 basis points this year.

Factory price deflation Highlighting deflationary risks, producer prices may have fallen 3.1 percent in December from a year earlier. That would extend to 34 months a streak of declines that has eroded corporate earnings. November saw a 2.7 percent slide.

Annual consumer inflation likely hovered near five-year lows, at 1.5 percent, in December, leaving some room for the central bank to loosen policy if needed.

Reflecting lacklustre domestic demand, China’s imports may have declined 7.4 percent in December from a year earlier, following a 6.7 percent drop in November.

Export growth likely accelerated to 6.8 percent in December from 4.7 percent in November. The December trade surplus could be around US$50 billion, near record highs.

Retail sales, a key gauge of domestic consumption, were seen expanding 11.7 percent in December from a year earlier, steady from November, according to the poll.

Reuters

China has granted a US$5.3 billion credit line to Ecuador as the oil-reliant Andean nation reorganizes its finances after a crash in crude prices slashed export earnings, Ecuador’s official newspaper reported. Ecuadorean Finance Minister Fausto Herrera said the government would tap US$1.5 billion this year of the 30-year credit, which carries a 2 percent annual interest rate, El Ciudadano reported. China’s state-controlled and trade-focused Eximbank, which offered the new loan, has been one of Ecuador’s top financiers, investing heavily in the oil and hydroelectricity sectors.

Nissan says 2014 China sales up Nissan and its Chinese joint venture partner sold 1.22 million vehicles in China in 2014, up 0.5 percent from the previous year, the Japanese carmaker said yesterday. In the month of December, Nissan sold 121,900 vehicles, down 9.1 percent from a year earlier, the sixth straight month the carmaker has seen sales decline in China. Japanese carmakers in China have faced the twin challenges of a slowing economy and political tension between Beijing and Tokyo over the past year. The growth rate of China’s auto market, the world’s biggest, halved to around 7 percent in 2014.

10 | Business Daily

January 8, 2015

Greater China

Hong Kong home prices hit record high Developers continued to offer discounts to attract buyers who are exempted from a series of cooling measures aimed at pricking the city’s property bubble measures aimed at pricking the city’s property bubble, analysts expect pent-up demand to keep boosting sales in 2015.

Developers will keep giving discounts and incentives and that will “continue to capture the end-user demand”, said Joanne Lee, research manager at property consultancy Colliers International in Hong Kong.

She forecast that home prices will edge up 3-5 percent in 2015.

Cooling measures

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ong Kong’s home prices hit a record high for a seventh consecutive month in November, official data showed, as pent-up demand for smaller units continued to boost sales in one of the world’s most expensive property markets.

An index of overall private home prices for November edged up 3.7 percentage points month-on-month to 274 points. It was the index’s eight straight monthly gain.

Home prices rose 12 percent in the

first 11 months of 2014, according to government data.

The data came days after the city’s largest developer, Sun Hung Kai Properties, sold 300 small and medium-sized units within nine hours of their launch. The developer said units were sold at between HK$4 million (US$515,843) to HK$7 million, a discount of up of 10.5 percent from the stated price.

As developers continued to offer discounts to attract buyers who are exempted from a series of cooling

12 pct home prices rising in first 11 months of 2014

Hong Kong’s overall property sales fell to a 17-year low in 2013, partly because of the cooling steps taken by authorities.

In late 2009, the government of the former British colony unveiled the first of a series of measures to cool one of the world’s most expensive real estate markets, including the doubling of stamp duty on residential transactions to as much as 8.5 percent of the sale value.

Centaline Property Agency said the total value of 2014 transactions for Hong Kong private new homes was the highest since it started keeping records on them in 1996.

Steep discounts attracted buyers once turned off by the sales tax, it said.

The Centa-City Leading Index, a widely used indicator of the city’s residential price trends, is now at a record 132. That’s 11 percent higher than a year ago.

The city’s real estate sub-index has risen more than 19 percent since lows hit in March.

Hong Kong home prices have surged about 120 percent since 2008 due to low interest rates, a supply shortage and flush liquidity.

Reuters

New compound rubber recipe to hurt top producers The new standard will be implemented on July 1 Dominique Patton

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hina has approved a new standard for compound rubber that reduces the amount of natural rubber allowed in the formula, a move that is expected hurt major producers in Thailand and Malaysia, analysts and traders said.

Compound rubber, which includes small amounts of powdered carbon, has become popular in China as it can be imported tariff-free, compared to a 1,500 yuan (US$242) per tonne tariff for natural rubber.

Thailand typically ships about 600,000 to 700,000 tonnes of compound rubber to China, a Singapore-based trader said, while Malaysia exports slightly less. Total use is around 1.5 million tonnes.

The rule change by the world’s top rubber consumer, which was first proposed in August, will cap the natural rubber content in compound rubber at 88 percent, down

From July, the use of compound rubber will dramatically decline from 95-99.5 percent previously.

This will make the compound less stable and much less attractive to tyre manufacturers, likely killing off demand for the product, traders and analysts said.

The new standard will be implemented on July 1, said a notice published on the Standardization Administration’s website.

“From July, the use of compound rubber will

dramatically decline,” said Quan Shuwen, senior analyst at Dongwu Futures.

Producers are expected to ship large volumes of compound rubber into China ahead of the rule change but it is unclear whether they will produce the product after July.

