Year II Number 259 MOP 6.00 Thursday April 11, 2013 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: Vitor Quintã www.macaubusinessdaily.com
Air quality ‘below standard’ in most casino smoking areas T
Investors fail to connect with Viva Macau auction The auction of a 99.9 percent stake in downed budget airline Viva Macau flopped yesterday, with no bids during the government’s attempt to recoup money it loaned. Viva Macau was declared bankrupt in September 2010. A report prepared by the court-appointed administrator estimated the airline’s debts were about US$38 million but did not identify any assets.
here were air quality problems in the smoking areas of almost two-thirds of the city’s casinos and slot machine parlours, the Health Bureau announced yesterday. The industry has been told to improve or face possible reduction in the scale of existing smoking zones. That could have negative financial consequences for the casinos involved. A report from Morgan Stanley in December estimated eight in ten Macau gamblers are smokers, compared to only three or four in ten in Australia. Casinos should submit their own air quality reports within four weeks and then the bureau will send staff to carry out checks in the problematic venues, the Health Bureau said. More on page 7
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Poor weather hits light rail works
The foundations of the Light Rapid Transit railway depot in Cotai are ready but over schedule. The delay has been blamed on ‘poor weather’, the Transportation Infrastructure Office confirmed. Carriages supplied by Japanese giant Mitsubishi Heavy Industries Ltd will only arrive in Macau next year, meaning trial operations will be delayed until at least then.
HANG SENG INDEX
Zhuhai hotels MOP1,000 cheaper on average Okada facing criminal inquiry in United States Kazuo Okada – a former director of Wynn Resorts Ltd and Wynn Macau Ltd – is officially under criminal investigation in the United States according to a Nevada court filing lodged by federal authorities. It relates to a US$2.3 billion (18.4 billion patacas) Philippines casino project he is planning, and alleged possible breaches of the U.S. Foreign Corrupt Practices Act.
Hotel rooms in neighbouring Zhuhai cost only a third of nightly rates in Macau according to a hospitality industry survey. The latest Greater China hotel quarterly review by consultant HVS found Macau hotels charged on average 1,486 patacas (US$186) per night in the fourth quarter of last year. Zhuhai hotels asked only 355 yuan (453 patacas). But few big spenders will opt for budget cross-border accommodation, an expert told Business Daily.
Pan democrats urge clarity on association handouts
Lift safety guidelines are due out this month Page 2
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business daily April 11, 2013
Pause for thought
Cotai lift accident prompts drafting of new safety rules Government accelerates plans to regulate lift and escalator maintenance after 34 Four Seasons workers were hospitalised Stephanie Lai
José I. Duarte Economist
very time there is news of a new strain of influenza virus in the mainland, there are many who cannot avoid feeling a chill run down their spine. Anyone who was around when the severe acute respiratory syndrome (SARS) epidemic derailed the economy in 2003 is acutely aware of how sensitive Macau is to these types of calamities. In the second quarter of 2003, the economy was badly battered by the ill winds of that epidemic. An economy that was acclimatising to rising tourist numbers was suddenly faced with a drop of 31 percent in that quarter and, God forbid, even posted a loss of tax revenue from gambling. The consumer price index dipped into negative territory, retail sales, employment and GDP almost came to a standstill. It was a shortlived crisis and the recovery was swift. Hopefully, this new strain of the bird flu virus will be less virulent than SARS and that the health authorities have learned their lessons. There are currently grounds to hope that this outbreak will not evolve into a serious crisis. The H7N9 strain of bird flu was identified relatively quickly and mainland officials seem to have gone public with their findings early. SARS’ virulence was compounded by a policy of concealment that allowed the epidemic to fester for months and for hundreds of people to become infected before any serious alarm was raised or action taken to contain it. By then, the openness of our world and ease of travel had carried the infection well beyond its origins in Guangdong. Also, there is no evidence of the H7N9 strain being transmitted between humans. Although the strain’s source and its mode of transmission are yet to be established, the first results of screening among those who were in contact with infected patients give grounds for optimism. The suggestion is human transmission is, at the very least, difficult.
Cautious optimism The current strain is more easily detected in affected birds, which become visibly ill. That helps facilitate the identification of potential sources and containment measures. Finally, the health authorities, both in the mainland and in neighbouring regions are, in principle, better equipped now than they were then, and under the gaze of an attentive and better informed public. Alertness is certainly paramount but these facts give us justifiable grounds for cautious optimism. In the end, unless this outbreak takes a sharp turn for the worse, its economic and social impact is likely to be minor. The current situation should remind the public that the economy is increasingly dependent on a single activity – gambling – and associated businesses, and how they are increasingly dependent on flows from the mainland, including food, tourists and money. As more and more resources are attracted to those activities, and fewer independent small and medium companies can resist the problems of running their businesses, the economy becomes increasingly reliant on the success of its golden-egg avian. Benevolent policies from Beijing, not to mention, possibly, a blind eye to less conventional practices, have ensured the undiminished laying of riches. But then, there are events that no one can control, be it a virulent avian flu, a less than benign regional conflict, natural catastrophe, a successful competitor or any other event our imagination is not prepared to picture. Unusual events are bound to happen. If the big one strikes, we may find the economy is less resilient than we would like to admit. God forbid.
Four Seasons hotel staff were hospitalised after they were trapped inside a lift for about 20 minutes earlier this week (Photo: Manuel Cardoso)
he government will roll out a set of guidelines controlling regular lift inspections later this month, Secretary for Land, Public Works and Transport Lau Si Io said yesterday. “This month we will contact the engineering sector and introduce a set of monitoring guidelines for them to follow,” he told reporters after a meeting of the Legislative Assembly. “Whether the monitoring mechanism will be legislated, we will see how well the implementation of the guidelines goes. We do not rule out [drafting] legislation on it.” Mr Lau said the government had yet to decide if it would set up a
standalone body to monitor lift and escalator safety. There is no compulsory monitoring of escalators and lifts here. Mr Lau was questioned yesterday by reporters after workers were trapped in a lift at the Four Seasons Hotel in Cotai. The Fire Services said 34 workers were hospitalised after being trapped inside a lift for about 20 minutes on Tuesday. The lift reportedly lost speed while ascending to the hotel’s first floor before it plummeted to the ground floor. Injured staff reported headaches and “palpitations” from being trapped in side the stuffy lift, the
Progress in land swap rules: legislators Ilha Verde land swap still unresolved, government acknowledges Stephanie Lai
evelopers could only ask for a land swap within the same district if the government asks to take away part the granted plot for public use, namely for road construction, according to the land law revision. “Under these circumstances the developers are only allowed to swap for a plot within the same district as their development project,” said Kwan Tsui Hang, head of the Legislative Assembly’s first standing committee. “And the plot to be swapped should be of the same or smaller size as their original plot,” she told media yesterday after a meeting with government representatives. But if the government decides to take away all of the land to proceed with a public interest
project the rules change. “In that case the land to be swapped could be a bigger one, though the area should not be more than 50 percent bigger than the original plot granted to the developer.” “And, the developer has to pay a premium for the bigger land,” she added. Land swapping principles and procedures have been heavily criticised by legislators in the past. One notable example was the land swap agreement with developer Pak Lei Sun Development Ltd, a subsidiary of Polytec Asset Holdings Ltd, for Ilha Verde sites where public housing was eventually built. The said sites were granted in 1989 by the Portuguese administration to the developer for
Macau Gaming Enterprises Staff’s Association told Business Daily. The lift’s maximum capacity is 21 people. “The staff at the hotel used to complain that the lift sometimes halted when ascending or, all of a sudden, the emergency bell would go off, even when there was no overloading,” Choi Kam Fu, the deputy director general of the trade union told Business Daily. The Four Seasons told Business Daily that the elevator’s manufacturer, Schindler Lifts (Macau) Ltd, had checked and fixed the malfunctioning lift. “The elevator is back in normal operation,” it said.
an old neighbourhood revival project. The project never got off the ground and the government eventually took over the land. In a reply to a legislator’s enquiry in 2010 Housing Bureau director Tam Kuong Man confirmed that the government decided to give a parcel the same size as the Ilha Verde plots to Pak Lei Sun. However the exact location of the land plot to be granted to Pak Lei Sun has not been disclosed. “The Ilha Verde land swap case is the one that is left unresolved,” said Ms Kwan, quoting the government. Pak Lei Sun will not get a plot in the same district, she added. Hong Kong developer Kerry Properties Ltd is also waiting to get a plot in one of Macau’s five new reclaimed areas in return for giving up part of the land granted for the Galaxy Macau resort. The committee head noted that the legislators were fairly satisfied with the latest changes to the land swap conditions. “Though some legislators urged the government to make sure it fully discloses land swap procedures for public knowledge,” she said. “There were also voices that questioned if the government is holding too big of a discretionary power over land swap,” she added. The government replied it would “try their best to balance public interest and developers’ rights,” Ms Kwan said.
April 11, 2013 business daily | 3
MACAU Natural gas hike could affect electricity price The government should be “cautious” in considering a hike in natural gas prices, which may push up electricity tariffs, said Companhia de Electricidade de Macau - CEM, SA. Iun Iok Meng, advisor to CEM’s executive committee, told media yesterday they hope the natural gas importer Sinosky Energy (Holdings) Co Ltd and the government could settle this issue soon. Sinosky said earlier this week they were hoping for a price rise in mid-year. Mr Iun also said CEM was looking forward to the natural gas supply resumption this year, which is a cheaper means for electricity production.
