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In Depth Look of Hong Kong - Past, Current & Future
In Depth Look of China - Past, Current & Future
To succeed in business in Hawaii, you must understand the islands
How to Do Business with China, through Hong Kong & Setting up Business in China?
Hawaii Failed Business Image and Continue Missed Opportunities

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  Listen to MP3 Business Beyond the Reef” to discuss the problems with imports from China, telling all sides of the story and then expand the discussion to revitalizing Chinatown - Special Guest: Johnson Choi, MBA, RFC. President - Hong Kong.China.Hawaii Chamber of Commerce (HKCHcc) and Danny Au, Manager, Bo Wah Trading

BRENDA FOSTER, PRESIDENT OF THE AMERICAN CHAMBER OF COMMERCE IN SHANGHAI; "An Update of the Business Climate in China" to the Hong Kong China Hawaii Chamber of Commerce (HKCHcc) at the Pacific Club 2/14/2008

Mar 28 - 30, 2009

Hong Kong: Hong Kong shares fell 0.5 per cent by midday on Friday, as Esprit slumped after the surprise departure of a key executive, but losses were capped as investors bought into some of the laggards in this week’s rally. Shares in the world’s No 6 fashion retailer by market value following Gap, slid 9.3 per cent to HK$43.40 after the resignation of Thomas Grote, a director of the company and president of the Esprit brand, raised doubts over Esprit’s succession plan. Mr Grote’s is the second high profile exit from Esprit in less than a year. In July last year Esprit announced the resignation of its chief financial officer John Poon, sending shares in the company sliding. “In less than a year, we saw two departures in the management, both who were familiar with the group’s operation. The market would have concerns over these personnel changes, and their impact on the company,” said Fiona Wong, analyst with Sun Hung Kai Financial. The benchmark Hang Seng Index ended the morning session 63.96 points lower at 14,045.02 after opening 1.1 per cent firmer. Mainboard turnover edged up to HK$34.9 billion from HK$33.1 billion by midday Thursday. The improved liquidity in the market this week has brokers betting on further upside in the near term. Stocks that got left behind in this week’s more than 1,200 point rally, led mostly by banking stocks, on the main index raced ahead of the broad market on Friday.

Tycoon Li Ka-shing, Hong Kong's richest man, has vouched for the local economy and expressed confidence in the stock and property markets despite the uncertain global outlook. Mr Li, who is known for his perennially bullish comments, said there had been recent signs of improvement in the economy. "Recently, the property market has improved a bit, there have been more orders for durable goods, and stock markets have gone up in the past two weeks," Mr Li said. "If the US economy remains stable, there will be a positive reaction around the world." The need to replenish low inventories in the US and EU would boost exports from the mainland next month and in May, he said. Mr Li said he expected a recovery "will not be too far away" given efforts to kick-start the stalled US economy and help banks clear up toxic assets. Hong Kong would also benefit from the mainland, which would be the first to emerge from the global downturn, he said. "Hong Kong needs to be strong," he said. "Don't waste energy on unconstructive things for Hong Kong. For Hong Kong, the most important thing is that we have the support of our mother country. The individual visit scheme from the mainland has contributed greatly to Hong Kong. Whatever our country can do for us, they have done so. "China will be the fastest to recover among all countries. I expect a recovery will not be too far away ... we should hope for the best and prepare for the worst. But the situation should not be too bad." Repeating comments he made last year, the billionaire cautioned against spending beyond one's means but remained buoyant on his companies as investments. During the stock market boom last year, Mr Li urged people not to borrow funds for investments. "I am the chairman and largest shareholder of Cheung Kong (SEHK: 0001) and Hutchison (SEHK: 0013). I put a lot of time and effort into these companies and yet only draw an annual salary of HK$5,000. I think this signifies whether I have confidence in these two companies. I don't need to do any selling job," he said. "I won't comment on short-term speculation. But if you have extra money, buying Cheung Kong and Hutchison shares should be good." Asked about layoff plans, Mr Li offered no guarantees. He said it was difficult to say whether the jobless rate would worsen to 8 per cent. "We operate in 54 countries with over 23,800 staff in many different businesses. There is no guarantee that there will be no redundancies in all these different businesses," he said. "I can only say right now, at this very minute, that we have no immediate layoff plans. However, circumstances may change." Mr Li maintained that he was very happy and did not feel fatigued despite getting up at about 4am, playing golf, going to work and attending an evening cocktail gathering.