The remainder of the compound must be made up of carbon black, a fine powder that is difficult for rubber producers to handle without

Quan Shuwen, senior analyst, Dongwu Futures

installing special equipment.

Traders said the move would benefit Chinese rubber producers, such as Hainan Rubber Industry Group, although tyre companies would still need to source large amounts of natural

rubber from overseas to meet demand.

China imported 2.3 million tonnes of natural rubber and 1.35 million tonnes of synthetic material in the first 11 months of 2014.

China was expected to produce around 800,000 tonnes this year, said Quan, about 10 percent lower than expected after the domestic industry reduced tapping due to low prices and switched to growing other crops such as coffee.

The move comes as rubber prices hover close to five-year lows on adequate supply and fears over tepid Chinese demand, pushing producers in top exporting countries to call for government support.

Rubber demand in China remains lacklustre, traders said, with many tyre companies planning to start Chinese new year holidays early.

Reuters

Business Daily | 11

January 8, 2015

Asia

Modi’s pledge tested as deficit at 99% of target

While the Modi administration has taken short-term spending cuts, it has met less than 5 percent of its budget estimate to raise 434.25 billion rupees from sales of holdings in staterun companies this fiscal year. Nomura says even if disinvestment picks up, the government will have to resort to sharp expenditure cuts and seek higher dividends from state-run firms to meet the 4.1 percent target.

Government expects to fetch 160 billion rupees by selling some telecommunications airwaves before March 31 though Anoop Agrawal

Rate pause

Markets are uncertain about the deficit target.

When there is uncertainty, the tendency is to sell Vijay Sharma, PNB Gilts, president

Prime Minister Modi (L) and Finance Minister Arun Jaitley (R) with two other government members

I

ndia’s budget deficit reached 99 percent of the full-year target in just eight months, raising doubts that Prime Minister Narendra Modi can keep a pledge to narrow the gap to a seven-year low.

Failure to meet the goal for a shortfall of 4.1 percent of gross domestic product would disappoint global investors who parked a record US$26.4 billion in local debt in 2014, according to PNB Gilts Ltd. Nomura Holdings Inc. and IDBI Federal Life Insurance Co. say fiscal indiscipline

may hold up rate cuts by the Reserve Bank of India, which has been pressuring the government to play its role in fixing the economy.

Governor Raghuram Rajan said December 2 that “a change in the monetary policy stance is likely” in early 2015 should improvements in inflation and fiscal health continue. Modi has scrapped controls on diesel prices, raised natural gas tariffs and allowed more foreign investment in sectors such as defence since taking the reins of Asia’s thirdlargest economy in May.

“Fiscal consolidation will certainly have a bearing on the central bank’s rate decision,” Sri Prasad Prabhu, the head of fixed-income at IDBI Federal in Mumbai, said in an e-mail interview on January 1. “Bonds may give up some gains if the fiscal weakness persists.”

The shortfall in government finances reached 5.25 trillion rupees (US$82.6 billion) in the eight months ended November, official figures showed last week, compared with a goal of 5.31 trillion

rupees for the year through March 2015.

Government efforts A tax revenue shortage makes it difficult to shrink the budget gap from 4.5 percent of GDP last fiscal year, Finance Minister Arun Jaitley said in November, as growth in the US$1.9 trillion economy slowed in the July-September period for the first time in three quarters. The government last week raised taxes on gasoline and diesel, and decided against extending a tax break for the local automobile industry.

“There’s a risk the quality of fiscal consolidation will likely suffer,” said Sonal Varma, a Mumbai-based economist at Nomura, who doesn’t expect a rate cut before April. “If the quality of consolidation is not encouraging, then the chances and the quantum of RBI’s monetary easing will be called into question.”

The central bank will have more confidence that the government is meeting its fiscal targets next year, Rajan told analysts on December 2.

He left the repurchase rate unchanged at 8 percent for a fifth straight meeting that day even as plunging oil prices improved the inflation outlook for India, which imports about 80 percent of its oil.

The yield on India’s current benchmark 10-year bonds due July 2024 has risen three basis points, or 0.03 percentage point, since the budget deficit figures were announced on December 31. The Indian rupee has weakened 0.8 percent to 63.55 a dollar in the period.

Foreign funds pared their holdings of rupeedenominated government and corporate bonds by US$51.7 million last week, according to exchange data.

Bloomberg News

South Korean finance minister celebrates oil price decline His remarks echoed those of the country’s central bank governor, who also shared the same sentiment earlier this week

S

outh Korea’s finance minister said yesterday the recent decline in global oil prices is expected to have a “greatly positive” effect on the local economy, boosting manufacturing, exports and investment.

“Some have expressed concern over deflation, but deflation comes from a lack of demand and not from the supply side,” said Finance Minister Choi Kyung-hwan at the start of a meeting with government officials.

“The recent decline in oil prices is due to supply issues...and could lead to increased income, possibly leading to bigger consumption,” the minister said.

Choi added low oil prices offer a good opportunity for the economy to raise its vitality, as South Korea imports all of its oil.

The minister’s comments also come just as a group of prominent, mostly state-run research bodies released a report yesterday that oil prices will boost economic growth

KEY POINTS Finance minister says low oil prices “greatly positive” Joint research report says oil prices to boost growth in 2015 in South Korea this year by 0.1 to 0.2 percentage points and positively affect the economy overall.