Zhuhai hotels are on average about a 1,000 patacas cheaper (Photo: Carmo Correia)
Real-time payments in budget hotel website
Cheap Zhuhai hotels not yet a challenger Hospitality experts say longer border opening hours would have a limited impact on the industry Tony Lai
Tourists could soon be able to pay online for hotel rooms booked in the Macau budget hotels’ website, the online platform administrator told Business Daily. “Right now tourists can reserve rooms in the website but they can only pay the fees after they have arrived, at the frontdesk of the budget hotels,” said Kenny Cheung Kin Chung. “But we are discussing with some companies now on how to improve the website this year so that tourists can pay with credit cards,” said the secretary-general of the Macau Hoteliers and Innkeepers Association. The association set up in November an online platform allowing visitors to reserve a room at one of the city’s budget hotels, with the help of the Macau Government Tourist Office. The website covers 500 rooms out of the city’s 1,500 budget hotel rooms. Mr Cheung said they had so far received “positive feedback” from the hotels and users, but without giving any concrete examples and figures. T.L.
ower room rates in Zhuhai and the possibility of keeping border crossings open for longer would have little effect on the hotel industry here, hospitality experts and an industry insider say. The latest quarterly review of Greater China hotels by consulting firm HVS found the difference in average room rates between hotels here and Zhuhai had reached 1,000 patacas (US$125). A night in a Macau hotel cost an average of 1,486 patacas in the fourth quarter of last year. Across the border, the price was 355 yuan (453 patacas), the report said.
The room rate here is acceptable and the occupancy rate remains very strong Edmund Loi Hoi Ngan, gaming and tourism professor, Macau Polytechnic Institute
The price gap does not surprise the secretary-general of the Macau Hoteliers and Innkeepers Association Kenny Cheung Kin Chung. He told Business Daily that room rates were influenced by factors such as the balance of supply and demand, Macau’s appeal to visitors and inflation. The annual rate of inflation stood at 6.11 percent last year but was 2.6 percent in mainland China. “Macau has a very good tourism image and the central government has also said they want Macau to become a global tourism centre,” Mr Cheung told Business Daily. He said the city had “its own characteristics with elements of West meeting East… and the service management of the hospitality here is at a quite high level, so the visitors will know how to choose”. Two academics also said Zhuhai did not pose a big threat. “It will all depend on the types of customers Macau wants to attract,” said Gao Yan, a tourism professor at the City University of Macau. “High-end travellers usually care about the experience the hotel can provide while customers with limited budgets eye the price.”
Holiday headache Macau Polytechnic Institute gaming and tourism professor Edmund Loi Hoi Ngan said: “Those
who stay overnight in Macau usually have a high spending power. The room rate here is acceptable and the occupancy rate remains very strong”. “One problem in Macau is that the visitors cannot find accommodation during holidays, as well as speculation over the room rates.” Mr Loi was referring to soaring prices charged by hotels during peak periods, such as the Chinese New Year holidays. Three-star hotels were charging more than 2,600 patacas a night during the festival, according to data from the Macau Government Tourist Office. The occupancy rate in January was 82.9 percent, up by nearly 4 percentage points in year-onyear terms. Ms Gao warned that mid-priced hotels with room rates of about 1,000 patacas a night might be concerned when border crossings stay open longer or even around the clock. “They charge visitors at a certain level but most do not provide services matching their standards,” she said. “When the border opens for 24 hours, the mainland will draw some guests away from such hotels.” Chief Executive Fernando Chui Sai On said on Monday the government would strive to open the border around the clock. There was a temporary twohour extension in the operating hours of the Gongbei border
crossing during last week’s threeday Ching Ming festival. Mr Cheung said members of his association were not concerned by the border staying open for longer periods. “It may draw some travellers away but at the same time it also helps bring more people to come and stay here,” he said. Mr Cheung said the city needed more budget hotels to better suit all tourists. Macau had just 1,500 budget hotel rooms in January, accounting for 5.8 percent of the city’s 26,000 hotel rooms, official data show.
When the border opens for 24 hours, the mainland will draw some guests away from such hotels Gao Yan, tourism professor, City University of Macau
business daily April 11, 2013
macau Second half loss for soccer club owner Birmingham International Holdings Ltd, owner of Birmingham City Football Club in the United Kingdom, expects to record a net loss for the six months ending December 31, 2012. It blames a “decrease on profit on sales of players”. The club is 13th in the Football League Championship, the second tier of English professional football and is BIHL’s main asset. The company’s stock has been suspended from Hong Kong trading since June 2011 following the arrest of its chairman Carson Yeung Ka Sing, a businessman with Macau business interests, on money laundering charges. He faces trial in Hong Kong this month.
Bidders overlook Viva Macau auction The government will look for another way to recoup 212 million patacas loaned to failed airline Tony Lai
he auction of shares in Viva Macau – Sociedade de Aviação Ltda flopped yesterday, with no bids in the government’s attempt to recoup money from the failed airline. The auction of a 99.9-percent stake in the airline was arranged by the Court of First Instance. The stake belongs to Eagle Airways Holdings Ltd, Viva Macau’s major shareholder, and had a face value of almost 25 million patacas (US$3.1 million). The reserve price was about 17.5 million patacas, 70 percent of the face value. The auction lasted less than one minute with no party bidding for a stake in the airline that was grounded in March 2010 after repeated cancellations of flights. Viva Macau was declared bankrupt in September 2010. A report prepared by the court-appointed administrator estimated the airline’s debts were about US$38 million but did not
“There will not be another scheduled auction and the party [the government] will sell the assets through other means,” a court spokesperson told Business Daily. The government could have arranged a second auction with the reserve price reduced to 50 percent of its face value. If that auction failed, a third auction could have been held without a reserve price.
The low-cost carrier Viva Macau was declared bankrupt in September 2010
identify any assets. Yesterday’s auction was an attempt by the Economic Services Bureau’s Industrial and Commercial Development Fund to recoup 212
Pan-democrats call for subsidy openness
Macau University of Science and Technology received over 128.4 million patacas in subsidies last year
he New Macau Association has urged public bodies to publicise their criteria on granting subsidies. Associations that receive money should also release their financial statements for public supervision,
the pan-democrats said. “The Macau Foundation should be particularly open over how it approves or rejects applications for subsidies as its criteria is the least strict compared to other public bodies like the Social Welfare Bureau and
million patacas in loans granted to Viva Macau in 2008 and 2009. The airline failed to repay all of the five loans. Eagle Airways is the guarantor.
the Education and Youth Affairs Bureau,” said Jason Chao Teng Hei. The New Macau Association president thinks the government should hold a public consultation on criteria for granting subsidies. The group held a press conference yesterday to announce the 10 associations that received the most public money last year. The Macau University of Science and Technology and its affiliated groups top the ranking with 47 subsidies worth over 128.4 million patacas (US$16.05 million), data compiled by the association show. The General Union of Neighbourhood Associations of Macau came second with 91.1 million patacas in 333 subsidies. Macau’s largest labour group, the Macau Federation of Trade Unions, ranked third with 81.6 million patacas. The Women’s General Association of Macau (55.7 million patacas) and the City University of Macau (41.5 million patacas) came next. Mr Chao said the parties receiving public money should publicise their annual accounts and reports on the activities in which the subsidies were used. “There were cases in which three affiliates of a same association applied for government subsidies for the same event,” he said. T.L.
A lawyer representing the Industrial and Commercial Development Fund did not comment on the government’s next move. “I am not in a position to say anything now. I have to discuss with my client first,” the lawyer said. He would not give his name. “This auction is just part of the procedures my client is carrying out.” The Economic Services Bureau did not reply to Business Daily’s inquiries yesterday. The government may opt to keep the stake in Viva Macau as compensation for all or part of the debt. If that happened, the government would become the major shareholder of a now defunct private company that has a lawsuit pending against it. The airline’s suit alleges that Secretary for Transport and Public Works Lau Si Io illegally ordered the city’s flagship carrier, Air Macau Co Ltd, to revoke Viva Macau’s sub-concession to run a low-cost airline in 2010. The Court of Second Instance threw out the case last month, saying Mr Lau had given Air Macau his opinion rather than an order. Viva Macau could take its claim to the Court of Final Appeal, if the bankruptcy administrator gives its permission. Economic Services Bureau director Sou Tim Peng has defended the Viva Macau loans against criticism from Legislative Assembly member José Pereira Coutinho. Mr Coutinho accused officials of negligence and wasting government money in a written inquiry to the government in February. Mr Sou responded in a written statement released last month that the fund had “strictly fulfilled its responsibilities according to the law and prudently utilised its resources”. Mr Sou also leads the board of directors of the Industrial and Commercial Development Fund.
April 11, 2013 business daily | 5
Poor weather hits LRT depot works Trials of railway carriages planned for Cotai depot could be postponed Vítor Quintã
he foundations of the Light Rapid Transit (LRT) railway depot in Cotai are ready but only after a delay caused by poor weather, the Transportation Infrastructure Office confirmed. According to a notice published in Monday’s Official Gazette, the 386-million-pataca (US$48.3 million) construction contract with China Road and Bridge Corp was stretched for another year. The depot foundation “was originally scheduled for completion by the end of year 2012,” the office admitted in an e-mail reply to Business Daily. “However, due to poor weather conditions such as heavy rainstorms and typhoons during the construction period” the works were postponed by “more than a month,” the authorities added. The foundation works were finished in January and the first phase of the depot construction “is basically completed,” the office said. The delay has had “no major impact” on the construction works of the depot superstructure, which
The first phase of the elevated railway’s Cotai section should be completed by 2015 (Photo: Manuel Cardoso)
Macau next year, thus forcing a postponement of the trial run. “The supplier has commenced the production work of the LRT vehicles, with expectation to undergo testing in Japan at the end of this year,” the reply says. The four-cabin trains stretching 47 metres long, 2.8 metres wide and 3.9 metres high and with a capacity for 476 passengers “will be shipped to Macau after completion of a series of testing procedures and approval of acceptance,” the office added. Mitsubishi won the contract worth 4.69 billion patacas to supply the rolling stock and the system for the first phase of the railway system in late 2010. At the time the company was given almost four years to complete all the construction works and after that, two more months of trial runs for the system to begin operation. The launch of the railway system was originally slated for 2008 but it has been successively postponed. The project’s budget has topped 11 billion patacas – almost three-times higher than the initial forecast.