Auction director John Kapon of Acker Merrall & Condit shows some of the fine wines to go on the block tomorrow at the Island Shangri-La. This year's local wine-auction season kicks off tomorrow with an ambitious 1,000-lot sale of fine wines and vintage champagnes that is expected to be a litmus test of people's appetite for investment and consumption amid the economic downturn. Valued at an estimated HK$30 million to HK$35 million, the lots in New York-based Acker Merrall & Condit's auction already reflect a year-on-year drop of between 20 and 40 per cent in prices, the firm's president and auction director John Kapon said. With the rapid decline in prices, many sellers have been less enthusiastic than before about offloading their collections, preferring to wait out the crisis. But some people have had to cash in because of financial difficulties, Mr Kapon said. "There are not as many people rushing to sell as there had been in 2008, when prices were so high," he said. "But I don't see more people forced to sell in the financial crisis. I don't see desperation on the part of collectors." One possible consequence of the credit crunch was in evidence at the firm's previous Hong Kong sale, in November, when a mainland bidder failed to pay for his purchases. "There was one significant purchaser that openly disappeared on us, and we've kind of been advised that it might not necessarily be worth it to go into the mainland legal system to try to pursue this person to the very end. So we are more cautious. It's the only time it's happened in years," Mr Kapon said. The bidder, who signed up at the last minute, successfully bid for between 20 and 30 assorted lots, including some cases of 1982 Chateau Lafite Rothschild. He said he would make a down payment in January and pay the balance in February, but subsequently disappeared. The purchases totalled "over six figures, US", Mr Kapon said. Tomorrow's auction, at the Island Shangri-La, will offer online bidding.