The report also pointed out a need for price reforms in order for falling oil prices to be accurately reflected in local consumer goods, and that caution must be taken so that lower oil prices do not lead to a decline in inflation expectations.

The government now forecasts growth this year at 3.8 percent while expected inflation for the next 12 months in December fell to a record low of 2.6 percent.

Finance Minister Choi Kyung-hwan with FMI head Christine Lagarde at latest G20 Finance Ministers meeting

Some analysts have said that the recent change of tone from policymakers for the better may delay policy easing by the Bank of Korea, which is due to next review its monetary policy on January 15.

The central bank is widely expected to lower interest rates further this year after cutting them in two 25-basispoint steps in August and October last year to 2.0 percent.

Reuters

12 | Business Daily

January 8, 2015

Asia

Malaysia’s exports lead trade surplus to 3-year record The statistics department said exports were boosted by electrical and electronic goods Trinna Leong

Vietnam devalues currency again Vietnam’s central bank yesterday said it would devalue the dong currency in a bid to contain inflation and bolster economic growth. The State Bank of Vietnam (SBV) will devalue the reference rate by one percent to 21,458 Vietnamese dong per dollar to “control inflation and... push up economic growth”, it said in a statement. The move -- the second devaluation in eight months -- is “in accordance with the developments of the domestic and international financial markets, creating a solid stability for the forex market”, the SBV said.

Myanmar trade deficit close to US$4 billion Myanmar registered a trade deficit of nearly US$4 billion in the first nine months (April to December) of the 2014-15 fiscal year, according to official statistics yesterday. With its total foreign trade amounting to US$20.9 billion during the period, its export stood at US$8.6 billion while its import took US$12.3 billion. According to the Central Statistical Organization, Myanmar also suffered a trade deficit of US$2.652 billion in the whole of 2013-14, which registered a total trade volume of US$24.868 billion with export taking up US$11.108 billion and import representing US$13.76 billion.

M

alaysia’s exports in November rose unexpectedly, dodging the impact from tumbling world oil prices and providing a brief respite for the sliding ringgit.

The Southeast Asian exporter is grappling with sliding prices for energy and commodities as growth slows in Europe and China. There are concerns the government will miss its budget deficit target of 3 percent of GDP this year, which will add pressure on its sovereign ratings.

Annual exports in November surprisingly rose 2.1 percent, confounding market expectations for a fall, supported by electrical and electronic products despite a drop in commodity-related exports, government data showed yesterday.

A Reuters poll had forecast exports would drop 0.4 percent.

Imports were flat from a year earlier, however, much lower than an expected 8.2 percent rise.

KEY POINTS Nov exports up 2.1 pct y/y vs Reuters poll f’cast down 0.4 pct Nov imports flat vs forecast of 8.2 pct rise Trade surplus 11.13 bln rgt vs f’cast 4.9 bln rgt surplus Exports to China down 14.6 pct y/y; to U.S. up 16.0 pct

“You’ll see some run-up in domestic demand before the GST (Goods and Services Tax) so consumption, imports could pick

The ringgit was Asia’s weakest currency in 2014

up but over the rest of the year it could moderate below trend,” said Michael Wan, economist at Credit Suisse.

Philippines cuts 2016 growth target

Growth in 2014 will likely be 6-7 percent, Abad said. There Abe could declare end was 7.2 percent expansion in 2013 of deflation Japanese Prime Minister Shinzo Abe said yesterday he may be able to declare that Japan has broken free from a long phase of deflation if companies continue to raise wages. Abe also said he hopes that by improving the economy Japan will be able to contribute to global growth

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ust days into 2015, the Philippine government gave up its goal to grow by more than 8 percent next year, saying it had to be “prudent” in setting targets given challenges the country faces.

Budget Secretary Florencio Abad said yesterday the government has cut

Toyoda Gosei exec to plead guilty A former executive of Japan’s Toyoda Gosei Co Ltd has agreed to plead guilty to price fixing and rigging bids for auto parts made for cars sold in the United States, the Justice Department said on Tuesday. As part of the deal, Japanese national Makoto Horie agreed to serve one year and a day in prison and to pay a criminal fine of US$20,000, the department said. The Justice Department, along with antitrust enforcers worldwide, have been investigating price fixing of more than 30 car parts, including seat belts, air-conditioning systems, power window motors and power steering components.

2016’s growth target to 7-8 percent from the original 7.5-8.5 percent.

The Philippines is leaving intact its goal to grow this year by 7-8 percent, which would keep it as one of Asia’s fastest-expanding economies.

The trim of next year’s target came at a cabinet-level committee’s review of the medium-term targets for administration of President Benigno Aquino, due to end in June 2016.

Abad told reporters that looking at the global and domestic challenges, it was prudent to set the annual growth target at 7-8 percent “up to the end of this administration”.

Manila is on course to miss its 6.57.5 percent growth target for 2014, as the economy lost some steam in the third quarter, due in part to slowerthan-expected government spending.

Slowed spending

Benigno Aquino’s (pictured in the centre) Government spending has slowed since a Supreme Court decision in July declared aspects of an economic stimulus fund illegal

Government spending has slowed since a Supreme Court decision in July declared aspects of an economic stimulus fund illegal. That has cause public officials, wary about

accusations of recklessness, to subject decisions to more scrutiny, crimping public investment.

