Macau Business Daily, Jan 14, 2015

MOP 6.00 Closing editor: Sara Farr Publisher: Paulo A. Azevedo Number 707 Wednesday January 14, 2015 Year III

2015 budget

under the Microscope

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he gov’t is being urged to improve its budget execution. In 2013 and 2014, at least three public departments recorded the lowest execution rate of the year. Whilst managing to secure the highest increase in annual budget and recruitment of personnel. Legislators are now combing through this year’s budget, with explanations requested PAGE

3

Hotel Lisboa restaurant workers demand overtime compensation

HSI - Movers January 13

Name

Page 2

Macau police to aid Indonesian counterparts Page 3

Ford sales nearly double in 2014 Page 4

%Day

China Merchants Hold

3.66

Sun Hung Kai Propert

3.43

China Unicom Hong Ko

3.42

Galaxy Entertainment

2.70

China Mobile Ltd

2.69

China Resources Powe

-0.25

Bank of East Asia Lt

-0.64

Lenovo Group Ltd

-0.93

Tingyi Cayman Island

-1.46

CNOOC Ltd

-1.69

Source: Bloomberg

Gaming revenues may drop 16.5pct in January

I SSN 2226-8294

Page 6 Brought to you by

December’s surprise Last month’s trade data in China turned out better than expected. Exports rose above predictions.

And imports dropped.

Delivering a trade surplus of US$49.6 billion

Caution: downgrade possible They were once the darling of the rating agencies. But things have changed.

Operators’ plummeting gaming revenues have set off alarm bells. While Macau’s reserves are substantial, agencies warn that the consequences may spread to the wider economy. An industry downgrade is possible if the gaming crisis continues

www.macaubusinessdaily.com

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Page 6

Hole in one Dunkin’ Donuts will soon open its first store in Macau. As part of the company’s expansion plans in China. Over the next two decades, as many as 1,400 stores are being planned for Greater China. Local Dunkin’ Donuts will square off against rival coffeehouse Starbucks

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2015-1-14

2015-1-15

2015-1-16

9˚ 15˚

9˚ 16˚

11˚ 18˚

2 | Business Daily

January 14, 2015

Macau

Secretary for Security: All equal before law

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he police earlier this week busted a prostitution ring involving high-ranking hotel executives.

When asked whether he was under a lot of pressure, Secretary for Security Wong Sio Chak said, “everyone is equal before the law” is the principle of police law enforcement. He was speaking to reporters following his inspection of the Fire Services Bureau.

Wong Sio Chak said that the police operation was based on

information and investigation, and followed strategic plans and normal procedures. He denies that the police’s latest ‘big operations’ has anything to do with new officials taking office or being in compliance with the Central Government’s anti-graft campaign.

“Regarding the recent major cases, they were all operated based on the intelligence we have collected before and the investigations that have been carried out all along”, said Mr. Wong.

“It’s just a coincidence that the arrests were made recently and the cases busted. It’s not because of anyone taking the office and having a new style.”

Wong Sio Chak stressed that the police have always put a lot of effort into preventing and tackling criminal acts. The operations in recent major cases are not part of a new trend.

“You can see that security in Macau has improved significantly.

Food prices to remain stable during CNY

Hotel Lisboa restaurant workers demand overtime compensation

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D

uring the lunar New Year, imported food prices are expected to remain stable, without too much of a hike, said Zheng Guanmin, General Manger of the Nam Kwong Kok Fong Distribution and Transport Company, Ltd., as reported by local TV station TDM. The food import company general manager said that residents nowadays are more demanding about food and

companies have to cater to the different needs of residents.

“With the rapid development of the Macau economy and the increasing income of residents, the locals now have higher demands of the quality as well as variety of food”, said Mr. Zheng.

“According to the market, we have been importing more various and diversified food”.

Zheng also said that with food prices on the

For example, the number of crimes that are of a very serious nature has decreased a lot. Actually, there have always been continuing efforts in tackling crime”.

In terms of the security situation, the security head said that organised crime is a trend, with drugs, fraud and terrorism all within the police’s main scope. The police will conduct more research and provisional works to prevent such crimes.

mainland decreasing, some imported food to Macau has experienced a price slump as well although he expects food prices to remain stable as in previous years during Chinese New Year.

“During the Chinese New Year, the demand for highend food products such as dried seafood would increase.

In terms of price, it won’t increase a lot but remain relatively stable”.

early 100 workers from Palacio Lisboa, a restaurant inside Hotel Lisboa, complained to the Labour Affairs Bureau yesterday that they had been overworked in the past yet had not been compensated by the company.

Some 30 of these workers, assisted by legislator José Coutinho, met with the government department yesterday, demanding compensation from their employers for their overtime work, as well as a 13th month salary bonus, according to TDM radio.

In addition, the workers claimed that their days off have also been curtailed by their employer.

“We have a regular four days off every month. If they [the company] arrange your day off on mandatory holidays, you will only have three days off [left] for the month. This is an act of exploitation”, a worker surnamed Chong told reporters, claiming there is no compensation even when

workers work on mandatory holidays.

Meanwhile, the legislator told the Chinese media that three employees of the restaurant, aged 71 years old, 67 years and 65 years dared not retire even if they wanted to. “[They] want to retire but the company does not allow them to do so.

Meanwhile, if they retire themselves, they would not get any [compensation] from the employer. As such, we hope that the company can understand these employees are very old and tired, and that they want to avoid being fired by the company using excuses of breaking the rules”, Mr. Coutinho said.

Business Daily contacted the press office of Hotel Lisboa, who claimed that the restaurant was not under their scope. Meanwhile, according to TDM Chinese TV news, the Labour Affairs Bureau said it had contacted the employer to investigate the case.

K.L.

Business Daily | 3

January 14, 2015

Macau

Legislators urge gov’t to improve budget execution Legislators have urged the government to better execute its 2015 budget after some departments were shown to have a low budget execution rate in the previous two years but still increased their budgets, whilst hiring more people Joanne Kuai

joannekuai@macaubusinessdaily.com

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he Legislative Assembly Public Finance Affairs Monitoring Committee has met with government representatives on budget execution issues. The president of the committee, Mak Soi Kun, said they have learned that the lack of effectiveness in central recruitment and the delay in projects open biddings resulted in the low budget implementation rate.

The Legislative Assembly’s special committee on public finance invited some government departments that had a low budget execution rate in 2013 but still had a relatively higher increase rate in their budget for the year 2015 to explain their rationale.

Representatives from some government departments that had the lowest budget execution rate in 2013 are among the ones that are hiring most public servants in 2015, namely the Science Technology Development Fund, the Cultural Affairs Bureau and Environmental Protection Bureau, all present at the meeting.

According to the 2015 budget, in terms of personnel changes the government expects to recruit around 2,600 public servants and see another 360 leave, which makes the total number of people working in public departments and organisations some 35,015 until the end of this year, a 6.8 per cent increase compared to that of 2014.

Three government departments expect to see most newcomers are the Health Bureau, the Public Security Forces Affairs Bureau and the Cultural Affairs Bureau; the Cultural Bureau plans to recruit 184 new staff and sees the highest increase rate in the number of staff at 33.4 per cent.

According to the supplement of the 2015 budget and information form of the Financial Services Bureau, as at the end of August 2014 the budget execution rate of the Science and Technology Fund was 19 per cent, while the Marine and Water Bureau’ s rate stood at 32.7 per cent.

The 2015 Budget estimates that the revised total revenue of the government in the coming year will reach some MOP155 billion, up just 0.7 per cent year-on-year, while the revised budgeted total expenditure is some MOP83.7 billion, a year-on-year increase of 7.8 per cent.

In addition, the general integrated budget of public expenditure for 2015 (before revision) had increased MOP13.1 billion compared to the beginning of 2014, reaching a total of some MOP93.1 billion. Legislators that approved the budget had explained before that the growth was due to the suggestion of increasing the salaries of public servants in the budget.

Macau police to aid Indonesian counterparts

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ndonesian authorities have sought help from Macau authorities in the country’s anti-corruption campaign, regarding which the SAR agreed to collaborate.

Macau police told the Indonesian National Police that they are ready to assist their counterparts in pursuing corruption suspects who have fled to the SAR, the Honorary Liaison Secretary of the International Police Association of Macau (IPA), Wilson Wong, told Indonesian news agency Antara.

“Of course, we will offer support to the Indonesian Government regarding this matter. But we will

need more detailed information on the Indonesian fugitives”, Mr. Wong remarked following a meeting with Indonesian Attorney General Muhammad Prasetyo.

Besides discussing corruptionrelated issues, during the meeting the Macau and Indonesian representatives also broached the subject of the protection of Indonesian workers in the Special Administrative Region.

According to the results of the 2011 Population Census, there were 6,269 Indonesians living in Macau, accounting for 1.1 per cent of the total population of the SAR at that time.

J.S.F.

Legislator Mak Soi Kun said that government officials from the previous term had promised to hand in the draft on budget law by the end of last year but did not keep their promise.

He indicated that the newlyinaugurated Secretary for Economy and Finance, Lionel Leong Vai Tac, who was also present at the meeting said that he has taken up the relevant works and is following up on the matter, although no timetable was given to the legislators.

Mak Soi Kun added that the Legislative Assembly’s special committee on public finance’s main focus of this year’s tasks include urging the government to finish the budget law as well as the procurement law revision and supervising the government to make better use of fiscal reserves for investment.

Ho Cheong Kei appointed GIT interim co-ordinator

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o Cheong Kei is going to assume the position as interim Co-ordinator of the Transportation Infrastructure Office (GIT), according to Radio Macau.