have already begun, it added. The depot includes a test track that will host trials of carriages destined to run on the Light Rapid Transit elevated railway system before the end of the year, office
coordinator Lei Chan Tong said in February. But the office has now hinted that the carriages supplied by Japanese giant Mitsubishi Heavy Industries Ltd will only arrive in
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business daily April 11, 2013
macau Okada v. Wynn – now the U.S. govt is involved
Okada facing criminal inquiry in U.S. – court filing Feds also conducting criminal investigation into Wynn Resorts’ donation to University of Macau Michael Grimes
azuo Okada – a former director of Wynn Resorts Ltd and Wynn Macau Ltd – is officially under criminal investigation in the United States according to a state court filing lodged by federal authorities on Monday, U.S. time. The inquiry relates to a US$2.3 b i l l ion ( 18.4 billion p atac as) Philippines casino project he is planning, and alleged possible breaches of the U.S. Foreign Corrupt Practices Act, say the papers. The statute bars payments to foreign officials. The U.S. Department of Justice also noted in the filing that it has been conducting a criminal investigation into Wynn Resorts’ US$135 million donation to the University of Macau Development Foundation. The bequest was announced in May 2011. Mr Okada has said Wynn’s board turned against him for opposing the donation. Mr Okada is a Japanese citizen, and his main known investment vehicle is Universal Entertainment Corp., a company listed on the JASDAQ in Osaka. Business Daily understands however that the U.S. is claiming jurisdictional interest in Mr Okada because
KEY POINTS U.S. criminal probes into Okada’s Philippines deal and Wynn Resorts’ University of Macau donation Okada’s Japanese company Universal Entertainment Corp., ‘cooperating fully’ Wynn Resorts ‘continuing cooperation’ with govt Dept of Justice asking Nevada court for stay of civil hearings in Okada v. Wynn
of his former role as a director of Wynn Resorts Ltd, a company with operations in the U.S., and with the majority of its group revenue coming from Macau operations. The Japanese pachinko billionaire also controls Aruze Gaming America Inc., a business with an office in Las Vegas. The firm is licensed to supply electronic casino equipment including slot machines, to major casino markets including Nevada and Singapore. Aruze equipment has also been approved for use in Macau. Monday’s filing asks for a stay in civil proceedings in Nevada between Mr Okada and Wynn Resorts. There are multiple lawsuits there stemming from the unilateral cancellation by Wynn Resorts in February 2012 of Mr Okada’s near 20 percent stake in the company and his ejection from the Wynn Macau board. Wynn has said in stock market and court filings the reason for the action was that Mr Okada’s conduct in pursuing a Philippines casino scheme had made him “unsuitable” to be a director of Wynn Resorts; involved possible violations of the FCPA; and threatened Wynn Resorts’ Nevada gaming licence. Mr Okada has denied all those claims and countered the shareholding cancellation was to shore up the chairman Steve Wynn’s own position in the company. According to a U.S. stock market filing in late March, Mr Wynn has 9.9 percent of Wynn Resorts.
Manila probe In January Cristino Naguiat, current chairman of the Philippines’ gaming regulator Pagcor – the Philippine Amusement and Gaming Corporation – told local media Mr Okada faced a Federal Bureau of Investigation probe in the U.S. – in addition to a Philippines Department of Justice inquiry into how he got a Philippines casino permit. That was not confirmed at the time by U.S. federal authorities. Reuters reported in March that the FBI and the Philippines’ National Bureau of Investigation
were investigating allegations of US$40 million (320 million patacas) in payments to Rodolfo Soriano. Mr Soriano – understood to be a Philippine national – was described by Reuters as a “former consultant” to Pagcor and a “fixer” who assisted Mr Okada in his bid for a gaming resort on a planned strip of new Las Vegas-style casinos at Manila Bay. Mr Okada has denied any wrongdoing.
Philippines licence Mr Okada’s Manila casino licence was granted in August 2008 under the leadership of the previous Pagcor chairman Efraim Genuino. Last September the Philippines DoJ recommended the prosecution of Mr Genuino for 175 counts of malversation of public funds and 174 counts of violation of the AntiGraft and Corrupt Practices Act. The U.S. Department of Justice said in its court filing in Nevada on
Melco Crown unit boosts share capital fivefold A
shelf company – expected to raise US$400 million (3.2 billion patacas) from a share sale for Melco Crown Entertainment Ltd’s managed Manila casino venture Belle Grande Manila Bay – has been given permission to boost its share capital more than fivefold. The Philippines’ Securities and Exchange Commission approved an increase in Melco Crown (Philippines)
Monday that Mr Okada’s lawyers would probably oppose the stay request “in whole or in part”. Wynn Resorts won’t oppose the request, the DoJ said. The federal government’s application is due to be heard next Tuesday U.S. time by Clark County District Judge Elizabeth Gonzalez, according to court papers. Universal Entertainment’s shares initially fell 18 percent on Wednesday trading in Japan on news of the criminal inquiry into Mr Okada in the U.S. The stock closed the day at 1,666 yen (US$16.8), a fall of 15.73 percent. Wynn Macau’s shares were up 0.48 percent yesterday in Hong Kong to close at HK$21.00. “Universal is cooperating fully with all investigations,” said Eric Andrus, a spokesman for the Japanese company at RLM Finsbury, a public relations firm. Kim Sinatra, general counsel for Wynn Resorts, said the company would continue to cooperate with the government.
Resorts Corp.’s capitalisation from 900 million shares at par value of one peso per share, to 5.9 billion shares at the same value. “One of the shelf company’s purposes was to own land which under Philippines law requires 60 percent local ownership,” a gaming industry source told Business Daily. “Melco Crown acquired the company and technically defaulted on one of the purposes of the company. Now they are amending their primary objective away from owning land, after which they can own as much of the stock as they like,” said the person. “…the Corporation currently does not own land, and does not intend to do so for now,” the local unit said in a filing to the Philippine Stock Exchange. The Melco Crown unit is developing the casino there in a venture with Filipino Chinese entrepreneur Henry Sy.
April 11, 2013 business daily | 7
Air quality ‘below standard’ in most casino smoking areas
Sands expands green meetings plan Integrated resort operator Las Vegas Sands Corp has expanded its Sands ECO360 Meetings programme, which has also been implemented in the company’s Macau properties. New offerings include ‘green meeting concierges’ to guide the entire sustainable meeting planning process for the minimum environmental impact. The concierge also use the new event planning tool to work closely with clients to customise their programmes and help them meet individual sustainability goals. Another new option is the event impact statement, a report to track a meeting’s sustainability performance, including a carbon footprint calculation, utility consumption, recycling and waste diversion, sustainable food and community benefit. Customers will also be given the option to add community engagement events to the meeting experience. “Our clients have a growing interest in conducting business in an environmentally responsible way,” said John Mims, senior vice president of worldwide sales and resort marketing at Las Vegas Sands.
Sofitel Macau chef recognised in France Yannick Ehrsam, the executive chef of Ponte 16’s Sofitel Macau has been named Master Chef by one of France’s most esteemed culinary associations, ‘Maîtres Cuisiniers de France’. The association created in 1949 held its 59th congress in Lyon, France, last month and welcomed 28 new master chefs including Mr Ehrsam, who oversees the culinary team at Sofitel Macau. “His passion towards the culinary arts is exemplary. He sets a great example for our younger chefs to learn from, said Cory Winter, regional director of food and beverage at Sofitel Greater China. Mr Ehrsam opened upscale boutique French restaurant Privé at Sofitel Macau in September 2012 after having worked at award winning Beijing restaurant Pre Lenotre. He learned his trade at some of France’s most renowned kitchens such as L’Atelier De Joel Robuchon, La Ferme de Mon Pere and Le Bateau Ivre.
Health Bureau wants improvements, threatens to cut down on smoker zones Vítor Quintã
here were air quality problems in the smoking areas of almost two-thirds of the city’s casinos and slot machine parlours, the Health Bureau announced yesterday. A first round of regular checks during six days in late March shows 28 gaming venues “have at least one indicator that does not match the standards, accounting for 63.6 percent of the total,” the bureau said in a statement. More than half – 16 – of the casinos with air quality issues were run under the gaming licence of Sociedade de Jogos de Macau, SA (SJM). However most are actually run by other companies. Melco Crown (Macau), SA also had problems with eight of its gaming venues, most of which were the company’s Mocha Clubs. Three of the casinos run under the licence of Galaxy Casino, SA were also on the warned list, along with Wynn Macau casino, operated by Wynn Resorts (Macau), SA. “We will be working closely with the Health Bureau over the coming weeks to address this matter,” Wynn Resorts told Business Daily. “We regret that the air quality test result … is less than satisfactory and we pledge to make the necessary improvements to go in line with the related requirements,” Galaxy said. Business Daily asked SJM and Melco for a comment but received no reply before press time. MGM Macau, operated by SJM sub-concessionaire MGM Grand Paradise, SA and all four casinos run by Venetian Macau, SA, (technically a sub-concession of Galaxy) matched the air quality requirements.