In November, the government posted its fourth monthly budget surplus in 2014, boding ill for an economy banking on infrastructure investments to boost growth.

“We do have challenges that we need to deal with, some beyond our control,” Abad said.

As examples, he cited the dramatic decrease in oil prices. which impacts tax collection and “the continuing difficulty of getting key spending agencies to disburse and spend according to programme.”

Central bank Governor Amando Tetangco said on Tuesday there was no immediate need for further stimulus, although manageable inflation prospects give authorities room to “support” economic growth.

Yesterday, the government committee also set its long-term outlook for the exchange rate of the peso at 42-45 to the dollar for 2015 to 2018.

Reuters

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Business Daily | 13

January 8, 2015

Asia “The trade balance would moderate because of this oil price decline,” said Wan, adding that the high figure was likely a “one-off” incident.

The country’s trade surplus for the month expanded to 11.13 billion ringgit (US$3.12 billion), the highest in value terms since November 2011. In October, the trade surplus was at 1.2 billion ringgit and the forecast for November was 4.9 billion ringgit.

ANZ said in a research report that the trade balance could potentially be Malaysia’s “Achilles’ heel” in 2015, despite an encouraging November print with unexpected strength in exports and weakness in imports.

The statistics department said exports were boosted by electrical and electronic goods making up 36 percent of the total exports with most of the products exported to the United States, the Netherlands, China and Singapore.

Exports to China declined 14.6 percent from a year earlier due to lower demand for metal, petroleum products and crude natural rubber from the country.

The ringgit, Asia’s weakest currency in 2014, won brief reprieve after the export and trade balance data. It pulled up to 3.5550 per dollar, off lows of 3.5850.

The currency, the second-worst performer among emerging Asian currencies this year, has fallen to more than five-year lows against the dollar on concerns over Malaysia’s trade and fiscal balances. The country is a net oil exporter.

Reuters

Thai consumer confidence index hits 18-month high Consumption, which accounts for half of gross domestic product, is only slowly picking up, curbed by high household debt levels Kitiphong Thaicharoen and Pairat Temphairojana

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onsumer confidence in Thailand hit an 18-month high in December, a university survey showed yesterday, helped by low inflation, reduced gasoline prices and government payments to rice farmers.

The consumer confidence index of the University of the Thai Chamber of Commerce rose to 81.1 in December from 79.4 in November. It was the highest since June 2013 when the index was 81.6.

In line with guidance from the military government and thanks to a drop in global crude prices, retail gasoline prices were trimmed in December. That helped lower the cost of living and raise consumer purchasing, the university said.

The university also attributed higher consumer spending in the month to government subsidies to rice farmers.

“Consumer confidence in December was the highest in 18 months and back to a level before the domestic political unrest,” Thanavath Phonvichai, an

economics professor at the university that did the confidence survey, told a news conference.

“Lower oil prices helped increase disposable incomes and people felt more confident to spend, especially during the New Year season,” he said.

“Government’s acceleration of budget spending and investment could lift confidence in coming months.”

Thailand’s economy, Southeast Asia’s second largest, expanded only 0.2 percent in the first nine months of 2014 from a year earlier due to weak exports and subdued domestic demand.

The central bank last month slashed its 2014 economic growth forecast to 0.8 percent from 1.5 percent and 2015 projection to 4.0 percent from 4.8 percent.

High debt is one reason the central bank has kept its policy interest rate on hold at 2 percent since March.

Annual headline inflation in Thailand was a more than five-year low of 0.60 percent in December.

The junta, which took power in May, is banking on big infrastructure projects to help the economy as sectors badly hit by prolonged political turmoil, such as tourism, are recovering slowly.

The university’s confidence index began declining months before Thailand entered a period of political turmoil in late 2013.

Through April 2014, the index fell 13 consecutive months, then it rose between May and August.

Reuters

As Myanmar opens up, miners weigh potential versus risk Isolation under military rule plus international sanctions hampered exploration work Jared Ferrie

W

ith abundant mineral wealth from jade and rubies to copper and coal, Myanmar ought to be looking forward to a mining boom as it opens up its economy. But longrunning insurgencies and a murky regulatory framework are holding back all but the intrepid.

Foreign investment in the Southeast Asian country as well as home-grown development were held back by 49 years of military rule that ended when a quasi-civilian, reformist government took office in 2011

and started courting investors.

The security and regulatory risks remain daunting, however, and although 69 foreign firms have registered to work in Myanmar’s mining sector, only 11 are operating.

One of them, Asia Pacific Mining Ltd (APML), has been granted an exploration licence covering 650 square km in restive Shan State, where it hopes to find deposits of lead, zinc and silver.

On January 5, APML announced that its first month of exploration had yielded “significant discoveries of massive sulphide silver-leadzinc mineralisation” and said it expected to start exploratory drilling by April.

APML’s concession surrounds the Bawdwin mine, which CEO Andrew Mooney said was the world’s largest source of lead and zinc in the 1930s.

Despite its prospects, Myanmar’s risks will probably deter big firms from investing any time soon, Mooney told Reuters. “(Myanmar’s) been off the radar since the 1960s,” he said. “In Southeast Asia, Indonesia is the major mining powerhouse. I think Myanmar has the potential to overtake it.”