Mr. Ho will replace Lei Chan Tong, who was in that position since 2007, when he was first appointed by the former Secretary for Transport and Public Works Lau Si Io. Mr. Ho will now head the office accountable for the Light Rapid Transit (LRT) system, a project that has been delayed and run substantially over budget.

4 | Business Daily

January 14, 2015

Macau

Sasa retail sales drop continued in Q3 Less demand for high-priced products by mainland tourists amid the anti-graft storm is still affecting the performance of cosmetics retailer Sasa Kam Leong

kamleong@macaubusinessdaily.com

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osmetics retailer Sasa International Limited continued to see sales head south in its Macau and Hong Kong markets during the third quarter of its fiscal year ended December 31.

The same-store sales of the company dropped 2.7 per cent year-on-year despite increasing transactions.

The Hong-Kong listed company informed the Hong Kong Stock Exchange on Monday that the decreasing demand by mainland Chinese tourists for expensive products had driven its retail sales in the two Special Administrative Regions down by 1.1 per cent year-on-year, at HK$ 2.03 billion during the quarter.

According to the filing of the Group, although the total number of transactions had increased by 5.6 per cent year-on-year, with Mainland Chinese sales jumping 20 per cent year-on-year during the three months, the average amount per transaction had dropped by 6.4 per cent year-on-year, reaching only HK$403.

‘Mainland Chinese tourists demand less highpriced products, resulting in a decrease in the average sales per transaction attributable to them. In addition, sales of gifts during the traditional gifting season of December were affected by the Chinese Government’s

Mainlanders less confident about bankcard consumption A survey by UnionPay released last Friday shows that Mainland Chinese confidence in bankcard consumption is at a three-year low.

The survey, titled Bankcard Consumer Confidence Index, reported that mainland Chinese confidence in consumption was at 82.56 per cent, a decrease of 2.97 per cent year-on-year.

The Index indicated that Mainland consumers’ spending on hotels, restaurants, jewellery and bags had fallen for several months from September 2014, while transactions in malls, entertainment venues and tourist spots also registered declines.

The drop in confidence of bankcard consumption was due to the slowdown of the economy in China and the adjustment of the property market in the country, UnionPay said in its report.

ongoing anti-corruption campaign. This resulted in a significant decline in the sales of premium products and holiday gift sets, and weakened the Group’s sales performance in December’, the company wrote.

The declines in retail sales had also led the turnover of the Group, including its wholesale business, to post only HK$2.5 billion, a 0.5 per cent drop year-on-year during the third quarter.

Meanwhile, the turnover of the company from other markets, such as Mainland China, Singapore, Malaysia, Taiwan and its online stores

recorded a drop of 1.2 per cent year-on-year.

Nevertheless, for the first nine months of its fiscal year, Sasa’s retail sales and turnover in Macau and Hong Kong retained positive growth of 5.2 per cent and 4.6 per cent year-on-year, amounting HK$5.44 billion and HK$6.75 billion, respectively.

Believing the soft market will linger, the company said it is cautious about sales outlook in the final quarter of the fiscal year.

In fact, during the second quarter, the company saw decreases in its profits of 4.9 per cent year-on-year.

Ford sales nearly double in 2014

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ord Motor Company saw its sales in 2014 break its record for the Macau and Hong Kong markets, reaching 1,018 units, almost double that of 2013.

The record-breaking sales, according to the company, are driven by its sporty Fiesta model, which accounted for 305 units of total sales.

Meanwhile, the Transit commercial van also registered a 25 per cent year-on-year increase in sales, moving 279 units.

Other major models that the company sold last year include the Kuga SUV and Ranger, which posted sales of 196 units and 159 units, respectively.

“Our widest-ever range of Ford vehicles in Hong Kong and Macau

is helping introduce our brand to even more customer segments and helping attract so many new-to-Ford customers”, said David Westerman, managing director, Asia Pacific Emerging Markets, Ford Motor Company.

Meanwhile, the company said it has been continuing expanding its network for sales and service to support its growing customer base with its partners in the two Special Administrative Regions.

In Macau, Ford and Winson

Motors, a partner of the company in the city, opened an upgraded dealership facility in an automotive district last April, offering a one-stop shop for local customers.

In addition, the motor company expanded its network in Hong Kong with partner Future Motors by opening a new service centre named Quick Lane Tyre and Auto Centre in Hong Kong.

“Together with our world-class partner, Future Motors, we are committed to bringing even more global Ford vehicles to Hong Kong and providing customers with the best ownership experience and highest-quality after sales service”, Mr Westerman said.

K.L.

Business Daily | 5

January 14, 2015

Macau

Dunkin’ Donuts enters Macau as part of China expansion strategy The American donuts company is expanding in China and will start to operate in Macau. The Special Administrative Region will host a replica of the ‘fight’ between the two main rivals that will have as its main battlefield mainland China João Santos Filipe

Jsfilipe@macaubusinessdaily.com

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he global donuts and coffeehouse company Dunkin’ Donuts will enter the Macau market as part of its strategy to expand operations in China. The American-based company is planning to open and operate more than 1,400 over the next twenty years in the country, while in the Macau SAR it is expected to present extra competition for ‘rival’ Starbucks, which already has five coffeehouses in Macau.

“Dunkin’ Donuts has signed the largest development agreement in the company’s history with the goal of expanding in China”, the company announced last week. “Through this franchise development agreement, the largest in our history, we believe we can significantly expand and accelerate Dunkin’ Donuts presence in China”, Nigel Travis, chairman and chief executive officer of Dunkin’ Brands explained.

In order to sustain the expansion move Dunkin’ Donuts reached a longterm franchise agreement with Golden Cup Pte. The latter is the result of a joint venture between the Philippine multinational chain of fast food restaurants Jollibee Worldwide Pte and Jasmine Asset Holdings Ltd, a subsidiary of the Hong Kong and Singaporean based firm RRJ Capital Master Fund II. The expansion has been in the works for some time now, with the American company starting the registration

process of the trademark in Macau in April last year.

“We are delighted to enter into this relationship with Jollibee and RRJ, a group with a proven track record of success in the quick service restaurant industry in China and a deep knowledge of the consumer”, said Mr. Travis.

Dunkin’s Donuts already has 16 restaurants in Shanghai, Fushun, Xi’an, Xianyang and Shenyang.

Now the time has come for the company to expand to places such as Beijing, Hong Kong, Guangdong and Tianjin.

“We are excited about the prospect of bringing Dunkin’ Donuts to China.

Dunkin’ Donuts is a leading global brand in baked goods and coffee, and the China market offers a tremendous opportunity as its consumer base continues to grow in number and spending power”,

said Tony Tan Caktiong, Chairman of Jollibee Foods Corporation.

“We are pleased to partner with Jollibee to expand Dunkin’ Donuts’ presence in key regions across China in the years ahead”, said Charles Ong, Co-CEO, RRJ. “There is a strong demand in China for Dunkin’ Donuts’ high-quality foods and beverages, served in a welcoming restaurant environment with fast and

friendly service, all at a great value to consumers”, he added.

Dunkin’ Donuts and Starbucks competition will not be limited to Macau. The Seattle-based multinational is also increasing the number of its shops in Mainland China.

Starbucks is expected to open more than 1,700 outlets in the country until 2019, which will result in a total of 3,400 eating places.

percentage points yearon-year to 0.6 per cent and 0.7 per cent, respectively, whilst construction fell 0.4 percentage points yearon-year to 4.4 per cent [in 2013] due to the completion of a major part of the new campus of the University of Macau’, the survey says.

In addition, the growth in gross value added of all economic activities outpaced growth in gross output, bringing the ratio of gross value added to gross output up to 46 per cent in 2013, up from 44.5 per cent in 2012.

‘Owing to a slower increase in compensation of employees (+14.9 per cent) the ratio of compensation of employees to gross value added shrank by 1.8 percentage points to 29.7per cent’, according to the survey.

Regarding changes in the industrial structure, gross value added of the secondary sector grew by 10.4 per cent year-onyear, lower than the rate of economic growth, bringing its relative importance to GDP down 0.6 percentage points to 5.7 per cent.

Tertiary sector growing in Macau Joanne Kuai

joannekuai@macaubusinessdaily.com

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acau’s tertiary sector accounted for 94.3 per cent of the city’s overall 2013 GDP (Gross Domestic Product) over that of the previous year, with the total gross added value reaching MOP251,242, up 22.5 per cent on 2012.

The latest industrial structure survey conducted by the Statistics and Census Service (DSEC) reveals that the growth of Macau’s tertiary education sector has outgrown that of the secondary education sector,

which recorded a slight decrease on the year.

‘In 2013, the relative importance of the tertiary sector increased while that of the secondary sector decreased further’, the survey reads, adding that ‘this was not due to the shrinkage of the secondary sector but to the robust growth in gross value added by the tertiary sector, far higher than the rise in the secondary sector, boosted by the rapid development of the gaming industry’.

In addition, the structure

of economic activities shows that gaming took up 46.1 per cent, making it the city’s biggest sector, followed by public administration, education and health services combined at 10.9 per cent, real estate at 8.7 per cent, retail at 7.6 per cent and banking, insurance and pension funding combined accounting for 6.2 per cent of the overall economy.

“In the secondary sector, the relative importance of both manufacturing and electricity, gas and water supply dropped by 0.1

6 | Business Daily

January 14, 2015

Macau Gaming revenues may drop 16.5pct in January Investors estimate a 16.5 per cent decline in gaming revenues this month, still the best month for the industry since September. SJM is expected to suffer the biggest blow Macau Gaming Revenue Growth (year-on-year)

Moody’s warns of possible rating downgrade The second biggest rating agency says the current casino revenue plunge in Macau could affect the city and some gaming operators’ credit notations.