The bureau has conducted 1,000 checks on Macau’s 44 casinos and slot parlours between March 25 and 30. The partial smoking ban in casinos came into effect on January 1. The testing focused on six indicators linked to tobacco smoke: carbon monoxide, carbon dioxide, fine particles smaller than 2.5 micrometers, fine particles smaller than 10 micrometers, volatile organic compounds, and benzopyrene. The average air quality in casinos’ smoking areas was 2.7 points – in a scale of 0 to 5 with five being the best. Air quality was somewhat better outside smoking areas: 3.3 points. Gaming operators were also required to carry out monthly checks on their smoking areas’ air quality and submit the report to the bureau. As of April 9, two casinos or slot parlours had failed to submit a complete set of required reports, the bureau revealed – without naming those venues. The authorities said they have already notified the operators of the venues that fail to meet the standards and told them to improve their facilities. Casinos should submit their own air quality reports within four weeks and then the bureau will send staff to carry out checks in the problematic venues, the statement said. In case the smoking areas still fail to meet the requirements, the government could “reduce the area of its [a casino’s] smoking area in accordance with the legal proceedings,” the bureau warned. Chief Executive Fernando Chui Sai On has the power to reduce or terminate smoking areas in casinos.
Partial smoking ban in casinos came into effect on January 1
business daily April 11, 2013
GREATER CHINA Surface tablet warranty follows law Microsoft Corp. said its Surface Pro tablet and all other products meet or exceed warranty laws in China. Consistent with Chinese law, Surface Pro and its main components are covered under a two-year warranty, Microsoft said in an e-mailed response. China National Radio on Monday reported the company had a one-year pledge for the Surface Pro. “We stand behind our products with a manufacturer’s warranty, which is additional to our commitment to honour any statutory obligation as either a manufacturer or retailer, to repair or replace a faulty product,” Microsoft said in the statement.
Trade deficit sets upbeat tone March trade deficit may signal key import shift Aileen Wang and Nick Edwards
hina has posted a surprise trade deficit in March as imports rose more-thanexpected on stronger demand for commodities such as copper and oil. March saw a mild trade deficit of US$884 million as a forecast-busting 14.1 percent year-on-year surge in imports eclipsed export growth of 10 percent, signalling that domestic demand was gathering steam needed to drive economic recovery. Customs Administration data yesterday showed import growth far in excess of the 5.2 percent expected, while exports fell just short of the 10.5 percent rise forecast in the benchmark Reuters poll. That left China with a trade deficit, compared with a forecast surplus of US$15.4 billion and February’s surplus of US$15.3 billion. Haibin Zhu, chief China economist at JP Morgan in Hong Kong, said the surge in imports in March could help dispel a major concern over the strength of the domestic demand cycle prompted by weakness of import data in previous months. “The stronger than expected import growth for March suggest this cycle is probably coming to a
turning point,” Mr Zhu told Reuters. “If domestic demand turns out to be stronger than expected, it’s definitely positive for the economic outlook.” China’s Commerce Ministry has pledged to unveil fresh measures this year to boost imports, chiming with Beijing’s long-term goal of balancing its trade structure to pursue more sustainable growth by tilting the economy more towards domestic consumption. Yesterday’s data follows two months of particularly strong export
KEY POINTS China posts unexpected trade deficit of US$880 mln Imports rose by an aboveforecast 14.1 pct y-o-y March trade data signals strengthening recovery
growth – February’s soared past forecasts to jump by a fifth year on year, even after January’s had jumped by 25 percent – which had implied a overseas demand boom that had confounded economists.
‘Uncomfortable reality’ “We thought something odd had been going on with [export] numbers,” said Alistair Thornton, China economist at IHS Global Insight in Beijing, who believes the export data does not support the notion of the overall economy gaining significant momentum and remains suspicious of it. “China’s exports to Hong Kong grew by an astounding 93 percent year on year – the highest since March 1995 – whilst exports to the EU contracted by 14 percent year-on-year and those to the U.S. sank by 7 percent. Given a lot of exports to Hong Kong are actually re-exported to the EU and U.S. as final destinations, this seems a little incongruous, to say the least,” he said. “The upshot is that the 10 percent headline [export] growth number
Yuan-Aussie trading starts as HSBC joins market makers
to reduce the country’s reliance on the dollar. China has accumulated US$3.3 trillion of foreign- exchange reserves, the world’s largest stockpile. This is a “significant step forward in supporting the growing demand for RMB for payments, settlement and financing globally,” said Tony Cripps, chief executive of HSBC’s Australia unit, according to a statement from the company released yesterday. “Greater RMB turnover and liquidity will ultimately make exchange-rate transactions for businesses and investors from both countries easier.” RMB, or renminbi, is the official Chinese name for the currency. The PBOC announces a daily reference rate for the yuan against the Australian dollar at around 9.15 am in Shanghai on each trading day, based on market-maker prices. The rate was set at 6.54 per Australian dollar yesterday, compared with
masks an uncomfortable reality – either the trade data is unreliable, or if it is reliable, then what are being booked as exports are not actually exports. Either way, this is not an optimistic data release,” Mr Thornton added. Analysts believe that Hong Kong is often used by Chinese firms as a conduit through which they can
Fitch cuts local currency debt rating
Becomes the third currency to trade directly with the Chinese yuan SBC Holdings Plc started direct trading between the yuan and Australia’s dollar yesterday, joining two other banks in getting approvals from China as market makers. China, Australia’s top trading partner, will start direct trading between the nations’ currencies, Australian Prime Minister Julia Gillard announced on Monday in Shanghai during an official visit. The People’s Bank of China approved Australia & New Zealand Banking Group Ltd and Westpac Banking Corp. as market makers for such transactions, she said. The Australian dollar becomes the third major currency allowed to have direct trading links with the yuan after the greenback and Japan’s yen. Chinese Premier Li Keqiang took office last month and retained central bank governor Zhou Xiaochuan, who has been seeking
Imports boost – key for a more sustainable growth
6.5314 on Tuesday, according to the China Foreign Exchange Trade System. Direct trading means the fixing will be computed without involving a cross rate with the U.S. dollar. China remained Australia’s top trading partner in February, with transactions at A$9.7 billion (US$10.2 billion), according to the bureau of statistics. “For China, the interest for having direct trading with the Aussie is very much tied up with the desire to have commodity pricing other than the dollar,” said Cliff Tan, East Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong. “From the Chinese perspective, it’s always great to have one more potential offshore pool of yuan liquidity. But I’m very interested to see how Australian companies will go in terms of adoption.” Bloomberg News
Fitch Ratings Ltd cut China’s long-term local-currency debt rating, citing increasing risks to the country’s financial stability given the lack of transparency in the increased borrowing of local governments. Fitch lowered its assessment by one step to A+, the fifth-highest grade, it said in a statement yesterday. The agency cited “underlying structural weaknesses” and a growing risk from shadow banking. The downgrade is for yuan-denominated debt, not foreign currency debt. It estimates total credit in China’s economy, including various forms of so-called shadow banking, may have reached 198 percent of gross domestic product at the end of 2012, up from 125 percent four years earlier. Chinese local governments “likely have significant additional contingent liabilities” arising from the debts of companies linked to them, Fitch said. The local governments may have had 12.85 trillion yuan (US$2.1 trillion) in debt at the end of last year, equal to about 25 percent of GDP, up from 23.4 percent at end-2011, Fitch said. “The proliferation of other forms of credit beyond bank lending is a source of growing risk from a financialstability perspective,” Fitch said.
April 11, 2013 business daily | 9
GREATER CHINA Mirae Asset to cut half of HK payrolls Mirae Asset Securities Co., the brokerage affiliate of South Korea’s second-largest money manager, will eliminate half of its 38 staff positions in Hong Kong after stock trading in the city fell. The timing of the reductions hasn’t been determined yet, Choi Jong Hyun, a Seoul-based spokesman for the brokerage, said yesterday. The move won’t affect services in Mirae’s home market, he said. Firms have been cutting jobs in Hong Kong to pare costs. Average daily turnover by value on the Hong Kong exchange fell 23 percent last year to HK$53.9 billion (US$6.9 billion), according to data compiled by Bloomberg.
government departments to do more detailed research in the future and hope to sort out various reasons behind abnormal trade growth with Hong Kong and will take regulatory measures if needed,” he said.
inflate invoices to boost foreign exchange earnings, though there are also legitimate reasons for routing via the special administrative region to mitigate tax bills and third-party customs duties. There’s a huge amount at stake in an economy where total trade was worth some US$3.9 trillion in 2012. March exports were worth US$182.2
billion, while imports were worth US$183.1 billion. Zheng Yuesheng, spokesman of General Administration of Customs, told a news conference on Wednesday at which the trade data was released that the issue was being investigated. “We are now looking into the issue closely and have done some initial research. We will work with related
Tokyo Star was delisted from the Tokyo Stock Exchange in 2008
Chinatrust seeks takeover of Tokyo Star Bank Acquisition may be completed in less than two months
aiwan’s Chinatrust Financial Holding Co. is seeking to acquire Tokyo Star Bank Ltd for about 50 billion yen (US$503 million) in a deal that may be struck as soon as June, according to two people with knowledge of the matter.
Chinatrust is in talks to buy closely held Tokyo Star from a group of shareholders including Dallas-based Lone Star Funds, Shinsei Bank Ltd and Aozora Bank Ltd, the people said, asking not to be identified as the information is private.
