MGM announces 3Q earnings
Year I Number 153 Thursday November 1, 2012 MOP 6.00 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte
1 dependent per 2 workers by 2036
Under-fire phone firm cuts Net prices
‘Golf into gaming’
hope for Cotai
everal of Macau’s best connected local business people are said to be interested in buying Caesars Golf Macau – a 175 acre (70 hectare) prime site at the southern end of Macau’s new casino district the Cotai Strip. They want it not as a going concern, but for its land bank – possibly as a casino resort – two people familiar with the situation have separately told Business Daily. With change of use permission the Caesars Golf site could offer up to three times the developed area of The
Venetian Macao – at 10.5 million square feet already one of the world’s biggest buildings. “If the land use issue is resolved, then in return the buyer will give some of the land back to the government,” said one source. But a Hong Kong-based analyst told Business Daily: “I think gaming operators will be looking to buy Cotai Lots 7 & 8 before they think about Caesars Golf. Lots 7 & 8 are in effect already zoned for gaming and leisure.”
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HANG SENG INDEX
Home price high as new supply squeezed
Home prices reached a new high in September. The average cost rose by 1.3 percent from August to reach 62,552 patacas (US$7,836) per square metre, the Financial Services Bureau revealed yesterday. It was the second time in three months that residential prices exceeded 62,000 patacas. The main inflationary factor was a 14.6 percent rise in prices in Taipa to 72,837 patacas, the highest figure in almost two years. In just six months the price for Macau homes soared by more than 50 percent to reach in August the highest figure since authorities began releasing data, in 2004.
HSI - Movers
‘Middle class’ definition much too loose
The definition of ‘middle class’ suggested by the government thinktank is too broad, suggests an academic – a view supported by at least one legislator. The Policy Review Office, headed by Lao Pun Lap, said in a statement released on Monday that the middle class can be interpreted as the middle-earning group with individual monthly income ranging from 12,000 patacas (US$1,500) to 78,000 patacas.
Export growth on rare upward trend
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Macau’s trade deficit this year is already higher than the one recorded for the whole of 2010. But the city’s exports are firmly on the comeback trail after years of slump. They posted four consecutive quarters of growth for the first time since 2004. That’s when the World Trade Organization agreement allowing clothing and textile exports from Macau to developed markets was phased out.
business daily November 1, 2012
Exports on best uptick since WTO quotas ended Seven years after textile industry started its decline, city sets new exports record but not with ‘made in Macau’ goods Vítor Quintã
xports are on the comeback after years of decline, posting four consecutive quarters of growth for the first time since 2004 when trade was protected by World Trade Organization quotas. Exports grew to 742.8 million patacas (US$93.1 million) in September, a 40.2 percent increase compared to the same time last year, according to data released by the Statistics and Census Service yesterday. September was the eight consecutive month of year-on-year export growth, pushing third quarter exports up to 2.2 billion patacas, the highest since the end of 2008. The past four successive quarters of export growth is the strongest positive trend since 2004, when trade quotas that supported the city’s textile manufacturing industry were quashed. However, the territory is increasingly playing the role of trade middleman and not primary producer. September’s sales growth was mainly driven by a jump in exports of just less than two-thirds, to 573 million patacas. The value of domestic exports fell by 7.7 percent to just 170 million patacas. Sales of goods bought elsewhere were triple those of “made in Macau” exports for a second consecutive month. Just three years ago, domestic exports were almost 50 percent higher than re-exports.
Rising deficit Sales of mobile phones to Hong Kong were the main reason behind the
Year-on-year growth of re-exports in September
The trade deficit to the end of September was greater than for all of 2010
increase in exports. They rose to 48.4 million patacas in September, from 4.4 million patacas 12 months before. Mobile phone exports have been a consistent feature of the economy this year. In the first nine months of the year, Macau re-exported handsets worth 725.5-million patacas, up from 69 million patacas during the same period 12 months before. In September, the second fastestgrowing exports were products for casinos, with sales reaching 109.8 million patacas, up from 47.9 million patacas.
The once dominant textile manufacturing industry saw exports drop by a further 22.4 percent to 73.6 million patacas in September – the lowest monthly figure since February last year. Meanwhile, imports rose by 10.2 percent year-on-year to 6.1 billion patacas in September, the highest figure this year. Most of that growth came from a 16 percent increase to 2 billion patacas in imports from the mainland, Macau’s major supplier, and from a 10.7 percent jump in imports of consumer goods.
Although exports grew faster than imports, Macau’s still buys many more goods than it sells. In the last quarter, the territory bought 17.9-billion patacas worth of goods from outside, a record since data was first collected in 1998. In September, Macau’s trade deficit increased by 7 percent in yearon-year terms to 5.4 billion patacas. For the first nine months of the year, the trade deficit was 46.3 billion patacas, which is already higher than the deficit of 37.2 billion patacas recorded for the whole of 2010.
MGM China easily outperforms U.S. but VIP shaky
GM Resorts International saw its net revenue from Macau gaming grow at triple the rate in its United States casino operations in the third quarter. However in Macau, MGM Resorts is only a 51 percent owner of the casino operator MGM China Holdings Ltd. That means it has to share the economic benefit of local earnings with other stakeholders. MGM’s U.S. casino net revenue rose two percent year-on-year, while that from MGM China climbed six percent to HK$5.15 billion (US$665 million) from HK$4.86 billion a year earlier. Macau’s adjusted earnings before interest, taxation, depreciation and amortisation were up nine percent from the equivalent period a year earlier, to HK$1.2 billion, net of a branding fee of HK$41.1 million paid to MGM. But Grant Bowie, chief executive officer and executive director of MGM China, said there had been some deterioration in the third quarter in VIP business, linked to bad luck versus the players, and the leadership
change in mainland China. “Our overall VIP win rate for the quarter was approximately three percent,” Mr Bowie told analysts on last night’s earnings conference call. “EBITDA was negatively impacted by the low win rate on our in-house business and [from] the rolling chip operators,” he added. He said the company faced the “double jeopardy” on the VIP trade of sometimes not holding well against the players but also having to pay commission to junket operators. The Macau boss added that China’s leadership change had also had an impact on the VIP business and “cooled the market somewhat”. MGM China – partly owned by Stanley Ho Hung So’s daughter Pansy Ho Chiu King – announced on October 18 it had been awarded a land concession to build a second resort on Cotai, an area increasingly focusing on higher margin massmarket gamblers rather than the traditional VIP junket operations of peninsular Macau. A.E.
November 1, 2012 business daily | 3
‘Connected’ locals eyeing Caesars Golf site Developable area up to three times that of The Venetian: sources Associate Editor
everal of Macau’s best connected local business people are said to be interested in buying Caesars Golf Macau – a 175 acre (70 hectare) prime site at the southern end of Macau’s new casino district the Cotai Strip. But their interest is not in running it as a going concern, but for its land bank – possibly as a casino resort – two people familiar with the situation have separately told Business Daily. That’s a transformation the course’s current owner, Caesars Entertainment Corp, – an American company without strong political links locally – tried and failed to achieve after paying more than half a billion U.S. dollars (four billion patacas) for the site in 2007. In April 2008 Macau officials said no new casino gaming licences would be approved during the lifetime of the existing ones, which expire in stages between 2020 and 2022. But those now interested in buying the site aren’t looking for a new casino concession and are likely to have the right connections to link up with existing gaming concession holders, said the sources.
Right connections “There are several interested parties that have enough political influence locally to get the land use issue resolved to allow them to build whatever they wanted – whether it’s residential and commercial or commercial and gaming,” one of the people familiar with the situation told Business Daily. Caesars Golf Macau is immediately to the west of land near Macao Dome linked to a tourism project proposed by Angela Leung On Kei, fourth consort of Stanley Ho Hung Sun, the former Macau casino monopolist. Immediately to the northwest of Caesars Golf is a plot linked to SJM Holdings Ltd, a casino investment company founded
WYNN Cotai MGM Cotai
Caesars Golf Macau
Out of range – ‘no’ on Caesars’ golf course to casino plan
Cotai land map (Source: Union Gaming Research)
by Mr Ho. To the northeast is Studio City, a resort majority owned by a joint venture co-chaired by one of Mr Ho’s sons Lawrence Ho Yau Lung. Taken as a whole Caesars Golf is a huge land bank – offering possibly three times the developed area of The Venetian Macao – which at 10.5 million square feet is already one of the biggest buildings in the world. “It’s likely that if the land use issue is resolved, then in return the buyer will give some of the land back to the government,” said the second source. “It’s still likely to be a huge land bank. I understand the calculations are being done on the basis of a four times plot ratio,” added the first source.
then one or more hotel towers on top. Although the entire footprint of a site is not the same as the potential usable area, four times 175-acres is 700 acres or 30.5 million sq. ft. But a Hong Kong-based analyst told Business Daily: “I think gaming operators will be looking to buy Cotai Lots 7 & 8 before they think about Caesars Golf. The [Cotai] 7 & 8 sites are already in effect zoned for gaming and leisure. It would be politically easier for the government to give permission for a new project there.”
