Macau Business Daily, Jan 30, 2015

MOP 6.00 Closing editor: Luís Gonçalves Publisher: Paulo A. Azevedo Number 719 Friday January 30, 2015 Year III

Smoke Free: Secretary puts his cards on the table

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moking bans. They’ve been introduced piecemeal over the years. But it now looks like a blanket ban in casinos will be a reality. Regardless of gaming industry or investors’ concerns. Yesterday, Secretary for Social Affairs and Culture Alexis Tam resolutely declared the govt’s “determination” to enact legislation. He said the health of gaming workers, residents and visitors was paramount.

An increase in tobacco tax and heftier fines for smoking in banned venues are also on the horizon PAGE

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Sands China profits tumble

IGT revenues drop 17 percent PAGE 7

Sands China profits dropped 15 pct in Q4. Retreating VIP gamblers are thought to have been influenced by the current anti-graft campaign. The US$713 million in profits was short of market expectations with profit margins still under pressure. Sands China chairman Sheldon Adelson visits Macau next week

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Chang Meng Kam questions delay of 4th cross-sea link PAGE 7 New amusement facilities for Chimelong PAGE 6 Mainlanders caught in illegal UnionPay scheme PAGE 3

HSI - Movers January 29

Name

Retail revolution

www.macaubusinessdaily.com

Revitalisation of old districts. The gov’t wants it, and so does a new breed of entrepreneur.

New shops featuring local and overseas creative cultural brands will open near Macau’s iconic landmark on Sunday. The company behind the project favours unique brands with potential.

Providing items Macau hasn’t experienced before.

Rua de Nossa Senhora do Amparo and Patio de Chon Sau are the main areas for 12 new shops, six rented at 40 pct discount

Happy together That’s nice. A Taiwanese Government census has detected romance in the air. The majority of Macau-born people living in Taiwan and married to locals are very content.

Despite their average household income being less than half the local average. More than 90 pct of Macau expats in Taiwan say they’re happy on Ilha Formosa

%Day

Hengan International

3.56

MTR Corp Ltd

2.67

China Mengniu Dairy

1.72

Bank of East Asia Lt

1.10

China Mobile Ltd

0.87

CNOOC Ltd

-2.49

Lenovo Group Ltd

-2.71

China Overseas Land

-3.78

China Resources Land

-3.81

China Resources Powe

-4.17

Source: Bloomberg

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Double link in Autumn

Brought to you by

Nothing like a good idea. Hong Kong Stock Exchange will implement a link with Shenzhen Stock Exchange.

Probably in the second half of the year. They hope to replicate the Shanghai market link success

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January 30, 2015

Macau Absence of ‘no smoking’ sign in CoD attracts MOP100,000 fine The Health Bureau says it has fined the City of Dreams casino-resort MOP100,000 (US$12,524) for failing to put up a sign prohibiting smoking in a section of its casino. The Bureau says it ordered the City of Dreams to put up a sign but the casino-resort did not comply. The order was given because the casino-resort was suspected of illegally allowing smoking in the area in question.

Alexis Tam: Gov’t “determined” to introduce full smoking ban in casinos Any likely impact on casino income will not affect the government’s will to impose a full smoking ban in gaming venues here, the Secretary said Stephanie Lai

sw.lai@macaubusinessdaily.com

Secretary for Social Affairs and Culture Alexis Tam (second from left)

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he MSAR Government is “determined” to enforce a full smoking ban in casinos to protect the health of gaming workers and residents, which is going to be part of a new amendment to the city’s smoking control law alongside a mulled increase in tobacco tax and fines for smoking in banned venues, Secretary for Social Affairs and Culture Alexis Tam Chon Weng said yesterday.

Within the first half of this year, the government plans to deliver an amendment proposal to the Regime for Prevention and Control of Tobacco Use, which will include a proposed rule to enforce a full smoking ban in the city’s gaming venues, Mr. Tam told a press conference attended by Health Bureau officials yesterday.

“This is a clear decision by the MSAR Government that we are determined to enforce a full smoking ban in casinos here,” Alexis Tam said.

However, the Secretary said that he was uncertain when the proposed change in the smoking control regime would come into force. He stressed, however, that the government would like to see the amended law enforced “as soon as possible”.

“Of course the [gaming] sector has reflected [that on top of] the seven straight months fall in gross gaming revenue [in 2014] that a full smoking ban could further impact casino income,” the Secretary said.

“But as I said, economic factors will not stop us from enforcing the ban –

we will not, for the sake of generating more gaming revenue, sacrifice the health of residents, gaming workers and visitors.”

The officials have announced their determination to amend the tobacco control law after completing their study of its enforcement in the past three years. The Regime for Prevention and Control of Tobacco Use - known as law No.5/2011 - was approved by the Legislative Assembly in April 2011 and has been in force since the start of 2012.

“About 85 per cent of our visitors do not object to a full smoking ban in casinos,” Mr. Tam said, citing an official study of 1,078 visitors in December last year, “Of these visitors, only thirty per cent smoke. And less than 10 per cent of these smoking visitors said they would not come here again if the full ban [in casinos] is enforced.”

“As we receive an increasing number of inbound visitors, the government does not think that a full smoking ban in casinos would affect the economy here,” the Secretary stressed. “At the same time, a full ban in casinos is also an opportunity for us to realise the goal of becoming a Centre of World Tourism and Leisure.”

The backing of residents and gaming workers’ support for a full ban in casinos is also a strong reason for the government to advance their decision, officials said.

Nearly 80 per cent of 1,031 gaming workers and 74 per cent

of 2,054 residents surveyed by the health authority supported a full smoking ban in casinos, the official study shows.

At the start of the implementation of the law, smoking was banned in most indoor public spaces in Macau while casinos and ‘entertainment venues’ such as bars, karaoke parlours, discos and saunas were the exception.

A partial smoking ban in casinos has only been in effect since January 1, 2013, whereby casinos that have applied for smoking areas – allowed in up to fifty per cent of a property’s floor space – must submit a monthly air quality report to the Health Bureau. Anyone found smoking in a non-smoking area in a casino can face a maximum on-the-spot fine of MOP400 (US$50) – lower than the MOP600 fine applied to smoking in other public indoor spaces.

Meanwhile, smoking has only been banned in the city’s bars, karaoke parlours, discos and saunas since the start of this year.

Tougher rules The Secretary also noted that the proposed legal amendment would ban the smoking of electronic cigarettes in gaming venues.

“Since assuming office, I’ve met different [labour and employer] associations, including representatives from the six gaming companies here,” he said. Mr. Tam, a former government spokesperson, assumed

the post of Social Affairs and Culture Secretary on December 20.

“In principle, the gaming companies support the idea of a full smoking ban in casinos but they have asked to retain the set up of airportstyle smoking lounges inside them,” said Mr. Tam. By the end of last year, there were a total of 59 smoking lounges – with no gaming facilities inside – set up in 22 of the city’s casinos and slot parlours, the Health Bureau revealed yesterday.

The establishment of the smoking lounges is in compliance with a new smoking ban that came into force on October 6 last year, whereby smoking is only allowed on casinos’ main floors in enclosed smoking rooms that do not contain any gaming facilities. But smoking is still allowed in VIP rooms.

Despite the efforts and investment spent in the set up of such smoking lounges last year, Mr. Tam noted that the government might not adopt the suggestion to retain ‘airport-style’ smoking lounges inside casinos while stressing that the government is adamant in its goal of having clean air in the properties.

Alongside a proposed full smoking ban in casinos, the government is also mulling increasing tobacco tax from its current 33 per cent for a packet of 20 cigarettes to 70 per cent, Mr. Tam said.

Another amendment to the tobacco control law would be the imposition of a uniform fine that would exceed 600 patacas for smoking in any banned public indoor venue, officials said.

Business Daily | 3

January 30, 2015

Macau Mainlanders indicted on illegal UnionPay transactions

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udiciary Police have busted another unauthorised UnionPay transaction scheme, in which four mainlanders were arrested. They were suspected of committing computer fraud and the case has been handed to the Public Prosecutor’s Office.

Police revealed that the group had been operating for at least nine months; they made cashback transactions of more than 102 million yuan, costing UnionPay more than 250,000 yuan.

The police said they were tipped off that the suspects were illegally assisting people to make unauthorised cashback UnionPay transactions in a hotel room in Coai. Police narrowed down the targets after intelligence analysis and launched an operation on the afternoon of 25 January. In a hotel room, four people were arrested and the police confiscated four illegal UnionPay mobile card swipe devices, mobile Internet devices, and 50,000 yuan in cash.

The investigation also revealed that two individuals were in charge of providing cash and the devices, while the other two escorted clients to the hotel rooms to make the cashback transactions. The police said that they did not rule out the possibility that more people are behind the scheme and still at large.

The police said that the suspects were using mainlandbased unauthorised UnionPay terminals in Macau to profit from the difference between the service charges. Using a 10 million yuan cashback transaction, for example; if it’s made on the mainland network the service fee would be 26 yuan but if the transaction is made via a Macau UnionPay network, the service fee would be 1.4 per cent of the amount transacted which would reach 140,000 yuan. The suspects charged their clients the usual service charge for transactions made on the Macau network and profited from the margin.

However, the multibillion dollar illegal cash transfer business is being used in Macau widely to circumvent China’s strict money transfer controls, allowing gamblers access to more cash.

The daily limit that individual Chinese can legally move out of the mainland is 20,000 yuan in cash.

The scam involves a cash transfer through a mobile swipe device, usually disguised as the purchase of watches or jewellery. With the POS (point-of-sale) machine registered on the mainland, the transaction appears to have been conducted outside of Macau.

Gov’t to disburse MOP100mln in student subsidies

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he Macau Government is to disburse some MOP100 million in subsidies for tertiary students, according to a report by Portuguese news agency Lusa, which cites Sou Chio Fai as saying that the government aims to help 34,000 students purchase study materials.