Lu Ting, chief Greater China economist at Bank of AmericaMerrill Lynch in Hong Kong, echoed concerns about the Hong Kong export surge, but was more focused on the import numbers. “Import growth in March, mainly on rising domestic demand for raw materials, was strong, implying robust FAI [fixed asset investment] growth in coming months,” Mr Lu wrote in a client note. Infrastructure spending – which grew at an annual rate of 21.3 percent in the first two months of 2013 – has provided a crucial underpinning to activity in the world’s second biggest economy and is widely credited with triggering the recovery which began in Q4 last year. But Lu pointed to growth of imports for domestic use improving to 4.8 percent year on year in March from a fall of 2.3 percent in JanuaryFebruary combined, as a clear sign of an uptick in internal demand fuelling economic output. “With the rise in import growth, which implies a rise in domestic demand as well as some other indicators, we believe GDP growth will rebound in Q2 to above 8.0 percent (we forecast 8.1 percent),” Mr Lu said. Reuters
A takeover would be the first of a Japanese bank by a foreign lender, helping Chinatrust to serve as a bridge between corporate customers in Taiwan and the world’s thirdlargest economy, the person said. Japan’s Topix Banks Index up 70 percent in the past six months as investors bet that fiscal and monetary stimulus will spur borrowing. Spokesmen for Taipei-based Chinatrust, Lone Star, Shinsei Bank and Aozora Bank declined to comment on a potential deal. Hiroki Nakano, a spokesman for Tokyo Star, said the company isn’t in position to comment on the matter. Any deal would require regulatory approvals from authorities in Taiwan and Japan, one person said. The Nikkei newspaper reported in January that Chinatrust was in talks to acquire the Japanese bank. Chinatrust, Taiwan’s largest issuer of credit cards, is considering the purchase with Japan’s property market expected to benefit from Prime Minister Shinzo Abe’s efforts to put an end to decades of deflation. Tokyo Star focuses on mortgages in addition to its corporate lending business in industries such as health care and shipping. The sale would be the fourth time ownership of Tokyo Star has changed hands since 1999, when the lender was bailed out by Japan’s government. Bloomberg News
Beijing charges former rail chief Liu Zhijun charged with corruption, abuse of power
hina formally charged former railways minister Liu Zhijun with corruption and abuse of power yesterday, state media said, the latest step in a graft investigation into the scandal-plagued railways. Mr Liu faces either a lengthy jail sentence or possibly death. How severely he is dealt with will be an indicator of how seriously new Chinese President Xi Jinping Xi takes his fight on corruption, one of the pillars of his new administration Mr Liu “practiced favouritism and carried out malpractice, misused his power and caused big losses to public property and the interests of the state and the people,” the official Xinhua news agency said. “The second intermediate Beijing court has already accepted the bribery and misuse of power case in accordance with the law and will chose a date for a trial,” the news agency said. “As a worker for the state, Liu Zhijun used his position to help others seek gain, illegally accepted wealth and assets from other people. The numbers involved were huge and the circumstances very serious,” Xinhua added. Mr Liu, who was removed from his post in 2011 and later expelled from the Communist Party, championed what he called leapfrog development of a rail network that accumulated more than 2.6 trillion yuan (US$419.8 billion) in debt as it laid almost 10,000 kilometres (6,200 miles) of track. The allegations of corruption surrounding the rail construction, along with a July 2011 bullet-train crash that killed 40 people, have come to symbolise broader concern over the quality of China’s infrastructure expansion. Mr Liu had successfully resisted a merger with the Ministry of Transport six years ago, but China’s National People Congress approved the rail ministry’s dismantling last month. It was split into two, with regulatory functions being absorbed by the Ministry of Transportation and the commercial operations made into a new company, China Railway Corp. Reuters
Liu Zhijun, former rail minister
business daily April 11, 2013
ASIA S.Korea govt to submit extra budget bill The South Korean government will submit an extra budget proposal to parliament next week aiming to have it ratified by the end of April, Finance Minister Hyun Oh-seok said yesterday. Mr Hyun, speaking at a weekly policy meeting, did not disclose the amount of the extra budget, but said the package aimed to boost jobs and encourage business start-ups by young people. It would also address pressing needs such as strengthening the country’s defences against cyberterrorism and revitalising the property market. The government will likely need to borrow more to fund the extra budget, which is expected to be somewhere between 15 trillion won (US$13 billion) and 20 trillion won. Analysts say that the South Korean government’s fiscal position is strong enough to handle additional debt. Yesterday’s announcement appeared to signal that the extra budget, centrepiece of new President Park Geun-hye’s stimulus package, would not involve massive infrastructure spending but would instead use more modest measures to shore up growth in Asia’s fourthlargest economy. But it is unclear how much of the stimulus package will lead to new spending because the government needs extra money to make up a projected 12 trillion won revenue shortfall for the year as well.
Malaysian election set for May 5 Malaysia will hold general elections on May 5, the Election Commission said yesterday, in what could be the toughest test of the ruling coalition’s 56-year grip on power in Southeast Asia’s third-largest economy. Opinion polls suggest a narrow victory for the National Front led by Prime Minister Najib Razak, who is under pressure to restore the two-thirds majority the coalition lost for the first time in 2008. Mr Najib ended months of speculation when he called for the poll last week, less than a month before the end of the parliamentary term. He says he needed time to show the impact of his economic transformation programme, but critics say the delay was a sign of indecision that kept financial markets on edge. Mr Najib faces a confident opposition led by former deputy prime minister Anwar Ibrahim, whose Peoples’ Alliance won five of Malaysia’s 13 states in 2008 and has the best chance of toppling the coalition in Malaysia’s postcolonial history. The May 5 poll could be Mr Anwar’s last chance to become premier, analysts say. His alliance wants to tap into a growing desire for faster political and economic reform. Elections Commission chairman Abdul Aziz Mohd Yusof told reporters that candidates will be nominated on April 20, meaning a two-week campaigning period.
Singapore mansion for sale at record S$300 mln Wing Tai Holdings Ltd chairman Cheng Wai Keung is seeking a record S$300 million (US$242 million) for a home near Singapore’s Orchard Road shopping belt, betting that developers may profit from dividing the site. The 85,000-square-foot site on an elevated lot at 33 Nassim Road, near the city’s Botanic Gardens, includes a two-story home, swimming pool and tennis court, according to Jones Lang LaSalle Inc., the sole marketing agent. “These kinds of assets come onto the market once in 10, 15 or even 20 years,” Karamjit Singh, head of investments and residential at Jones Lang LaSalle in Singapore, said. “The potential buyers of this league would be able to recognise the opportunity.” The site may be sold as two lots, which can yield a total of five homes, he said.
Singapore casinos chasing millions in debt High-rollers from China make operators see red Eveline Danubrata and Anshuman Daga
Marina Bay Sands has filed 84 claims since 2010, court documents show
igh-rollers get lavish treatment and hefty credit lines at Singapore’s two casinos, like any other gaming house in the world. But there, more of them skip town without paying their debt, a matter of increasing concern for investors. Three years after Singapore allowed casinos to open, Genting Singapore PLC’s Resorts World Sentosa and Las Vegas Sands Corp’s Marina Bay Sands have become some of the world’s most profitable. Chinese nationals account for around half of the VIP gaming volume at their tables. An examination of court documents by Reuters and a series of interviews with lawyers and industry executives reveal that several of the gamblers have run up millions of dollars in debt and then scampered back to China, where they are effectively untouchable. Resorts World sued Chinese gambler Kuok Sio Kun in Singapore last year to recover S$2.2 million (US$1.8 million). But more than six months on, the casino has not even managed to serve court papers to the Macau-based woman. After several letters of demand went unanswered for months, it tapped a Singapore law firm to sue the 46-year-old, court documents show. It then hired a Macau-based law firm, which advertised in a Chineselanguage newspaper, posted the court documents at Ms Kuok’s last known address and went there twice. “I have made all reasonable efforts and used all due means in my power to serve the court documents on the defendant, but have not been able to do so,” the Macau lawyer said in the documents. In Macau, junket operators, who
bring high rollers to casinos, mostly handle debts. Singapore only has three junket operators, which are heavily regulated and must renew their licences each year as the city-state seeks to maintain its image as a clean and safe business and tourist destination. So, when faced with bad debts, casinos negotiate with the gamblers, and as a last resort, file suits in court. But as gambling debt is considered a civil, not criminal, issue in Singapore, gamblers who fail to pay will not be arrested.
Write-offs risk Singapore’s two casinos had estimated combined gross gaming revenue of about US$5.9 billion last year, according to industry analysts, just below the US$6.2 billion pulled in by dozens of casinos on the Las Vegas strip. “It’s the volume and the level of play,” said Adam Weissenberg, global leader of the travel, hospitality and leisure segment at Deloitte & Touche. “The casinos are bringing in people who have million-dollar credit lines. They are bringing in people who are playing million-dollar hands.” The casinos in Macau raked in US$38 billion (304 billion patacas) in gaming revenue in 2012. But despite profit margins of more than 40 percent, far higher than in Macau and on the Las Vegas strip, Singapore’s casinos risk more write-offs. Genting Singapore’s trade and other receivables rose by nearly onethird from a year earlier to S$959.5 million as of end-2012. Impairment loss on trade receivables was 18 percent higher at S$143 million for 2012.