In May, Moody’s assured the industry that a downgrade was very unlikely but now the tide has turned Luís Gonçalves

luis.goncalves@macaubusinessdaily.com

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n May, when it upgraded Macau to its third highest rating level above China and Japan, Moody’s said its main concern was the slowdown of the mainland economy, never referring to a possible gaming crisis here. The remarks were made despite signs that the current record plunge of revenues, profits and stocks of casinos here was already germinating under investors’ noses. That month, gaming revenue growth was already slowing for three straight months, with June marking the first year-on-year decline in years.

A downgrade ‘was very unlikely’, wrote the company at the time.

Now, Moody’s tone has changed.

This month, the world‘s second biggest credit agency sent several warnings to Macau officials and gaming operators.

The agency yesterday said that the decline in gaming revenues here was credit negative for the government.

Which means a downgrade in the upcoming three months is likely. With seven straight months of declining casino revenues - with a record 30 per cent drop in December, and a recovery only expected in summer - Moody’s analysts are getting less optimistic about the secular success story of Macau.

If, in May, Moody’s underlined the excessive dependency on China as the main risk for a downgrade, now it’s the casinos’ turn. The gaming industry represents half of Macau’s economy and 80 per cent of its taxes compared to 50 per cent in 2002. Since that year, Moody’s has upgraded Macau four times, giving the territory a Aa2 grade, the third highest, with the city being considered a ‘high quality and subject to very low credit risk’ investment, according to the company’s website. Macau sits one notch behind Hong Kong

and above China and Japan, the two biggest economic powerhouses in Asia.

Safety net For now, what keeps Macau high on credit agencies’ rankings is its safety net. The Government has in its coffers MOP393 billion in ‘savings’, around 95 per cent of the territory’s GDP and more money than 100 nations around the world.

This amount of capital protects Macau. Moody’s said: ‘If there were to be an unforeseen shock that caused revenues to fall drastically, the government would be able to finance itself without relying on borrowing for some time to come due to the size of its assets’.

But if the Government has its own safety net gaming operators don’t.

Last week, Moody’s warned Melco Crown Entertainment that the slump in gaming revenues in Macau will have negative implications on its ratings. ‘Declining gaming revenue will weaken the companies’ revenue and profit generation, which in turn diminishes their debt-servicing capacity’, Moody’s wrote.

Despite the warning, the agency has maintained its Ba3 rating for the operator owned by Australian mogul James Packer and Lawrence Ho. If casino revenues keep declining or the recovery expected for this year fails to materialise, Melco Crown will face a new wave of rating downgrades.

Melco Crown unveiled two days ago its new mega project here called Studio City. The US$3.2 billion integrated resort will provide 1,600 rooms, 500 gaming tables, a Batman Gotham City park and the highest ferris wheel in Asia.

Growth (%)

Midpoint (%)

Sterne Agee

(-15 to -19)

-17

Wells Fargo

(-16 to -19)

-17.5

Daiwa

(-14 to -20)

-17

HSBC

(-13 to -16)

-14.5

Average

I

-16.5

t’s still a huge drop but at least it is the best performance turned in by the gaming industry in the last three months. Gaming revenues in Macau will likely decline 16.5 per cent this month, according to a poll of four investment houses conducted

by Business Daily.

With investor checks only going as far as January 11, the estimations for the full month still have a considerable margin of error – and in previous months, final figures have fallen on the lower side of interval expectations.

If market predictions are correct and casino revenues drop by 16.5 per cent in January on a year-on-year basis, Macau casinos will have its best month since September. Gaming revenues went down at an average 25 per cent in the last quarter of 2014.

Of all four investment houses, the size of the decrease in revenues this month ranges from 13 per cent from HSBC to 20 per cent from Daiwa.

The most pessimistic is Wells Fargo, with a midpoint 18 per cent decline (see table).

Wells Fargo said in a note to clients yesterday that daily revenues coming

from revenues during the second week of January was MOP743 million, 22 per cent behind January’s first week (MOP950 million) and 1 per cent down from December’s daily average. December was the worst month for the industry here with revenues plunging 30.4 per cent.

The US-based daily revenues need to stay in a MOP715-755 million band for the rest of the month. Sterne Agee says revenues from casinos here totalled MOP8.7 billion in the first 11 days of January, a drop of 13 per cent from a year ago.

Macau gaming operators recovered some ground yesterday in the stock market, with shares improving around 1.5 per cent (except Melco Crown, which lost 1.2 per cent). This, in a week that saw the arrest of more than 100 people in Macau related to a prostitution ring, including Alan Ho, nephew of casino tycoon Stanley, and other executives. In addition, Studio City, one of the ten big mega casinos set to open up to 2017, presented itself, changing even more the gaming landscape of Macau.

L.G.

Government of the Macao Special Administrative Region MACAU GOVERNMENT TOURIST OFFICE NOTICE The Macau Government Tourist Office hereby announces an invitation to tender for the “Macau Tourism Industry Development Master Plan Service Provision”, in accordance with the approval of the Secretary for Social Affairs and Culture dated 5th of December of 2014.

From the date of publication of the present notice, interested bidders may visit the Macau Government Tourist Office Reception Counter, located in Alameda Dr. Carlos d’ Assumpção, no. 335-341, “Hotline” Building, 12th floor, Macau, to view the Tender Program and Terms and Conditions of the Tender within the working hours, and pay MOP 500.00 (five hundred patacas) to obtain the copies.

For any further enquiries, please visit the Macau Government Tourist Office website (http://industry.macautourism. gov.mo) to submit your enquiries starting from the day of publication of the present notice until 10 days before the tender submission deadline. All replies will be posted on the same website.

The maximum price limit for the tender is MOP 20,000,000.00 (twenty million patacas).

Criteria for tender evaluation and their respective percentages are as follow: - Appreciation of the planning task (35%); - Planning methods and programme of work of the phases (20%); - Price (15%); - Experience (30%).

Bidders must submit the tender written in Chinese, Portuguese or English, within the working hours by 17:45 hours on 2nd of March of 2015, to the Macau Government Tourist Office Reception Counter, located in Alameda Dr. Carlos d’Assumpção, no. 335-341, “Hotline” Building, 12th floor in Macau and shall submit the provisional guarantee fee of MOP 400,000.00 (four hundred thousand patacas). The provisional guarantee fee shall be paid by: 1) cash deposit to the account of “Tourism Fund” at Banco Nacional Ultramarino of Macau; 2) bank guarantee; 3) cash, cashier’s order or mark good cheque deposit directly to the Macau Government Tourist Office, cashier’s order or mark good cheque should be made payable to “Tourism Fund”; 4) wire transfer directly to the account of Tourism Fund, at Banco Nacional Ultramarino of Macau (account no. 8003911119).

The tender opening session will be held in the Auditorium of the Macau Government Tourist Office, located in Alameda Dr. Carlos d’Assumpção, no. 335-341, “Hotline” Building, 14th floor in Macau, at 10:00 hours on 3rd of March of 2015.

In case of the services of the Macau Government Tourist Office are suspended owing to typhoon or force majeure, the scheduled closing date and time for submission of tender, as well as the date and time for opening the tender shall be extended to the next working day that follows immediately.

According to the article n.º 27 of Decree-Law n.º 63/85/M, of 6th July, the legal representatives of the Bidder should be present during the tender opening session for any complaints and/or to explain any doubts regarding their respective tender.

Macau Government Tourist Office, on 18th of December of 2014.

Director Maria Helena de Senna Fernandes

Business Daily | 7

January 14, 2015

Gaming

Hedge funds push for Caesars bankruptcy, seek examiner

A

group of hedge fund creditors of Caesars Entertainment Corp sought to force its main operating unit into bankruptcy and to appoint an independent examiner to investigate what they allege was the plundering of the company.

The move on Monday follows last week’s announcement that the largest U.S. casino operator had the backing of senior noteholders for its plan to cut the debt of the operating unit, known as CEOC, to US$8.6 billion from US$18.4 billion.

Under that plan, the hedge funds that filed the involuntary bankruptcy would be paid around 12 percent of what they are owed. They hold claims of US$41.1 million, according to court papers.

The funds alleged that insiders of Caesars “plundered” billions of dollars in choice assets from the operating unit, including Planet Hollywood and The Quad in Las Vegas. They asked the Delaware Bankruptcy Court to appoint an examiner to investigate deals involving the operating company

dating back to 2010.

“The action is designed to injure CEOC while these junior creditors attempt to boost their standing,” Caesars said in a statement. The company has said the asset moves were aimed at freeing the operating unit of capital-intensive properties.

The involuntary bankruptcy petition was filed by affiliates of Appaloosa Management, Oaktree Capital Management and Tennenbaum Capital Partners, which are large investors in financially

distressed companies.

“They want to throw sand in the gears and slow down a prenegotiated plan,” said Jonathan Lipson, a professor at the Temple University School of Law. Certain first lien bank lenders of CEOC said late on Monday they have agreed not to support, consent to or approve the proposed restructuring deal unless the transaction is approved by them, making the bankruptcy process more complex.

The group, holding more than 50 percent of the aggregate principal amount of first lien bank debt, is advised by Stroock & Stroock & Lavan LLP and Rothschild Inc, the statement said. It didn’t name the lenders involved in the group.

Examiners are often frowned upon by the lawyers who restructure companies because their investigations can derail a bankruptcy. Caesars creditors seem to be hoping to repeat the Chapter 11 case of Dynegy, a power plant operator.

Dynegy Holdings filed for bankruptcy in 2011 and junior creditors alleged assets had been moved to the parent company beyond their reach. An examiner found those moves were fraudulent and eventually the transferred assets were brought into the bankruptcy for the benefit of the creditors.