Each student will be entitled to a subsidy of around MOP3,000, which will be handed out in one go.

Any Macau ID cardholder who is studying – either in local institutions or at foreign universities – can apply for the subsidy. Applications are being

accepted until March 31, and the administrative regulation is likely to be published in the Official Gazette next week.

Throughout recent years, the Macau Government has disbursed subsidies to students at different levels of their education, primarily to purchase study materials.

Other subsidies handed out by the government include the partial and full payment of students’ tuition fees, depending upon the institutions the students are attending.

Lusa

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January 30, 2015

Macau

Special retail shops I rank therefore I am near Ruins of St. Paul’s to open on Sunday opinion

José I. Duarte Economist

Shops featuring local and overseas creative cultural brands are to open near Macau’s landmark tourism site in a bid to revitalise the old neighbourhood Joanne Kuai

joannekuai@macaubusinessdaily.com

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e live in a time that seems obsessed with rankings of all kinds of subjects.

The top (you choose the number) beaches, hotels, countries, politicians, you name it. Otherwise obscure institutions become famous/ notorious for publishing this or that type of ranking.

Politicians love to gloat about them, when convenient, and can safely ignore them when they do not fit the official narrative. Nobody wants to get into the details of what they really mean.

Newspapers seem to love them – they provide easy and alluring headlines, at least – and the common man and woman is excused from any further thinking effort. Analysis becomes so easy; all is so transparent… Figures, indices are reassuring, there‘s a kind of hypnotic power in their presumed precision. Numbers seem to provide objectivity, if not a hint of scientific truth. As a matter of fact, numbers don’t lie - or do they?!

And yet, I wonder how many people – in the political world, in academia, in the media, in the general public - ask themselves how the rankings are made; what are the assumptions or prejudices of their creators; what do they actually stand for, if anything at all. In fact, as someone once said, after being properly tortured, numbers will always tell us whatever we want them to say.

So, we’ve just been told that Macau ranks 34th freest economy in the world.

That gets us a place among the ‘mostly free’ economies. No, we’re not at the top (damn, it’s Hong Kong) but we can claim to be in good company. In our ‘group’ we have Canada, the United States and other distinct economies. The group also includes some more inconspicuous, but clearly not less distinguished, economic stars such as Bahrain, Colombia and Santa Lucia.

But we must be careful. Our score has been falling for the last five years. We dropped one full point relative to the previous ranking. Mind you, our place in that group was achieved by a minimal margin.

We got 70.3 points from one hundred possible. Just a loss of 0.4 points would have landed us in the ‘moderately free’ economies. We would be tarred with the likes of Botswana and Jordan! Of the 10 criteria used, our score was unchanged in 6 of them, improved in two (government spending and fiscal freedom) and declined in two others (labour freedom and monetary freedom).

Now this is serious; this raises complex questions. We get high marks for low government spending and low taxation (which are strongly correlated, by the way). Possibly, that’s the new model for economic success the world should follow. Rely on a highly taxable single sector – that is, high taxes on casinos or similarly ‘sinful’ or ‘addictive’ activities – and save most of the revenue. Regarding the issue of low government spending, however, a hint of doubt creeps in. If one spends little money in wasteful ways, does that still represent more points than those given to whoever spends more, more wisely?

Two things the index seems to get right. Our labour market situation is not brilliant. In fact, some might say that in what concerns labour relations, Macau still has to cross into a new century (and no, I don’t mean the 21st Century). Still, we get 50 points out of 100.

Possibly the index makers have something else in mind. Nevertheless, it’s bad enough that we rank well below China in this item.

Who would have thought?

Anyway, as I said, these ranking exercises are great to keep us speaking without the need to understand what we’re talking about. (Well, it allowed me to write this column with minimal effort! Now you know!) What do these figures actually mean? Not today, don’t worry, my patient reader!

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he opening ceremony of some specialty retail shops at Rua de Nossa Senhora do Amparo and Patio de Chon Sau, which is next to the Ruins of St. Paul’s is slated for this Sunday at 3:00 pm.

Weng Leong, general manager of Number 81 Co., Ltd., the enterprise that is behind this project, said that the company owns 12 shops on the street and that they will be operating six of them, while renting out the other six to shoppers with a 30 to 40 per cent discount on market price.

The beneficiary terms are offered because of the organiser’s wish to promote the creative and cultural industry and revitalise the old neighbourhood of Macau. Mr. Leong told Business Daily that the criteria in choosing the brands lie in their uniqueness and potential in order to provide something that Macau has not had before.

Mr. Leong said that through collaborative partnerships the first phase of nine distinctive shops will open on that day, with four more launching in the next few months.

The shops range from South African handicrafts to contemporary Chinese furniture and art works to ceramic Portuguese artwork to fusion cuisine and a Macanese café.

The general manger also hopes to have an opportunity to collaborate with the government since they share the same purpose of revitalising the old neighbourhood and promoting Macau tourism. So far, the Internet, social media and magazines are their main marketing channels.

Some shops on the street are in trial operation now, introduced

by Mr. Leong, and they have been performing well in terms of business and receiving orders. Mr. Leong said Rua de Nossa Senhora do Amparo is a street with a profound historical and cultural heritage which he visualises

becoming a foundation model for the revitalisation of Macau’s old district.

Organiser Isabel Chiang said in a statement announcing the opening ceremony that the promotion of the economic diversification and the revitalisation of old districts has been the SAR Government’s objective for a long time, and that the cultural and creative industry is an area in which there has been a significant effort made by both the government and private entities.

Because of high rents in Macau and many other hurdles, however, Ms. Chiang said she believes not every entrepreneur or artist has the appropriate funding or opportunity to demonstrate their talent and work to the public. Hence, she wanted to use the street, the project, as a platform to develop a commercial area unique to Macau by inviting the participation of local and overseas cultural, creative and tourism brands.

Business Daily | 5

January 30, 2015

Macau Dynam Japan revenue drop 3pct in 3Q Japanese pachinko hall operator Dynam Japan Holdings Co. Ltd. posted revenue of ¥115.9 billion (HK$7.6 billion/US$950 million) during the third quarter of its fiscal year ended December 31 2014, which is a year-on-year drop of 2.9 per cent, the company told the Hong Kong Stock Exchange on Wednesday. According to its filing, the total pay-ins and payouts of the Group were at ¥616.7 billion and ¥500.8 billion, which decreased by 11.1 per cent and 12.8 per cent year-on-year, respectively. Dynam said the decrease in revenue was ‘due to a [year-on-year] increase in consumption tax’, claiming it will ‘further enhance the utilisation of machines in halls and reduce hall operating expenses by low-cost operations.’

Sands China earnings miss estimates as VIPs retreat Chairman Sheldon Adelson said he would travel to Macau “this coming week” to meet the city’s newly-installed government

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ands China Ltd., the Macau casino operator controlled by billionaire Sheldon Adelson, reported worse than expected earnings after China’s clampdown on graft and illicit fund flows into the city deterred high-end gamblers.

Fourth quarter adjusted property earnings before interest, taxes, depreciation and amortization fell to US$713.2 million from US$836.4 million a year earlier, according to parent Las Vegas Sands Corp’s earnings statement. That compares with the median estimate of US$728 million from 10 analysts surveyed by Bloomberg.

Chinese President Xi Jinping’s war on corruption has contributed to seven straight months of revenue declines for the casino industry. Sands China said yesterday it will open its fifth casino in the world’s biggest gaming hub in 2016, among a slew of new projects touting highlights such as Batman and Broadway aimed at drawing mass market tourists to offset declines in high rollers or VIP customers.

The company had previously said it would open the Parisian Macao as early as 2015.

“We don’t have an opening date yet. It’ll be some time in 2016,” Adelson said in a conference call, adding he would travel to Macau “this coming week” to meet the city’s newly-installed government.

The stock fell as much as 1.4 per cent to HK$39.1 in Hong Kong trading before rebounding to gain

Sheldon Adelson

0.3 per cent. The city’s benchmark Hang Seng index lost 0.8 per cent.

Las Vegas Sands fell 1.6 per cent in New York trading before the results.

Net income in the quarter at Sands China declined to US$535.3 million from US$655.6 million a year ago, and net revenue slumped 16 per cent to US$2.12 billion, according to the parent.

Adelson, 81, is due to take direct charge of Las Vegas Sands’ China unit as Macau recorded its first annual casino revenue slump in the wake of government actions that included a crackdown on ‘criminal activities’ linked to mainland bank cards.

Adelson, CEO He will become chief executive officer of Sands China on March 6, in addition to his existing role as chairman, as resorts in the gambling enclave face tightening rules that are part and parcel of China’s anti-corruption campaign.

The appointment comes after Sands China chief Edward Tracy said he will retire in March.

Xi visited Macau in December, coinciding with government efforts that include plans to crack down on illicit funds funnelled through the city, the only place in China where casinos are legal.

Macau authorities have also imposed restrictions on the use of UnionPay’s debit cards in casinos, making it harder for punters to buy pricey items that they exchange for cash to gamble with. More scrutiny of

junkets and stricter visa requirements have further affected mainlanders travelling to the SAR. The campaign’s reach widened further this month with the arrest of a prominent hotel executive in the largest bust of a prostitution ring in Macau’s history, indicating that Xi’s crackdown is targeting even longtolerated vices.

“We simply wait for direction of the government and follow it accordingly,” Rob Goldstein, Las Vegas Sands chief operating officer, said on the conference call, referring to questions about Macau Government’s policies including compliance. “We’re

big believers in all the things they’re doing in terms of the corruption issues and anti-money laundering.”

Parisian Macao Sands China is building the US$2.7 billion Parisian Macao, which will have about 3,000 hotel rooms and feature an Eiffel Tower replica.