Huge area ‘Plot ratio’ refers to the ratio of a development’s total floor area relative to the size of the parcel of land upon which it is built. It assumes a building will have multiple storeys. Most of the current casino resorts on Cotai have a podium several storeys high, and
Lots 7 & 8 That’s a reference to two parcels of land that are to the south of the Sands Cotai Central resort already developed by Las Vegas Sands Corp. LVS had hoped to develop another resort on 7 & 8, and said in U.S. regulatory filings it had spent US$100 million on ground preparation work. But in December 2010 the government in a letter told LVS that its right to the site was “not approved”. In January
2011, subsidiaries of LVS’s local unit Sands China Ltd appealed against the government decision in the Court of Second Instance. But on May 30 this year Sands withdrew its appeal. As Business Daily reported at the time, the government in return agreed a timetable extension on Sands’ Lot 3, which is now earmarked for a Frenchthemed resort called The Parisian. The government has said it is currently holding back Lots 7 & 8 as a “land reserve” on Cotai. Another issue to be considered, said a second Hong Kong analyst, is whether the price tag for Caesars Golf as a private land sale will be lower on a per acre basis than the government land premiums that companies pay for land concessions from the government. As a point of reference, MGM China Holdings Ltd is to pay a land premium of 1.29 billion patacas – around US$162 million – for a 25-year concession on a Cotai plot of 18 acres. That’s approximately ten times smaller than the Caesars Golf site. MGM will also have to pay an annual rent.
Caesars’ likely huge loss on golf course sale But company says upbeat on its Asian prospects
aesars Entertainment Corp. could lose hundreds of millions of U.S. dollars on any sale of its Macau golf course, sources told Business Daily. The then Harrah’s Entertainment Inc. paid US$577.7 million (4.61 billion patacas) for the Cotai facility in September 2007. In August this year, Caesars wrote down US$101 million related to the company’s land concession in Macau and higher depreciation expenses in Las Vegas in its second quarter 2012 results. Even with write downs factored in, the site – if sold simply as a golf course – is unlikely to yield Caesars a profit, two sources separately told Business Daily. “As a golf course it’s worth maybe less than US$200 million,” said the second of the two sources. “The people that can spring higher value by getting the land use changed might possibly bump up the price if they compete among themselves to bid. But I don’t think it will get anywhere near US$450 million or even US$400 million,” said the first source. But Steven Tight, president international development, for
Caesars based in Hong Kong was more upbeat. He said yesterday: “Right now we are in the process of speaking to potential buyers. There’s a tremendous amount of interest. I don’t know if it will make a profit, but we’re looking for an offer that will be a significant one. Our focus is to try and redeploy that capital into investments that generate a greater near term return. “I think the money would go back
into general investment opportunities for Caesars, maybe in Asia or domestically,” Mr Tight told Business Daily. “But it’s mainly a treasury function to manage our overall cash.” Caesars – which changed its name from Harrah’s in 2010 – has casino operations focused on the still sluggish United States market, including Atlantic City. The New Jersey casino city was yesterday hit by Sandy, a powerful storm that blacked out power in much of southern Manhattan Island in New York City and flooded areas along the U.S. east coast.
I don’t know if it will make a profit, but we’re looking for a significant offer Steven Tight, president international development, Caesars Entertainment Corp.
Harrah’s didn’t bid for a Macau gaming concession in 2002. And in 2006 the company – at the time the world’s biggest casino operator by revenue – dropped out of the running for a Singapore casino licence just days before the final bidding deadline. In January 2008 Harrah’s took on debt when it was bought for US$30.7 billion in a leveraged
buyout by affiliates of private equity firms Apollo Global Management LLC and TPG Capital. Last week CreditSights Inc., a New York-based debt research company, said Caesars – still burdened with US$22.7 billion of debt – would need to restructure its borrowings in order to obtain even a modest US$187 million loan it has been seeking for a U.S. opportunity. But Mr Tight told Business Daily: “We don’t see our finances as a constraint for pursuing our opportunities in Asia. It’s not as though we need to set this money aside specifically for Asia development. The corporate strategy is to reduce our leverage as a company and they’re taking a number of steps to do so.” However a New York-based analyst told us: “Caesars’ debt load is crushing and their leverage ratio [debt divided by cash flow over preceding 12 months] is very high. With asset sales Caesars might reduce its absolute debt number, but its leverage ratio is probably going to increase.” A.E.
business daily November 1, 2012
macau Chui to deliver policy address on Nov. 13 Chief Executive Fernando Chui Sai On will deliver his Policy Address for the fiscal year 2013 on November 13, the Spokesperson Office said in a statement. The session, to be held in the Legislative Assembly at 3pm, will be followed by a press conference at the government headquarters. Mr Chui will be back to the assembly the following day to answer questions from the legislators. In his policy address, the chief executive is expected to announce measures to tackle housing shortage, rising inflation and fine-tune welfare policies.
Govt’s middle class definition ‘too broad’ Critics say income bracket defining the middle class is too broad, although it is a useful starting point for policy development Tony Lai
riteria suggested by a government think tank to define the city’s middle class are too broad and require further work, according to critics. The government’s Policy Review Office said in a statement released on Monday that the middle class worker earned an individual monthly income between 12,000 patacas (US$1,500) and 78,000 patacas. “This range covers employed residents and owners of small- and medium-sized enterprises,” said Lao Pun Lap, director of the policy review office.
While Jenny Huang Bihong, public finance professor at the University of Macau, agrees it was time for the administration to pay more attention to the middle class, the way the group is defined is too broad. “When the government devises policies to help the middle class, this definition may cause some hindrance as the range is quite broad right now,” she said. “It needs to be narrowed down. For instance, the income range can be divided into lower middleincome and higher middle-income groups. This will lead to more focused policy.”
According to government statistics, individuals who earn between 10,000 patacas and 80,000 patacas accounted for 55.9 percent of the employed population – more than 180,000 people – by the end of the second quarter last year. Ms Huang said that while employees in the gaming industry, such as dealers, and employees in the banking industry have different education levels, they may have similar salaries. Such diverse groups will need different assistance to climb the social ladder. She wants the criteria extended to
consider educational backgrounds and occupations.
Starting point Member of the Legislative Assembly Ho Ion Sang echoed the academic’s views but says he understands the difficulties the government faces. “The Macau economy is currently dominated by the gaming industry and its related sectors and I don’t see there will be any change to this situation in the short run,” he said. “This [definition] serves as a starting point for assisting the middle class, and the administration should continue to polish this concept with further studies.” Both experts agree there is an urgent need for the government to raise the competitiveness of the middle class. Mr Ho said the government should design policies to help the “sandwich class” – an informal term used in Hong Kong to describe the middle class – to secure housing and provide some tax relief. The ceiling for professional tax exemption should also be raised from annual earnings of 144,000 patacas to 216,000 patacas. Ms Huang said greater investment in on-the-job education was needed because the city faces “a lack of human resources and many workers require more training”. The Policy Review Office, a government think tank, says the government should assist the middle class with issues such as tax relief, continuous education subsidies and involvement in development of Hengqin Island. It has also recommended the establishment of a professional certification mechanism.
City’s population to grow older faster The number of senior citizens is going to accelerate dramatically inside the next two decades, a government study says Vítor Quintã
or every two workers there will be one nonworking resident by 2036, according to population projections released on Tuesday. The Macau Population Projections said the proportion of people younger or older than the working age compared to working age residents was 23.7 percent last year. The proportion will increase to
more than 50 percent by 2031. The increase in the so-called dependency ratio means the workforce will need to work harder to support a growing number of seniors citizens. Seniors accounted for just 7.3 percent of the population last year. They will account for 20 percent of the population within 20 years. The report published by the Statistics and Census Service says
the number of people aged 80 years or more will see a four-fold increase from current levels to 43,500 people by 2036. The population is estimated to rise fromabout562,900toanywherebetween 680,400 and 830,800 people by 2036. Recent population growth has been largely fuelled by a jump in imported labour but the report says residents will account for most of the population
increase during the next few decades. The forecast says the number of imported workers will not exceed 100,900 people by 2036. At the end of September, there were 109,038 foreign workers in Macau. The projection shows there will be increased pressure on younger generations and the city’s social security system, launched last year, to which non-resident workers do not contribute.
November 1, 2012 business daily | 5
Costly Taipa flats fuel property price record As owners wait to judge the impact of government moves to cool the market, limited supply is creating record housing prices in some districts Vítor Quintã
Home prices in Taipa hit a two-year high in September (Photo: Manuel Cardoso)
verage property prices have recovered in September from a dip one month earlier and hit a record high, official data released yesterday show. The average price of housing was 62,552 patacas (US$7,836) a square metre in September, a 1.3 percent increase compared to the month earlier, the Financial Services Bureau said. The average price peaked largely because of the sales of costlier units in Taipa. In just six months, the average price of homes in Macau has soared by more than 50 percent to its highest rate since authorities began
releasing data in 2004. Experts and realtors have warned that a lack of supply would keep prices high despite new government policies designed to cool the market. It is the second time in three months that home prices have exceeded the 62,000-pataca level, a fact that does not surprise Midland Realty (Macau) Ltd managing director Ronald Cheung Yat Fai. Mr Cheung said he expects prices to remain “steady during the next five to six months, rising a bit after March”. Average prices in Taipa rose by 14.6 percent to 72,837 patacas in September, the biggest jump in almost two years.