A company can contest an involuntary bankruptcy or convert it to a voluntary Chapter 11. The operating unit has said it will file for bankruptcy by January 20.

The casino operator has been weighed down with debt from a US$30 billion leveraged buyout in 2008 by TPG Capital and Apollo Global Management.

Reuters

8 | Business Daily

January 14, 2015

Greater China

December’s trade more robust than expected China’s total trade value increased by 3.4 percent from a year earlier

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hina’s December trade data beat expectations, as demand from a stronger U.S. economy helped offset weakness in Europe and Japan while Chinese bargainshopping in commodities markets put a floor under sliding imports.

But while exports grew faster and imports shrank less than forecast, trade officials warned of more headwinds to come in the first quarter.

Policymakers are trying to steer the world’s second-largest economy through a soft patch as it confronts weak demand and a slowdown in its property market.

Exports in December rose 9.7 percent from a year earlier in dollardenominated terms, data from the General Administration of Customs showed yesterday, handily beating a Reuters poll by nearly three full percentage points.

Imports dropped by only 2.4 percent, where analysts’ consensus was for a far steeper decline of 7.4 percent.

Officials were cautious when discussing how much positive momentum trade will deliver.

“We think the negative factors that crimped trade performance in 2014 will be sustained for a period of time,” said Zheng Yuesheng, a spokesman for China’s customs bureau.

Zheng was referring to factors

such as a weak recovery in the world economy, falling foreign direct investment in Chinese manufacturing and rising domestic production costs.

Commodities windfall The smaller fall in imports than in November was largely due to a resurgence in commodity purchases, and Zheng noted sliding prices had been a net benefit for the country by reducing import costs. China posted

KEY POINTS Dec exports +9.7 pct y/y vs forecast +6.8 pct Dec imports -2.4 pct y/y vs forecast -7.4 pct Dec trade surplus $49.6 bln, smaller than Nov 2014 total trade value rose 3.4 pct, short of target

China faces biggest fiscal challenge since ‘81 Kevin Yao

a trade surplus of US$49.6 billion for the month, smaller than November’s record US$54.5 billion.

China imported 30.37 million tonnes of crude oil in December, or 7.15 million barrels per day (bpd), topping the 7 million bpd mark for the first time, customs data showed, as the world’s largest oil importer took advantage of low global prices to fill its strategic reserves.

It also purchased a record high volume of iron ore.

However, falling commodity prices have proven to be a net negative for Chinese industrial profits, and analysts warned that investors should not read too much into the recovery in imports.

“The jump in commodities imports was a big boost to overall trade figures (but) is not a reflection of underlying demand,” said Nelson Wang, an energy analyst at CLSA Research.

During 2014, China’s total trade value increased by 3.4 percent from a year earlier, short of the official target of 7.5 percent.

Yesterday’s “data means China’s export sector remains one of the world’s best performing,” wrote Julian Evans-Pritchard, China economist at Capital Economics, in a research note.

“Although the global economy remains fragile, we nonetheless expect growth in many of China’s key export

Land sales, which account for over a third of local government revenues, may fall 20 percent, the report said

OEMs losing the

Technology firms are exp labour advantages disapp up with the latest techno

A

C

hina’s fiscal revenue growth is set to hit a three-decade low in 2015, Deutsche Bank said in a report, complicating policymakers’ efforts to rein in runaway local government debt without crippling the broader economy.

Total fiscal revenues will likely grow just 1 percent in 2015 year-on-year, the slowest pace since 1981, Deutsche Bank predicted, and forecast local government revenues to fall 2 percent - the first contraction since 1994.

Land sales, which account for over a third of local government revenues, may fall 20 percent, the report said.

Local governments, mostly barred from directly taking out loans or issuing bonds, have managed to rack up some US$3 trillion in debt via opaque local government financing vehicles (LGFVs). Much of the funds have been invested in questionable infrastructure and real estate projects.

With a slowing economy - in particular sliding land prices - hitting revenues, Deutsche Bank economists Zhiwei Zhang and Andrey Shi see a crisis looming.

“China will likely face the worst fiscal challenge since 1981,” they wrote in a research report published.

“We believe this is the most important risk to the economy and one that is not well recognized in the market.”

markets, such as the U.S., to stage a slight recovery this year, which should provide support to Chinese exports.”

But he added that “those anticipating a stimulus driven pick-up in investment or a marked turnaround in the property sector will be disappointed.”

China, due to release GDP data

Much of the funds provided by government have been invested in questionable infrastructure and real estate projects

The government needs to find ways for local governments to raise much needed funds to bankroll key social services while maintaining discipline on spending - a difficult economic and political balancing act.

China’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.

Yet borrowing rates remain relatively elevated despite previous rounds of cautious monetary easing.

“The economy faces relatively big downward pressures and local resistance (to reforms) is strong,”

said an influential economist who was involved in revising the budget law, speaking on condition of anonymity.

“Local officials have been complaining about their debt burdens already and they will cry louder if their financing powers are stripped.”

Analysts fear slower economic growth, and reduced options for refinancing following crackdowns on off-balance sheet lending, could push stretched local governments to the wall.

Such a development risks squeezing China’s economy further, as rising bad loans make banks less willing to lend.

Reuters

t a time when many Chinese workers are anticipating their year-end job bonuses, Wei Tao, a migrant worker in Suzhou, was given notice he lost his job.

Last month, the United Win Technology, one of the biggest original equipment manufacturer (OEM) in Suzhou, announced a shutdown amid a severe financial crisis, leaving more than 2,000 workers like Wei with nothing to do.

Founded in Suzhou in 1999, the company was one of the major suppliers for Apple. In its heyday, the company boasted more than 20,000 employees.

The shutdown, however, is only a prelude. On Sunday, the China Times reported that Honghui Technology in Suzhou, which was a supplier for Nokia and had more than 10,000 employees at its peak, had recently laid off a large number of its workers and halted parts of production due to lacklustre demand.

In the industrial park of Suzhou, an imposing building stands in awkward contrast to the scattered trash in front of it. This is the former office of United Win Technology, where hundreds of workers staged a strike over compensation after the company announced shutdown on December 5.

Similar situations can be found in Xukou Town, where Honghui Technology is located. Just a few scattered workers were in the usually

Business Daily | 9

January 14, 2015

Greater China High employment for leading universities More than 90 percent of graduates from 75 universities overseen by the Ministry of Education (MOE) got jobs in 2014, the ministry said recently.

Seventy-four universities of the 75 had an employment rate of above 90 percent last year, with only one’s employment rate standing at 88.62 percent, according to the ministry statistics. Other than the 75 universities, most of which are leading ones in the country, the majority of China’s universities are run by provincial governments. Among the 75, the China Pharmaceutical University had the highest employment rate of 99.59 percent.

Huawei says 2014 revenue 20 pct up

for the fourth quarter next week, has been long awaiting a turnaround in imports, which would show a recovery in domestic demand.

Economists believe full-year growth may undershoot the government’s 7.5 percent target, the weakest expansion in 24 years.

Stock markets posted little reaction

to the data. Spot yuan ticked up slightly, but demand for the currency has flagged in the face of an ascendant dollar.

“The continuous appreciation of the U.S dollar since October had a smaller-than-expected impact on China’s exports; the depreciation of the yuan since late November also contributed to it,” said Nie Wen,

technology cutthroat game

periencing an industry slump, as the country’s pear and companies in the sector fail to keep ology

economist at Hwabao Trust in Shanghai, adding that he expected China’s 2015 exports to be depressed by offshore currency movements.

“Monetary authorities are very likely to engineer a periodic depreciation of the yuan if the next export figure is sluggish.”

Reuters

Zhang Erzhen, director of the Research Centre of International Economy under Nanjing University, said a slow in the sector is an inevitable trend.

With the rising labour costs along China’s eastern seaboard, more OEMs could face crisis.

Liang Zhenpeng, an expert on computer, communication and consumer electronics, said some OEMs were driven out of their business as they fail to upgrade technology, and Honghui is a good example.

Zhang Erzhen suggested Chinese OEMs either divert to the middle and western areas to decrease costs or start building their own product brands instead of simply making components for others.

Xinhua

bustling area.

According to a security of Honghui, many workers have been dismissed, though some machines in the factory are still operating.

The company used to make keypads of mobile phones, but the popularity of touch-screen cellular has given it a big blow, said a local town official.

Zhang Bing, a former recruit of Honghui, said the reduction in production does not take him by surprise.

“Now that Nokia cell phone sales are on the wane, it is no surprise that Honghui would halt parts of its production,” Zhang said, adding that the company has seen its output

dwindle since mid-2014.

Hundreds of kilometres away, Guangdong’s Dongguan City, dubbed the “Factory of the World”, has seen scores of big OEMs closed down by October 2014, according to official statistics. More are expected to go out of business by this year’s Spring Festival, China’s lunar New Year, as the eastern area typically faces a severe labour shortage around this time.

In the latest case, the Dongguan Zhaoxin Communications, an OEM specializing making mobile phone parts, had a capital chain rupture recently, putting the company in huge debt. Its president Gao Min committed suicide last week as a result.

Huawei Technologies Co Ltd’s 2014 revenue was likely 287 billion yuan (US$46.29 billion) to 289 billion yuan, an increase of roughly 20 percent from a year earlier, the company said yesterday in its unaudited results.

Operating profit last year likely reached 33.9 billion yuan to 34.3 billion yuan, up 17 percent from 2013, Huawei said.

Operating profit margin was likely flat at 12 percent. China’s leading communication technology company has been challenging Sweden’s Ericsson for the top spot in the global telecommunications equipment market while undergoing a multi-year transition to expand into consumer devices and enterprise computing.