When completed, Sands China’s room supply will increase to almost 13,000, representing about 45 per cent of total hotel rooms in Macau, Adelson said.

The company will compete with a series of new projects being constructed on the city’s Cotai Strip, including a US$3.2 billion Melco Crown Entertainment Ltd. resort that seeks to woo vacationing Chinese with a family entertainment centre that includes a Batman ride. The project is part of the company’s plan to shift resources away from high rollers.

Galaxy Entertainment Group Ltd. also announced on January 23 that it will invest about HK$57 billion (US$7.4 billion) to expand in Macau and will recreate New York’s Broadway theatre district to attract more visitors.

Bloomberg

6 | Business Daily

January 30, 2015

Macau

Macau people happily married to Taiwan locals The majority of people born in the Special Administrative Region that moved to Taiwan and married there with local spouses enjoy a great time, according to the local government census João Santos Filipe

jsfilipe@macaubusinessdaily.com

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he majority of Macau-born people living in Taiwan and married to locals are happy with their lives, despite the fact that their average household income is less than half the local average.

This information was revealed by a census among foreign-born spouses conducted by the Taiwanese Government.

From a total of 498,368 nonlocal spouses living in Taiwan, including naturalised immigrants and foreign nationals, 92.9 per cent of respondents said they were happy with their lives in their new home, while 87 per cent said they had no trouble communicating with local family members, despite cultural and linguistic barriers.

From the total number of nonlocal Taiwanese people, two thirds, roughly 67.6 per cent, were born in Mainland China, Hong Kong or Macau, while 28.1 per cent came from other parts of Southeast Asia, such as Vietnam, Indonesia, Thailand, the Philippines or Cambodia.

The statistics also revealed that the largest single group of all non-locals by marriage - 315,293 individuals or 63.3 per cent - are women from mainland China, Hong Kong or Macau. The next largest are women from Vietnam at 90,503.

The largest single group of men also come from China, Hong Kong and Macau at 21,735, with men from Thailand taking second place at 2,661.

The survey found that the average household income in families with new non-locals was NT$46,173 per month, less than half the NT$98,073 earned in the average Taiwanese household.

New amusement facilities for Hengqin Chimelong

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he construction of three more amusement facilities at Chimelong International Ocean Resort on Hengqin officially started yesterday following nearly a full year of operation of the amusement park’s first phase, the operator of the theme park, Guangdong Chimelong Group Co. Ltd., has announced in a press statement.

The new construction projects include a 300-hectare ‘animal kingdom’, an indoor amusement park and a 5,000-seat circus to be added to the whole amusement park and resort, the group said.

The new circus to be built would be the second in the Chimelong amusement park.

The group gave no construction figures for the new facilities in the press statement.

‘Chimelong’s investment will largely strengthen Macau’s position as an international tourism destination,’ Guangdong Chimelong Group said in the statement. “It would also make Hong Kong, Zhuhai and Macau a highly competitive golden triangle in the world.’

The soft opening of the group’s Hengqin amusement park and resort took place in late January last year.

Since its official opening of the first phase in March, Chimelong International Ocean Resort has been visited by 8 million people, the group said in its statement.

The only hotel in service on the site following the opening is Chimelong Hengqin Bay Hotel, which provides 1,888 rooms.

The Guangzhou-based amusement park operator said that construction of the Chimelong Penguin Hotel and Chimelong Circus Hotel is now nearing completion.

The two new hotels, which have been under construction since January last year, will add 2,700 new rooms to the group’s Hengqin portfolio.

S.L.

Good Force to acquire Jade Talent

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ade Talent Holdings Ltd., a wholly owned subsidiary of New Media Group Holdings Ltd., is selling its entire equity interest. The purchaser is Good Force Investments Ltd., a wholly owned subsidiary of Emperor International Holdings Ltd. According to a filing with the Hong Kong Stock Exchange, submitted

by Emperor International, the acquisition agreement comprises the sum of consolidated net asset value of Jade Talent, the value of the property at HK$420 million, and the shareholder’s loan due to Good Fortune.

The property comprises a 10-storey industrial building, inclusive of a car park, on a 10,000 square foot plot located in Kowloon, Hong Kong, acquired by Winning Treasure for HK$255 million in April 2011.

Winning Treasure is also a direct wholly owned subsidiary of Jade Talent.

‘The board [of Emperor I n ter n a ti o n a l ] co n s i d e r s t h e

acquisition as an opportunity for the group to expand its property investment portfolio and increase the income stream of the group,’ the filing reads.

The audited consolidated net asset value of Jade Talent is approximately HK$91.5 million, including the property first valued at HK$384 million in June 2014. The shareholder’s loan from Jade Talent was approximately HK$289 million at the end of June last year.

Jade Talent posted profits before tax of HK$35.9 million for the year ended June 30, 2014, compared to HK$39.9 million for the same period a year earlier. While after tax, profit reached HK$33.9 million for 2014, compared to HK$38 million in 2013.

The audited consolidated net asset value of Jade Talent was HK$91.5 million for the twelve months ended June 2014, whilst the fair value of the property was HK$384 million.

S.F.

Business Daily | 7

January 30, 2015

Gaming Melco Crown Entertainment to award one month’s bonus Melco Crown announced yesterday that it is to distribute a bonus to all its non-management workers, equivalent to one month’s salary. In addition, according to its internal notice, some 1,300 workers working for the corporation currently will be promoted or shifted to the Group’s upcoming project – Studio City. Melco Crown is the third gaming corporation to announce a bonus distribution this year, following SJM Holdings Ltd. and Wynn Macau.

Its new project will offer some 9,000 job opportunities, it said in the notice.

Chan Meng Kam questions progress of 4th cross-sea passageway

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egislator Chan Meng Kam has urged the government to announce the progress made in establishing the fourth passageway connecting Macau Peninsula and Taipa, indicating that the traffic capacity of the three cross-sea bridges that the city currently has is almost full.

‘The traffic capacity of Amizade Bridge and Sai Van Bridge is nearly full. In addition, incidents happen [on the bridges] frequently, which always paralyses traffic. As such, it’s an urgent task [for the government] to reroute the sea-crossing traffic by constructing the fourth cross-

Chan Meng Kam

sea passageway,’ Mr. Chan wrote in his interpellation to the government yesterday.

The legislator also queried why the government’s proposal on the model of the

new cross-sea passageway - whether a bridge or a subterranean tunnel - has not yet been announced to the public, given the concept was aired in 2006.

IGT revenues drop 17pct

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lot machine maker International Game Technology (IGT) has reported a drop of 17 per cent in revenues for the three months ended December 31, 2014, the company announced yesterday.

According to IGT’s consolidated results, total revenue dropped 17 per cent to US$451 million from US$541.2 million in the same period 2013, primarily driven by declines in product sales. This was a result of an increase in social gaming revenue, the company said.

In addition, operating cash flow increased by US$27 million, or 35 per cent, to US$102.9 million ‘as improvements in certain working capital metrics offset the decline in net income,’ the company said in its results.

Under its gaming operations, IGT posted a 5 per cent drop in revenues to US$211.1 million in the three months ended December

31, 2014, from US$223 million in the same period a year earlier. Also gross profit decreased by 4 per cent in the same period to US$131.3 million from US$136.2 million.

“Our continued focus on profitability has resulted in strong gross margins this quarter, including improvements in gaming operations gross margins,” said Patti Hart, IGT chief executive officer. “While market challenges remain in the land-based casino business, our DoubleDown social casino generated a double-digit increase in both revenue and average daily active users in the quarter.”

In terms of profit sales, the company’s revenues totalled US$148 million, down 39 per cent from US$243.6 million, while gross profit dropped 44 per cent to reach US$71 million between October and December, from US$126.9 million in the same period the previous year.

Mr. Chan also said that the Lotus Border located in Cotai did not effectively help to relax pressure on the Border Gate, even following its implementation of a

24-hour border crossing in December 2014.

Perceiving that the traffic pressure on the three bridges will keep increasing following the continuous growth of tourists, as well as the launch of new casino projects in Cotai, the legislator said that the government should enhance its regional co-operation with the Mainland authorities so that auxiliary facilities of the Lotus Border can be improved to relax the traffic pressure on the Border Gate and the Islands.

Currently, Macau has three cross-sea bridges; the oldest, Governador Nobre de Carvalho Bridge, is only open to public transportation.

K.L.

8 | Business Daily

January 30, 2015

Greater China

Hong Kong-Shenzhen launch set for seco

Market-watchers had speculated that China would look to launch the Shenzhen link ahe of the MSCI’s annual June review Michelle Price

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he Hong Kong stock exchange expects a much-hyped trading link with its counterpart in Shenzhen to launch in the second half of this year, sources told Reuters - a timeline that could undermine China’s chances of being included in a major investor benchmark.

Many market watchers had expected the landmark Stock Connect scheme linking Hong Kong with Shanghai to be extended to Shenzhen before June, but individuals briefed

by Hong Kong Exchanges & Clearing CEO Charles Li said a start towards the end of the third quarter now looks more likely.

Seen as China’s equivalent of the Nasdaq, the Stock Connect link to Shenzhen would for the first time allow foreign investors to trade the next generation of Chinese companies, including software, high-tech, and biotechnology stocks, via the Hong Kong exchange.

A spokesman for the HKEx said the exchanges are conducting a feasibility study on a link and “will seek approval from the relevant authorities upon completion of their proposal”. The Shenzhen Stock Exchange did not return requests for comment.

Market-watchers had speculated that China would look to launch the Shenzhen link ahead of the MSCI’s annual June review, during which the global index provider will decide whether to include

Chinese investors glued to Hong Kong trading figures display

China “A” shares in its Emerging Markets Index, the main global benchmark for emerging markets stocks.