A tumble in commodity prices may also deter some.

Silver has lost two-thirds of its value since 2011 and zinc has shed almost 20 percent since then.

Wildcats

KEY POINTS Heavyweights deterred by shortcomings of law and order Conflict, land disputes fester in mineral-rich areas Only 11 foreign firms operate in Myanmar’s mining sector

Thein Sein, President of Myanmar, has been heading the reform process since 2011

Myanmar’s government cannot put a precise figure on its potential mineral wealth and is unable to provide data on the sector’s worth before 1989.

With US$2.86 billion in foreign investment since 1989 - an annual average of just US$114 million - its mining sector is tiny compared to that of Indonesia, where coal exports alone generate revenue of over US$25 billion a year, even at current low prices.

The limited surveying

work done suggests large resources. “Judging by the size of its mineral deposits, you would expect a bonanza,” the Oxford Business Group, an investment and economic consultancy, said in its 2014 report on Myanmar.

Yet for now, Myanmar is the domain of small, wildcat companies specialising in highrisk frontier investment.

Conflicts between the military and numerous ethnic minority armies have flared since the 1950s and much of the mineral wealth is in areas controlled by insurgents keen to get a share of the spoils under any peace deals.

And earlier this month, a woman was killed and about a dozen other people were wounded when police and villagers clashed in central Myanmar during a protest over the expansion of a copper mine owned by a Chinese firm and a Myanmar company controlled by the military.

Legal hurdles are a problem, too: a new mining law has been held up in parliament for more than a year. The bill in its initial form did not inspire confidence among investors.

Reuters

14 | Business Daily

January 8, 2015

International German jobless rate hits record low Germany’s unemployment rate dropped to a record low of 6.5 percent in December, Labour Office data showed yesterday, suggesting consumers are likely to continue supporting growth in Europe’s largest economy at the start of 2015. The jobless rate fell from 6.6 percent in November. It is now at its lowest level since German reunification in 1990. The rate had been forecast to hold steady. The number of people out of work fell by 27,000 on a seasonally-adjusted basis to 2.841 million, the data showed.

Euro zone prices fall more than forecast Stefan Riecher

If you look at past experience we’ve taken major monetary-policy decisions in a situation where there was no unanimity

Petrobras reaches debt accord Brazil’s state-run oil company, Petroleo Brasileiro SA, said it had completed talks with “bilateral” government creditors on the release of third-quarter financial results that have been delayed by a corruption scandal. The lenders had demanded the presentation of audited third-quarter results by the end of January, said the statement, filed with securities regulator CVM. Petrobras, as the company is commonly known, did not name the lenders, but major bilateral lenders include national import-export banks that are important sources of finance for oil industry equipment.

Petrobras did not immediately respond to requests for additional comment.

US judge sets March hearing for Citigroup A U.S. judge has scheduled a March 3 hearing over whether Citigroup Inc. can process interest payments by Argentina on bonds issued under its local laws following its 2002 default.

The hearing was set by U.S. District Judge Thomas Griesa in Manhattan, who had in November put off holding a determinative hearing on the subject while allowing the bank to process a payment due the next month.

Obama chooses Fed board member President Barack Obama on Tuesday nominated former community banker Allan Landon to a seat on the U.S. Federal Reserve’s board, responding to calls for a greater voice for Main Street in the central bank’s deliberations. Landon, a partner at private investment fund Community BanCapital, was chief executive of the Bank of Hawaii from 2004 until 2010. Previously, he had worked as the bank’s chief financial officer and as CFO at First American in Tennessee. Several lawmakers on Capitol Hill had urged the White House to name someone with community banking experience.

Monster sues Beats over alleged fraud Audio equipment maker Monster LLC has sued Beats Electronics LLC, owned

by Apple Inc, over alleged “fraud and deceit” in the way that Beats acquired control of the rights to the popular “Beats by Dr. Dre” headphones. Under a partnership formed in 2008, Monster and Beats developed “Beats by Dr. Dre”, a line of colourful, high-end headphones that vie with the likes of Skullcandy Inc. and Bose Corp. According to the suit Monster engineered the success of the headphones and was unfairly cut out before Beats was sold to Apple last year.

A sluggish economy and slumping oil prices are damping inflation across the euro region

Mario Draghi European Central Bank President

ECB President Mario Draghi has said deflation can’t be “entirely excluded.”

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BNP Paribas SA in London. “We expect the ECB to announce a broad-based asset-purchase program including government bonds.”

Joblessness in Italy rose to a record 13.4 percent in November, separate data showed.

A sluggish economy and slumping oil prices are damping inflation across the euro region. Consumer prices are falling on an annual basis in Spain and Greece, while data showed inflation in Germany at 0.1 percent, its weakest since 2009.

Crude oil prices have fallen about 50 percent in the past year amid a supply glut. Core euro-zone inflation, which strips out volatile items such as energy, food, tobacco and alcohol, increased to 0.8 percent year-on-year in December.

ECB officials have taken different approaches in analysing the impact of plunging oil prices on the economy.

While Draghi has warned of a disanchoring of inflation expectations and signalled support for QE, Bundesbank President Jens Weidmann favours not acting at this time, arguing that the drop could be a “mini-stimulus package.”