Solid waste smuggling cases uncovered

China’s customs have uncovered 174 solid waste smuggling cases since 2012, involving 385,900 tonnes of illegally imported garbage, such as electronics and discarded clothes, customs authorities revealed yesterday.

Some 712 suspects were captured in the smuggling cases, according to Zheng Yuesheng, spokesman for the General Administration of Customs.

Chinese law on the control of solid waste bans imports of solid waste that cannot be used as raw materials or that pose a serious risk to the environment.

However some dealers have smuggled or worked with overseas organizations to bring foreign garbage.

Most of China’s OEMs still stay at the bottom of Beijing wholesale the industry chain with market closes very few benefits, and to ease traffic many of them rely on a A wholesale market in downtown Beijing has closed and is expected to move to sole client, which makes neighbouring Hebei Province in a move to reduce traffic congestion and population them quite vulnerable to density in the capital. Tianhaocheng Market, which closed on Monday, financial risks became the first market in the famous Zhang Erzhen director of the Research Centre of International Economy Nanjing University

clothing wholesale zone near Beijing Zoo to shut its doors. Other markets, such as Julong and Zhonghe in the zone, are also expected to move. Stall tenants are encouraged to move their businesses to Langfang City, Hebei Province, but will not be organized to do so, said an official in charge of the closure.

10 | Business Daily

January 14, 2015

Greater China

Cheaper prices drive commodity imports to record highs China’s slowing economic growth rates have sent shockwaves throughout global markets

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hina imported record levels of crude oil, iron ore and soybeans in December as the country took advantage of cheap global prices to boost shipments, despite faltering demand growth at home.

The surge in shipments helped improve China’s trade figures, according to data published yesterday by the country’s customs authority.

Total imports still dipped 2.4 percent, down for a second month in succession, but they beat a decline forecast of 7.4 percent.

“The surge in imports was

largely due to the sharp drop in prices, which encouraged opportunistic restocking,” said Nelson Wang, an energy analyst at CLSA Research.

Crude oil surged to a record 7.15 million barrels per day in December, confirming earlier predictions by Thomson Reuters Oil Research and Forecasts that China was seizing on tumbling global prices to build up its strategic reserves.

While copper imports were flat in December compared to the previous month, deliveries for the whole of the year rose 7.4 percent to a record high,

KEY POINTS Crude oil, iron ore and soybean shipments hit new monthly record Overall imports still down for second month in a row Dec coal shipments highest since Jan but annual volume down

with state stockpilers taking advantage of cheaper prices.

Steel mills also replenished their iron ore stockpiles in the final month of the year, driving imports to a record 86.85 million tonnes, after prices nearly halved over 2014 due to a supply glut.

Cheaper prices also drove coal imports to their highest level since January but it was not enough to prevent the first annual decline in at least a decade, following a series of measures from the government aimed at curbing oversupply.

China is the world’s

biggest buyer of iron ore, coal, copper and soy, and is the world’s second-largest crude importer after the United States, and the country’s slowing economic growth rates have sent shockwaves throughout global markets.

The role of the state has become decisive, with crude and copper shipments both rising as a result of efforts to fill strategic stockpiles and coal shipments suffering because of government policies to curb oversupply.

Though underlying demand in China is still relatively weak, low prices could keep import rates at a relatively high level into the new year, especially for crude oil, although shipments could be disrupted by the Chinese new year holiday in mid-February.

“For oil, the record imports was clearly driven by low prices and shipments will continue to rise because current prices give the government a rare opportunity to build its strategic petroleum reserves,” said CLSA’s Wang.

Soybeans could also remain at a relatively high level ahead of the Chinese New Year, with buyers awaiting shipments booked three months ago, when prices were low and crushing margins relatively strong.

There could also be an upturn in domestic demand for copper in January, with banks likely to give more credit at the start of the year, analysts said.

Despite flat steel demand, iron ore shipments could also remain high, with cheaper foreign supplies likely to squeeze out more high-cost local producers.

Reuters

Balance of payment errors may mask fund outflows Cash outflows may tighten funding conditions at a time when the government is attempting to lower borrowing costs Justina Lee

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rowing error items in China’s balance of payments may reflect a pickup in hidden cash transfers from the nation and the central bank will likely favour a stable yuan to prevent outflows quickening, Goldman Sachs Group Inc. said.

Net errors and omissions, an accounting fix used to plug the gap when official records of cross-border flows don’t balance, was negative by more than US$300 billion since 2010, Goldman Sachs economists MK Tang and Maggie Wei wrote in a note yesterday. That included a record US$63 billion in the third quarter of 2014, a year in which yuan sentiment soured and President Xi Jinping’s anti-corruption drive widened.

“Since such outflows may be harder to contain with regulations, a continuation of their recent acceleration could start posing tangible financial stability concerns,” Tang and Wei wrote in the note.

President Xi’s campaign to rein in corruption has ensnared more

than 480 officials spanning all of China’s provinces and largest cities.

Cash outflows may tighten funding conditions at a time when the government is attempting to lower borrowing costs to boost an economy estimated to have grown at the slowest pace since 1990 last year.

One-year interest-rate swaps, the fixed payment to receive the floating seven-day repurchase rate, have climbed 22 basis points to 3.35 percent since the People’s Bank of China cut interest rates in November for the first time since 2012. The yield on the five-year government bond has risen four basis points, or 0.04 percentage point, to 3.52 percent.

Stable rate As falling confidence in the yuan will exacerbate any hidden outflows, the PBOC may aim to maintain a stable exchange rate, according to the Goldman Sachs economists. The U.S. lender expects the monetary authority to weaken its daily fixing

People’s Bank of China headquarters in Beijing

for the yuan only slightly to 6.16 a dollar in three months and to 6.20 in a year, compared with 6.1195 yesterday.

It is not in the PBOC’s interest to allow the yuan to decline because that could lead to capital outflows

and increase financial risk, Australia & New Zealand Banking Group Ltd. economists Liu Li-Gang and Zhou Hao said in a note yesterday. The currency is unlikely to drop sharply in 2015, they added.

Bloomberg News

Business Daily | 11

January 14, 2015

Asia KEY POINTS Oil price collapse pushing down consumer prices

Japan to miss inflation target

BOJ faces difficult choices on price target Econ Min Amari says cheap oil has some economic benefits

But current account surplus keeps on black ink

US$3.63 billion current account surplus in November

Economics Minister Akira Amari (pictured) said that he expects overall consumer prices to rise 1.4 percent in fiscal 2015

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apan’s economics minister said yesterday the Bank of Japan is unlikely to meet its inflation target next fiscal year because the collapse in oil prices puts downward pressure on consumer prices.

Economics Minister Akira Amari spoke one day after the government said it expects overall consumer prices to rise 1.4 percent in fiscal 2015, well below the BOJ’s target of 2 percent inflation.

Amari’s comments are the clearest sign yet that the BOJ will either have to expand monetary policy further to meet its price target on schedule, or possibly allow more time for oil prices to rise.

“Our forecasts show it will be difficult for the BOJ to achieve its price target due to falling oil prices,” Amari told reporters.

“Lower oil prices aren’t necessarily a bad thing for the economy, but they are a negative factor for the BOJ’s price target.”

It is up to the BOJ to make its own decisions about the outlook for prices, Amari said.

The BOJ launched quantitative easing on an unprecedented scale in 2013 to drive consumer inflation to 2 percent around fiscal 2015, which starts in April.

The central bank’s purchases of government debt and risk assets helped push down bond yields and initially boosted inflation expectations.

However, the outlook for prices started to weaken last year as consumer spending lost momentum after an increase in sales tax.

The BOJ has argued that consumer prices would accelerate again due

Hyundai fail to sell US$1.25 bln affiliate shares

H

yundai Motor yesterday said its chairman and his son failed to sell about US$1.25 billion worth of shares in affiliate Hyundai Glovis, thwarting a succession move at South Korea’s second-biggest family-owned conglomerate.

The size of the sale spooked investors at a time of heightened market resistance to the tendency of South Korea’s family-owned business empires, known as chaebols, to put the interests of kin ahead of ordinary shareholders, analysts said.

Hyundai Motor Chairman Chung Mong-koo and Vice Chairman Chung Eui-sun on Monday offered 5.02 million shares at 264,000 won to 277,500 won (US$244 to US$256) each, a discount of up to 12 percent to the last closing price of Hyundai Glovis, bringing their total stake to below 30 percent.

The sale would have helped Eui-sun, the only son of Mong-koo, buy stakes in

key units such as Hyundai Mobis while having freed Hyundai Glovis from antitrust scrutiny over inter-affiliate transactions, analysts said.

Although Mong-koo, 76, has given no signal that he plans to step down soon as head of Hyundai Motor Group, he is expected to eventually hand over the reins to Eui-sun, 44, his only son.

The junior Chung lacks stakes in key units like Hyundai Mobis, Hyundai Motor Co and Kia Motors, which he needs to gain control of South Korea’s biggest conglomerate after Samsung, analysts said.

Hyundai Mobis shares surged by as much as 13 percent yesterday on expectations that the junior Chung may try to buy shares in the auto parts affiliate.

Shareholders traditionally held little sway over the chaebols that form the backbone of Asia’s fourthlargest economy.

But with Hyundai and Samsung both seen preparing

to rising wages and a tight labour market, but this outcome is looking less likely in the face of an oil glut which could push Japan’s consumer prices lower. Oil futures are the weakest since 2009.

Stable surplus The positive note was government announcement of current account surplus that recorded 433.0 billion yen (US$3.63 billion) in November 2014, marking the fifth consecutive month in black ink, data showed yesterday.