Inclusion in the index would require funds globally to rejig their portfolios, potentially channelling billions of dollars into Chinese shares.

A Shenzhen Connect could also

pressure other Asian markets, such as Singapore, Taiwan and Korea, as investment flows get diverted to the mainland should MSCI give China the green light.

Singapore’s stock market is already thinking of ways to counter the Stock Connect threat.

Taiwan 2014 GDP robust Manufacturing activity as measured by the HSBC PMI showed total new business and new export orders both fell for the first time in 16 months J.R. Wu

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Taiwan dollar closely follows American greenback

aiwan’s export-driven economic growth could be entering a seasonal slowdown that may last longer than usual if current soft conditions outside the United States herald a downswing for major trading partners.

The government is expected to report its slowest quarterly year-onyear growth rate in five quarters on Friday when it issues preliminary fourth quarter gross domestic product data, although full-year 2014 growth is expected to be the fastest in three years.

A Reuters poll forecast Taiwan’s GDP for the October-December period to have grown 3.1 percent, slowing from the 3.63 percent year on-year pace of the third quarter, resulting in a 3.5 percent GDP gain for all of 2014.

The Federal Reserve’s latest upbeat assessment of the U.S. economy, the ultimate destination for many Taiwan-produced tech gadgets, favours a more optimistic view on Taiwan’s economy.

Taiwan tends to follow U.S. monetary policy closely and economists don’t expect the island’s central bank

Speaking to Reuters on Wednesday, the Singapore Exchange’s CEO Magnus Bocker said he hoped to emulate the Stock Connect link-up within Southeast Asia, in a move that would promote cross-border trading and improve SGX’s liquidity.

The launch of Stock Connect in

to raise benchmark interest rates until the second half of this year.

“Growth in Taiwan is still very solid,” said Tao Wu, a senior economist at the International Monetary Fund.

Taiwan has been bucking the slowdown trend because of demand for Apple Inc’s signature smartphones, which are packed with parts made

by Taiwanese suppliers.

Apple issued its latest quarterly result this week, the largest such profit in corporate history.

The “Apple effect” pushed Taiwan’s technology goods-related exports to a record high in 2014, but some of Taiwan’s December indicators point to weakening conditions.

Manufacturing activity as measured by the HSBC PMI showed total new business and new export orders both fell for the first time in 16 months in December.

December exports fell a surprising 2.8 percent as shipments to China, Japan and Europe all contracted.

The rise in export orders last month beat expectations, but was lower than November’s gain as orders from China contracted for the second month in a row.

Reuters

3.5 pct 2014 Taiwan’s GDP gain

Business Daily | 9

January 30, 2015

Greater China Coal output could face first drop in a decade

ond half

ead

Machinery sector faces overcapacity

Last year, Chinese power output growth was the slowest since 1998 while steel production growth was also the weakest in more than three decades November last year is regarded as a milestone in the opening up of China’s stock markets, helping to ease some of the investment constraints that led the MSCI to keep China out of the index during its annual review last year.

It is not clear, however, if access to Shanghai alone, which is home to around 986 companies compared with more than 1600 in Shenzhen, will be enough to mitigate MSCI’s concerns around liquidity. A June launch of Shenzhen would have opened up the market further and underlined Beijing’s commitment to liberalise its equity market.

A third-quarter Shenzhen launch does not preclude inclusion in the index provided Beijing makes a formal commitment ahead of June, industry insiders said. Changes to the index are likely to come into effect in 2016, meaning Shenzhen could be online in time for funds to rebalance.

A slightly delayed launch would also allow the exchanges and Hong Kong brokers more time to do the technical work.

“There are quite a few differences between the Shanghai and Shenzhen stock exchanges, so although it will be based on SH-HK Connect it’s not a clear cut case of replicating the work done for Shanghai,” said Stephen Baron, manager at Shanghai-based investment consultancy Z-Ben Advisors.

Reuters

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hina’s coal production is estimated to have fallen 2.5 percent in 2014, the first annual drop in more than a decade, hit by a war on pollution and government efforts to tackle a supply glut as demand from industry and the power sector weakens.

The forecast by the China Coal Industry Association comes after official data showed China produced 3.52 billion tonnes of coal in the first 11 months of 2014, down 2.1 percent, with mines under pressure to cut output in the second half of the year in a bid to prop up plunging prices.

The National Bureau of Statistics has yet to publish coal production data for December or the whole year.

China officially produced 3.7 billion tonnes in 2013.

Zheng Nan, an analyst at Shenyin Wanguo Futures in Shanghai, said falling industrial and residential demand made a 2015 recovery unlikely.

China’s coal data is notoriously unreliable and often fails to take into account a vast amount of illicit, private production and consumption from poorly regulated industries.

However, official data suggests that the last year-on-year drop in output was in 2000.

Production has more than doubled

since then, causing chronic pollution problems in industrial regions as well as a surge of greenhouse gas emissions.

A decline in 2014 output supports a view that China is close to “peak coal” use, though the International Energy Agency said earlier this month that it expected Chinese consumption to continue rising until beyond 2020.

Some experts also warned it was too soon to say whether this represented a turning point.

Yuan Jiahai, professor at the North China Electric Power University, said shrinking exports and cooler summer weather in 2014 also contributed to the decline.

Jiang Zhimin, vice-president of the China National Coal Association, told state news agency Xinhua that he expected output to fall a further 2.5 percent in 2015.

Shenyin Wanguo Securities’ Zheng said any decline this year would be limited, with the state keen to preserve jobs.

The government has already tried to push production cuts to support prices and also imposed import restrictions. But efforts to support prices in 2015 could be offset by a campaign to slash consumption in more regions.

Reuters

Political tensions behind China-Japan economic issues

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which honours Japan’s war dead including convicted war criminals from World War II. Japanese official figures show the country had a record 5.79 trillion yen (US$49.1 billion) trade deficit with China last year, while according to Beijing’s own data, the balance was in the other direction, with China in

Undeniably the severe difficulties in the two countries’ political relations also had impact to a certain level Shen Danyang Commerce ministry spokesman

BOC HK considering unit sale Lender BOC Hong Kong Holdings Ltd is considering a sale of its US$6 billion subsidiary Nanyang Commercial Bank (NCB) to stop cannibalising the China business of its parent, people familiar with the matter said. BOC Hong Kong is a unit of Bank of China Ltd, the fourthbiggest lender by assets in the mainland, and a sale of NCB will help streamline the group’s operations in the country, the people said. At US$6 billion, the sale would be Asia’s No. 3 bank deal of all time.

Shanghai FTZ policies to spread China’s cabinet announced yesterday that some preferential policies piloted in the Shanghai free trade zone (FTZ) will be expanded nationwide. The State Council said in a circular that the rest of the country will be allowed to adopt 22 measures on investment, foreign trade, finance, service and government supervision by June 30 at the latest. Six customs measures will be expanded to selected customs by June 30. The measures have proven successful in the Shanghai FTZ and can be duplicated in other places, the State Council said.

China appoints senior officials

Asia’s two biggest economies have been at loggerheads over a maritime territorial dispute and other disagreements olitical tensions are partly to blame for Japanese investment in China recording its biggest fall for almost a quarter of a century, Beijing’s commerce ministry said yesterday.

Investment from Japan slid 38.8 percent to US$4.33 billion last year, Chinese figures show, with a respected Japanese industry group saying the drop was the steepest since 1989, when it fell around 35 percent in the wake of the Tiananmen Square killings.

Commerce ministry spokesman Shen Danyang said that in 2014 economic reasons were behind “sluggish Japan-China trade and economic co-operation”.

But he added: “Undeniably the severe difficulties in the two countries’ political relations also had impact to a certain level”.

Asia’s two biggest economies have been at loggerheads over a maritime territorial dispute and disagreements over how to interpret and remember Japan’s invasion of China during the 1930s and 1940s.

Japan’s nationalist Prime Minister Shinzo Abe angered Beijing in 2013 by visiting Tokyo’s Yasukuni Shrine,

China’s machinery industry faces overcapacity at the low-end sectors and a lack of capacity at the high end, head of the China Machinery Industry Federation (CMIF) said yesterday.

The biggest problem for the industry is “structural overcapacity” -- huge capacity in low added-value sectors, said Wang Ruixiang, president of CMIF, the leading association of China’s machinery companies. Production capacity utilization rate in some sectors is as low as 30 percent, he told an industry meeting, warning that “industrial adjustment and upgrading is the top priority.”

deficit by US$13.6 billion.

Shen did not explain the contradiction per se, but downplayed the Japanese statistic, stressing it was denominated in yen.

“The Japanese yen has depreciated sharply in recent years and the foreign exchange rate of the yen has been very volatile over the long run, therefore the divergence between statistics in yen and those in the dollar was rather big.”

He called for Tokyo to “take concrete actions to implement” an agreement which paved the way for a meeting between the countries’ leaders at an Asia-Pacific summit in November, where the two appeared stiff and awkward.

The agreement papered over differences in the dispute over uninhabited islands in the East China Sea that both sides claim, without making progress on a resolution.

Japan should also “continue to make efforts to improve bilateral relations to create positive conditions for the recovery, consolidation and further development of the two countries’ trade relations”, Shen added.

AFP

The State Council, China’s Cabinet, has appointed and removed some senior government officials. Nur Bekri was named deputy head of the National Development and Reform Commission and head of the National Energy Administration, replacing Wu Xinxiong, the council announced yesterday. Huang Yuzhi was appointed deputy director of the State Administration of Work Safety and director of the State Administration of Coal Mine Safety, replacing Wang Dexue who was also relieved of his position as director of the National Workplace Emergency Management Centre. The post was appointed to Sun Huashan.