“The more you start to see the increase in their receivables, what you then start to see coming through in their results later on, is possible deterioration in their earnings quality and also including cash flow generation,” said Vicky Melbourne, Fitch Ratings’ Asia Pacific head of industrials. Las Vegas Sands said its overall provision for doubtful accounts rose an annual 59 percent to US$239.3 million last year, with the bulk of the increase due to receivables at the Singapore casino “related to credit extended, as well as increases to provisions for specific customers”. Other gaming company analysts said the numbers were not yet a huge worry, but they were watching the increase with concern. “The junket operators shoulder most of the credit risk and debt collection in Macau, but Singapore has a structural disadvantage of not having the junket network and presence,” said Lucius Chong, an analyst at CIMB Research. Court documents show Marina Bay Sands has filed 84 claims for at least S$250,000 each at Singapore’s top court since 2010, including 62 last year and 11 as of mid-March this year. Resorts World filed 11 cases in 2012 and one in 2010. These cases relate to all manner of claims, not just gambling debts. Marina Bay Sands did not give details of the cases. Genting Singapore declined comment. Many of the suits filed in the Singapore court are against gamblers based in the country, but there are likely to be larger claims on Chinese high-rollers that are not pursued due to the “painful” process and the potential bad publicity, lawyers said. Singapore does not have reciprocal enforcement of judgments with China, except for Hong Kong. This means that even if a casino obtains a judgment in a Singapore court, it also has to sue the gambler in China, they said. Reuters
The more you start to see the increase in their receivables, what you then start to see … is possible deterioration in their earnings quality Vicky Melbourne, Fitch Ratings’ Asia Pacific
April 11, 2013 business daily | 11
Manulife, HDFC eye HSBC India insurance arm Winner to get access to about 5,500 bank branches
Sale is part of HSBC’s exit from noncore businesses
anada’s Manulife Financial Corp and the Indian affiliate of Standard Life Plc are among the suitors to place first-round bids for HSBC Holdings Plc’s Indian life insurance business, a stake valued
around US$200 million, people familiar with the matter told Reuters. HSBC, Europe’s biggest bank, is selling its 26 percent stake in a life insurance joint venture with two Indian state-run banks, as it sheds
noncore businesses globally. The winner of the auction will get immediate access to about 5,500 branches of the two state-run banks. Bancassurance – an arrangement in which a bank and an insurance firm
tie up so that the insurer can sell its products to the bank’s customers – is emerging as a key tool to sell insurance products across Asia as the life insurance industry matures in the region. HDFC Life, a joint venture between India’s top mortgage lender HDFC Ltd and British insurer Standard Life; Birla Sun Life, a venture between Indian conglomerate Aditya Birla Group and Canada’s Sun Life; and ICICI Prudential Life, a joint venture between India’s No. 2 lender ICICI Bank and Britain’s No. 1 insurer Prudential Plc, are among the bidders to submit first-round bids last week, the people said. HSBC’s two Indian partners in the venture – Canara Bank Ltd and Oriental Bank of Commerce Ltd – could also pare their stakes, the people said, although no final decision has been made on this. That could push the deal value to US$800 million, including a bank distribution agreement, they added. “The biggest attraction for any Indian or foreign bidder in this joint venture would be the vast distribution network, which is absolutely essential in a country like India,” said one of the sources directly involved in the process. “There are a very few good partnership opportunities available for foreign players in India, this venture is one of them.” The sale is part of HSBC’s exit from nonstrategic businesses. It has got out of about 50 businesses globally since chief executive Stuart Gulliver took over at the start of 2011, including its recent profitable sales of its US$9.4 billion stake in Ping An Insurance Group Co of China Ltd and its US$2.1 billion Panama business. Reuters
business daily April 11, 2013
MARKETS Hang SENG INDEX NAME
CHINA UNICOM HON
BANK OF CHINA-H
BANK OF COMMUN-H
AIA GROUP LTD
BANK EAST ASIA
CLP HLDGS LTD
POWER ASSETS HOL
SANDS CHINA LTD
SINO LAND CO
SUN HUNG KAI PRO
COSCO PAC LTD
BOC HONG KONG HO
HANG LUNG PROPER
TINGYI HLDG CO
CATHAY PAC AIR
HANG SENG BK
WANT WANT CHINA
CHINA COAL ENE-H
CHINA CONST BA-H
CHINA LIFE INS-H
CHINA MOBILE CHINA OVERSEAS CHINA PETROLEU-H
HENDERSON LAND D
HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC
IND & COMM BK-H
LI & FUNG LTD
INDEX 22034.56 HIGH
CHINA RES ENTERP
CHINA RES LAND
NEW WORLD DEV
CHINA RES POWER
PING AN INSURA-H
52W (H) 23944.74 21650
(L) 18056.4 8-April
Hang SENG CHINA ENTErPRISE INDEX NAME
AIR CHINA LTD-H
CHINA RAIL CN-H
CHINA RAIL GR-H
BANK OF CHINA-H
CHINA CITIC BK-H
CHINA COAL ENE-H
CHINA COM CONS-H
IND & COMM BK-H
CHINA CONST BA-H
CHINA COSCO HO-H
BANK OF COMMUN-H BYD CO LTD-H
PICC PROPERTY &
PING AN INSURA-H
CHINA MERCH BK-H
CHINA LIFE INS-H
CHINA NATL BDG-H
INDEX 10694.23 HIGH
52W (H) 12354.22 10400
(L) 8987.76 8-April
Shanghai Shenzhen CSI 300 NAME
AIR CHINA LTD-A
CSR CORP LTD -A
SANY HEAVY INDUS
DAQIN RAILWAY -A
BANK OF BEIJIN-A
DATANG INTL PO-A
BANK OF CHINA-A
EVERBRIG SEC -A
SHANG PHARM -A
ALUMINUM CORP-A ANHUI CONCH-A
GD MIDEA HOLDI-A
BANK OF NINGBO-A
GD POWER DEVEL-A
BAOSHAN IRON & S
SHANXI LU'AN -A
BANK OF COMMUN-A
BYD CO LTD -A
CHINA AVIC AVI-A
CHINA CITIC BK-A
CHINA CNR CORP-A
CHINA COAL ENE-A
CHINA CONST BA-A
CHINA COSCO HO-A
HONG YUAN SEC-A
CHINA EAST AIR-A
YANGQUAN COAL -A
HUAXIA BANK CO
CHINA INTL MAR-A
IND & COMM BK-A
CHINA LIFE INS-A
CHINA MERCH BK-A
INNER MONG BAO-A
INNER MONG YIL-A
NINGBO PORT CO-A
CHINA STATE -A
PING AN BANK-A
CHINA VANKE CO-A
PING AN INSURA-A
POLY REAL ESTA-A
PRICE DAY %
PRICE DAY %
52W (H) 2791.303 (L) 2102.135
FTSE TAIWAN 50 INDEX NAME ACER INC
ASIA CEMENT CORP ASUSTEK COMPUTER
NAME FORMOSA PLASTIC
PRICE DAY %
TAIWAN MOBILE CO
TPK HOLDING CO L
HON HAI PRECISIO
AU OPTRONICS COR
HOTAI MOTOR CO
HUA NAN FINANCIA
CHANG HWA BANK
YULON MOTOR CO
CHENG SHIN RUBBE
CHIMEI INNOLUX C
MEGA FINANCIAL H
CHINA STEEL CORP
NAN YA PLASTICS
DELTA ELECT INC
FAR EASTERN NEW
SYNNEX TECH INTL
FAR EASTONE TELE
FORMOSA CHEM & F
TAIWAN GLASS IND
INDEX 5389.54 HIGH
52W (H) 5639.93 5360
(L) 4719.96 8-April
April 11, 2013 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 58.7
39.4 39.3 39.2 39.1 Max 39.45
WTI CRUDE FUTURE May13
BRENT CRUDE FUTR May13
GASOLINE RBOB FUT May13
GAS OIL FUT (ICE) May13 NATURAL GAS FUTR May13 HEATING OIL FUTR May13 METALS
Gold Spot $/Oz
Silver Spot $/Oz
Platinum Spot $/Oz
Palladium Spot $/Oz
LME ALUMINUM 3MO ($)
LME COPPER 3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) May13 CORN FUTURE
WHEAT FUTURE(CBT) Jul13
SOYBEAN FUTURE May13
COFFEE 'C' FUTURE May13
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
1.0524 1.5325 0.9308 1.3102 99.44 7.9955 7.7626 6.1939 54.465 29.01 1.2375 29.962 40.993 9692 104.647 1.21947 0.85491 8.1255 10.475 130.28 1.03
0.6119 0.1961 0.5157 0.5063 -0.4928 0.0188 0.0167 0.1356 0.2203 0.1034 0.1455 0.2203 0.4635 0.2683 -1.097 0.0148 -0.2994 -0.5218 -0.4926 -0.9902 0
1.4068 -5.2609 -1.6545 -0.6672 -13.4151 -0.1538 -0.1546 0.5925 0.9731 5.4119 -1.301 -3.1006 0.0293 1.0421 -14.6397 -0.9832 -4.6192 1.1322 0.5289 -12.8262 -0.0097
1.0625 1.6381 0.9972 1.3711 99.66 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 104.693 1.25692 0.88151 8.4957 10.9254 130.51 1.0314
0.9582 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1907 51.295 28.87 1.2152 28.913 40.54 9153 74.482 1.20051 0.77553 7.7018 9.6245 94.12 1.029
MACAU RELATED STOCKS NAME
SUGAR #11 (WORLD) Jul13
AMAX HOLDINGS LT
COTTON NO.2 FUTR Jul13
BOC HONG KONG HO
CHOW TAI FOOK JE
CHEUK NANG HLDGS
World Stock MarketS - Indices NAME
DOW JONES INDUS. AVG
NASDAQ COMPOSITE INDEX
FTSE 100 INDEX DAX INDEX
HANG SENG BK
HSBC HLDGS PLC
HUTCHISON TELE H
LUK FOOK HLDGS I
MELCO INTL DEVEL
HANG SENG INDEX
CSI 300 INDEX
MGM CHINA HOLDIN
TAIWAN TAIEX INDEX
S&P/ASX 200 INDEX
FTSE Bursa Malaysia KLCI
NZX ALL INDEX
PHILIPPINES ALL SHARE IX
JAKARTA COMPOSITE INDEX
CURRENCY EXCHANGE RATES
NEW WORLD DEV
SANDS CHINA LTD
SHUN HO RESOURCE
SHUN TAK HOLDING
SJM HOLDINGS LTD
WYNN MACAU LTD
HSBC Dragon 300 Index Singapor
STOCK EXCH OF THAI INDEX
HO CHI MINH STOCK INDEX
BOC HONG KONG HO
Laos Composite Index
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
INTL GAME TECH
JONES LANG LASAL
LAS VEGAS SANDS
MGM CHINA HOLDIN
MGM RESORTS INTE
SJM HOLDINGS LTD
WYNN RESORTS LTD
business daily April 11, 2013
Why capitalism won’t change North Korea’s regime Andrei Lankov
Professor of history at Kookmin University in Seoul
o an outside observer, the behaviour of the North Korean leadership often appears shortsighted and irrational. There seems to be a tested and easy way out of their predicament – the path of Chinese-style economic reforms. While such gradual capitalist reforms might be good for the country, however, they would be far too dangerous for the current North Korean elite. As a consequence, they’re unlikely to be implemented anytime soon. The history of East Asia after World War II has been, above all, one of spectacular economic growth. From 1960 to 2000, average per-capita grossdomestic-product growth in East Asia reached 4.6 percent, while the same indicator for the world was 2.8 percent. In 1960, in terms of per-capita GDP, South Korea ranked slightly below Somalia, while Taiwan lagged behind Senegal. The remarkable economic transformation of those two Asian economies was overseen by governments that were decisively illiberal and undemocratic. These regimes are often described as “developmental dictatorships” – largely because they combined authoritarian politics with an obsessive focus on economic growth. The military regime in South Korea, and a hereditary dictatorship in Taiwan, spouted anti-Communist rhetoric and paid lip service to the principles of the “free world”, while pushing a market-driven but government-controlled development strategy. Lacking natural resources, they emphasised cheap labour and economic efficiency, and they were successful beyond anybody’s wildest expectations.