According to the Finance Ministry, exports in the period were up 10.8 percent on year to 6,322.1 billion yen thanks to a weaker yen, but imports rose only 2.2 percent to 6,959.0 billion yen, bringing the goods trade

deficit to 636.8 billion yen, down 42.4 percent from a year earlier.

The ministry believed that a downturn in crude oil prices slowed imports. In November, crude oil imports plunged 21.6 percent as average oil prices fell 19.4 percent to 90.82 dollars per barrel during the month.

Meanwhile, the surplus in the primary income account, which reflects how much Japan earns from its foreign investments, jumped 44.4 percent to 1,276.0 billion yen, marking the fifth straight monthly rise and hitting the highest level since comparative data became available in 1985.

The services sector, including passenger transportation and cargo shipping, marked a deficit of 106.3 billion yen. However, the travel balance of payments improved to a surplus of 11.8 billion yen as the number of foreign travellers arriving in Japan soared 39.1 percent from a year before to 1.17 million, the biggest for the month.

Reuters and Xinhua

The sale collapsed due to its large size and as “some conditions were not met,” Hyundai Motor said in a statement, adding that it had no plan to resume the block deal for now

Hyundai, far beyond cars

to hand over management control to new generations, investors are seizing the

moment to stiffen their resistance to decisions made with little consultation and

without sufficient regard to their interests.

Reuters

12 | Business Daily

January 14, 2015

Asia S.Korea import prices drop South Korea’s import prices plunged in December at the sharpest pace since October 2009, continuing their longest consecutive fall as global oil prices slide, central bank data showed yesterday. Import prices in won terms dropped 13.0 percent in December from a year earlier, the Bank of Korea said. In November, import prices fell a revised 8.0 percent on year. The sub-indices showed prices of coal and oil products plunged 37.8 percent in December from a year ago in their fastest drop since May 2009, central bank records showed.

Forecasting South Korean rates gets tougher As President mulls probable rate change Jiyeun Lee

Lower GDP growth for Malaysia in 2015 Malaysia’s gross domestic product (GDP) growth will slow down to 5 percent this year against 5.7 percent in 2014, according to a local asset management company ‘s anticipation. This is on the back of a net drag in exports based on weaker outlook from the country’s top trading partners such as China, the eurozone and Japan, the Eastspring Investments Berhad said in a report issued yesterday.

Among all countries in Asia, Malaysia is the most affected by the fall in oil prices, while other countries will benefit, it said.

Vietnam to merge major banks

S

outh Korean President Park Geun Hye has injected a new element of uncertainly for economists already divided on the chances of an interest-rate cut by the Bank of Korea (pictured) this week.

While 13 of 17 economists surveyed by Bloomberg forecast the benchmark rate to remain at 2 percent when the central bank board meets on January 15, bond yields hit record lows yesterday after Park said the government would discuss borrowing

More than six to eight major banks in Vietnam would likely merge with each other in 2015 in an effort to strengthen the industry, according to sources with the State Bank of Vietnam, or the central bank. The Joint Stock Commercial Bank for Foreign Trade of Vietnam, the country’s biggest bank by market value, could merge with unlisted Saigon Bank for Industry and Trade, while the Hanoi-based Joint Stock Commercial Bank for Industry and Trade (VietinBank) may join with unlisted OceanBank, local Tuoi Tre (Youth) daily reported yesterday, quoting central bank sources.

costs with relevant authorities. That’s bolstered the case for dissenters including ING Groep NV and Nomura Holdings Inc., who predict a cut to record low 1.75 percent.

The majority see the BOK delaying a move as Governor Lee Ju Yeol

9,731

corporate bankruptcy cases Japan 2014

Cambodia reveals last year’s taxes Cambodia has earned US$2.4 billion from all sources of taxes in 2014, an increase of 27 percent from US$1.88 billion a year earlier, according to official figures. The Southeast Asian nation has two institutions that are responsible for collecting taxes. One is the General Department of Taxation (GDT), which collects interior taxes such as income tax, VAT (value added tax), merchandise and service tax, road tax and property tax, and the General Department of Customs and Excise (GDCE) which collects taxes on goods entering and leaving Cambodia.

Abe’s policy has driven up import costs, hurting domestically focused companies and smaller businesses

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

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Business Daily | 13

January 14, 2015

Asia Recent rhetoric from officials in South Korea suggests that there is no sense of urgency for monetary easing this month Ronald Man economist HSBC Holdings

“We interpreted President Park’s comment as a general one responding to a reporter’s question,” not something that came out of an agreement with officials on the need for a rate cut, Lim Ji Won, a Seoulbased economist for JPMorgan Chase & Co., said on January 12. “We expect the Bank of Korea to downgrade its official growth and inflation forecasts this week, but with no accompanying rate cut.”

The central bank also releases its updated economic outlook this week.

On October 15 it said consumer prices would increase 2.4 percent in 2015 while the economy was projected to expand 3.9 percent.

Consumer prices in Asia’s fourthbiggest economy increased 0.8 percent in December from a year earlier, well below the central bank’s 2.5 percent to 3.5 percent target range.

Finance minister attempts to gauge the long-term impact of supply factors including the slump in oil on prices and growth.

Lee said in a New Year speech that it wasn’t appropriate to manage monetary policy just to match price targets in this environment.

“President Park’s comment tipped the scales in favour of Thursday’s monetary policy meeting for our forecast timing of a rate cut to 1.75%,” Tim Condon, head of Asia research at ING, said yesterday. ING, currently the top-ranked forecaster on the BOK according to data compiled

by Bloomberg, also expects the central bank to trim its 2015 growth forecast, said Condon.

President Park downplayed her initial comments made at a press briefing, later saying that monetary policy decisions aren’t made by the president’s office, according to local media Infomax.

Policy makers’ focus on structural reforms is another reason for some analysts pointing to no change in rates this week. Finance Minister Choi Kyung Hwan said on Jan. 6 that government policies would focus on structural reforms of sectors including labour and finance this year.

“Recent rhetoric from officials in South Korea suggests that there is no sense of urgency for monetary easing this month,” Ronald Man, a Hong Kong-based economist for HSBC Holdings, wrote in report yesterday. “BOK Governor Lee and Finance Minister Choi focused their New Year speeches on the need to prepare for financial volatility and implement structural reforms, respectively.”

Man expects the benchmark rate to be lowered to 1.75 percent in the next couple of months.

Bloomberg News

Japanese bankruptcies in 2014 fewest since bubble era Prime Minister’s reflationary policies have weakened the yen, helping the earnings of exporters Keiko Ujikane

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apanese corporate bankruptcies fell in 2014 to the lowest level since the final year of Japan’s asset bubble, as a government request for banks to alter loan conditions for smaller firms helped companies stay afloat.

Business failures slid 10.4 percent in 2014 from a year earlier to 9,731 cases, the fewest since 1990, Tokyo Shoko Research Ltd. said in Tokyo yesterday. There were no bankruptcies among listed firms last year for the first time in 24 years.

Prime Minister Shinzo Abe’s reflationary policies have weakened the yen more than 24 percent against the dollar in the past two years, helping the earnings of exporters.

At the same time, this has driven up import costs, hurting domestically focused companies and smaller businesses, which employ about 70 percent of the nation’s workforce.

“The benefits of Abenomics haven’t sufficiently spread to smaller firms

yet,” Shinya Matsunaga, a senior manager at Tokyo Shoko Research, said before the data was released.

“It’s difficult to say that corporate bankruptcies are falling as the economy is improving. Rather, government support for smaller firms and public works spending are having results.”

There were 282 company failures in 2014 in which the weak yen as cited as a contributor, more than double the 139 cases in 2013.

Bankruptcies have kept falling even after the expiry in 2013 of a moratorium on loan repayments for some smaller firms. The government has called on banks to keep accepting loan rescheduling requests.

About 10 percent of small and mediumsized companies have rescheduled loans, according to Tokyo Shoko’s Matsunaga.

“Despite falling corporate bankruptcies, conditions for small to medium-sized companies probably remain severe,” Matsunaga said.

Bloomberg News

1Malaysia redeems Cayman Island investment after criticism The corporation came under scrutiny in parliament in 2013 after singling out Goldman Sachs Group Inc. to manage the sales of US$6.5 billion of conventional dollar bonds

1

Malaysia Development Bhd., a state investment company, redeemed its US$2.32 billion investment in a Cayman Island fund following criticism from opposition lawmakers the money wasn’t managed transparently.

“1MDB hopes the redemption of these funds, in full, draws a line under this matter,” Arul Kanda, the company president and group executive director, who was appointed last week, said in an e-mailed statement yesterday. The Cayman Island fund is under the custody of a licensed financial institution with a good credit rating, according to 1MDB’s 2013 annual report, which didn’t provide more detail.

Criticism had mounted since the company failed to repatriate the funds by the end of November as promised by Deputy Finance Minister Ahmad Maslan November 6. The delay raised concerns about 1MDB and threatened the country’s financial stability, said Tony Pua, a politician with Malaysia’s opposition Democratic Action Party, according

to a January 7 report in the Malaysian Insider. Former Prime Minister Mahathir Mohamad, who governed Malaysia from 1981 to 2003, said in November the fund is only serving to increase the nation’s debt.

Notes rise 1MDB missed two repayment deadlines for a 2 billion ringgit (US$557 million) loan and has been given a grace period until the end of January, The Edge reported on Jan. 6, citing unidentified people.

1MDB’s spokesperson declined to say if the money from the Cayman Island fund would be used to repay outstanding debt.

1MDB’s borrowings climbed to 41.9 billion ringgit in the year ended March from 36.2 billion ringgit in previous period, it said in November.

The company, whose advisory board is headed by Prime Minister Najib Razak, said last week it’s embarking on a “strategic review” of operations.