A batch of 73 units sold in the Pac On and Taipa Grande area for an average of 92,412 patacas a square metre – these were likely flats at the high-end One Grantai development. Some 53 units in Coloane’s luxury high-rise residential project One Oasis also sold for an average of 83,930 patacas a square metre, a 4.9 percent increase on August’s price. The price hikes in Taipa and Coloane more than offset a 4.8 percent drop in Macau peninsula prices to 56,548 patacas a square metre. The cost of buying a flat on the peninsula has been rising each month since February, when it was
just 38,430 patacas a square metre. The government last month extended its special stamp duty regime on housing to shops, offices and car parks, and announced stricter rules on mortgage lending for non-residents. Mr Cheung expects the market to take a couple of months to “digest and adapt to the new measures”. In September and last month, there were deals designed to entice buyers to accelerate transactions before higher stamp duty rates come into effect. Despite those efforts, the number of sales citywide fell by 1 percent to 1,219 homes – a six-month low – but Mr Cheung expects this to “drop dramatically” until the end of the year, in part reflecting traditionally slow sales during the holiday period. “Even though there is demand, most of the buyers and landlords have no intention of selling. They want to keep their property because it’s the most effective investment in a context of high inflation and currency depreciation,” Mr Cheung said. So far, no measures have been announced to boost the supply side but the government “has been studying [the issue],” Executive Council spokesperson Leong Heng Teng said last month. The drop in sales was sharpest in Coloane, where transactions fell by 63 percent in September. In just two months, home sales in Coloane dropped by more than two-thirds from 226 in July. Sales in Taipa dropped by 2.3 percent to 250 and even on the Macau peninsula, transactions fell by 9.7 percent to 916. As in August, the busiest part of town was the reclaimed area near the Areia Preta, surrounding the Pearl of Orient roundabout, where 215 units were sold.
CTM cuts broadband tariffs for home services Photo by Manuel Cardoso
To accompany the official sales launch for the iPhone 5, telco CTM announces broadband tariff cuts Stephanie Lai
esidential broadband services will be 10 percent cheaper on average from today and upload speeds double for all Home Fibre Broadband services from CTM, Companhia de Telecomunicações de Macau, SARL. CTM said yesterday the cost of its three home fibre broadband plans would fall by between 12 percent and 20 percent a month as a result of the changes. A 50Mbps download service will now cost 318 patacas (US$40), while the 250Mbps and 100Mbps speeds will cost 438patacasand368patacasrespectively. The tariff cuts for other monthly home broadband service plans with unlimited usage and a download speed between 4Mbps and 15Mbps range from 4 to 9 percent.
CTM said the decision to cut costs was made as a result of “constant reviews on tariff plans” and was “a response to clients’ demand”. In August last year, similar tariff cuts for all home broadband services were closer to 20 percent, while the rates for fibre broadband services fell by 41.9 percent. However, this year’s price slash comes later than expected. CTM’s chief executive Vandy Poon Fuk Hei had told media in May that it could be expected in summer. The tariff cut does not include business services. They were cut by up to 30 percent in June last year. CTM is yet to clarify any change in the cost of office broadband service plans this year. It has said a decision on pricing is
pending government approval. At the beginning of this year, CTM announced a three-year investment plan worth 1.2 billion patacas to expand the network’s infrastructure in Macau.
Popularity in doubt Alongside yesterday’s news of lower tariffs for home broadband services, CTM said Apple’s iPhone 5 would be available in stores from Friday. The mobile phone was launched in Hong Kong on September 21. Authorised iPhone 5 sellers CTM and Hutchison started taking preorders from customers on Monday. CTM told Business Daily that the pre-orders for the iPhone 5 had fallen, but not by a “huge drop” compared to previous models.
However, stores selling parallel imports of iPhone 5, mainly sold to customers from the mainland, said there were fewer inquiries and sales for this year’s model. “A reason for the dwindled popularity of the iPhone 5 may have to do with the intense competition with Samsung,” a sales representative at mobile phone shop Iat Tung Tin Son told Business Daily. The grey market price for an iPhone 5 has hovered at about 8,000 patacas since late September, with the top-line model costing about 9,600 patacas.
business daily November 1, 2012
macau 2G users down in September The number of users of the threatened 2G mobile phone network has dropped below 7,000, data released by the Bureau of Telecommunications Regulation on Monday show. Earlier this month the government said the 2G network could remain operational beyond the end of the year, a clear departure from authorities’ original intention to shut down the network last July. Fixed service users continue to shrink, falling by 1 percent from August to 162,668. On the contrary, mobile service users rose again, up by 1.4 percent to 1.5 million in September.
Bus route tweaks to cut traffic snarls Starting with the city centre this Sunday, bus routes and stops will be restructured to reduce traffic jams, improve service Stephanie Lai
he locations of some bus stops in Macau peninsula and in Taipa will be tweaked to improve service from Sunday but there are no plans to expand routes, the Transport Bureau has said. In a move that is hoped will reduce waiting times, a bus stop in front of former Estoril Hotel will now service routes 2, 4, 7, 18A and 19, all of which pass through San Ma Lou said Lou Ngai Wa, the head of the bureau’s public transport management. In Patane, an extra bus stop will be set up in front of the Banco Nacional Ultramarino branch at Avenida do Almirante Lacerda for routes 26, 26A and 33, all of which travel to Taipa.
The bureau also wants to alleviate heavy traffic in some narrow streets around Patane by combining two bus stops – one in front of the market and the another at Rua do Guimarães – into one, located at Ian Heng building. In Taipa, one new bus stop for routes 35, 50X and MT4 will be set up in front of the International School of Macau following the bus route redistribution plan launched last year. The bureau said it had no plans to launch any new bus routes this year. It cited traffic congestion as a major factor. “Previously, we had a bus route readjustment done in the central zone, which worked quite well,” said Mr Lou.
“For this rearrangement, if it eventually eases the traffic, we’ll come up with more bus route redistribution plans.” Meanwhile, there was still “no
concrete timeframe” to accept the requests by the three public bus operators for a service charge raise due to inflation, and hike in bus drivers’ salary and fuel prices, Mr Lou said.
Bus routes will be altered and combined in an attempt to streamline the service and reduce traffic congestion
Tomorrow Gala Dinner
Corporate Sands’ Cotai resorts honoured UK team at MGM Macau in World Travel Awards 2012 world lion dance contest
For more information visit www.macau-event.com or write to email@example.com
ands China Ltd’s collection of Cotai casino resorts – now branded as Sands Cotai Macao – has been named ‘Asia’s Leading Tourism Development Project’ in the World Travel Awards 2012. The prize was presented by Graham Cooke, president and founder, World Travel Awards, at a ceremony in Singapore. “Sands China is delighted that our company’s integrated resort city has been singled out for this honour,” said Sands China president and chief executive Edward Tracy. Phase 2A of the firm’s newest Cotai property – Sands Cotai Central – launched in September. It added the first of two Sheraton hotel towers, which together form Sheraton Macao Hotel, Cotai Central, Macau’s largest hotel. Sands China’s Cotai Strip development now has three integrated gaming resorts – The Venetian MacaoResort-Hotel, The Plaza Macao and Sands Cotai Central. The award for Sands Cotai Macao was accepted on behalf of Sands China by George Tanasijevich, managing director of global development for its parent company Las Vegas Sands Corp.
he MGM Macau casino resort will host the third MGM Macau International Lion Dance Championship on November 10 and 11 at the property’s indoor square known as Grande Praça. This year’s contest will include for the first time a team from the United Kingdom. The other teams in the men’s competition are from mainland China, Hong Kong, Taiwan, Indonesia, Malaysia, Singapore, Thailand, and Vietnam as well as Macau. The women’s competition – held for the first time last year – will also return, with eight teams from China, Hong Kong, Macau, Taiwan, Indonesia, Malaysia and Singapore. The top prize for the men’s contest is 50,000 patacas (US$6,250) while the prize pool to be shared among the top three female teams is 18,000 patacas. The event is supported by the Macau Sport Development Board, Macau Government Tourist Office and the Dragon & Lion Dances Federation of Asia.
business daily November 1, 2012
Shanghai, Beijing lure back investors Investors see less visibility in second-tier cities increased building of low-cost social housing and placed home-purchase restrictions in about 40 cities. Home prices have risen about 155 percent nationwide since reforms that privatized the country’s housing market in 1998.
Monthly prime office rents in Shanghai are 563 yuan per square meter, says a real estate consultancy
eal estate investors and developers are abandoning a two-year foray into China’s provincial cities and switching back to Shanghai and Beijing, where offices are fuller, rents are higher and home prices are stabilising. Of the US$34 billion of direct investment in commercial real estate in 2010 and 2011 combined, 20 percent went to China’s 50 biggest second-tier cities, according to Jones Lang LaSalle Inc., up from 5 percent in the prior two years. That percentage is now set to decline, according to Michael Klibaner, China head of research for the world’s secondbiggest commercial realtor. A three-year building boom, fuelled by government stimulus, has pushed up office vacancy rates in second-tier cities such as Chongqing and Chengdu
to almost 40 percent, while rising land prices have squeezed homebuilders’ profit margins. Investors and developers are refocusing on Beijing and Shanghai, where prime offices are close to full occupancy and rents are on par with cities such as New York and Sydney, according to Cushman & Wakefield Inc. “In a world of uncertainties, the best investment is the one that produces stable rents,” said Albert Lau, head of China at property broker Savills Plc. “When the whole world gets riskier, when financing is harder, if the market is difficult, you’d rather buy some good stuff rather than gamble.”