Perfect Machiavellians After the mid-1980s, this “first generation” of developmental dictatorships was emulated by Communist regimes in mainland China and Vietnam. In both countries, the party elite kept up the old slogans and quasi-Leninist decorum for the sake of domestic stability but for all
practical purposes switched to the growth strategies pioneered by Taiwan and South Korea. If anything, their version of capitalism was even more unabashed and brutal. Regardless, the model worked again: The “second generation” of developmental dictatorships also achieved spectacular results. Vietnam, which experienced a famine in the mid-1980s, had by the mid-1990s become the world’s third-largest exporter of rice. A similar course has failed to inspire the North Korean elite. And unfortunately for common citizens, this unwillingness to emulate China is neither irrational, nor ideological. On the contrary, North Korea’s leaders are rational to the extreme, being perhaps the most perfect bunch of Machiavellians currently in power anywhere. They do not want to pursue reforms because they realise that in the specific conditions produced by the division of their country, such reforms constitute the surest way of political (and, perhaps, physical) suicide. The existence of a rich and free South Korea makes North Korea’s situation vastly different from that of China or Vietnam. The regime lives next to a country whose people speak the same language and are officially described as “members of our nation,” but who enjoy a per-capita income at least 15 times (some claim 40 times) higher than that of North Koreans. Even if the lowest estimate is taken, it would still represent by far the world’s largest per-capita income difference between two countries that share a land border. To put things in perspective, the income ratio in divided Germany was merely 3-to-1, and even this was enough to prompt the East Germans to overthrow the regime as soon as they had an opportunity to do so without fear of Soviet retribution. One can only imagine the mind-blowing effect upon ordinary North Koreans that would be caused by the sight of the average Seoul street, a typical South Korean department store, or, for that
North Korean elites … stand little chance of becoming successful capitalists if the system is overthrown
matter, the flat of a humble, semiskilled manual worker in the South. Perhaps 15 years of flourishing market activities have accustomed some North Koreans to visions of consumerist abundance (after all, one can buy a lot in Pyongyang now if money is available). But picture what a previously isolated North Korean might think after he or she discovers that a South Korean worker – supposedly a slave of American neocolonialism – enjoys amenities and a lifestyle that in North Korea would be available only to successful drug smugglers or Central Committee officials.
Foreign investment and technology are necessary preconditions for any successful reform programme. If such changes were to be instigated, a large number of North Koreans would quickly be exposed to dangerous knowledge of the outside world, and above all of South Korea. A considerable relaxation of surveillance would be unavoidable, as well: Efficient market reforms cannot work in a country where a business trip to the capital city requires a weeks-long wait for travel permits and where promotion is determined not so much by labour efficiency as by demonstrated political loyalty. Information would begin to flow into the country, and the dissemination of this information, as well as of the dangerous conclusions drawn from it, would become much easier.
No future It is doubtful the North Korean population would be prepared to endure a further decade of destitution followed by a couple of decades of relative poverty and backbreaking work after they learned about another Korea – affluent, free, glamorous and attractive. Would they tolerate a reforming, but still authoritarian and repressive regime on the assumption that this regime will
on some distant day deliver a prosperity comparable to that of their Southern brothers and sisters? North Koreans are much more likely to toss out their current rulers and seek to reunify the peninsula in order to partake in the South’s fabulous prosperity. It is an open secret that many Chinese party officials have used their country’s reforms to enrich themselves: The new Chinese entrepreneurial class, to a significant extent, consists of former officials, as well as their relations and buddies. However, the situation of the North Korean elites is different. They stand little chance of becoming successful capitalists if the system is overthrown. In all probability, the important positions in any new economy would be taken by people from South Korea – executives and entrepreneurs with capital, education, experience and perhaps political support. This fact is understood by at least some North Korean bureaucrats, but the majority of them have another, greater, fear. They know how brutal their rule has been. They also know how they would have treated the South Korean elite (and their descendants) had the North won the intra-Korean feud. They are not merely afraid to lose power and access to material privileges (these privileges are quite modest, by the standards of the rich in most other countries). They are afraid of being slaughtered or sent to prisons. A few years ago, a highlevel North Korean bureaucrat told a top Western diplomat: “Human rights and the like might be a great idea, but if we start explaining it to our people, we will be killed in no time.” Perhaps one of the reasons behind the remarkable resilience of the North Korean regime is this universal assumption of its bureaucrats that they would have no future in case of regime collapse. This makes North Korea different from many other dictatorships. *This is an excerpt from his new book, ‘The Real North Korea: Life and Politics in the Failed Stalinist Utopia’ Bloomberg View
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April 11, 2013 business daily | 15
Leading reports from Asia’s best business newspapers
Chairman of Soros Fund Management and of the Open Society Foundations
Jakarta Globe The Asian Development Bank has warned Indonesia that maintaining the current national subsidy on fuel would be unsustainable and could jeopardiseeconomicdevelopment in the long term, even though the country can still afford it at present. The ADB said the fuel subsidy has been putting pressure on the country’s budget and external account. Switching from general price subsidies to targeted transfers is the best option, the report said, suggesting that fiscal resources be reallocated to spending on infrastructure, health and education, which would support future growth and make it more inclusive.
Times of India India has said that it’s ready to engage on an agreement on trade facilitation, which among other things proposes time-bound clearance of certain types of consignments, single-window approval for cargo and processing of documents even before goods reach Indian shores. A copy of the draft agreement shared by the commerce department with trade bodies is seen to be beneficial for importers, although exports are unlikely to get a major lift. But the big worry even within the government is the move to release “expedited shipments” within three hours of arrival. The proposal is being resisted as it will aid a bunch of courier companies.
Asahi Shimbun Bank of Japan Governor Haruhiko Kuroda has drawn admiration for the scale of his new monetary easing measures. Many experts believe the package will rescue the Japanese economy. There are growing expectations that the yen will decline further, which will be a boon for Japanese exports. Stock prices are also expected to rise further. But there are also concerns that foreign exchange rates and stock prices should not move too drastically. “There is a possibility that the BOJ’s policies will damage the economies of other countries as well as failing to save Japan’s own economy,” said Li Ruogu, president of Export-Import Bank of China.
Bangkok Post Tourism businesses need to understand and cover various online marketing channels to catch up with fast-moving trends in the industry, said a survey by Google Thailand. The survey found domestic tourism interest rose to 2,500 searches a minute in January compared with 1,300 searches a minute in 2011. Searching via mobile increased 10-fold from 2011, as the number of smartphone users here has jumped to 20 million. This trend has prompted budget airline Thai AirAsia to put most of its content and promotions online, with the carrier saying that 85 percent of its bookings now come from online channels, up from 40 percent in the first year of operation nine years ago.
he euro crisis has already transformed the European Union from a voluntary association of equal states into a creditordebtor relationship from which there is no easy escape. The creditors stand to lose large sums should a member state exit the monetary union, yet debtors are subjected to policies that deepen their depression, aggravate their debt burden, and perpetuate their subordinate position. As a result, the crisis is now threatening to destroy the EU itself. That would be a tragedy of historic proportions, which only German leadership can prevent. The causes of the crisis cannot be properly understood without recognising the euro’s fatal flaw: By creating an independent central bank, member countries have become indebted in a currency that they do not control. At first, both the authorities and market participants treated all government bonds as if they were riskless, creating a perverse incentive for banks to load up on the weaker bonds. When the Greek crisis raised the spectre of default, financial markets reacted with a vengeance, relegating all heavily indebted euro zone members to the status of a Third World country overextended in a foreign currency. Subsequently, the heavily indebted member countries were treated as if they were solely responsible for their misfortunes, and the structural defect of the euro remained uncorrected. Once this is understood, the solution practically suggests itself. It can be summed up in one word: Eurobonds. If countries that abide by the EU’s new Fiscal Compact were allowed to convert their entire stock of government debt into Eurobonds, the positive impact would be little short of the miraculous. The danger of default would disappear, as would risk premiums. Banks’ balance sheets would receive an immediate boost, as would the heavily indebted countries’ budgets.