Agriculture produce safe, reliable China’s agricultural products are generally safe and reliable, an official with Ministry of Agriculture said yesterday. “The government attaches great importance to food safety and people’s food consumption has a safety guarantee,” said Bi Meijia, a chief MOA economist. Rice imported from Japan is the latest addition on the Chinese list of “everyday foods they bring in from abroad at luxury-good prices.”

The report went on to say that the 160 tonnes of Japanese rice imports in 2014, three times more than in 2013, illustrates “Chinese consumers’ dwindling confidence in the safety of the country’s own agricultural produce.”

10 | Business Daily

January 30, 2015

Greater China

China summons banks for promoting national technology Country’s share of information, communication and technology exports rose to 30 percent in 2012 from 2 percent in 1996 Bloomberg News

The CBRC didn’t respond to a faxed request for comment yesterday.

China has benefited from global integration through the World Trade Organization, the letter said. The country’s share of information, communication and technology exports rose to 30 percent in 2012 from 2 percent in 1996, it said.

China has carried out a trial to test whether NeoKylin, a Linuxbased operating system from China Standard Software Co., can substitute for Windows and servers made

by Inspur Electronic Information Industry Co. can replace IBM’s, people familiar with the matter said in December.

Server sales

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hinese regulators summoned bank officials for a meeting this month to stress the need to carry out a nationwide directive

to cut China’s reliance on foreign technology, said people familiar with the matter.

In the January 15 meeting,

the China Banking Regulatory Commission suggested lenders not buy new mainframe computers in 2015 and draft plans to replace the ones they now have, said the people, who asked not to be identified because the meeting was private. A senior CBRC official said in November banks rely on foreign brands for 80 percent of their core servers and systems.

The directive is a follow-up on a broad national strategy, reported

by Bloomberg News in December, to purge most foreign technology for banks, state-owned enterprises and the military by 2020. The move, which would grant reprieve to foreign companies that turn over their core technology, threatens sales for vendors including Microsoft Corp., International Business Machines Corp. and Cisco Systems Inc. The CBRC told bank officials in the meeting to think of ways to use more domestic products or foreign brands that comply with government demands to share core technology or give China’s security inspectors access to their products, the people said. They said banks should also draft a five-year plan on making the transition.

China’s displacement plan and its intention to start a new national security review mechanism have raised concern among U.S. business groups. In a letter January 28, the U.S. Chamber of Commerce and 17 other groups called for urgent talks with Chinese Communist Party officials on the “growing trend” of policies toward using Chinese-developed or “secure and controllable” information communications technology.

Enhancing security “Our concern is not with the goal of enhancing security, but with the means to reach it,” said the letter to the party’s Central Leading Group for Cyberspace Affairs. “An overly broad, opaque, discriminatory approach to cyber security policy that restricts global Internet and ICT products and services would ultimately isolate Chinese ICT firms from the global marketplace and weaken cyber security.”

Servers are one technology product in which Chinese brands have seen sales surge while foreign providers posted lower shipments. In the third quarter of last year, Hewlett-

In line with China’s World Trade Organization commitments, it is of critical importance that policies be developed in a transparent and open manner U.S. business groups letter

Packard Co. server shipments fell by 14.9 percent and IBM’s fell by 15 percent, according to the research group Gartner Inc. At the same time, shipments by Inspur rose 81.9 percent, while Huawei Technologies Co. posted an increase of 34.3 percent.

“In line with China’s World Trade Organization commitments, it is of critical importance that policies be developed in a transparent and open manner,” the U.S. business groups said in the letter.

Business groups signing the message letter include The Software Alliance, the Semiconductor Industry Association, the Telecommunications Industry Association and the USChina Business Council.

Bloomberg News

Business Daily | 11

January 30, 2015

Asia Japanese retail sales rise for six straight months Policymakers expect consumer spending to firm up this year as the impact of the sales tax hike fades away Tetsushi Kajimoto

KEY POINTS Dec retail sales +0.2 pct yr/yr vs forecast +0.9 pct Private consumption seen firming up after tax-hike slump Wages hold key to sustained growth, 2 pct inflation target

A branch shop of one of the nation’s most successful firms in recent years

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apan’s retail sales rose for a sixth straight month in December, providing evidence of a gradual recovery in private consumption as the economy climbs out of recession.

The 0.2 percent year-on-year sales growth fell short of a 0.9 percent gain seen by economists in a Reuters poll, following a revised 0.5 percent rise in November, data by the Ministry of Economy, Trade and Industry (METI) showed yesterday.

A recovery in private consumption, which accounts for about 60 percent of the economy, is a welcome sign for Prime Minister Shinzo Abe, who has been

struggling to get the economy back on track after a sales tax hike in April hit consumer demand harder than expected.

Private consumption has languished since the government raised the sales tax hike to 8 percent from 5 percent, curbing consumers’ purchasing power as broad price increase outpaced wage growth, causing steady declines in real wages.

“Year-on-year growth in retail sales eased due to effects such as falling oil prices and pre-sales-tax buying rush a year ago. Taking these factors into account, private consumption is on track for recovery,” said Hiroshi

Watanabe, senior economist at SMBC Nikko Securities.

“Private consumption could accelerate ahead as cheap oil prices boost consumers’ purchasing power and the negative impact of the sales tax hike fades. Strength of consumption will depend on wages.”

Policymakers expect consumer spending to firm up this year as the impact of the sales tax hike fades away, and they count on wages to help private consumption pick up pace.

The government and the Bank of Japan are urging Japanese companies to raise wages, which are seen as

crucial for generating a sustainable growth cycle and achieving a 2 percent inflation target.

Crude oil prices below US$50 a barrel are expected to give a boost to Japanese households and the broader economy in the long run as they reduce costs for resource-importing Japan, offsetting rising import costs caused by a weak yen.

But cheaper oil also compounds the challenge for the central bank in meeting its 2 percent inflation target around the coming fiscal year that begins in April, which many investors see as impossible to achieve.

Last week, the central bank sharply cut its inflation forecast, and Governor Haruhiko Kuroda conceded it may take longer than expected to hit the price target.

Compared with the previous month, seasonally-adjusted retail sales fell 0.3 percent in December, the METI data showed.

Reuters

Thai factory output contracts slightly December capacity utilisation in industry was 59.76 percent Orathai Sriring and Kitiphong Thaichareon

T KEY POINTS Dec output -0.35 pct y/y, down for 21 straight months Output dropped 4.59 pct in 2014 Production of hard drives, cars, petroleum weak Dec capacity utilisation at 59.76 pct, vs Nov’s 59.78 pct

hai factory output fell less than expected in December as exports rose, but it still dropped for a 21st straight month, a further sign that the economy remains wobbly.

The Industry Ministry said output in December fell 0.35 percent from a year earlier, the smallest drop since the string of production shrinkages began in April 2013.

The December fall compared with a 1.8 percent drop seen in a Reuters poll and November’s revised 3.7 percent contraction. In 2014, output declined 4.6 percent from the previous year.

Much of Thailand’s industrial output is for exports, which are equal to more than 60 percent of the country’s gross domestic product.

In December, exports were stronger than expected, up 1.9 percent

from a year earlier. But they still dropped 0.4 percent for all of 2014, the second year of decline, and the central bank expects a rise of only 1 percent this year.

December capacity utilisation in industry was 59.76 percent, almost identical with November’s revised 59.78 percent, when it fell below 60 percent for the first time since April.

Tumbling auto sales Thailand is a regional hub and export base for global automakers, and sector output in 2014 slipped 23.5 percent, according to the Federation of Thai Industries (FTI).

Domestic auto sales tumbled 21.4 percent in December from a year earlier and were down 33.7 percent in 2014, hit by the slowing domestic economy and delays in

government spending.

Production is expected at 2.2 million vehicles this year, up from about 1.88 million in 2014, according to the FTI’s Auto Industry Club.

The central bank and the military government say the economy is improving, but with commodity prices expected to remain weak and soft demand seen from China and Europe, the growth outlook for this year remains cloudy.

The central bank expects 2015 economic growth of 4 percent after 0.8 percent growth projected for 2014, the weakest since devastating flooding in 2011.

Along with exports, domestic demand is also likely to remain soft, putting more pressure on the government to ramp up infrastructure spending.

Reuters

12 | Business Daily

January 30, 2015

Asia Philippines achieves 60-year growth record The economy expanded 6.1 percent in 2014, compared with a 7.2 percent pace reported previously for the year earlier and 6.8 percent in 2012 Cecilia Yap and Siegfrid Alegado

since the mid-1950s, according to data compiled by Bloomberg.

Spending rebound

President Benigno Aquino has pledged to fix spending bottlenecks and raise outlays to a record to spur growth

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hilippine economic growth accelerated last quarter as government spending and manufacturing output rose, capping the best three years of expansion since the mid-1950s. Stocks rose to a record.

Gross domestic product increased 6.9 percent in the three months through December from a year earlier, the Philippine Statistics Authority said in Manila yesterday, after a 5.3 percent gain in the previous quarter.

That beat all estimates in a Bloomberg

News survey of 19 economists, where the median was 6 percent.

President Benigno Aquino, who steps down in June 2016, has pledged to fix spending bottlenecks and raise outlays to a record to spur growth to as much as 8 percent this year and next.

His efforts are receiving a boost from plunging oil prices, which are helping slow inflation and boost consumption in most emerging nations in Asia amid a cloudy global outlook.

“The key now is to accelerate

infrastructure projects to expand the economy’s capacity and boost growth to the 7-8 percent level the government is targeting,” said Michael Wan, a Singapore-based economist at Credit Suisse Group AG. Low oil prices will keep inflation subdued, and “2015 should be another solid year,” he said.