Cheaper land The capital Beijing, the financial centre of Shanghai and the two southern business centres of Shenzhen
and Guangzhou are ranked as firsttier cities, according to the National Bureau of Statistics. The second tier includes provincial capitals, while the third includes smaller cities. In the wake of the 2008 credit crisis, developers and investors were lured to inland cities by cheaper land and rising incomes. China’s Premier Wen Jiabao, who is set to hand over power in March after a once-in-adecade leadership transition that begins next month, has sought to curb property speculation in Shanghai and Beijing. That encouraged developers to seek opportunities elsewhere, where property policies were more relaxed. China has over the past two years raised down-payment and mortgage requirements for home buyers, imposed a property tax for the first time in Shanghai and Chongqing,
Monthly prime office rents in Beijing and Shanghai are 690 yuan (US$110) and 563 yuan per square metre (10.8 square feet), according to Cushman & Wakefield. That compares with 284 yuan in Nanjing, the capital of eastern Jiangsu province, which is the most expensive among China’s second-tier cities, according to the broker. Fantasia Holdings Group Co., a Shenzhen-based developer, paid about 779 million yuan to buy Huawanli Investment, which holds a 17,138-square-metre site in Beijing’s central business district, according to a statement to the Hong Kong Stock Exchange on October 24. It plans to develop a business complex on the land, executive director Lam Kam Tong said by e-mail. Fantasia plans to expand to first-tier cities such as Beijing and Shanghai, Mr Lam said, citing better prospects for commercial properties in the biggest cities. “There are more advantages than disadvantages to develop in firsttier cites compared with smaller ones,” he said. “With the high value-added development model, it can bring in a relatively higher gross margin to the company.” “In China’s second-tier cities we see less visibility on price and growth of the local office markets,” said Daan Van Aert, head of strategic real estate at APG Investment Asia Ltd, a subsidiary of APG Algemene Pensioen Groep NV. “The returns at this stage don’t really seem to justify the risks for institutional investors.” Bloomberg
Hong Kong intervenes again to weaken dollar Fifth intervention in two weeks to defend peg
he Hong Kong Monetary Authority sold its own currency for a fifth time in less than two weeks after it touched the upper limit of a 29-year-old peg to the United States dollar. The central bank added HK$2.71 billion (US$350 million) to the banking system in Hong Kong on Tuesday, according to a spokeswoman for the HKMA, who declined to be identified because of government policy. That followed a US$603 million intervention on October 19, the first time since 2009, and a combined US$1.25 billion on October 23. Funds are flowing into Hong Kong after the U.S., Europe and Japan introduced policies to stimulate their economies and data signal China’s growth slowdown is abating. Last month, the Federal Reserve unveiled a third round of quantitative easing and Europe announced bond-buying
We will remain closely vigilant of the situation and to maintain the exchange rate stability in accordance with the currency board mechanism Hong Kong Monetary Authority plans, spurring capital inflows into emerging markets. The Bank of Japan expanded its asset-purchase
The monetary authority added HK$2.71 bln to the banking system
programme for the second time in two months on Tuesday. The HKMA said it expects net inflows into the currency will continue “for a period of time,” according to an e-mailed statement. “We will remain closely vigilant of the situation and to maintain the exchange rate stability in
accordance with the currency board mechanism,” it said. Macau’s Secretary for Economy and Finance, Francis Tam Pak Yuen, said last week there was no sign of hot money flowing into the market here. “At this present stage, I don’t see a strong influx of capital to Macau,
November 1, 2012 business daily | 9
Big banks set for slimmest annual profit growth Following the central bank’s interest rate cuts Taiwan cuts growth forecast
Bank of China last week posted its biggest quarterly gain in a year
hina’s top four banks are on course for their weakest annual profit growth since going public, as the central bank’s interest rate cuts in the middle of the year kick in, slicing lending margins. After posting profit gains of more than 20 percent for years, the so-called “Big Four”, led by Industrial and Commercial Bank of China Ltd (ICBC), are expected to report growth of as little as 5 percent in 2012, according to Thomson Reuters Starmine. That would be the slimmest growth since China Construction Bank Corp became the first of the four to list in 2005, following the central bank’s interest rate cuts in June and July. “As loans mature, they will have to be re-priced downwards based on the new benchmark rate,” said Bill Stacey, an analyst at KBW in Hong Kong. “The margin pressure has been deferred, but it’s coming.” The sobering estimate comes after the banks, including Agricultural Bank of China Ltd and Bank of China Ltd, surpassed third-quarter profit
but there are, of course, some minor fluctuations,” he said.
Chinese economy When the Hong Kong dollar reaches the so-called strong end of the permitted trading range, the HKMA offers to buy U.S. dollars to prevent further appreciation under its currency board system. Hong Kong fixed the currency in 1983, and in 2005 committed to keep the exchange rate between HK$7.75 and HK$7.85. The city had US$301.2 billion of foreign-exchange reserves as of the end of September, amounting to about eight times the currency in circulation. The holdings grew 8.5 percent in the past year. The latest intervention will raise the banking system’s aggregate balance to HK$165.7 billion on November 1, according to HKMA data. Capital inflows into Hong Kong signal the Chinese economy is bottoming, Credit Suisse Group AG said in a report last week. Industrial production in September rose at a better-than-estimated 9.2 percent from a year earlier, retail sales climbed 14.2 percent, the most since March, and fixed-asset investment excluding rural households for the first nine months of the year increased 20.5 percent. Bloomberg
expectations, helped by the central bank’s landmark decision to allow lenders to set their own loan rates. ICBC, whose market value alone is roughly equals that of Bank of America Corp, Morgan Stanley and Goldman Sachs put together, said yesterday it expects margins to fluctuate around current levels. “There will be some volatility with margins, but things should remain largely stable,” ICBC’s president Yang Kaisheng said on a conference call with analysts. Barclays estimates ICBC’s net interest margin was about 2.7 percent in the third quarter.
Impairment charges Smaller lenders such as Bank of Communications Ltd will be hit worse by the rate cuts, having reported earnings that largely met expectations as a rise in loan volumes offset flat to narrower interest margins. The central bank’s rate cuts – and the resulting narrower margins – will be felt most keenly by the smaller
banks, including China CITIC Bank Corp Ltd and China Minsheng Bank Corp Ltd, which have no choice but to compete with state-owned behemoths by offering cheaper loans. China Minsheng’s third-quarter net interest margin narrowed 10 basis points to 3.04 percent, while China Merchants Bank Co Ltd’s margin shrank 11 basis points to 2.92 percent. The plight of the smaller banks will also be exacerbated by a scramble for deposits after the central bank gave lenders more leeway in setting their own deposit rates, on top of loan rates. “None of them have enough market share to have the ability to fix interest rates,” said Jim Antos, an analyst at Mizuho Securities in Hong Kong. The better-than-expected thirdquarter earnings growth posted by the Big Four would have been smaller if they had taken bigger impairment charges by putting aside more funds as provisions for bad loans. By cutting back on provisions, a greater sum of a bank’s revenue can be counted as profit. “It depends which direction an investor thinks earnings can go,” said Alexander Lee, an analyst at DBS Vickers. “If you think things are going to get worse, then a bank isn’t setting aside enough. If you think things will get better, then it’s great because it means more profits.” Bank of China, which posted its biggest quarterly gain in a year, would have seen its earnings slashed by 2 billion yuan in July-September if it had set aside more funds to cover potential bad loans, according to DBS Vickers. ICBC reduced impairment charges by about 1.9 billion yuan in the quarter from a year earlier. Reuters
Air China reports lower profits
Cosco narrows loss on container rates
hina Cosco Holdings Co., the nation’s biggest listed shipping company, narrowed its thirdquarter loss after raising container rates and paring its dry-bulk fleet. The net loss of 1.53 billion yuan (US$245 million) compares with a 2.07 billion yuan loss a year earlier, the Tianjin, China-based company said in a Hong Kong stock exchange filing yesterday. Sales rose 4.5 percent to 19.06 billion yuan. China Shipping Containers Lines Co., the nation’s biggest cargo-box carrier after Cosco, posted a profit compared with a year-earlier loss as greater cooperation helped operators raise fees. Asia-Europe rates have since fallen because new ships entered service and as the Euro area’s debt crisis damps demand for Chinesemade toys, furniture and auto parts. China Shipping had a third-quarter profit of 991 million yuan compared with a loss of 951 million yuan a year earlier. “The container business won’t
Taiwan cut its 2012 growth forecast for a ninth time in just over a year yesterday as Europe’s ongoing woes, concerns over the U.S. economy and China’s slowdown kept third-quarter growth below forecasts, but bright spots indicate the economy may have bottomed out. The economy grew a preliminary 1.02 percent in the third quarter of 2012 year-on-year, the statistics agency said, below the median forecast in a Reuters poll for 1.55 percent growth, and ticked up 0.86 percent from the previous quarter. But persistent global concerns saw the 2012 full-year forecast cut to 1.05 percent from 1.66 percent, the ninth cut since August last year. The statistics office left its inflation forecast for 2012 unchanged at 1.93 percent, close to the central bank’s comfort level of 2 percent and likely to underscore views that interest rates will be left on hold when the bank next meets at the end of December. Economists, however, said the economy appeared to be turning the corner and was heading towards a modest recovery. “Taiwan is recovering but at a slow pace,” said Aidan Wang, economist at Yuanta Securities in Taipei. “We forecast a 3-4 percent growth in Q4. This should be the last time the government revises down full-year GDP because the economy has reached the bottom. From Q4 to Q2 next year the growth will be better on a low base effect.” Taiwan is one of the most exposed among Asian exporting economies to fluctuations in overseas demand, particularly for high-tech items. Its exports fell for six straight months to August, as did orders for its exports, a leading indicator of demand.