Shanghai's ambitions of becoming a global financial hub were given a boost by the central government. Imagine, 11 years from now, a Hong Kong factory owner produces electronics gadgets in Shanghai's state-level Jinqiao export processing zone for clients in Europe and then settles the trade in yuan directly through banks in the city. This scenario could come to fruition following the central government's anointment of Shanghai as a global hub for finance and shipping in 2020, with possible full convertibility of the yuan in a vision for the fast-growing city and the industrialising Yangtze River Delta region. As the mainland's second international financial centre, in tandem with Hong Kong, Shanghai would facilitate the country's growing prominence on the global economic and political stage, but it would also catapult the two cities to a fresh level of competition. The competition debate would escalate from a Mickey Mouse issue - a proposed Disneyland theme park in Shanghai - to the probable prospect of that city threatening Hong Kong as the gateway for foreign capital and the entrepot for the mainland. The 2020 vision would also raise questions about the future of the Hong Kong dollar. "Shanghai has got the gift it has longed for, for ages," said Priscilla Lau Pui-king, an associate professor and associate head of the department of business studies at Hong Kong Polytechnic University and a Hong Kong representative at the National People's Congress, referring to a freely convertible yuan. "The two cities will brace for more competition. Shanghai has lots of potential in banking and finance, whereas Hong Kong could expand horizontally." China's tight grip on foreign exchange has cemented Hong Kong's role as the artery for foreign capital inflows. The city was the mainland's single largest source of overseas capital last year, accounting for 44.4 per cent of US$92.4 billion in foreign direct investment, according to statistics from the Ministry of Commerce. However, a freely convertible yuan will change all that and provide the ultimate key to help Shanghai realise its grand ambition of becoming an international financial, economic, trade and shipping hub by 2020. It would mean bigger convenience in trade and financial transactions for Shanghai, despite the fact that Hong Kong was picked for the first batch of trial centres for yuan settlement of trade, along with Guangxi, Yunnan, Guangdong and the Yangtze River Delta. At present, Shanghai is arguably the country's financial powerhouse, home to the mainland's main stock markets, the foreign-currency market, one of three commodities futures exchanges, and the only financial futures exchange and gold exchange. The People's Bank of China also has a second headquarters in the city, after Beijing. Nonetheless, a comprehensive set of financial infrastructure does not necessarily give the city the upper hand, some critics argue. "Hong Kong is a real global financial centre," said Chen Shuang, chief executive of Hong Kong-listed financial group China Everbright (SEHK: 0165). "Shanghai has a long road ahead. It at least requires the support of a sound regulatory system." As the head of a red-chip company, Mr Chen has no intention of repatriating resources from Hong Kong to Shanghai, where Everbright's core securities brokerage operations are located. Ms Lau said that on the back of its developed capital and equity markets, Hong Kong could develop and offer yuan-related derivatives, financial instruments that are not expected to be available in the Shanghai market, at least in the coming decade. "It is not impossible to see Shanghai surface as the world's financial market in 11 years, as China moves ahead `a thousand miles a day', as the Chinese saying goes," she said. "The question is how it strengthens its rules and regulations, judicial system and talent supply." She said Shanghai would enjoy greater convenience in trade should the yuan be fully exchangeable. The tale of the two cities has unfolded differently primarily owing to Hong Kong's governance under the "one country, two systems" principle. "The political arrangement did resolve a confidence crisis, but it ties Hong Kong's hands in its future development," said a senior official at one of Hong Kong's oldest banks. Opportunities, therefore, thrive in the banking and financial sector in Shanghai, where advantages would sway in favour of mainland banks and financial institutions such as the Bank of China, Industrial and Commercial Bank of China (SEHK: 1398) and Bank of Communications (SEHK: 3328), he said. "If Hong Kong doesn't rethink seriously its way forward in terms of positioning and strategy, it stands to lose its existing position," the bank official said. He also warned of the waning importance of the Hong Kong dollar when the yuan becomes fully convertible. With its geographical advantage as the window to the west, Hong Kong has sought to align its economic development with the Pearl River Delta. With China's aggressive transformation to a service-led economy and its ongoing upgrade to a hi-tech based industrial structure, the city has little choice but to merge further into the country's economy. Hong Kong's development roadmap could have been rewritten if the city chose to be included in the 11th national five-year plan, which spans from 2007 to 2012. A State Council researcher said Hong Kong missed the chance of fitting into the country's planning as it did not contact the National Development and Reform Commission until the top planning agency finished the plan. What difference will full convertibility of the yuan bring to Shanghai? It may be hard to quantify at present, but few will dispute the positive impacts on city's top-notch international hotels, glitzy fine-dining restaurants and shopping malls, the modern and expansive Pudong international airport and the world's second-busiest port.

Former AIG chief executive Maurice "Hank" Greenberg lashed out at his former employer yesterday, telling a Hong Kong audience it made no sense to pay US$165 million (HK$1.27 billion) in bonuses to executives in AIG's failed financial products unit. "There's no reason to pay them bonuses," Greenberg said in a talk arranged by the American Chamber of Commerce in Hong Kong. "Compensation did get out of hand." Greenberg was the sole architect of the unit, AIG Financial Products, which lost more than US$100 billion on credit- default swaps. "When they lost all this money in 2005/6/7, why would you pay them a bonus to make up for the losses that they had in their capital account?" Greenberg said. "It doesn't make any sense." Greenberg, 83, said AIG's decision to pay the bonuses was part of a wider failure at the firm since it ran into trouble. He singled out new chief executive Edward Liddy for particular criticism. "[This is an] example of people running a company with no experience of dealing with a company of AIG's background," he said. The former US Army captain, who led the insurance company for almost 40 years, was forced out by AIG's board in March 2005 amid state and federal probes into whether he used off-balance sheet transactions to improperly boost profits. He had refused to cooperate with the company's own probe. Greenberg yesterday disputed the claim that he was responsible for losses in AIG Financial Products. The unit "went on a spree" writing credit-default swaps in huge volumes after AIG lost its triple-A credit ratings in the wake of his departure in 2005, Greenberg said. Instead, it should have stopped writing credit-default swaps and hedged its holdings. AIG has said Greenberg was "directly responsible" for the creation of the financial products unit. "It strains common sense to accept Greenberg's allegations that he ... did not appreciate the risks from the multisector CDS book written by AIG," the company said in response to a lawsuit from Greenberg earlier this month. "AIG FP, from the way it operated to its compensation, were all set up under Greenberg." On Greenberg's watch, AIG Financial Products became a sought- after employer as it offered to share a third of all its profits with staff. But several key executives have quit the financial products unit after weeks of ridicule and scorn. They include executive vice president Jake DeSantis who, in a parting letter to CEO Liddy, wrote: "Most of those responsible have left the company and have conspicuously escaped the public outrage." Greenberg also hit out at the US government, describing its various AIG rescue plans as "going from one failed strategy to another." He added: "There's only one way to pay back taxpayers...that is to rebuild AIG. Destroying it doesn't accomplish anything - nobody wins." That's especially true for Greenberg, who was AIG's largest shareholder before the government takeover. He has seen most of his net worth, pegged at US$3.2 billion the year after he left AIG, evaporate in the turmoil.