The economy expanded 6.1 percent in 2014, compared with a 7.2 percent pace reported previously for the year earlier and 6.8 percent in 2012. That is the best three years of expansion

Nomura profit jumps on retail boost Overseas operations posted a pre-tax loss of 7 billion yen in the quarter

KEY POINTS Q3 profit Y70 bln yen vs Y39.5 bln analyst view Retail pretax income Y50.5 bln, strongest in six quarters Fixed income falls, overseas ops post loss

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omura Holdings reported a near 50 percent jump in third-quarter net profit yesterday, as weakness in overseas bond-trading was offset by strength in the retail business of Japan’s biggest investment bank and brokerage.

Profit reached 70 billion yen (US$595.24 million) in OctoberDecember versus the 39.5 billion yen estimate of three analysts on Thomson Reuters Starmine, lifted by gains on stakes in firms such as

regional lender Ashikaga Holdings.

The blight was a 23 percent decline in revenue from acting as broker for fixed income products such as bonds, as traders were less active while concerns ran high over the Greek economic outlook, European deflation and a plunge in oil prices.

The fixed income business makes up the bulk of Nomura’s wholesale division, which in turn accounts for around 42 percent of the bank’s revenue.

Industrial production grew 9.2 percent in the fourth quarter from a year earlier and government spending increased 9.8 percent, the fastest pace in six quarters, according to data compiled by Bloomberg. Services expanded 6 percent.

“The government stood by its commitment to ramp up and catch up with its spending as we approached the last three months,” Economic Planning Secretary Arsenio Balisacan said at a briefing yesterday. “The Philippine economy’s performance in 2014 and the preceding years starting in 2010 shows how our country can no longer be called the ‘sick man of Asia’.”

The International Monetary Fund last week raised its forecast for Philippine growth this year to 6.6 percent, even as it made the steepest cut to its global outlook in three years.

Philippine inflation may have eased in January to the slowest pace in five years, central bank Governor Amando Tetangco said yesterday.

Bangko Sentral ng Pilipinas, which held the benchmark interest rate at 4 percent in December, is on guard against risks from diverging monetary policies and uneven growth globally, Tetangco said on January 20.

“We remain vigilant against risks from the global front,” Balisacan said yesterday. “Amid the lingering and uneven external conditions, the economy is likely to draw its vigour from the domestic front.”

Bloomberg News

“There were several events that caused market volatility in the quarter,” Chief Financial Officer Shigesuke Kashiwagi said at a news conference after the earnings release.

Overseas operations posted a pretax loss of 7 billion yen in the quarter, but would likely book a profit for the year ending March as planned, Kashiwagi said.

A more than 8 percent slide in the yen versus dollar during the quarter also weighed on business abroad, analysts said.

The fall in wholesale operations was balanced by sales at its retail division, which serves small corporate clients and individual investors who invested heavily in stocks amid a rally spurred by Prime Minister Shinzo Abe’s reflationary policies.

Pre-tax profit at the retail division rose 6 percent to 50.05 billion yen, marking the strongest quarter for six quarters, the bank said.

Reuters

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Business Daily | 13

January 30, 2015

Asia

NZ central bank holds rates

Indonesian inflation easing

The RBNZ’s shift to a neutral tone followed surprise monetary easings of Singapore and Canada

Annual inflation in Indonesia likely eased to 7.50 percent in January from 8.36 percent in December 2014 after domestic fuel prices fell on sliding global oil prices, a Reuters poll showed. The median forecast of 15 analysts in the poll was for monthon-month inflation to cool to 0.26 percent in January from 2.46 percent in December. One analyst forecast deflation. Inflation spiked late last year after President Joko Widodo hiked subsidised fuel prices in November.

But in January, he managed to cut fuel prices while scrapping subsidies for gasoline due to the fall in global oil prices.

Gyles Beckford

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ew Zealand’s central bank yesterday opened the door to a possible rate cut in the face of low inflation and an uncertain global outlook, sending the kiwi dollar to a near-four year low.

The Reserve Bank of New Zealand (RBNZ) held its cash rate steady at 3.5 percent as expected, but said inflation was set to remain lower for longer even though the economy was growing strongly, meaning there was no need to change rates.

“In the current circumstances, we expect to keep the OCR on hold for some time,” RBNZ Governor Graeme Wheeler said in a statement, as he dropped the explicit tightening bias of the December statement.

“Future interest rate adjustments, either up or down, will depend on the emerging flow of economic data.”

The RBNZ’s shift to a neutral tone followed surprise monetary easings in Canada and Singapore over the past week, and a bigger-than-expected bond-buying stimulus programme by the European Central Bank, as policymakers globally respond to the

KEY POINTS Official cash rate held at 3.50 pct, as expected RBNZ expects to stay on hold for “some time” RBNZ says next move could be “up or down” Inflation expected to be lower for longer

BOJ’s to look at long-term price trend

RBNZ Governor Graeme Wheeler said the outlook for major trading partners, except the United States, was weaker

threat of deflation from collapsing oil prices and faltering growth.

Wheeler said the outlook for major trading partners, except the United States, was weaker. Indeed on Wednesday, the Federal Reserve struck an upbeat note on the U.S. economy, skirting tottering economies in Europe and Asia.

“The RBNZ is going with the global flow - as far as a still-strong domestic economy will allow,” said ANZ chief economist Cameron Bagrie.

The RBNZ repeated its nowstandard warning about the currency’s was unjustifiable and unsustainable level and the risk of further “significant depreciation”.

Neutral stance The central bank said inflation, which slowed to 0.8 percent in the year to December, might turn negative at some stage and would stay below the 1-3 percent target band through

2015, before moving more slowly than previously expected back to 2 percent.

A Reuters poll after the decision saw 11 of 15 economists picking the next move to be a rate rise in the first half of next year, or even later, and three seeing a rate rise in the last quarter of this year. One respondent was picking rate cuts from June this year.

Further rate hikes are eventually expected because of the strength of economic growth, and the RBNZ not wanting to boost a housing market which is showing renewed signs of heating up.

Financial market pricing sees a 28 percent chance of a rate cut in March, and 20 basis points of cuts over the next 12 months.

Wheeler said the economy was growing at more than 3 percent, supported by strong construction activity and household incomes, but faced headwinds from sharply lower dairy prices, the risk of drought, and the high exchange rate.

Reuters

Skymark files for bankruptcy Tokyo-based private equity firm Integral Corp has agreed to provide financing to help the airline restructure

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apan’s leading independent budget airline Skymark Airlines filed for protection from creditors late, blaming a weak yen and a dispute with Airbus Group for its financial straits.

The low-cost carrier had liabilities of 71.09 billion yen (US$603.6 million) as of its bankruptcy filing with the Tokyo District Court, it said in a statement via the Tokyo Stock Exchange after an emergency board meeting.

Chief Executive Officer Shinichi Nishikubo resigned and was replaced by board member Masakazu Arimori, said the company, which will delist on March 1.

Skymark said Tokyo-based private equity firm Integral Corp has agreed to provide financing to help the airline restructure, pending court approval.

The airline’s downpayment for Airbus A380 jets and its fuel contracts became a difficult financial burden as

the yen plunged last year, Skymark said.

“The company, believing the demands for breach-of-contract payments were unreasonable, attempted to negotiate a reduction in the payments with Airbus but reached a situation in which there were concerns that payment for breach of contract would have worsened the company’s financial base,” Skymark said.

Last July, Airbus revoked the US$2 billion contract for six A380

superjumbo jets and filed a law suit in December over a dispute with Skymark concerning unpaid deposits.

“We are aware that Skymark Airlines has filed for bankruptcy protection, this is now a matter for the courts,” said an Airbus spokeswoman.

Skymark, struggling with rising operating costs and intensifying competition from Japan’s two big carriers, ANA Holdings and Japan Airlines Co (JAL), had projected a record net loss of 13.6 billion yen (US$116 million) for the business year ending in March.

Nishikubo, the outgoing CEO and leading shareholder, had threatened to take on JAL and ANA on their international routes too. The former Internet entrepreneur had planned to use the Airbus A380’s to offer cut-price business class tickets on lucrative routes such as to New York.

Reuters

Bank of Japan Governor Haruhiko Kuroda said yesterday it was important to look not just at price moves of individual goods but at the medium- to long-term trend of inflation. Consumer inflation may slow in the short term due to falling oil prices, but is seen accelerating in the latter half of next fiscal year beginning in April, Kuroda told parliament. “As a trend, price rises are continuing,” Kuroda said.

Toshiba to exit American TV biz Toshiba Corp said it will stop making and selling TVs in North America and is considering similar exits from other countries, the latest Japanese electronics maker to exit the TV market amid intensifying price competition.

Toshiba said on Thursday it will license the North American TV business to Taiwan’s Compal Electronics, and was in negotiations to sell its TV brand in other markets as well. The company said it had tried to cost cuts and launch higher-margin large-screen TVs, but the “global market is slowing down and continues to see harsh price competition”.

Cyber-crime rises in Singapore The overall crime rate in Singapore rebounded in 2014 after it reached a 30-year low in 2013, the Singapore Police Force said in its annual statistics report yesterday. The crime rate, which rose 7.4 percent, was largely driven by a surge in the number of cases involving e-commerce, police said, adding that the number of such cases increased by 225.3 percent yearon-year to 1,659 cases in 2014. Police attributed the increase to a growing number of people shopping online last year. Cases of victims lured into making multiple payments online rose from 269 cases in 2013 to 904 cases last year.

Myanmar seeking Japanese loan Myanmar’s parliament is seeking a loan of 24.678 billion yens (US$246.78 million) from the Japan International Cooperation Agency (JICA) for several power projects in the central part of the country, parliament sources said yesterday. The loan will be used in building two power stations in Meikhtila in Mandalay region and Toungoo in Bago region. With an interest rate of 0.01 percent, the loan will be paid back in 40 years, the sources said.