be too good in the fourth quarter,” Sarah Wang, a Shanghai-based analyst at Masterlink Securities Corp, said before the results were released. “Rates have already trended down and the peak Christmas shipping period is pretty much over.” Cosco’s container unit boosted revenue 27 percent to 11.5 billion yuan in the third quarter and volume rose 13 percent to 2.15 million TEUs. Asia-Europe volumes jumped 19 percent and average rates rose 22 percent. Transpacific shipments increased 7.4 percent, with rates climbing 15 percent. Volumes at Cosco’s dry-bulk unit fell 16 percent, as the company pares it commodity-shipping fleet because of falling rates. The Baltic Dry Index, a benchmark for commodity-shipping rates, averaged 45 percent lower in the third quarter than a year earlier, as expansion in the global fleet outpaces China’s demand for iron ore and coal. Reuters
Air China Ltd and China Eastern Airlines Corp., two of the nation’s big three carriers, reported lower quarterly profits because of a weaker yuan and slowing demand for air travel. Air China’s net income fell 16 percent to 3.17 billion yuan (US$509 million) in the third quarter, it said on Tuesday. China Eastern’s profit dropped 20 percent to 2.63 billion yuan. China Southern Airlines Co., the nation’s biggest carrier by passenger numbers, also reported a lower profit in the period as the weaker yuan increased the cost of dollardenominated debts and fuel purchases. China’s slower economic growth has also damped demand for flights. China Eastern, based in Shanghai, had a net exchange loss of 143 million yuan in the quarter, compared with a 685 million yuan gain a year earlier, it said. Beijing-based Air China said the effect of exchange rates on cash and cash equivalents narrowed to minus 58.1 million yuan from minus 126.8 million yuan. The People’s Bank of China weakened the yuan reference rate against the dollar by 0.25 percent in the third quarter, compared with an increase of 1.8 percent a year earlier. Air China carried 13.5 million passengers in the period, 2.3 percent more than a year earlier. China Eastern boosted passenger numbers 10 percent to 20.6 million. Air China rose 0.54 percent to close at HK$5.54 in Hong Kong trading yesterday. China Eastern gained 2.26 percent to HK$2.72. Both companies have declined about 4 percent this year, compared with a 16 percent gain for the benchmark Hang Seng Index.
business daily November 1, 2012
InBrief Won at fresh 14-month high The South Korean won was a tad higher yesterday to its strongest value against the dollar in nearly 14 months on greater appetite for risk as worries about the euro zone ease. But dealers said further gains were capped by speculation of possible intervention by local foreign exchange authorities to prevent the currency from rising too high. The won stood at 1,090.7 against the dollar at the end of onshore trade. “Most Asian currencies are on a strengthening track and the Korean won has developed a strong tolerance to euro zone events,” said a dealer.
All Nippon profit jumps 62pct All Nippon Airways Co., Japan’s largest listed carrier by sales, boosted firsthalf profit 62 percent due to a rebound in travel following last year’s nuclear crisis and cost cuts. Net income rose to 36.9 billion yen (US$464 million) in the six months ended September, from 22.9 billion yen a year earlier, it said in a statement yesterday. Sales rose 6.9 percent to 753.2 billion yen. The carrier reiterated that it expects net income of 40 billion yen for the full year. It trimmed its sales forecast 2 percent to 1.47 trillion yen.
Panasonic cleans house with writedowns Panasonic Corp said it will lose almost US$10 billion this business year as it cleans house of risky assets, writing down billions of dollars of goodwill and assets in its mobile and energy units while its new boss readies for a fresh bout of restructuring. Panasonic is heading for a fourth net loss in five years after forecasting a 765 billion yen (US$9.6 billion) loss for the year to March. The result would boost its cumulative loss over five years to nearly US$25 billion. In the three months to September 30, Panasonic posted an operating profit of 48.8 billion yen.
Softbank net income falls on rising costs Softbank Corp., the Japanese mobilephone carrier that agreed this month to buy a US$20 billion stake in Sprint Nextel Corp., said second-quarter profit fell 36 percent as it spent more to boost network capacity. Net income fell to 78.8 billion yen (US$980 million) in the three months ended September 30 from 122.5 billion yen a year earlier, the Tokyo-based company said in a statement yesterday. The company left its projection for at least 700 billion yen in operating profit for the year ending March 31 unchanged.
India cuts bank reserve not rates Chidambaram irked as central bank defies call for rate cut Kartik Goyal and Tushar Dhara
ndia’s central bank resisted calls from Finance Minister Palaniappan Chidambaram for lower interest rates, prompting him to say the government will revive economic expansion by itself if necessary. Governor Duvvuri Subbarao kept the repurchase rate at 8 percent to damp price increases, while reducing the cash reserve ratio to 4.25 percent from 4.5 percent to support lending, the Reserve Bank of India said in Mumbai yesterday. Borrowing costs have remained unchanged since a 50 basis-point cut in April. Mr Chidambaram called for cheaper credit earlier this month to back a government push to spur growth, and pledged on Monday to contain the budget deficit as officials try to increase scope for a rate cut. While the monetary authority signalled it may ease policy in January-to-March as inflation cools, the finance minister said boosting the economy is already a key task. “Growth is as much a challenge as inflation,” Mr Chidambaram told reporters in New Delhi after the Reserve Bank’s decision. “If government has to walk alone to face the challenge of growth, then we’ll walk alone.” An inflation rate near 8 percent
curbed Mr Subbarao’s scope to join counterparts from Brazil to Thailand in extending rate cuts as the global recovery falters. Indian inflation, fanned by food and fuel costs, accelerated to a 10-month high of 7.81 percent in September.
‘Bit peeved’ The reduction in reserve requirements, the fourth this year, is effective on November 3 and will add about 175 billion rupees (US$3.2 billion) to the banking system, the Reserve Bank said. The 25 basis-point cut takes the cash reserve ratio to a 36-year low. “Both the government and the Reserve Bank share concerns both about growth and inflation,” Mr Subbarao told reporters in Mumbai in response to a question about Mr Chidambaram’s comments. Prime Minister Manmohan Singh’s administration started a policy revamp on September 13, including fuel-subsidy curbs and a push to spur investment. That snapped months of gridlock over how to bolster growth. The rupee is up 2.7 percent versus the dollar since then, paring its one-year drop to 9.6 percent. “As recent policy initiatives by the
If government has to walk alone to face the challenge of growth, then we’ll walk alone Palaniappan Chidambaram, India’s Finance Minister government start yielding results in terms of revitalising activity, they will open up space for monetary policy to work in concert to stimulate growth,” the central bank said, adding the administration’s steps need to yield “effective action.” The rupee strengthened 0.2 percent to 53.9675 per dollar yesterday in Mumbai, while the BSE India Sensitive Index of stocks fell 1.1 percent. “The central bank is still waiting to see the government effectively implement the reforms it announced before it cuts interest rates,” said Robert Prior-Wandesforde, an economist at Credit Suisse Group AG
News Corp seals US$2.1 bln pay-TV deal Consolidated shareholders approved takeover
upert Murdoch’s News Corp boosted its share of Australia’s pay-TV market after shareholders in Consolidated Media Holdings Ltd voted in favour of a A$2 billion (US$2.1 billion) takeover offer from News Corp. The deal will double the stake of News Corp’s Australian arm in dominant pay-TV operator Foxtel to 50 percent and give it 100 percent of content provider Fox Sports, increasing its pay-TV exposure at the same time as it cuts costs at its print operations. Consolidated Media said shareholders at a meeting yesterday voted 99.9 percent in favour of the takeover. Its board had backed the offer. “Foxtel and Fox Sports are going to be two cornerstone assets in the News Corp publishing business after the demerger, and I assume the market will put fairly healthy multiples on those assets,” said Citi analyst Justin Diddams. News Corp announced plans in June to split the US$60 billion media conglomerate into two publicly traded companies, publishing and entertainment. The split will take about a year to complete. The publishing arm will include Australian newspaper The Australian, UK newspapers The Times and The Sun, The Wall St Journal, book publisher Harper Collins, and pay-TV assets including Fox Sports, Foxtel
James Packer exits media business to focus on gambling
and Sky TV New Zealand. After the takeover of Consolidated, pay-TV – including affiliates such as Foxtel – would contribute 39 percent of News Corp’s publishing company revenues in fiscal 2014, CLSA analyst Digby Gilmour said in a note to clients last week. Gilmour estimated that Fox Sports would contribute 11 percent of publishing group earnings before interest, tax and depreciation in fiscal 2014, while the half-share of Foxtel would contribute 17 percent.
The Consolidated Media deal also clears the way for billionaire James Packer, who held a 50.1 percent stake in the firm, to exit his last big media venture as he focuses on gambling. Mr Packer, who has built stakes in casinos in Macau, Australia and London, owns casino group Crown Ltd which is hoping to build a casino in Sydney, the second casino for the city. News Corp’s Australian listed shares rose 0.3 percent, while the broader market rose 0.7 percent. Reuters
November 1, 2012 business daily | 11
Incheon plans gaming destination Leisure and entertainment area to have three times the size of Macau
in Singapore. “The finance minister was probably a bit peeved that the RBI wasn’t prepared to take his word for it.”