InvestHK associate director Simon Galpin will replace Mike Rowse, who retired in January, as head of the investment promotion body, a source said yesterday. Rowse, who became director general when InvestHK was set up in July 2000, was seen as a trusted subordinate of Chief Executive Donald Tsang Yam-kuen. Prior to taking up the post he was an administrative officer, which Galpin is not. Another source said an administrative officer would have been a more suited candidate as he would be more familiar with the workings of the government and especially in seeking resources. However, an open recruitment exercise last year for the directorate grade six position, which offers a monthly salary of HK$181,450, apparently failed to turn up new faces. A government source said Galpin is the most experienced in the department. Rowse had intentionally kept a low profile in recent months so as not to affect Galpin who became acting director general on his retirement, the source said. Galpin, as one of the three associate directors of InvestHK, was responsible for the retail, information technology, telecommunications, tourism and entertainment sectors. Galpin is in Nanjing, Jiangsu province, with Undersecretary for Commerce and Economic Development Greg So Kam-leung for an investment promotion. Galpin received his appointment letter last Friday, it is understood. An InvestHK spokesman declined to comment.

China: Australia rejected China’s state-owned firm Minmetals’ US$1.7 billion bid for Australian miner OZ Minerals on Friday, saying it would only approve the deal if it excluded the local firm’s prime mining asset. Treasurer Wayne Swan, in announcing the surprise decision, noted OZ Minerals’ Prominent Hill copper-gold mine was situated close to a sensitive defence facility, the Woomera weapons-testing range in the deserts of outback south Australia.

China box office is still recording strong growth despite the global economic downturn, posting increases of 29 per cent in January, the chairman of the country’s leading state-run movie company says. China Film Group chairman Han Sanping also predicted growth of at least 20 per cent for this year and total box office revenue of five billion Chinese yuan (US$732 million) for the year, according to an interview published on the website of People’s Daily on Friday. That figure is small compared to US domestic box office revenue for Hollywood films, which took in US$9.63 billion in 2007, the latest figures available according to the Motion Picture Association of America. Mr Han was quoted as saying China still has many untapped markets in smaller cities, noting that John Woo’s recent Chinese historical epics Red Cliff and Red Cliff II made 600 million yuan (US$88 million) from about a dozen major cities alone without being shown in some 300 smaller cities in the mainland. “If these 300 cities each build two or three multiplexes, and if each multiplex builds four or five screens, then we can cover another 300, 400 million people,” Mr Han said.