ECB Chief Economist Peter Praet

told Germany’s Boersen- Zeitung last month that in an environment in which inflation expectations are “extremely fragile,” officials cannot “simply look through” the slide in energy costs.

Praet makes a recommendation at the start of each monetary-policy meeting.

Central bank staff have worked on QE proposals in the past two months, and Dutch newspaper Het Financieele Dagblad reported yesterday that governors may be offered three different options to choose from at their January 22 meeting.

Since June, the ECB has cut interest rates twice, offered cheap long-term loans to banks to jumpstart lending and started a purchase program for asset-backed securities -- a decision Weidmann and German Executive Board member Sabine Lautenschlaeger opposed.

“If you look at past experience we’ve taken major monetary-policy decisions in a situation where there was no unanimity,” Draghi said after the ECB’s December 4 meeting. “So this is what we have to keep in mind.”

Belarus scraps duty on companies’ forex purchases

of its value last year.

The bank said then that the situation on the currency market remained stable but Reuters data has put the rouble at between 14,200 and 15,200 per dollar this week.

More than half of Belarus’s exports go to Russia, mainly trucks, tractors and industrial machinery.

Belarussian President Alexander Lukashenko, who keeps a firm grip on his command-style economy, said late last month he had demanded all transactions with Russia be carried out in dollars or euros.

Lukashenko has promised to protect Belarus from Russia’s economic woes and sacked his prime minister, central bank head and top ministers in late December after warning them there would be dismissals if they missed his economic objectives.

In December, the central bank increased its overnight refinancing rate to 50 percent from 24 percent, but kept the key refinancing rate unchanged at 20 percent, and imposed currency controls to try to support the rouble.

he inflation rate in the euro area fell below zero for the first time in more than five years, bolstering the case for more European Central Bank stimulus.

Prices dropped 0.2 percent in December, the European Union’s statistics office in Luxembourg said yesterday. That’s the lowest rate since September 2009. Economists in a Bloomberg survey predicted a decline of 0.1 percent. Unemployment held at 11.5 percent in November, Eurostat said in a separate report.

ECB officials are working on a plan to buy government bonds as they strive to prevent a deflationary spiral of falling prices and households postponing spending, a risk President Mario Draghi has said can’t be “entirely excluded.” They may use a gathering yesterday to weigh options for a quantitative-easing program that may be announced at their January 22 policy meeting.

“Inflation will most likely fall even further in January and remain extremely low all year long,” said Evelyn Herrmann, European economist at

Country’s president demandes all transactions with Russia be conducted in dollars or euros

B

elarus said it will scrap from today a duty paid by companies on purchases of foreign currency, imposed last month in response to a currency crisis in Russia.

A government order published on an official judicial website yesterday made no reference to individuals, who have to pay a 10 percent duty on such purchases.

The former Soviet republic’s central bank imposed a 30 percent duty in December on all purchases of foreign currency by companies and individuals because of increased demand following the Russian rouble’s

slide against the U.S. dollar.

It had already cut that duty twice before the publication of the new order yesterday.

The Russian rouble slid by around 40 percent against the dollar last year as Western sanctions over the crisis in Ukraine bit and oil prices plunged, hitting countries around the former Soviet Union which trade mainly with Russia.

Belarus’s central bank said on Monday it was lowering its official rate for the Belarus rouble by around 7 percent to 12,740 roubles per dollar.

The currency lost about 20 percent

Bloomberg News

Reuters

Business Daily | 15

January 8, 2015

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Euro grips the edge of the diving board

TAIPEI TIMES Financial Supervisory Commission (FSC) Chairman William Tseng is targeting profit growth of between 5 and 10 percent for the nation’s financial sector this year, citing the government’s continuous deregulation and stimulus measures. The nation’s financial sector posted a net profit of US$15.7 billion last year, marking the highest level in its history, data collected by the commission showed.

During the period, the banking sector’s return on equity (ROE) — a bank’s net income divided by its average stockholder’s equity — stood at 13 percent last year, while return on assets (ROA) — the percentage of how profitable a bank’s assets are in generating revenue — averaged 0.8 percent, statistics showed.

James Saft

Reuters columnist

THE KOREA HERALD As low inflation and growth pummelled profit, South Korea’s finance industry has shed the largest number of jobs in five years, a statistics agency said yesterday. There were 840,000 jobs on a monthly average in the local finance and insurance sectors in the January-November period, down 2.8 percent from the same period a year earlier, according to Statistics Korea. The figure translates to a loss of 24,000 jobs over the one-year period, marking the steepest fall since 55,000 jobs were erased off the market in 2009 in the face of the global financial crisis.

THE STRAITS TIMES Set up a single government agency focused on the development of small and medium-sized enterprises (SMEs), and introduce a loan scheme to help firms tide over cash flow needs for restructuring. These were among the suggestions for the upcoming Budget put forward by the Singapore Business Federation’s (SBF) SME Committee in a paper submitted to the Government last week. SMEs, which employ 70 per cent of the Singapore workforce, continue to grapple with perennial issues such as tightening manpower and rising business costs, said SME Committee chairman Lawrence Leow.