Bloomberg News

14 | Business Daily

January 14, 2015

International Mexico sees energy investment Mexico expects some US$14 billion of investment in wind farms between 2015 and 2018, which will more than triple installed capacity in the country, the energy ministry said. The planned investment aims to raise Mexico’s wind energy capacity from some 2,551 Megawatts (MW) to 9,500 MW, Energy Minister Pedro Joaquin Coldwell told local radio.

Mexico’s state-run electricity company CFE is due to oversee a sizeable chunk of the investment, aiming to develop eight wind parks generating 2,300 MW at a cost of some 52 billion pesos (US$3.55 billion), the ministry said.

MasterCard moves Russian processing International credit and debit card company MasterCard has agreed to transfer card processing inside Russia to the local state-owned system, Russia’s Central Bank said. Russian authorities have obliged foreign card companies, which have stopped providing services for some Russian banks that are subject to Western sanctions, to move Russian processing to the local system or pay a hefty security deposit. The deadline for companies to switch to the local system is the end of March. The agreement between MasterCard and the central bank-controlled National System Of Payment Cards (NSPC) was reached on December 30.

Soros raises bet on Spain George Soros bought into a fundraising by Santander last week, a source familiar with the matter said, in the latest bet by the U.S. billionaire on Spanish banks and companies trying to ride an economic recovery. Soros Fund Management took part in Santander’s 7.5-billion-euro (US$8.9 billion) share sale, completed over several hours last Thursday, with a 500-million-euro investment, the source said, speaking anonymously because the matter isn’t public. El Mundo newspaper earlier reported Soros’ participation. An investment of that size would give Soros’ fund a roughly 0.66 percent stake in the euro zone’s biggest bank.

Maduro secures Qatar financing Venezuela is securing financing from Qatari banks, President Maduro said from Doha, as he seeks to boost his country’s coffers amid falling oil prices and a recession. “We’re firming up a financial alliance with important banks in Qatar, that are giving us sufficient oxygen to cover the fall in oil revenue,” Maduro said without providing details. Venezuela’s tightening financial situation has fanned market anxiety about a default, especially as oil slumps to near six-year lows. Maduro has vowed to pay bondholders and most economists doubt a default is coming in the near-term, but investors are getting skittish.

Germany achieves balanced budget Germany achieved a balanced federal budget in 2014 for the first time in almost half a century and one year ahead of schedule, two coalition sources familiar with the final version of the budget told Reuters. That may mean the government, under pressure from its European partners to spend more on infrastructure and other items to boost weak euro zone growth, has more leeway to raise investments. Berlin has until now been reluctant to heed such calls for fear of jeopardizing the balanced budget goal.

Citigroup quietly scales back on consumer banking The company’s global consumer business, which includes branch banking and credit cards, accounts for half of the company’s revenue from its core operations David Henry

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itigroup has been quietly scaling back its consumer banking presence in some of the world’s major cities, pulling out from markets where it does not have enough branches to be competitive.

In 2014 Citi retail executives went from targeting 120 of “the world’s top 150 cities” to homing in on 100 cities where the company has the greatest scale and potential. As a result, it is withdrawing from Tokyo, Lima, Panama City, and Houston, for example. In the United States, it is now focused on six cities, down from 14.

And while the bank has no specific plans to cut more branches in the near term, it will continue to re-evaluate its holdings, Jonathan Larsen, who oversees Citigroup’s overseas retail branch business, told Reuters in an interview.

“We have to make sure that we are not subsidizing marginal operations for long periods,” Larsen said. The bank’s strategy will work with fewer cities, he added.

Cutting back in consumer banking will eat into the group’s earnings, at least in the near term. The bank is expected to book some US$800 million of restructuring charges in the fourth quarter when it posts results on Thursday.

Chief Executive Michael Corbat has announced US$2.4 billion of additional restructuring costs in the last two years. The bank hopes the

spending will eventually save it some US$3.4 billion annually.

The charge, in addition to an expected US$2.7 billion charge for litigation, largely involving other businesses, is expected to all but wipe out Citigroup’s profits for the fourth quarter. Analysts, on average, expect Citi to earn about 10 cents a share, down from 77 cents a year earlier, according to Thomson Reuters surveys.

The shift underscores Citigroup’s challenge: how to shrink in locations where it lacks critical mass and yet prevent its global network from becoming less valuable to customers while it focuses on fewer cities.

Citigroup prides itself on being the most international of U.S. banks and closings could hurt the visibility it needs as it continues to seek business with companies, institutional investors and governments in more than 100 countries.

The latest cuts came after the company raised its minimum thresholds for performance and prospects in consumer markets in the past year.

Higher targets are necessary because of increased costs of holding more capital and complying with additional regulatory requirements, including anti-money laundering rules, Larsen said.

The company’s global consumer business, which includes branch banking and credit cards, accounts for half of the company’s revenue from its core operations. But Citigroup has struggled for years to make its consumer business more efficient. The group has long operated as a loose confederation of local franchises, many of which are not big enough in their individual markets to really be profitable.

A set of consumer assets that the bank marked for disposal last October produced a return on assets that was one-eighth the return of the bank’s main assets, according to Citigroup disclosures.

In the United States, the bank decided to quit Dallas and Houston, where it ranked 24th and 33rd respectively by deposits.

Reuters

U.S. justices weigh antitrust lawsuits related to energy crisis The energy companies have asked the Supreme Court to rule that state antitrust law claims lodged are superseded by a federal law called the Natural Gas Act Lawrence Hurley

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he U.S. Supreme Court wrestled with the question of whether a federal law governing the natural gas market would allow energy companies to evade state antitrust claims made over the western U.S. energy crisis between 2000 and 2002.

The court appeared divided during oral arguments in the case, with the liberal justices voicing some support for the industrial and commercial users of natural gas who filed the lawsuits.

Several energy companies, including American Electric Power Company, Dynegy and ONEOK, were accused of manipulating published price indexes that led to a spike in gas prices. The resulting energy crisis included rolling blackouts in California.

The energy companies have asked the Supreme Court to rule that state antitrust law claims lodged are superseded by a federal law called the Natural Gas Act. That law grants the Federal Energy Regulatory Commission authority to regulate certain aspects of the natural gas market including wholesale prices.

The plaintiffs argue that the Natural Gas Act did not trump their antitrust claims because their case involves retail prices.

Justice Elena Kagan, one of the liberal justices, said even if the federal agency did have jurisdiction, that does not necessarily mean that certain claims could not be made under state law.

“I don’t really see a reason in this kind of case why you would exclude the state entirely,” Kagan said.

Justices on the conservative wing of the court seemed more sympathetic to the energy companies.

“The essence of the conspiracy that you are complaining about ... are actions that come within the jurisdiction of the commission,” Justice Antonin Scalia told Jeffrey Fisher, the lawyer representing the plaintiffs.

In an October 2012 ruling, the 9th U.S. Circuit Court of Appeals agreed with the plaintiffs and found that Congress did not intend to extend FERC’s jurisdiction to retail transactions.

A ruling is due by the end of June.

Reuters

Business Daily | 15

January 14, 2015

Opinion Business

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Leading reports from Asia’s best business newspapers

China’s record oil buying likely to continue awhile

THE KOREA HERALD The government said yesterday it will seek to revamp the local economy by boosting investment and domestic consumption and help improve the livelihoods of ordinary citizens.

In a joint report to President Park Geun-hye in Sejong on the government’s economic policy goals for this year, six economy-related ministries led by the Ministry of Strategy and Finance emphasized a “healthy” economy supported by domestic demand and exports. Efforts to boost domestic consumption will include opening four new duty-free shops throughout the country, along with new hotels aimed at meeting the growing demand from foreign tourists.

THE PHNOM PENH POST The Cambodian government is again urging petrol retailers to pass on savings to the consumer amid the continued plunge in global oil prices.

Prime Minister Hun Sen said that foreign retailers, Total and Caltex, were stalling on passing on the savings to consumers at the pump. He said that Caltex and Total were charging 4,100 riel (US$1.03) per litre for diesel, 4,250 riel per litre for regular petrol and 4,450 riel for super, while local retailers Sokimex and Tela were charging 4,000 riel for diesel, 4,200 riel for regular and 4,400 riel for super.

THE BANGKOK POST The mutual fund industry’s assets under management (AUM) surged 23.8% last year, with high-yield bond funds, foreign investment funds (FIFs) and equity funds in demand as investors shunned low deposit rates and fled to risky assets.

The industry’s AUM soared 733 billion baht to 3.8 trillion as of Dec 31. Of the total, 380 billion baht consisted of fixed-income funds, 243 billion was equity funds, and the rest was for other types such as property funds and real estate investment trusts.

THE JAPAN NEWS The Japan Patent Office has launched a new system in which users can search in Japanese patent applications published in China and South Korea. Users can search about 10 million documents on the website at no charge. The office aims to make it easier for Japanese companies to deal with patent infringement by providing information about patents in China and South Korea. The search system offers documents published by the patent authorities in both countries from 2003 to July 2014. The documents have been mechanically translated from their original languages into Japanese.

Clyde Russell Reuters columnist

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he rise in China’s imports of crude oil above 7 million barrels per day (bpd) for the first time looks impressive, but is it likely to be sustained?

Customs data showed crude imports jumped 13.4 percent in December from a year before, reaching a record 7.15 million bpd.

The big jump wasn’t really much of a surprise, given the massive purchases of oil by Chinese traders recently, with Chinaoil, the trading arm of state-controlled major PetroChina , buying a record 47 cargoes, or 24 million barrels, in the Platts trading window in October.

The market consensus is that the Chinese are buying more oil than they need in order to fill strategic reserves, taking advantage of a collapse in prices in the past seven months, with Brent crude dropping from around US$115 a barrel in June 2014 to about US$46.50 yesterday, the lowest in almost six years.