Outlook cut “The baseline scenario suggests a reasonable likelihood of further policy easing in the fourth quarter of 2012-13,” the Reserve Bank said. “The above policy guidance will, however, be conditioned by the evolving growth-inflation dynamic.” The central bank added that “it is critical that even as the monetary policy stance shifts further towards addressing growth risks, the objective of containing
inflation and anchoring inflation expectations is not de-emphasised.” The Reserve Bank raised its inflation forecast to 7.5 percent by March 2013 from 7 percent, adding the pace of price increases is expected “to rise somewhat” in the October through December period before easing in the following quarter. The projection for economic growth was cut to 5.8 percent for the year through March 2013, from 6.5 percent, on moderating investment and consumer spending, declining exports and the impact on farming of a weak monsoon season. Bloomberg
outh Korea’s Incheon city, where the nation’s busiest airport is located, plans to team up with a group of investors to develop a 317 trillion won (US$290 billion) leisure and gaming destination three times the size of Macau. The project called 8-City will be located in Yongyu-Muui island district in Incheon and built over 18 years, according to developer Eightcity Co., whose shareholders include luxury hotel operator Kempinski AG, Korean Air Lines Co. and Daewoo Engineering & Construction Co. The development will spread across an 80 squarekilometre (31 square-mile) area, it said in a statement yesterday. The new development, which will include hotels, casinos, performance halls, shopping malls, a marina resort and Formula 1 race course, will help push South Korea up in the ranks of Asia’s top destinations. The project will be built through 2030 and will draw 130 million visitors annually from the country and overseas markets including China and Japan, the developer said. “Eightcity is aiming to become a city that has the advantages of gaming and entertainment offered by Las Vegas, the shopping and financial hubs of
Singapore and Hong Kong, as well as Macau,” Shawn Park, chairman of Eightcity, told reporters and investors at a briefing in Seoul yesterday. The cost will include construction and land, as well as roads and other infrastructure developments, it said. The first phase of construction will begin in the first half of next year, according to the statement. The development is expected to add 930,000 jobs, it said. Incheon is located 40 kilometres (25 miles) west of Seoul and has the main airfield to South Korea. The board of the United Nations’ Green Climate Fund, set up to channel US$100 billion in aid annually to developing nations by 2020, proposed South Korea’s Songdo in Incheon city as the site for its planned headquarters earlier this month. The selection will be presented for approval at the UN climate summit scheduled to start on November 26 in Doha, Qatar. Bloomberg
Mongolia plans new laws to boost market
ongolia may pass a new securities market law allowing dual listings as the nation’s stock exchange attempts to boost trading volume amid slowing economic growth and Asia’s biggest equity slump this year. The Mongolian Stock Exchange is working with parliament on the new law that would enable companies listed overseas to sell shares domestically, according to the bourse’s chief executive Altai Khangai. The legislation is expected to pass within three to four months, he said. More than 300 companies listed on the exchange have a total market capitalisation of US$1.27 billion, less than Hong Kong-listed Mongolian Mining Corp., which is valued at US$1.81 billion. “The law is an absolute priority for us,” Mr Khangai said in a Bloomberg Television interview in Hong Kong yesterday. “That will help us increase the market and increase liquidity.” The benchmark MSE Top 20 Index has tumbled 26 percent this year as economic growth slowed in China, the nation’s biggest trading partner. Mongolia, squeezed between China and Russia, was the world’s fastestgrowing economy last year, according to the World Bank. Growth may slow to as low as 11 percent this year from a record 17.3 percent last year, central bank governor Naidansuren Zoljargal said in an interview with Bloomberg Television in Hong Kong on Tuesday. The slowdown in China has had a “big-time impact” on share prices in Mongolia, which relies on commodity exports to the world’s second-largest economy, Mr Khangai said.
Altai Khangai, chief executive of the Mongolian Stock Exchange
The exchange is also working with the London-based FTSE Group to introduce a Mongolian index and expects to obtain FTSE’s frontiermarket status within a year, Mr Khangai said. That would mean the country has met requirements on market size, governance and infrastructure required by international institutional investors, according to FTSE’s website. Mongolia’s government is considering easing curbs placed on foreign companies buying local assets, including in industries such as mining, as investors pull out of deals and economic growth slows, Chuluunbat Ochirbat, vice minister of economic development, told a conference in Hong Kong yesterday. The stock exchange is valued at 1.77 trillion tugrik (US$1.27 billion), compared with China’s US$2.74 trillion, according to data compiled by Bloomberg. Mongolian companies listed outside the country include Mongolian Mining and Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. in Shanghai. Bloomberg
Macau at your breakfast table. With Business Daily. Find us in the following newsstands Pacapio at San Ma Lo Opposite HKSB (Nam Van) Beside Luso Bank Building Wen Hang Bank at San Ma Lo In front of Portuguese Bookshop In front CTM at San Ma Lo In front Daiso shop at San Ma Lo Next to S. Lourenço Market Next to Human Resources Dpt Next BNU at Av. Sidonio Pais San Miu, Av. Horta e Costa Next to Metro Park Hotel
business daily November 1, 2012
MARKETS Hang SENG INDEX NAME
CLP HLDGS LTD
AIA GROUP LTD
CHINA UNICOM HON
BANK OF CHINA-H
BANK OF COMMUN-H
BANK EAST ASIA
COSCO PAC LTD
NAME SANDS CHINA LTD
HANG LUNG PROPER
TINGYI HLDG CO
CATHAY PAC AIR
HANG SENG BK
WANT WANT CHINA
HENDERSON LAND D
CHINA COAL ENE-H
CHINA CONST BA-H
HONG KG CHINA GS
CHINA LIFE INS-H
IND & COMM BK-H
LI & FUNG LTD
CHINA RES ENTERP
CHINA RES LAND
NEW WORLD DEV
52W (H) 21847.69922
CHINA RES POWER
PING AN INSURA-H
HSBC HLDGS PLC
SINO LAND CO
SUN HUNG KAI PRO
BOC HONG KONG HO
HONG KONG EXCHNG
POWER ASSETS HOL
INDEX 21641.82 HIGH
Hang SENG CHINA ENTErPRISE INDEX PRICE
CHINA RAIL CN-H
CHINA RAIL GR-H
BANK OF CHINA-H
BANK OF COMMUN-H
BYD CO LTD-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
CHINA LIFE INS-H
PICC PROPERTY &
PING AN INSURA-H
CHINA MERCH BK-H
AIR CHINA LTD-H
INDEX 10582.05 HIGH
52W (H) 11916.1
CHINA NATL BDG-H
Shanghai Shenzhen CSI 300 PRICE
DAQIN RAILWAY -A
AIR CHINA LTD-A
DATANG INTL PO-A
SHANG PHARM -A
NAME ALUMINUM CORP-A ANHUI CONCH-A
NAME EVERBRIG SEC -A GD POWER DEVEL-A
BANK OF BEIJIN-A
BANK OF CHINA-A
SHANXI LU'AN -A
BANK OF COMMUN-A
BAOSHAN IRON & S
CHINA CITIC BK-A
CHINA CNR CORP-A
CHINA COAL ENE-A
CHINA CONST BA-A
BYD CO LTD -A
HONG YUAN SEC-A
HUAXIA BANK CO
CHINA COSCO HO-A
IND & COMM BK-A
CHINA CSSC HOL-A
CHINA EAST AIR-A
INNER MONG BAO-A
YANGQUAN COAL -A
INNER MONG YIL-A
CHINA LIFE INS-A
CHINA MERCH BK-A
NINGBO PORT CO-A
PANGANG GROUP -A
PING AN BANK-A
CHINA STATE -A
POLY REAL ESTA-A
CHINA VANKE CO-A
CSR CORP LTD -A
PRICE DAY %
PRICE DAY %
SANY HEAVY INDUS
PETROCHINA CO-A PING AN INSURA-A
52W (H) 2781.99 (L) 2172.878906
FTSE TAIWAN 50 INDEX NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP
AU OPTRONICS COR CATCHER TECH
CHANG HWA BANK
HON HAI PRECISIO
HOTAI MOTOR CO
HUA NAN FINANCIA
CHENG SHIN RUBBE
CHIMEI INNOLUX C
MEGA FINANCIAL H
CHINA STEEL CORP
NAN YA PLASTICS
SYNNEX TECH INTL
DELTA ELECT INC FAR EASTERN NEW
FAR EASTONE TELE
FORMOSA CHEM & F
TAIWAN GLASS IND
PRICE DAY %
TAIWAN MOBILE CO
TPK HOLDING CO L
YULON MOTOR CO
INDEX 5030.3 HIGH
52W (H) 5621.53 4970
(L) 4643.05 29-October
November 1, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GALAXy ENTErTAINMENT
MELCo CroWN ENTErTAINMENT
MGM CHINA HoLDINGS 37.5
SANDS CHINA LTD
13.75 Max 37.05
SJM HoLDINGS LTD
16.4 Max 17.26
WTI CRUDE FUTURE Dec12
BRENT CRUDE FUTR Dec12
GASOLINE RBOB FUT Nov12
NATURAL GAS FUTR Dec12 HEATING OIL FUTR Nov12 Gold Spot $/Oz Silver Spot $/Oz
21.6 Max 22.25
Palladium Spot $/Oz
LME ALUMINUM 3MO ($)
LME COPPER 3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jan13 Dec12
WHEAT FUTURE(CBT) Dec12
1.0391 1.6119 0.9293 1.3 79.8 7.9826 7.7501 6.2373 53.925 30.67 1.2196 29.213 41.165 9624 82.911 1.20806 0.80649 8.1066 10.377 103.73 1.03
0.106 0.2987 0.4089 0.3629 -0.4762 0 0 0.0449 0.0766 0.1304 0.0656 0.1232 0.068 -0.0104 -0.5705 0.043 -0.0657 -0.3812 -0.3594 -0.8194 0
1.7827 3.7058 0.9469 0.3009 -3.6216 0.213 0.2232 0.9251 -1.5948 2.8693 6.3135 3.6491 6.4982 -5.7668 -5.4022 0.7226 3.3354 0.3405 -0.2409 -3.9236 0.0097
1.0857 1.6309 0.9972 1.3868 84.18 8.0308 7.7979 6.3964 57.3275 32 1.315 30.5 44.35 9662 88.637 1.24569 0.86648 8.7923 11.089 111.44 1.0311
0.9582 1.5235 0.8762 1.2043 76.03 7.9823 7.7498 6.234 48.6088 30.2 1.2152 29.084 41.12 8875 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.0288
MACAU RELATED STOCKS (H) 52W
AMAX HOLDINGS LT
BOC HONG KONG HO
SUGAR #11 (WORLD) Mar13
COTTON NO.2 FUTR Dec12
COFFEE 'C' FUTURE Dec12
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
SOYBEAN FUTURE Jan13
Platinum Spot $/Oz
World Stock MarketS - Indices NAME
CURRENCY EXCHANGE RATES
GAS OIL FUT (ICE) Dec12
DAY % YTD %
CHEUK NANG HLDGS
CHOW TAI FOOK JE
DOW JONES INDUS. AVG
NASDAQ COMPOSITE INDEX
HANG SENG BK
FTSE 100 INDEX
HSBC HLDGS PLC
HANG SENG INDEX
CSI 300 INDEX
TAIWAN TAIEX INDEX
S&P/ASX 200 INDEX
FTSE Bursa Malaysia KLCI
NZX ALL INDEX
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business daily November 1, 2012
Opinion A Europe of solidarity, not only discipline George Soros