Mainland will provide 20 yuan (HK$22.72) per watt peak (Wp) of subsidy for solar power projects attached to buildings that have capacity of more than 50 kilowatt peak (KWp), the Ministry of Finance said, as the government makes a push for clean energy development. Analysts said the support was unprecedented and would help expand the use of solar power much faster than before, when installation was hampered by high costs and limited subsidies. Mainland, the world’s third-largest major economy, is heavily reliant on burning coal to fuel its economic growth. Solar power programmes based on monocrystalline silicon panels should transform more than 16 per cent of solar heat that panels receive into power, while those using polysilicon panels, more than 14 per cent of solar heat, said the document posted on the ministry’s website. Solar power panels made by non-silicon materials are required to transform more than 6 per cent of solar heat. The government said it will give preferential support to projects that can integrate parts of solar power equipment into buildings and those having connection to grid networks. It will also give priority to schools, hospitals and government buildings aiming to develop solar power systems. “The threshold is pretty low,” said Wang Jing, chief power analyst with Hongyuan Securities. “Monocrystalline silicon panel projects over 313 square metres would qualify for the subsidy of some 1 million yuan, so will polysilicon panel projects over 833 square metres.” “Installers almost get free modules and will only be paying installation costs and other small fees,” she said. Solar panel installers are looking at least breaking even with the help of the subsidy, as power generation costs from solar panels could be lowered to as low as US$0.04-0.06 per kilowatt hour, largely in line with current power prices, a research note by Merrill Lynch and Banc of America Securities said. Hongyuan’s Ms Wang said she expects mainland’s new solar power generating capacity could soar to 500 megawatts (MW) and even more by the end of this year from less than 100 MW currently.

Beijing has called a Pentagon report about the PLA's pursuit of sophisticated weaponry and its conclusion that China was trying to alter Asia's military balance "a gross distortion of the facts". The annual report, "Military Power of the People's Republic of China, 2009", said Beijing had sold nearly US$7 billion worth of conventional arms in the global market, with Pakistan as the main customer. Andrei Chang, chief editor of the Canadian-based Kanwa Asian Defence Monthly, said the Pentagon was aware of Beijing's arms sale to countries hostile to the US, such as Iran, in exchange for cash and energy resources. "Beijing has expanded its weaponry global market over the past decade by upgrading both arms quality and quantity, especially with its deliberate arms sales to US-hostile countries such as Iran, Sudan and Venezuela," Chang said. "I believe Beijing undertook a new arms-sale strategy to counter the US' sale of weapons to Taiwan because mainland officials realised that all their vocal opposition to the US' arms support of Taiwan has never worked." He said the report also hinted the US had been concerned Beijing was using its sophisticated weaponry in deals to obtain oil and natural gas from resource-rich countries in the Middle East. "The US is worried that Beijing's arms-for-energy policy might harm its long-standing national interests in the sensitive Middle East region." In Beijing yesterday, Foreign Ministry spokesman Qin Gang raised China's "strong objection and solemn representations to the US" over the report. "This is a gross distortion of the facts, and China resolutely opposes it," he said at a scheduled press briefing. "This report issued by the US side continues to play up the fallacy of China's military threat." Although Beijing announced the PLA had spent 417.8 billion yuan (HK$473.8 billion) on defence last year, the Pentagon annual report said the actual amount was between US$100 billion and US$150 billion, at least 71 per cent more. The report also mentioned for the first time the PLA Navy was building a new base in Hainan, its island province in the South China Sea, saying it could serve the growing fleet of submarines, including those equipped with ballistic missiles. "The port, which has underground facilities, would provide the PLA Navy with direct access to vital international sea lanes, and offers the potential for stealthy deployment of submarines into the deep waters of the South China Sea." Earlier this month, the US surveillance ship USNS Impeccable had a standoff with several Chinese vessels, and Beijing accused the US Navy of ordering the ship to investigate the submarine base. The Pentagon report was written before the standoff, but a US senior defence official said Chinese actions appeared to be "consistent" with their military's mission of safeguarding against possible threats to the country's sovereignty. "China is very, very sensitive about what it perceives to be its territorial claims," the official said.