14 | Business Daily

January 30, 2015

International German exports to Russia could fall German exports to Russia are likely to fall by as much as 15 percent this year, or 4 almost billion euros, after plummeting 20 percent in 2014, due to sanctions over the Ukraine stand-off and the weak rouble, said Germany’s DIHK Chambers of Commerce. “Leading export sectors such as the automobile industry and engineering will be especially affected,” DIHK’s foreign trade head Volker Treier told Reuters yesterday, adding that the weak rouble created a “huge loss of purchasing power” in Russia.

Yellen deflation-fighting formula doubted by Summers She evinced some concern last year that the standard models central banks use to forecast inflation may be broken Rich Miller

Nokia beats profit forecasts Finland’s Nokia yesterday reported stronger-than-expected quarterly profits for its core network equipment business on the back of network roll-outs for faster 4G mobile services in North America. Nokia, which ranks third in the global network gear market after Ericsson and Huawei said its equipment unit’s core operating profit rose to 470 million euros (US$530 million) in the fourth quarter, or 14 percent of sales, from 397 million euros in the previous quarter. Analysts in a Reuters poll had on average expected a profit of 415 million euros and a margin of 12.4 percent.

U.S. Air Force awards deal to Boeing, Lockheed The U.S. Air Force yesterday awarded a US$383 million contract for more launch services to United Launch Alliance, a joint venture of Boeing Co and Lockheed Martin Corp, bringing the total value of the contract to US$4.08 billion.

The Air Force said it was adding three pre-priced launches to the existing contract, including the launch of a National Reconnaissance Office satellite that privately held company Space Exploration Technologies, or SpaceX, had hoped to win. The modified contract is due to be completed by August 28, 2017, it said in a daily digest of major Pentagon contracts.

Visa Europe profits jump More than 1.5 trillion euros (US$1.7 trillion) was spent on Visa cards in Europe last year, an annual increase of nine percent as more consumers switch from cash payments. Payments on Visa debit and credit cards now account for one euro in every 6 euros spent, Visa Europe said. Gross revenues in the year to the end of September were 1.9 billion euros, Visa Europe added, and its profits of 344 million euros were up 30 percent on the year before.

Diageo posts lowerthan-expected sales The world’s largest spirits maker, reported lower-than-expected sales for the six months to December, hurt by foreign exchange rate moves and discounting on vodka in the United States, its biggest and most profitable market.

The maker of Smirnoff vodka, Johnnie Walker whisky and Guinness stout warned last month that U.S. Thanksgiving sales were disappointing and it expected sales to be broadly flat in the region, where competition among vodka makers has sharpened as trendy drinkers moved to brown spirits such as bourbon.

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anet Yellen is betting she has the formula for fending off deflationary forces. Investors and some of her fellow economists aren’t so sure.

The Fed chair says history and theory suggest wages will pick up as the job market tightens, and prices will rise in line with the Federal Reserve’s 2 percent target. Former Treasury Secretary Lawrence Summers argues policy makers can’t count on this, while Richard Clarida of Columbia University in New York says it hasn’t happened in the last few economic expansions.

Investors have their doubts, too: They expect inflation will run well below the Fed’s target for the next decade, based on trading in U.S. Treasury securities.

“People have no confidence in the central banks being able to fight off deflation,” said Marvin Goodfriend, a former Fed official who is now a professor at Carnegie Mellon University in Pittsburgh, Pennsylvania.

The Fed chair and her colleagues said January 28 that inflation probably will ebb further in the next few months, driven lower by falling energy prices. Over the medium term, they see it rising “gradually toward 2 percent” as the labour market tightens and oil’s impact fades, according to the statement released after their January 27-28 meeting.

Yellen’s predecessor, Ben S. Bernanke, won plaudits in monetarypolicy circles when he finally got the Fed to sign on to an inflation target in early 2012. There’s just been one small hitch: Since April of that year, inflation has failed to hit the central bank’s objective. It was 1.2 percent in November.

Target irony “The irony is that Bernanke got his inflation target in January 2012, and in almost every month since then they’ve fallen below it,” said Clarida, who is also executive vice president at Pacific Investment Management Co. in Newport Beach, California, which oversees some US$1.7 trillion in assets.

Summers said the Fed shouldn’t base its interest-rate decisions on a

People have no confidence in the central banks being able to fight off deflation Marvin Goodfriend, former Fed official

theory that links changes in inflation to developments in the labour market.

That theory, known as the Phillips Curve, posits that wages and prices rise as unemployment falls.

“The Phillips Curve is a constantly changing, ephemeral relationship that does not provide a confident basis for a tightening,” he told a Bloomberg panel at the World Economic Forum in Davos, Switzerland, on January 22.

Summers, now a professor at Harvard University in Cambridge, Massachusetts, said there’s a big risk of the Fed “setting off a spiral towards deflation” by raising rates too soon. “The Fed should not be fighting inflation until it sees the whites of its eyes,” he said. “That’s a long way off.”

No slam dunk Wage growth probably will accelerate as unemployment continues to fall, Clarida said. The jobless rate was 5.6 percent in December, down from a post-recession high of 10 percent in October 2009.

“It’s not a slam dunk” that higher wages will feed through to faster inflation, though -- and in fact they haven’t always done so in the past. If productivity picks up, then companies can pay workers more without feeling compelled to raise prices, or they simply can elect to reduce profit margins, which are at all-time highs, he said.

America’s recent economic experience does raise some doubts about the Phillips Curve relationship.

In the 1991 to 2001 expansion, inflation fell even as wage growth accelerated and productivity increased. Inflation rose in the upswing that preceded the last recession, but labour compensation did not, as costconscious companies cut back on health care and other benefits.

Slow to act Goodfriend said much of the concern about deflation now is centred on the euro area, where the European Central Bank has been slow to take action against falling prices. The ECB unveiled a plan last week to buy government bonds, five years after the Fed took that step.

Still, “there is some evidence of a spill over of a deflation scare into the U.S.,” Goodfriend said.

That’s apparent in bond-market trading. The yield on the Treasury’s 10-year note was 1.72 percent at 5 p.m. in New York on Jan. 28, according Bloomberg Bond Trader prices, near the lowest since May 2013.

Yellen herself evinced some concern last year that the standard models central banks use to forecast inflation may be broken. Behind her disquiet: the failure of the models to foresee the path of prices in the U.S. during and after the last recession and in Japan during its deflationary period from 1998 to 2012.

Diminishing slack Jon Faust, director of the Centre for Financial Economics at Johns Hopkins University in Baltimore and a former Yellen policy adviser, took issue with Summers’s contention that the Fed is basing policy too much on the Phillips Curve. He argues that officials believe inflation will rise at some point as slack in the economy continues to diminish.

The trouble, said former Richmond Fed President J. Alfred Broaddus, is that the central bank “can’t really fine tune inflation.”

He likened the Fed’s task to turning an ocean liner rather than driving a Ferrari. That suggests Yellen and her colleagues may have to wait a while to see if they can lift inflation back up to their goal.

Bloomberg News

Business Daily | 15

January 30, 2015

Opinion Business

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Leading reports from Asia’s best business newspapers

China commodity trade data show winners are scarce

TAIPEI TIMES Former executive of foodscandal-plagued Ting Hsin Oil and Fat Industrial, Wei Yingchun, was released on NT$100 million (US$3.2 million) bail.

Following a 15-hour hearing, the Changhua District Court granted Wei bail at 1am on Wednesday, saying that it approved the release because prosecutors had completed their investigation and Wei’s threemonth detention period was about to expire. In laying down bail terms, the court restricted Wei from changing his place of residence and required that Wei report to his local police station every day by noon to help ensure that he would not try to flee.

Clyde Russell Reuters columnist

THE KOREA HERALD South Korean companies are announcing higher dividend pay-outs, nudged by growing pressure from the government and investors, but the question remains whether it will have a lasting effect on the dull local stock market, analysts said Thursday. In the on-going earnings season, major Korean companies have said they will return more of their 2014 profits to shareholders to raise their traditionally stingy dividend payout ratio, the key reason why Korean stocks are undervalued compared to their peers. The dividend pay-out ratio stood at 22.4 percent last year.

THE JAKARTA POST The rupiah’s current level supports exports and helps narrow Indonesia’s currentaccount deficit, Finance Minister Bambang Brodjonegoro said, signalling the government is comfortable with the currency’s 3 percent drop since October.

“12,500 is already a good rate to maintain our competitiveness,” Brodjonegoro, 48, said in an interview with Bloomberg Television on Tuesday, January 27. That level will also help shrink the current-account deficit, he said. The currency is set for a third month of decline, having weakened 3.1 percent since the end of October to close at 12,477 in Jakarta on Tuesday.

THE PHNOM PENH POST The opposition Cambodia National Rescue Party has called on the government to intervene in the softening prices of Cambodian agricultural commodities. In a letter passed to Prime Minister Hun Sen, via National Assembly president Heng Samrin, a group of opposition lawmakers has raised concerns over the impact falling prices of products such as rice, rubber and mung beans are having on the livelihoods of Cambodian farmers. “The fall of prices of Cambodian commodities at this time is due to lower price offers from middlemen without any ministry intervening,” the letter said.

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hina’s detailed commodity trade figures for 2014 do much to confirm that the trend has changed to higher import volumes being dependent on lower commodity prices, but there are a few notable exceptions.

Major commodities such as crude oil, iron ore and copper all showed increased imports on the back of falling prices, illustrating the changed dynamic in commodity markets whereby supply became the dominant driver of prices.

Taking away the temporary impact of the 2008 global financial crisis on China’s commodity demand, the trend for the last 10 years had been demand-led increases in both prices and volumes of imports.

In 2014 that changed as many commodities moved into structural oversupply, meaning prices fell even as Chinese demand increased.

China imported 13.7 percent more refined copper in 2014 from a year earlier, with prices being 8 percent lower in December 2014 than the same month in 2013, according to customs data.