Chairman of Soros Fund Management and of the Open Society Institute
riginally, the European Union was what psychologists call a “fantastic object,” a desirable goal that inspires people’s imaginations. I saw it as the embodiment of an open society – an association of nation-states that gave up part of their sovereignty for the common good and formed a union dominated by no one nation or nationality. The euro crisis, however, has turned the EU into something radically different. Member countries are now divided into two classes – creditors and debtors – with the creditors in charge. As the largest and most creditworthy country, Germany occupies a dominant position. Debtor countries pay substantial risk premiums to finance their debt, which is reflected in their high economy-wide borrowing costs. This has pushed them into a deflationary tailspin and put them at a substantial – and potentially permanent – competitive disadvantage visà-vis creditor countries. This outcome does not reflect a deliberate plan, but rather a series of policy mistakes. Germany did not seek to occupy a dominant position in Europe, and it is reluctant to accept the obligations and liabilities that such a position entails. Call this the tragedy of the European Union.
will perpetuate the division between creditor and debtor countries. A widening gap in economic performance and political dominance is such a dismal prospect for the EU that it must not be allowed to become permanent. There must be a way to prevent it – after all, history is not predetermined. The EU, originally conceived as an instrument of solidarity, is today held together by grim necessity. That is not conducive to a harmonious partnership. The only way to reverse the trend is to recapture the spirit of solidarity that animated the European project from the start. To that end, I recently established an Open Society Initiative for Europe (OSIFE). In doing so, I recognised that the best place to start would be where current policies have created the greatest human suffering: Greece. The people who are suffering are not those who abused the system and caused the crisis. The fate of the many migrant and asylum seekers caught in Greece is particularly heart-rending. But their plight cannot be separated from that of the Greeks themselves. An initiative confined to migrants would merely reinforce the
growing xenophobia and extremism in Greece.
Solidarity renewed I could not figure out how to approach this seemingly intractable problem until I recently visited Stockholm to commemorate the centenary of Raoul Wallenberg’s birth. This reawakened my memories of World War II – the calamity that eventually gave birth to the EU. Wallenberg was a hero who saved the lives of many Jews in my home city of Budapest by establishing Swedish safe houses. During the German occupation, my father was also a heroic figure. He helped to save his family and friends and many others. He taught me to confront harsh reality rather than to submit to it passively. That is what gave me the idea. We could set up solidarity houses in Greece, which would serve as community centres for the local population and also provide food and shelter to migrants. There are already many soup kitchens and civil-society efforts to help the migrants, but these initiatives cannot cope with the scale of the problem. What I have in mind is to reinforce these efforts.
The EU’s asylum policy has broken down. Refugees must register in the member country where they enter, but the Greek government cannot process the cases. Some 60,000 refugees who sought to register have been put into detention facilities where conditions are inhumane. Migrants who do not register and live on the street are attacked by the hooligans of the neo-fascist Golden Dawn party.
A widening gap in economic performance and political dominance is such a dismal prospect for the EU that it must not be allowed to become permanent
Sweden has made migration and asylum policy a high priority, while Norway is concerned about the fate of migrants in Greece. So both countries would be prime candidates to support solidarity houses. And other better-off countries could join them. OSIFE is ready to provide support for this initiative, and I hope other foundations will be eager to do the same. But this has to be a European project – one that eventually must find its way into the European budget. Currently, Golden Dawn is making political headway by providing social services to Greeks while attacking migrants. The initiative that I propose would offer a positive alternative, based on solidarity – the solidarity of Europeans with Greeks and of Greeks with migrants. It would provide a practical demonstration of the spirit that ought to infuse the entire EU. As soon as possible, I will dispatch an OSIFE needsassessment team to Greece to contact the authorities – and the people and organisations already helping the needy – to work out a plan for which we can generate public support. My goal is to revive the idea of the EU as an instrument of solidarity, not only of discipline. © Project Syndicate
Correcting mistakes Recent developments seem to offer grounds for optimism. The authorities are taking steps to correct their mistakes, especially with the decision to form a banking union and the outright monetary transactions programme, which would allow unlimited intervention by the European Central Bank in the sovereign-bond market. Financial markets have been reassured that the euro is here to stay. That could be a turning point, provided it is adequately reinforced with additional steps toward greater integration. Unfortunately, the EU’s unfolding tragedy characteristically feeds on such glimmers of hope. Germany remains willing to do the minimum – and nothing more – to hold the euro together, and the EU’s recent steps have merely reinforced German resistance to further concessions. This
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November 1, 2012 business daily | 15
OPINION A few Fed numbers worth wires a thousand words Business
Leading reports from Asia’s best business newspapers
Business Standard India yesterday asked Sweden to provide greater market access to its products. The issue was raised by Commerce and Industry Minister Anand Sharma in the presence of Swedish Minister for Enterprise Annie Loof during the meeting of IndoSwedish Joint Commission for Economic, Industrial and Scientific Cooperation. Bilateral trade between the countries stood at US$2.81 billion in 2011-12. India’s imports from SwedenwasUS$2billion,exports were merely US$825 million. Swedish companies like Volvo, Ericsson and Astra Zeneca have manufacturing facilities and research bases in India.
Jakarta Post Palm oil exports from Indonesia dropped 2.1 percent in September to the lowest level in three months as India and China reduced purchases of the most-used cooking oil, according to an industry group. Shipments were 1.38 million metric tons, down from 1.41 million tons in August, the Indonesian Palm Oil Association said on Monday. Palm, used in everything from biofuels to noodles, has suffered this year because of low demand and rising production in Indonesia and Malaysia, where reserves gained to a record level last month.
Korea Times KG Inicis, Korea’s leading provider forvariouscomprehensivepayment services, said on Tuesday it has formed a strategic alliance with Alipay of China in what analysts see as a move to bolster the Korean company’s Chinese presence. Under the alliance, customers in China who have appetites to buy consumer products in Korea are allowed to pay Chinese currency by using Alipay’s processing networks, while registered Korean companies using Inicis’ payment systems will be paid by the South Korean won, Inicis said in a statement.
Business World Philippine importers should maximise the advantages of the Korea-ASEAN free trade agreement (FTA), speakers at the Korea-Philippines FTA Forum 2012 said yesterday. The speakers were also optimistic there will be an eventual FTA between the Philippines and Korea. The ASEAN-Korea FTA, which entered into force in June 2007, provides tariff reductions for certain goods, including automotive parts, and preferential treatment for some sectors through more liberalised trade in services. Trade between Korea and the Philippines grew to US$10.9 million in 2011 from US$9.3 million in 2010.
Chief U.S. economist at JPMorgan Chase & Co
odern central banks have been described as “an army with only a signal corps.” It’s an apt portrayal. The instrument that central banks most directly control – the interest rate at which commercial banks lend to each other overnight – affects virtually no transactions that most people care about. But expectations about the path of that rate shape long-term interest rates, which then influence economic activity. The signal that central banks send about this path is how they exert leverage over an economy. Among the world’s central banks, the U.S. Federal Reserve’s signal corps has been the most active in sending out and refining its message. The logical next step is to specify numerical thresholds that will govern the Fed’s deliberations on the timing of its first rate increase since June 2006. More to the point, numerical thresholds will probably involve stating employment and inflation values that would need to be met before the Fed considers raising rates. This is a worthy undertaking, but one that could take time to refine and put into practice. Fed governors have already started the discussion. Further progress at this week’s Federal Open Market Committee meeting would be a welcome development. The Fed’s current calendar guidance – that near-zero interest rates will likely be warranted at least through mid- 2015 – is the FOMC’s best estimate of what constitutes a “considerable period after the recovery strengthens.” This guidance communicates two things at once: the Fed’s economic forecast, and the expected policy response given that forecast.