Executives sentenced in a milk scandal in which at least six children died and tens of thousands were hospitalized after drinking milk adulterated with melamine had their appeals rejected by a court yesterday. The Hebei high court upheld the life sentence for Tian Wenhua, chairwoman of dairy firm Sanlu, who was convicted last year of manufacturing and selling fake or substandard products. Tian, who said during her trial that she had reported the tainted milk to the government in early August, appealed on grounds of lack of evidence. China did not announce the milk contamination to the public until September, after the Olympic Games in Beijing were over. The court also upheld sentences for other defendants from Sanlu and melamine distributors, sentenced to death or life imprisonment.

Mar 26 - 27, 2009

Hong Kong: A Silicon Valley hedge fund manager wanted in the US on charges he duped investors out of at least US$5 million (HK$38.7 million) challenged his extradition from Hong Kong on Wednesday.

Bank of China (Hong Kong) (2388) has recorded its first ever half-year loss. The bank lost HK$3.75 billion in the second half of 2008 on impairment losses from investments and huge expenses relating to Lehman minibonds. The city's third-largest lender posted worse-than-expected earnings for 2008 of HK$3.34 billion, down from HK$15.446 billion a year ago, due to a more than sixfold rise in impairment allowances to HK$12.5 billion. The provisions include a HK$2.73 billion hit on its 5 percent stake in Bank of East Asia (0023) and a HK$8.253 billion charge on US non-agency grade RMBS holdings. BOCHK vice chairman and chief executive He Guangbei also blamed an extra HK$770 million in expenses as a result of the Lehman minibonds for the worse than expected results. BOCHK will not pay a final dividend. Salaries have been frozen and senior management will not get discretionary bonuses. He Guangbei said the bank's first half results this year will depend on the effectiveness of US government plans to bail out banks crippled by toxic assets. "If the measures are effective, US assets prices could [rise] and help the books," executive director and chief financial officer Lee Wing-hung said. He Guangbei stressed the bank's core business was sound, citing its decline by 6.3 percent over the year and a slide in its non-performing loan ratio by two basis points. BOCHK's parent Bank of China (3988) posted a net profit of 64.4 billion yuan (HK$73.07 billion) last year, up from 56.25 billion yuan in 2007, even as it saw earnings decline by 58 percent during the fourth quarter. Its net interest margin was 2.63 percent compared to 2.76 percent the year before on an increase in lending since November 2008, vice chairman and president Li Lihui said. BOC declared a final dividend of 13 fen per share. Like other lenders, it is facing downward pressure on net interest margin. In posting net income of 4.5 billion yuan for the fourth quarter, compared to 10.78 billion yuan for the same period the previous year, BOC fell nearly 3.5 billion yuan short of analysts' forecasts, according to Reuters. As at 31 December 2008 its holdings in US mortgage-related securities had taken a US$4.46 billion (HK$34.78 billion) hit. He Guangbei said BOCHK did not need to raise funds, adding there were no plans for massive staff layoffs or salary cuts at BOCHK. Li said BOC is positioning itself as a clearing bank for yuan-denominated trade settlement in Hong Kong.

Hong Kong shares ended 2.1 per cent lower on Wednesday pulling back from a two-day, 8.4 per cent rally, but refiner Sinopec surged after Beijing announced a hike in fuel prices.

The 10-metre humpback whale that spent a week in Hong Kong waters has not been sighted for two days might have left the area, whale expert Samuel Hung Ka-yiu said on Wednesday. Mr Hung, director of the Hong Kong Cetacean Research Project, said he had searched unsuccessfully for the whale off Beaufort Island, Po Toi Island, Cape D’Aguilar and Stanley. He told reporters that he believed it might have headed to Arctic feeding grounds. Mr Hung said a whale has an innate sense of direction and would often swim to the Arctic Ocean, alone. But he said local experts would continue searching for the humpback until Sunday. The whale, first sighted in the East Lamma Channel last Monday, aroused considerable interest in Hong Kong. Scientists say adult humpbacks range from 12-16 metres in length and weigh approximately 36,000 kilograms. They typically migrate up to 25,000 kilometres each year. The whales feed in polar waters only in summer. They usually migrate to tropical or sub-tropical waters to breed and give birth in the winter. Their food consists mostly of krill and small fish.