This is almost certainly the case, as the Chinese have in the past ramped up purchases when they consider prices to be relatively cheap.

The questions that remain are how much more can the Chinese buy before their storage tanks are at capacity, and assuming this is still a large number, will it be enough to cause oil prices to rise?

In a rare announcement, China said on November 20 it had filled the first phase of its

strategic petroleum reserve (SPR), which holds about 91 million barrels, enough for about 9 days’ consumption.

It also said it planned to complete the second phase by 2020, which would hold an additional 170 million barrels.

Consultants Energy Aspects estimated that this second phase of the SPR already held about 80 million barrels, meaning about 90 million more will be needed to fill it completely.

This implies that China will have plenty of scope to keep buying oil for stockpiling, assuming the tanks have finished being built and are ready to be filled.

If it can be assumed that the Chinese will keep filling the SPR in 2015, will this generate enough demand to influence prices?

One million bpd going to storage China’s implied oil demand, which is derived from adding net imports of refined products to refinery runs, held above 10 million bpd from September to November and is likely to have done so again in December.

While this speaks of solid demand for fuel in China, it doesn’t show convincing evidence of strong growth, which tallies with softness in economic indicators such as the Purchasing Managers’ Index.

Should December’s implied oil demand come in around the 10.3 million bpd in November, this

implies that about 1 million bpd went into storage in December.

This is calculated by adding imports of 7.15 million bpd to domestic output of around 4.2 million bpd, giving a total of just over 11.3 million bpd of available crude, and then subtracting the implied demand of 10.3 million bpd.

China will have plenty of scope to keep buying oil for stockpiling, assuming the tanks have finished being built and are ready to be filled

If a rate of 1 million bpd of storage is maintained, it seems likely the SPR will be rapidly filled, which may just be the intention of the Chinese, given market expectations that oil prices will stabilise and then rise somewhat by the middle of this year.

In the current market, it also seems likely that even an extra 1 million bpd of Chinese demand won’t be enough, by itself, to spark a price rally.

Thomson Reuters Oil Research and Forecasts expects Chinese imports to hold around 30-32 million tonnes in January, or about the same as December’s level.

This is oil that has already been purchased, meaning that even though the Chinese were buying record amounts of crude in recent months, the price was still plummeting.

However, the forward curve for Oman futures, a price benchmark for Asia, has been steepening recently, with the six-month contract currently commanding an 11 percent premium over the second month, up from 4.3 percent a month ago.

The increasing contango is a sign that the market doesn’t expect the current low price to be sustainable, but a strong recovery is not expected, either.

For the moment, market sentiment is such that it’s almost as if the Chinese could buy as much oil as they wanted, without boosting prices.

Reuters

16 | Business Daily

January 14, 2015

Closing Saudi Arabia and Tajikistan will join Asia Investment Bank Uniqlo under fire over factory conditions in China Both countries will join 24 other nations as founding members of the Asian Infrastructure Investment Bank, China’s Ministry of Finance said yesterday. The entry, which China said was approved unanimously by the other founding members of the China-backed multilateral lender, brings the total number of founder nations intending to join the US$50-billion bank to 26, according to statements published on the ministry’s website. AIIB, launched in Shanghai in October but still under development, is seen by the United States as a challenge to the Western-dominated World Bank (pictured) and Asian Development Bank.

Japanese clothing giant Uniqlo came under fire yesterday for buying supplies from Chinese factories accused of putting workers at risk in unsafe conditions, with sewage on the factory floor, extremely high temperatures and poor ventilation.

The claims made by a Hong Kong-based human rights group come as the apparel chain pursues aggressive expansion plans in a bid to challenge international brands like Zara, H&M and Gap. Uniqlo said that while it had “different views on some of the issues” in the report, it had opened an investigation.

Asia-Pacific developing economies to grow 5.8 pct in 2015 Growth in China is forecast to hover around 7 percent in 2015 consistent with the on-going economic rebalancing

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eveloping countries in Asia and the Pacific are forecast to grow at an average of 5.8 percent in 2015, up from 5.6 percent in 2014, the United Nations (U.N.) said yesterday.

This will be driven by improved performances in a number of major developing economies, including Bangladesh, India, Indonesia, Papua New Guinea, South Korea and Thailand, the U.N. Economic and Social Commission for Asia and the Pacific (ESCAP) said in its Economic and Social Survey of Asia and the Pacific 2014: Year-end Update.

Prospects for some of these economies will be aided by the progress in implementing structural reform programs in 2015, which are expected to improve the domestic business environment, the report said.

Regional inflation is likely to remain relatively subdued in 2015, falling to 3.5 percent from 3.9 percent in the previous year, which offers room in some economies for loosening monetary policies to support growth, the Year-end Update indicated.

United Nations Under-Secretary-General and ESCAP Executive Secretary Shamshad Akhtar

“Despite improved prospects, many developing economies in the region face structural constraints which have kept them from realizing their growth potential.

Infrastructure shortages remain acute and growth has not translated into enough decent jobs,” United Nations Under-Secretary-General and ESCAP Executive Secretary Shamshad Akhtar said.

Infrastructure deficits and lack of availability of decent jobs are the main domestic structural concerns which are impeding the supply potential of economies, the report showed.

Taiwan-Japan trading link to track Chinese markets

Also, likely capital volatility in 2015 stemming from monetary policies of developed economies may affect macroeconomic stability and investment in the region, according to ESCAP analysis.

“The impact may negatively affect GDP growth of some countries in the region by up to 0.7 percentage points,” the report said.

The ESCAP recommended using a variety of measures to tackle capital volatility, including ensuring good macroeconomic fundamentals, judicious foreign exchange intervention, and use of macroprudential policies to

A 10-dollar per barrel fall in the oil price in 2015 would translate into an increase in GDP growth of up to 0.5 percentage points

encourage entry of long-term capital.

In addition, the ESCAP predicted that the steep decline in oil prices would have varying impacts on balance of payments, inflation and fiscal space of countries.

For energy-importing countries, a 10-dollar per barrel fall in the oil price in 2015 would translate into an increase in GDP growth of up to 0.5 percentage points, it said.

Li Ka-shing overtakes Loius Vuitton owner

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However, this could reduce growth in Russia, a net energy exporter, by 1.1 percentage points and deprive neighbouring Central Asian countries of 1.7 billion dollars in remittances from nationals working in the Russian Federation, it added.

The ESCAP regarded declining global oil prices as “a valuable opportunity for AsiaPacific economies to reduce fuel subsidies that account for a large share of national budgets in many countries in the region.”

Regressive fossil fuel subsidies more often benefit the rich and have little impact on reducing poverty, the report said, adding that the savings from a cut in these could be better invested into more productive and inclusive development.

ESCAP estimated that savings from energy subsidies could, for example, finance the provision of income security to all elderly and persons with disabilities as well as universal access to health and education in Indonesia, Malaysia, the Philippines and Thailand.

Xinhua

Malaysian US$20bn banking merger scrapped

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plan to link stock exchange trading between Taiwan and Japan will focus on giving Japanese investors access to exchange traded funds, or ETFs, listed in Taiwan that track capital markets in China, two people in Taipei familiar with the matter said.

The Taiwan Stock Exchange (TWSE) has been eager to broaden its trading links to bolster its position after the launch of a similar link between Shanghai and Hong Kong.

Last month, TWSE president Michael Lin said the exchange expects to reach an agreement with the Tokyo Stock Exchange sometime this year to have investors buy and sell ETFs on both markets.

“The relationship between Japan and China isn’t good, but (Japanese investors) want to participate in China’s capital markets. Taiwan is a ready springboard,” said a person involved in the talks, who was not authorized to speak with media on the matter and so declined to be identified.

Japanese investors account for 1 percent to 2 percent of foreign investors in the TWSE.

i Ka-shing added the most among billionaires following his US$24 billion reorganization plan, overtaking LVMH Moet Hennessy Louis Vuitton SA’s Bernard Arnault as the world’s 15th-richest person.

The 86-year-old tycoon added US$2.2 billion yesterday as Cheung Kong Holdings Ltd.’s shares surged the most in more than six years, boosting his fortune to more than US$30.4 billion, according to Bloomberg Billionaires Index. The gain also helped Li overtake Hennes & Mauritz AB’s Stefan Persson, Google Inc.’s Larry Page and Alibaba Holding Group Ltd.’s Jack Ma, who was previously Asia’s richest person. Li’s proposal to restructure the assets of his companies into two new entities won the approval of investors. Cheung Kong focuses on property and Hutchison Whampoa Ltd. on assets such as utilities, ports and retail stores.

“The restructuring makes the holding companies in a way more transparent for investors,” said Ryan Huang, a market strategist at IG Ltd. in Singapore, who expects that the share prices of the two companies could continue to advance.

planned merger of two Malaysian finance firms that would have created the country’s biggest bank has been scrapped three months after it was announced due to concerns about the economy, Bloomberg News reported yesterday.

The financial newswire, citing unnamed sources with knowledge of negotiations, said it was decided that the 72.5 billion ringgit (US$20.3 billion) union of CIMB Group and RHB Capital was now too risky.

Concerns about the economic outlook are mounting in Malaysia, with falling oil prices expected to slash the petroleum-exporting country’s trade revenue and the ringgit currency at five-year lows.

The World Bank recently trimmed its economic growth forecast for Malaysia to 4.7 percent for 2015, citing export weakness, the oil price plunge, and subdued prices for other key Malaysian exports such as palm oil.

Ratings agency Fitch had warned last year when news of the impending deal first emerged that it was fraught with risk, particularly difficulties achieving integration.

Reuters

Bloomberg News

AFP