Numerical thresholds Numerical thresholds downplay the first part, and instead focus on articulating with more specificity the second part – the reaction to economic outcomes. This should provide important benefits. Instead of breathlessly waiting on the Fed to alter its rate guidance, the market can automatically adjust its rate expectations in light of incoming economic data. By focusing on how the Fed will react instead of what it forecasts, the tone of Fed communications should change for the better, too. Calendar guidance often risks sending a pessimistic signal about the Fed’s outlook for the economy. Communicating numerical thresholds, by contrast, would send a more affirmative message about the Fed’s commitment to full employment and price
Ben Bernanke, chairman of the Federal Reserve
stability – a message that should help bolster business and consumer confidence. Make no mistake: the immediate benefit of establishing these thresholds would likely be minimal. After several fits and starts, the Fed has finally pushed back market expectations on the timing of the first post-crisis rate increase. In late 2009, even as the unemployment rate hovered at about 10 percent, markets were expecting the Fed to raise rates at least twice over the following year. Now, the Fed has convinced the market that the first tightening is at least three years away. If the Fed says that rate increases won’t begin until unemployment is at least below 7 percent, that would likely do little to change market expectations on when shortterm rates will rise and, hence, on longer-term rates. Instead, the benefits would slowly accrue over time. A more predictable, stable, rules-based policy framework should reduce uncertainty and prevent another situation like 2009 when interest rates moved at odds with the Fed’s mandated goals. Operational hurdles remain. Take the example of Chicago Fed President Charles Evans’s “7/3” rule, which says the first rate hike won’t occur until the unemployment rate falls below 7 percent, provided inflation doesn’t get above 3 percent. There are still public misperceptions about what the 7 and the 3 really mean.
Minimally acceptable First, Evans has suggested that rates shouldn’t be raised before unemployment falls below 7 percent. After the surprise move down in the September unemployment rate, many analysts misinterpreted the 7 as a trigger rather than a minimally acceptable improvement in the labour market.
A more predictable, stable, rules-based policy framework should reduce uncertainty If unemployment falls below 7 percent (or whatever the threshold is) in a low-quality way – because, say, people are dropping out of the labour force or more people are accepting part-time jobs – there is no obligation for the Fed to raise rates. The Fed would need to emphasise that reaching an unemployment threshold is a necessary but not sufficient condition for tightening. Second, Evans stipulated that 3 percent inflation should be considered a serious enough deviation from the Fed’s 2 percent inflation target that it should release the Fed from its commitment to keep rates low, even if the
employment objective hasn’t yet been attained. Regrettably, many have misinterpreted this to mean that Evans intends to raise the Fed’s inflation objective to 3 percent from 2 percent. The Fed must do a better job of spelling out the distinction between an inflation objective and a threshold that represents an intolerable deviation from that objective. These are tactical issues. The strategic consideration, as it must be whenever a central bank is being innovative or aggressive in spurring growth, is inflation. The inherent conservatism of the Evans rule or similar thresholds is that they contain an automatic inflation firebreak. If structural unemployment is greater than anticipated, the ensuing wage and price inflation would activate the inflation circuit breaker and policy would be free to adjust. Inflation, the greatest risk in a numerical threshold policy, would be inherently limited. Over time the benefits could be large, including more stable, predictable policy-setting that would automatically adjust to ensure interest rates are geared toward getting the economy back to work. Bloomberg View
business daily November 1, 2012
CLOSING Nomura gets record fine
Disney buys Star Wars firm
Nomura Holdings Inc. was fined 200 million yen (US$2.5 million), the biggest penalty imposed on any company by the Tokyo Stock Exchange, after employees of Japan’s biggest brokerage gave tips on clients’ share sales. The firm’s Nomura Securities Co. unit lacked a proper framework to prevent the misuse of inside information on equity offerings, the bourse said in a statement yesterday. Exchanges in Osaka and Nagoya also fined Nomura. The penalties come after the Japanese Securities Dealers Association last month fined Nomura 300 million yen, the largest by the lobby group against any firm in 12 years.
Walt Disney Co agreed to buy filmmaker George Lucas’s Lucasfilm Ltd and its “Star Wars” franchise for US$4.05 billion in cash and stock, a blockbuster deal that includes the surprise promise of a new film in the series in 2015. Disney plans to release at least three more films in the Star Wars sci-fi saga that ranks among the biggest movie franchises of all time, chief executive Bob Iger told analysts on Tuesday. The last “Star Wars” picture was “Revenge of the Sith” in 2005. Mr Lucas said: “It’s now time for me to pass Star Wars on to a new generation of film-makers.”
U.K. Conservatives demand EU budget cut Cameron faces rebellion within his party
ritish Prime Minister David Cameron faces a rebellion from Conservative lawmakers who are demanding a cut in the European Union budget, highlighting the splits in his party over Europe. Mr Cameron wants the budget to rise only in line with inflation and his spokesman on Tuesday signalled he is ready to wield the British veto in EU talks next month if necessary. More than 30 Conservative lawmakers have backed a rebel amendment to a U.K. parliamentary vote yesterday, demanding Mr Cameron toughens his negotiating stance and argues for a real-terms cut. “This is not an antiEuropean amendment,” Tory lawmaker Mark Pritchard, who introduced the measure, said in a telephone interview. “It merely represents the view
of millions of U.K. taxpayers that the EU budget should not be increased at a time of financial austerity and fiscal restraint in the U.K. which has seen family, local council and government budgets cut.” The European Commission has proposed a spending package of 1.033 trillion euros (US$1.34 trillion) for the years 2014 through 2020, an increase of almost 6 percent compared with the 20072013 budget. EU leaders will try to clinch a deal at a November 22- 23 summit.
Excessive spending Mr Cameron has said the spending proposal is excessive at a time of national fiscal constraints and has vowed to use the British veto for a second time unless he gets “a good deal”. Conservative lawmaker
David Davis, who challenged Cameron for the party leadership in 2005, called the EU budget plans a “selfserving, inflation-busting bonus for Brussels”. “It would force Britain to pay an extra 1.3 billion pounds next year in annual EU contributions, on top of our existing 11 billion pounds,” Mr Davis wrote in the Daily Mail newspaper yesterday. “That’s a hike of more than 10 percent.” But the difficulties in restraining the EU budget were underlined on Tuesday as poorer countries in eastern Europe rebelled against a push to cut subsidies for farming and construction. Mr Cameron’s spokesman signalled the premier is willing to block a deal next month. He became the first British prime minister to use the veto last year when he refused to sign
Barclays in new regulatory probes New investigation into relationships to win business
Barclays reported a pre-tax statutory loss of 47 mln pounds for the third quarter
arclays Plc, already rocked by an interest rate rigging scandal, unveiled two new U.S. regulatory investigations into the bank’s financial probity yesterday and said its profit was hit by charges for mis-
selling insurance. Following investigations in the U.K. over its dealings with Qatari investors, Barclays said the United States Department of Justice and Securities and Exchange Commission
were investigating whether its relationships with third parties who help it win or retain business are compliant with the U.S. Foreign Corrupt Practices Act. The bank is currently under investigation by Britain’s financial regulator and fraud prosecutor into payments to Qatari investors after it raised billions of pounds from the Gulf state five years ago to save it from taking a taxpayer bailout. The Financial Services Authority (FSA) is investigating the bank and four current and senior employees, including finance director Chris Lucas, to determine whether it made adequate disclosure of the fees it paid in a 2008 capital raising. Barclays disclosed the FSA investigation when it released half-year results in July. The FSA investigation relates to fees paid to the Qatar Investment
Cameron ready to wield the British veto in EU talks
up to an EU-wide treaty to enforce fiscal discipline. “We need to be realistic,” Steve Field told reporters in London. “It’s going to be challenging to get agreement. We’re going into that negotiation with good
intentions. We want to try and reach a deal, but it needs to be in our country’s interests.” If no agreement is reached by the end of next year, the 2013 budget would be rolled over into 2014.
Authority on deals in June and November 2008, when Barclays raised 11.5 billion pounds (US$18.5 billion). Barclays declined to comment on whether the U.S. probe was linked to the same transactions. Barclays also said yesterday that the U.S. Federal Energy Regulatory Commission was investigating whether it manipulated power prices in the western United States from late 2006 until 2008. The bank said it would “vigorously” defend this matter.
stakeholders, our universal banking franchise remains strong and well positioned,” Mr Jenkins said. The bank said its adjusted pre-tax profit in the three months to the end of September was 1.73 billion pounds, in line with analysts’ forecasts and up from 1.34 billion a year ago. But a 700 million pound charge for mis-selling payment protection insurance pulled pre-tax profit down 23 percent to 1.03 billion pounds, and a 1.1 billion pound loss on the value of its own debt dragged it to a loss of 47 million pounds for the quarter. Investment bank income was 2.6 billion pounds in the quarter, up 17 percent on the same period the previous year, but down 13 percent on a strong performance in the second quarter. The bank also said performance during October had been affected by the “challenging economic environment and subdued market volumes”.
Charges hit profit New Barclays chief executive Antony Jenkins, who took over at the end of July when his predecessor Bob Diamond quit after the bank admitted rigging Libor interest rates, is in the midst of a review aimed at changing its culture and boosting profitability, which is expected to cut jobs and the size of investment banking. “While we have much to do to restore trust among