THE TIMES OF INDIA India Inc. made a strong pitch for reviving investment, easing interest rates, reworking the Minimum Alternate Tax (MAT) and restoring the incentives for Special Economic Zones (SEZs) during their pre-Budget interaction with finance minister Arun Jaitley and his team. Jaitley in his opening comments said that reviving manufacturing, diversifying its base and equipping it for robust long-run expansion is one of the major challenges of economic management.

India Inc. also raised the issue of retrospective taxes and the need to have a clear message on the issue.

W

ith Greece in the ejection seat and the European Central Bank facing a no-win decision on bond buying, the euro’s fall is far from over.

And that’s before we consider the poor economic fundamentals, not to mention the single currency’s new unpopularity with other central banks seeking a safe place to store their reserves.

The euro fell to near nine-year lows on Monday, hurt by fears that a push for vastly easier debt terms by a new Greek government, expected after January 25 elections, would lead not to agreement, but to Germany opening the door to a euro exit.

A report in German media that leaders in Berlin see a euro exit

by Greece as “manageable” may qualify more as a negotiating tactic than an analysis, especially given that no template for such a move exits. Either way, that we find ourselves here can be nothing other than negative for the euro, which would likely be in a cyclical decline even if its structural future were not in doubt.

The immediate consequences for the euro from a fracture in its line-up would probably be very negative, and certainly extremely volatile.

By the time we learn what kind of government Greece has elected, we will likely see important changes to monetary policy, with the ECB widely expected to make a significant announcement involving sovereign bond buying

at its January 22 monetary policy meeting. This may be one of those rare events in which all news is bad news for the single currency: if the ECB exceeds expectations with a large or forceful funding program, the euro will fall almost as a matter of policy; if the ECB disappoints, the euro will fall anyway.

The idea of buying up government bonds is more popular in Germany than wholesale Greek debt forgiveness, but only just.

That German Finance Minister Wolfgang Schaeuble voiced concerns about QE and lauded uber-skeptic Bundesbank President Jens Weidmann’s arguments against such moves recently implies that bond buying is far from assured. It will be hard to deliver meaningful QE while not appearing to stray into direct financing of euro zone members, or at least the mutualisation of risk.

“Any ECB decision to go ahead with QE, without substantial modification, would now entail severe loss of face for the German government, which might be obliged to abandon the condition which has so far governed its participation in the single currency arrangements,” Stephen Lewis, economist at ADM Investor Services in London, wrote in a note to clients.

Facts, those pesky things While few can agree about what the ECB should do or how Greek issues should be handled, facts, of which there

There is interesting new data showing that global central banks are no longer adding their support to the euro, something they have generally done since its inception

are many on the ground, are not in dispute and not terribly encouraging. Take deflation, the risk of which was illustrated by German inflation falling to just 0.1 percent annually in December, from 0.5 percent in November.

Data on Wednesday may show the first negative such reading; that is, deflation.

Remember, the price of energy continues to decline, and its impact on inflation in the euro zone has yet to be fully felt.

And while a cheaper euro is stimulative - this is partly the

point of bond buying - business and consumer confidence is not helped by the way in which the riven politics show up euro zone structural inadequacy.

Then there is interesting new data showing that global central banks are no longer adding their support to the euro, something they have generally done since its inception. While central banks will usually buy a reserve currency as it falls in order to keep their portfolios at the desired mix, that is not happening with the euro. The euro’s share of global reserves fell to 22.6 percent in the third quarter, according to new IMF data, down from 24.1 percent in the previous quarter, a decline of 122.9 billion euros.

“The euro has also become rather undesirable for central banks to hold,” Stephen Jen of hedge fund SLJ Macro Partners wrote to clients. “Nobody likes to hold a currency with a negative yield, and with the central bank managing the currency explicitly wanting the value of the currency to go down. “ Perhaps central banks are seeing the parallels between the euro and Japanese yen, which though it represents the third- largest economy in the world, accounts for only 4 percent of central bank reserves. Both economies face not only deflation, but seemingly intractable problems with making and implementing policy.

At some point, something will happen to arrest the fall of the euro. But not, probably, in the next month.

Reuters

16 | Business Daily

January 8, 2015

Closing Beijing airport sees record passengers in 2014

S.Korea’s Won-Yuan market outnumbers others

Beijing Capital International Airport (BCIA) saw 86.128 million passengers in 2014, an increase of 2.9 percent year on year, the operating authority said yesterday. BCIA was listed as the second busiest airport by passenger numbers in the world for its fifth-straight year, behind Hartsfield-Jackson Atlanta International Airport in the United States.

International passenger traffic hit 20.73 million at BCIA in 2014, recording 4.6 percent growth compared with 2013, according to the airport. In addition to passenger numbers, cargo increased 0.2 percent to 1.85 million tonnes, and a total 582,000 flights were handled.

Trade volume in the South Korean market to directly exchange currencies of China and South Korea far outnumbered those in other offshore markets, Seoul’s central bank data showed yesterday. The direct Won-Yuan trading market opened in Seoul on December 1, 2014 to exchange the won and the yuan directly, rather than brokering the two currencies through the U.S. dollar.

Since then, the daily average trade volume reached 5.4 billion yuan, or US$880 million, much higher than about US$200 million dollars in the Yen-Yuan market in Japan, according to the Bank of Korea (BOK).