Reducing risks Italy, for example, would save up to 4 percent of its GDP; its budget would move into surplus; and fiscal stimulus would replace austerity. As a result, its economy would grow, and its debt ratio would fall. Most of the seemingly intractable problems would vanish into thin air. In accordance with the Fiscal Compact, member countries would be allowed to issue new Eurobonds only to replace maturing ones; after five years, the debts outstanding would be gradually reduced to 60 percent of GDP. If a member country ran up additional debts, it could
borrow only in its own name. Admittedly, the Fiscal Compact needs some modifications to ensure that the penalties for noncompliance are automatic, prompt, and not too severe to be credible. A tighter Fiscal Compact would practically eliminate the risk of default. Thus, Eurobonds would not ruin Germany’s credit rating. On the contrary, they would compare favourably with the bonds of the United States, the United Kingdom, and Japan. To be sure, Eurobonds are not a panacea. The boost derived from Eurobonds may not be sufficient to ensure recovery; additional fiscal and/ or monetary stimulus may be needed. But having such a problem would be a luxury. More troubling, Eurobonds would not eliminate divergences in competitiveness. Individual countries would still need to undertake structural reforms. The EU would also need a banking union to make credit available on equal terms in every country. (The Cyprus rescue made the need more acute by making the field even more uneven.) But Germany’s acceptance of Eurobonds would transform the atmosphere and facilitate the needed reforms. Unfortunately, Germany remains adamantly opposed to Eurobonds. Since Chancellor Angela Merkel vetoed the idea, it has not been given any consideration. The German public does not recognise that agreeing to Eurobonds would be much less risky and costly than continuing to do only the minimum to preserve the euro. Germany has the right to reject Eurobonds. But it has no right to prevent the heavily indebted countries from escaping their misery by banding together and issuing them. If Germany is opposed to Eurobonds, it should consider leaving the euro. Surprisingly, Eurobonds issued by a Germany-less Eurozone would still compare favourably with those of the U.S., U.K., and
Japanese bonds. The reason is simple. Because all of the accumulated debt is denominated in euros, it makes all the difference which country leaves the euro.
Better off If Germany left, the euro would depreciate. The debtor countries would regain their competitiveness. Their debt would diminish in real terms and, if they issued Eurobonds, the threat of default would disappear. Their debt would suddenly become sustainable. At the same time, most of the burden of adjustment would fall on the countries that left the euro. Their exports would become less competitive, and they would encounter heavy competition from the rump euro zone in their home markets. They would also incur losses on their claims and investments denominated in euros. By contrast, if Italy left the euro zone, its euro-denominated debt burden would become unsustainable and would have to be restructured, plunging the global financial system into chaos. So, if anyone must leave, it should be Germany, not Italy. There is a strong case for Germany to decide whether to accept Eurobonds or leave the euro zone, but it is less
obvious which of the two alternatives would be better for the country. Only the German electorate is qualified to decide. If a referendum in Germany were held today, the supporters of a euro zone exit would win hands down. But more intensive consideration could change people’s mind. They would discover that the cost to Germany of authorising Eurobonds has been greatly exaggerated, and the cost of leaving the euro understated. The trouble is that Germany has not been forced to choose. It can continue to do no more than the minimum to preserve the euro. This is clearly Merkel’s preferred choice, at least until after the next election. Europe would be infinitely better off if Germany made a definitive choice between Eurobonds and a euro zone exit, regardless of the outcome; indeed, Germany would be better off as well. The situation is deteriorating, and, in the longer term, it is bound to become unsustainable. A disorderly disintegration resulting in mutual recriminations and unsettled claims would leave Europe worse off than it was when it embarked on the bold experiment of unification. Surely that is not in Germany’s interest. © Project Syndicate
business daily April 11, 2013
CLOSING EU probe to examine Mastercard fees
BHP expects China growth to moderate
Mastercard Inc. is being investigated by the European Commission over fees charged for card transactions made by people visiting Europe. The Commission said some of the firm’s “inter-bank fees and related practices may be anticompetitive”. The commission is already investigating rival Visa Inc. over similar practices. Mastercard, which said it would “fully co-operate” with regulators, could be fined up to US$740 million, or 10 percent of its 2012 revenue, if found guilty. The credit card firm said that it always aimed “to balance the interests of both consumers and retailers”.
BHP Billiton Ltd expects annual economic growth in China to moderate, saying prospects in its largest customer present its main business risk. “What you have seen over the last couple of years, I don’t expect the double digit growth rates to continue,” Graham Kerr, chief financial officer, said yesterday. “Their moderated growth is around the 7 to 8 percent mark for the next couple of years, then trending down toward the 6 percent mark.” “The biggest risk is clearly from our perspective what happens around the developing worlds, but predominantly China,” said Mr Kerr.
Cargo piles up as 2-week HK port strike drags on Li withstands port labour strike with Shenzhen its 14th day. The dispute, a rarity in Hong Kong’s free market economy, has caused delays of up to 60 hours at the port and is costing HIT about US$640,000 a day, according to Hong Kong media.
triking dock workers at a port operator backed by Hong Kong’s richest man Li Ka Shing failed to reach a deal for higher pay on yesterday, prolonging a dispute that could cost the city its position as the world’s third-largest container port. Roughly 500 workers, who say they have not had a pay rise in 10 years even as the cost of living has soared, are demanding a hike of around 20 percent and better work conditions. “We raised some treatment issues, including meals, overtime and leave but hadn’t got to the issue of salaries before they said they needed to go for lunch,” said Wong Shiu Cheung, representative from the Union of Hong
Bird ‘flu outbreak tied to two viruses
hina’s deadly avian ‘flu outbreak is being driven by at least two closely-related viruses, a situation that may make it more difficult to contain in humans and birds, researchers said. The H7N9 ‘flu has shown signs of genetic diversity since the first three patients were diagnosed, said Richard Webby, director of a World Health Organization collaborating centre for the virus at St. Jude Children’s Research Hospital in
Kong Dockers, referring to talks with contractors for the port operator and labour department officials. “We told them … we would always be willing to talk to them, whenever they want, even at midnight. But there’s no response yet as to when the next meeting will be.” Port operator Hongkong International Terminals (HIT) has distanced itself from the dispute, saying it should be resolved by contractors who supply workers to the berths it operates. The Hong Kong Association of Freight Forwarding and Logistics estimates 120,000 twenty-foot equivalent units (TEUs) have stacked up during the strike, which is now in
Memphis. It already appears more infectious than the H5N1 strain of bird ‘flu that has been circulating since 2003, infecting 600 people and killing 60 percent of them, he said. “This virus might be getting more infectious to humans,” Mr Webby said. “If this is let spread from where it is now, it will evolve further. That’s what viruses do. If it isn’t contained now, that will almost certainly happen.” Scientists tracking the virus need more information about the ecosystems of birds in China, including those in live markets, feeder farms and wild populations, to better understand and tackle the virus, said Maria Zambon, director of the U.K.’s national influenza centre.
At one of the berths operated by HIT, workers waved banners denouncing Mr Li, who controls more than half of Hong Kong’s container port traffic, depicting him as an octopus snatching money from people. “It’s his fault that the strike has dragged on for so long,” said container dock worker Ng Mei-tak, 46. “As the richest man, with all those businesses, I hold him accountable for not stepping in and for the impact of this strike on the Hong Kong economy.” The strike has diverted some traffic to the neighbouring Chinese port of Shenzhen. But that won’t hurt Mr Li’s business since the billionaire controls that port as well. Terminals backed by Mr Li’s Hutchison Port Holdings Trust have a 46 percent market share in Shenzhen, helping Mr Li recoup any loss at the Pearl River Delta. “Li is smart in hedging his bets while maintaining dominance in key markets,” Lawrence Li, an analyst at UOB-Kay Hian Holdings Ltd said. “Even if more ships are diverted to neighbouring terminals or Shenzhen, he doesn’t have much to lose.” Reuters
That will provide a clearer view of how easily H7N9 spreads and how best to control it. “The distribution of the cases, which is over several hundred kilometres, without obvious epidemiological links, suggests that there are diverse sources,” she said. Local governments must collect tissue samples from birds at poultry markets nationwide in the hunt for the cause of the outbreak that’s killed nine people, Chinese officials said yesterday. While the number of cases has risen to 28, there is no evidence yet that the virus is spreading from human to human, World Health Organization officials said. Bloomberg News
OECD sees growth picking up Growth is picking up in most industrialised countries, including in the euro zone, the OECD said yesterday, with the United States leading the way. The Paris-based think tank’s composite leading indicator shows growth firming in Japan and picking up in China while the outlook is improving for Italy and France is stabilising. Growth is seen weakening in India, however, while indicators for Russia, Brazil and the United Kingdom point to growth around trend, the Organisation for Economic Cooperation and Development said. The monthly indicator for the 33 OECD member countries inched up to 100.5 in February from 100.4 in January, slightly above the long-term average of 100.0, a level last seen in October. The euro area’s indicator has been gradually increasing over the past months, now at 99.9 from 99.7 in January and 99.4 in October. France’s 99.6 reading, from 99.5 in January, suggests that there is no further decline in growth, while growth is picking up in Germany, the OECD said
Suntech may sell assets Cash-strapped Chinese solar panel maker Suntech Power Holdings Co Ltd is seeking to sell some assets and bring in a strategic investor to repay debt and revitalise the company, a person with direct knowledge of the matter told Reuters yesterday. “It is looking for buyers for some of its projects and downstream assets,” said the source, who asked not to be identified as he was not authorised to speak to the media. “It is also seeking to bring in a strategic investor to take a stake in the company.” “Suntech is in dire need of cash,” the source added. A spokesman for Suntech Power, whose shares are traded on the New York stock exchange, declined to comment. Suntech Power said last month its biggest subsidiary Wuxi Suntech was bankrupt but would undergo government-led restructuring. Suntech Power had total debts of US$2.2 billion at the end of March 2012,. The company defaulted on US$541 million of its dollar-denominated bonds due last month.
Obama budget targets millionaires The White House yesterday proposed a budget that sharply trims the U.S. deficit over three years by forcing millionaires to pay more in taxes and enacting spending cuts that replace the “sequester” reductions that went into place last month. President Barack Obama’s fiscal 2014 budget blueprint ensures that those making US$1 million a year or more would have to pay at least 30 percent of their income, after gifts to charity, in taxes, officials said. That increase, along with spending cuts and a 28 percent cap on tax deductions for high earners, would bring the U.S. budget deficit down to 2.8 percent of GDP by 2016, senior administration officials told reporters. The nonpartisan Congressional Budget Office in February projected the U.S. deficit to be 5.3 pct of GDP this year.