In crude oil, China brought in 9.5 percent more in 2014, and iron ore imports jumped 13.9 percent, with the prices of both these commodities plunging during the year.

Only coal among major commodities saw falling imports amid lower prices, with inbound volumes dropping 14.7 percent in 2014 from a year earlier.

Coal’s woes are probably related to China’s efforts to clean up

pollution and new regulations aimed to improve the quality of imported coal.

However, while there were a few commodities where volumes increased as did prices, and these are the real winners in the story of Chinese demand for natural resources.

Coffee, bauxite are winners After several years in the doldrums, last year was a strong one for the raw materials used to make aluminium, namely bauxite and alumina.

Alumina imports surged 37.7 percent to 5.27 million tonnes in 2014, while the price reported by Chinese customs in December last year was US$382.34 a tonne, up from US$364.97 in December 2013.

Bauxite imports dropped by 48.3 percent to 36.28 million tonnes, but this has to be viewed in the context of the massive 78.7 percent jump in 2013 as Chinese aluminium smelters stocked up ahead of Indonesia’s ban on exports, instituted in January 2014.

The price paid for bauxite in December 2014 was US$58.57 a tonne, up from US$55.32 in the same month a year earlier.

What alumina and bauxite also show is that the relative winners in the commodity space can also shift quite quickly.

The major beneficiary from Indonesia’s decision to ban the export of raw ores would appear to be Australia, which

In 2014 … many commodities moved into structural oversupply, meaning prices fell even as Chinese demand increased

boosted exports of bauxite to China by 9.5 percent to become China’s top supplier.

For nickel ore, another commodity affected by the Indonesian ban, the big winner was the Philippines, which overtook its Southeast Asian rival as China’s biggest supplier, boosting its exports by 22.7 percent, while also receiving higher prices.

Another winning commodity was coffee, with Chinese imports growing by 36.5 percent in 2014 from 2013, and the price paid

in December last year jumping almost 15 percent from the same month a year earlier.

The strong gain in imports came despite China’s domestic coffee output also rising, although much is exported to Europe for use in blending.

While coffee prices may decline this year on improved crops from major producers such as Brazil, the outlook for Chinese demand remains robust as the beverage becomes more popular in the traditionally tea nation, and as the emerging middle class seeks better quality coffee.

Coffee, along with bauxite, alumina and nickel show that the place to be in meeting China’s commodity needs is where there is strong demand growth coupled with constrained supply.

This is a better position than most of the major commodities are in, where demand remains robust, but only because prices are low.

If crude oil suddenly jumped from its current levels around US$48 a barrel for Brent to closer to US$80, then it’s likely that Chinese imports would soften, as much of the current demand is heading into storage tanks.

It’s the same story for iron ore, any significant rise in price will bring about a concomitant drop in Chinese demand.

While bauxite’s and alumina’s strong run of 2014 may be repeated again, the trick will be to find the next commodities where Chinese demand will increase, even if prices go up as well.

Reuters

16 | Business Daily

January 30, 2015

Closing Official PMI seen lifting off 1-1/2-year low

HK, ROK sign MOU on intellectual property

China’s factory growth likely inched up from a 1-1/2-year low in January, helped by a slight pickup in momentum the previous month, but the bounce is not expected to last due to unsteady exports and slowing investment, a Reuters poll showed. The official manufacturing Purchasing Managers’ Index, or PMI, is forecast to inch up to 50.2 from December’s 50.1, according to the median forecast of 11 economists in the poll. Factory output growth ticked up to a three-month high in December as production of transport equipment rose at its fastest rate since August.

Hong Kong and Republic of Korea (ROK) signed a Memorandum of Understanding (MOU) on cooperation in the field of intellectual property (IP) yesterday. Hong Kong’s Director of Intellectual Property Ada Leung representing the Hong Kong Special Administrative Region Government and Commissioner of the Korean Intellectual Property Office (KIPO) of the ROK Kim Young-min signed the MOU. The MOU provides a framework to facilitate cooperation between Hong Kong and ROK in the areas of IP, such as exchange of information and experience, personnel training, promotion of IP trading and commercialization, as well as joint organization of seminars and conferences.

Chinese banks defy regulator on stocks margin finance Beijing does not want to stop margin financing entirely, as stocks are one of the few bright spots in China, so there is strong political pressure not to trigger a market collapse Engen Tham and Pete Sweeney

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hinese banks seeking to profit from the country’s stock market frenzy have bought into the recent surge in margin finance, foiling regulatory efforts to reduce debt-fuelled speculation and amplifying the risk if the rally turns into a rout.

Although regulators are cracking down on credit flows into the stock market, financial industry insiders say they still have not closed loopholes that allow banks to channel credit into the stock market via brokerages.

That exposes China’s banking system to greater risks, even as lenders struggle with an economic slowdown that has pushed up bad loans, but market watchers say it is not time to panic yet.

“I estimate that around 18 to 20 percent of margin finance loans end up with banks, but it varies from

brokerage to brokerage,” said a senior brokerage auditor at one of the big-four accounting firms in China. “It is definitely growing.”

The easiest way banks get into margin financing is by treating margin loans made by brokerages to investors as collateral for loans to the brokerages themselves.

This creates a quick profit for banks and frees up brokerages to lend more.

Brokerages are obligated to buy the collateral back from the banks, but that becomes a major problem if the market collapses as it did in 2009, after another liquidity-fuelled rally.

Despite a 40 percent jump since November, the current rally has still not returned indexes to their 2009 peaks.

The broader impact of the 2009 implosion was limited because most of the

Cross-Strait economic talks open in Taipei

Sri Lanka blocks Packer’s casino project

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S

he Cross-Strait Economic Cooperation Committee (ECC) yesterday morning opened its seventh regular meeting in Taipei to review the implementation of a landmark trade agreement signed by the mainland and Taiwan in 2010.

Zheng Lizhong, executive vice president of the mainland-based Association for Relations Across the Taiwan Straits, and Shih Hui-fen, vice chairperson of Taiwan’s Straits Exchange Foundation, served as the conveners of the twice-yearly meeting.

“The institutional construction of economic cooperation across the Strait witnessed disturbance in 2014, but progress is expected for the ECC in the new year,” said Zheng during an opening address.

He said he hoped the ECC can “respond positively to demands of industries from Taiwan and the mainland, inject vigour into cross-Strait cooperation” and help share the benefits of this economic cooperation among people on both sides of the Strait.

The mainland delegation was headed by Zheng and Gao Yan, ECC chief representative and vice commerce minister.

The one-day meeting reviewed the Economic Cooperation Framework Agreement.

Xinhua

speculation was done with cash, not credit. But China has lifted restrictions on margin financing since then.

“The economic risk to the equity market is that China’s growth is still decelerating,” wrote Jonathan Garner and Lara Wang of Morgan Stanley in a research note. Margin finance was another risk because it could amplify downward moves as investors sold out to protect their collateral, they added.

The margin credit balance in Shanghai is about 3 percent of total market capitalisation, compared with the last reading of 1.8 percent for the New York Stock Exchange in November.

Beijing has punished some brokerages for bending the rules, and drafted new rules targeting banks. But apart from a one-day plunge the day after the announcement, from which markets have already recovered, there has been little sign that investors, bankers or brokerages are intimidated.

The outstanding value of borrowing for margin trading hit 776 billion yuan (US$124.30 billion) on the Shanghai Stock Exchange on Monday, according to exchange data, and those figures do not include other forms of financing.

There are many variations on the theme, however.

Some banks accepting margin finance loans as collateral are repackaging them as wealth management products (WMP), which are sold to retail customers.

Major banks including Agricultural Bank of China (pictured) have gotten into the act along with smaller ones like Dongguan Bank, which if offering a WMP with an annualised rate of return of 5.5 percent and a guarantee on principal.

For Beijing, with an eye on the history of other asset bubbles, the challenge will be balancing the two.

Reuters

Nearly 100 trade probes against China

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ri Lanka’s new government has blocked three casinos approved by the previous administration, among them a US$400million project by Australian gaming mogul James Packer’s Crown Resorts Ltd. The widely-expected move redeems an election pledge by new President Maithripala Sirisena to cancel the Crown Resorts licence. Sirisena won a January 8 election, ending a decade of authoritarian rule by President Mahinda Rajapaksa.

The casinos faced opposition from Buddhist leaders and some of Rajapaksa’s own coalition partners, who feared that gaming could lead to a boom in prostitution and damage values and culture in the mainly Buddhist island nation.

Prime Minister Ranil Wickremesinghe said gazette notices that gave tax concessions to the projects, including Packer’s integrated mixeddevelopment project, had been amended.

Besides Lake Leisure, Packer’s Sri Lankan joint venture, the blocked projects are the US$300-million Queensbury resort planned

by Sri Lanka’s Vallibel One Plc, and the US$850-million Water Front Properties of John Keells Holdings Plc, the country’s biggest conglomerate.

hina’s trade partners launched nearly 100 investigations into its exports last year, Beijing said yesterday, blaming rising protectionism due to a lacklustre global recovery and the country’s growing economic clout.

The Asian powerhouse was targeted by 22 countries and regions with 97 trade probes, including 61 anti-dumping cases and 14 antisubsidy investigations, commerce ministry spokesman said.

“To a certain extent, the intense trade friction is a by-product of China becoming the world’s biggest trading country in goods and secondlargest economy,” he told reporters at a briefing.

He also put it down to governments strengthening protection of their own domestic industries at a time when the world economy is lacking momentum.

The number of trade investigations targeting Chinese products was expected to “continue to be high” this year as manufacturers become ever more competitive, he added.

Products affected last year ranged from wind power generators to mobile phones and food, he said.

A 2013 trade row with China over solar panels sparked the EU’s biggest-ever trade probe.

Reuters

AFP