China crude imports at record level

The country has been filling the second stage of its strategic reserves since completing the first phase in 2009

Adam Rose

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umbling world oil prices sparked a buying spree by China that led to record crude imports in December, according to Reuters estimates that suggest the top energy consumer doubled the oil put aside for strategic reserves in 2014 compared with 2013.

The figures indicate that thanks to the doubling of surplus oil in its system last year, China is much further along in filling up its strategic oil reserves than previously thought.

Yet analysts played down suggestions that Chinese buying could prop up global oil markets, where prices have dropped by more than half since the middle of last year.

Economic growth is slowing, and Daniel Ang, an analyst at Phillip Futures in Singapore, reckons China could be close to filling its currently available space for its strategic petroleum reserve (SPR).

Estimates by Thomson Reuters Oil Research and Forecasts indicate that China’s total crude imports surpassed 31 million tonnes, or more than 7 million barrels per day (bpd), for the first time

last month. That’s more than 10 percent above the previous record monthly amount.

Using data on domestic output, imports and commercial storage versus demand from refineries, that raised the excess oil available for China’s SPR last year to as much as 124 million barrels, separate Reuters calculations show, more than twice the 61 million barrels available for stock-building the previous year.

U.S. bank Citi said in a note it expects China’s crude imports to slow and that “anyone hoping for China to drive a rebound in oil prices is likely to be disappointed”.

Little is known about China’s strategic reserves, besides the locations of the storage facilities and their capacities. China also seldom issues any data on commercial crude and product stocks other than percentage changes in volumes released through official news agency Xinhua.

SPR stocks are currently estimated at more than 30 days’ worth of crude imports.

China plans to build reserves of around 600 million barrels, or about 90 days of imports.

China’s crude imports touched record or nearrecord levels in several months last year, despite a slowing economy and weak oil demand growth.

Imports have particularly picked up from September, largely fuelled by oil from the Middle East.

Ship broker data obtained

by Reuters shows that the number of super-tanker charters from that region to China surged over the last

Chinese firm to bid again for Mexico rail project

Lenovo to return Motorola to China

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L

he Chinese state firm which led a cancelled bid for a US$3.75 billion high-speed rail contract in Mexico plans to tender for the project again, a Chinese government agency said yesterday.

Mexico in early November abruptly cancelled a successful bid from a Chinese-Mexican consortium just days after it was awarded, amid questions over the legality and transparency of the process.

China Railway Construction, which led the previous bid, will re-enter the bidding which starts on January 14, said the State-owned Assets Supervision and Administration Commission (SASAC), which manages state firms.

“China Railway Construction has expressed it will participate again in the tender,” SASAC said in a brief statement on its verified microblog, without specifying whether the other companies in the original consortium would join.

The Chinese-Mexican group was the sole bidder in the final round, although 16 firms including industry giants Mitsubishi of Japan, Alstom of France, Bombardier of Canada and Siemens of Germany had initially shown interest.

AFP

four months of the year.

Unipec, the trading and chartering arm of state-owned Sinopec Corp, has loaded at least 40 super-tankers every month since September with Middle East and West Africa crude, the data shows.

Chinaoil, the trading arm of state-owned PetroChina , took in a record haul of Oman crude in October, buying 47 cargoes of Upper Zakum, Oman and Dubai in deals done as part of the Platts price

assessment process.

In November, President Xi Jinping pledged to start regularly releasing data on China’s oil inventories, although giving no timeline on when that might begin.

The National Bureau of Statistics (NBS) made its first announcement about the first phase last November, saying it contained about 91 million barrels, or 9 days’ worth of crude.

Reuters

70,000 officials punished for violating frugality rules

enovo Group Ltd. will bring Motorola phones back to China in the first quarter, reintroducing the brand to the world’s largest market after an absence of more than two years. Shares rose the most in almost four months.

The Moto X will be sold in February, with the Moto X Pro and Moto G to follow later, Motorola spokesman William Moss said in phone interview yesterday. Lenovo completed the US$2.91 billion purchase of Motorola Mobility from Google Inc. in October.

Lenovo, the world’s largest maker of personal computers, is focused on an expansion in smartphones amid a global decline in PC demand.

The Beijing-based company’s phone push has been challenged by cross-town rival Xiaomi Corp., which surpassed the company in China and worldwide smartphone market share in the third quarter.

“Motorola’s brand is well liked and respected in many markets, especially being a U.S. brand and long legacy in mobile” said Jessica Kwee, a Singapore-based analyst with researcher Canalys.

Bloomberg News

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total of 71,748 Chinese officials were punished in 2014 for violating the eight point anti-graft rules, the top ant graft body said yesterday.

At a press conference summing up China’s sweeping counter-corruption campaign, deputy secretary of the Communist Party of China’s (CPC) Central Commission for Discipline Inspection (CCDI) Huang Shuxian, said offenders were involved in 53,085 violations and 23,646 had received serious party and government penalties.

Offences include the violation of rules on the construction of government buildings, use of government vehicles, overseas travel financed with public funds, sending or accepting gifts, excessive spending on receptions, extravagant weddings or funerals, and other discipline violations.

China also brought back from overseas more than 500 fugitive corrupt officials and recovered more than 3 billion yuan (US$483 million U.S. dollars) in a campaign targeting those that had fled the country, said Huang, adding that China had inked deals on the subject with United States, Canada and Australia, among others.

Xinhua