Secretary for Food and Health York Chow Yat-ngok said on Wednesday the government has earmarked HK$1.5 million for the Health Department to hire overseas experts to study drug regulations in Hong Kong. He made the comments at a special meeting of the Finance Committee of the Legislative Council. However, some legislators voiced concern about whether the department had enough resources and manpower to regulate importers, wholesalers and drug manufacturing companies. Dr Chow replied that the Health Department planned to enhance both inspections and regulations of drugs. These plans come in the wake of a series of recent drug mishaps in the territory. He said the government had also set up a 20-member review committee comprising doctors and pharmacists to examine the regulatory system for pharmaceutical products. The first meeting of the committee will be held in early April. It is expected the review will be completed in six to nine months. The Health Department would also hire 10 more non-civil service contract pharmacists in the next fiscal year to inspect drug manufacturing companies. Dr Chow told the Legco recurrent government expenditure on health for the 2009-2010 year was HK$35.7 billion. This was 15.7 per cent of total recurrent expenditure and an increase of HK$1.8 billion over last year’s figure. The health secretary said the government would continue working on its healthcare reforms. “We are preparing to launch the second stage of a public consultation to encourage the public to discuss these reforms”, he explained. Dr Chow said the government also planned to implement a 10-year programme for developing of an electronic health record (eHR) sharing system.

Actors from Asia Television's talent pool help the station announce changes in its channel lineup yesterday, including a new Taiwanese channel, CTI-Asia. Asia Television's commitment to running a 24-hour high-definition TV channel next month will be met at the expense of three existing digital channels, despite the station insisting the revamp is not a cost-saving measure. It would be the first reform taken by the station to combat its low viewership since Taiwanese billionaire Tsai Eng-meng stepped into the cash-strapped company in January. The plan announced yesterday included a full-fledged 24-hour HD TV channel starting from April - in contrast to a mere two hours a day of such broadcasts since the beginning of digital TV at the end of 2007. A new Taiwanese channel - CTI-Asia, owned by Mr Tsai - would also be shown by the station in standard-definition quality and follow CCTV-4 to become the second outside channel freely available to Hong Kong viewers. But three existing digital channels run by the broadcaster will cease. Station vice-president Ip Ka-po, in charge of production administration and co-ordination, insisted the plan did not aim to cut costs and said more programs would be produced under the new regime. "We are not `chopping off' our existing channels," he said, noting that spectrum limitations had left ATV no alternative if it wanted to step into HD production. "We see it as the best time to commit to HD TV production as many viewers have now switched to digital television a year after it came into service," Mr Ip said. The station will introduce 24 hours of HD programs a week next month, rising to 38 1/2 in July. The new arrangement would leave ATV with one HD TV channel and four SD TV channels - ATV Home, ATV World, CTI-Asia and CCTV-4. According to the government figures, about 32 per cent of local households, or 726,000 families, were watching digital channels by the end of last year. Mr Ip said the broadcaster was expecting a slight increase in production following the revamp and that could require recruitment of 10 to 20 staff. According to the station's plan approved by the Broadcasting Authority on Monday, ATV's proposed investment would be revised from HK$200 million to HK$177.5 million due to savings in programming costs. Leung Tin-wai, head of the department of journalism and communication of Shue Yan University, said he would not be surprised by any cost-saving measures amid the financial turmoil.

Residents of Kowloon Bay and Kwun Tong may be able to commute to the future Kai Tak City by monorail under the latest plan for bridging the gap between east Kowloon and the former airport site. A monorail is already proposed to run the length of the new city, from the tip of the former runway in the south to Kai Tak MTR station in the north. Now the Civil Engineering and Development Department is looking into whether it could be extended to east Kowloon. A new bridge had been planned from the tip of the old runway to Kwun Tong but a recent study by the department found this might not be feasible in the short term because the construction could infringe the Protection of the Harbour Ordinance. "To allow vessels to pass under the bridge, it would have to be very high, which is not very user-friendly," a spokesman for the Development Bureau said. As an alternative, the department is studying the feasibility of extending the monorail to neighbouring areas, including Kowloon Bay and Kwun Tong, across an existing bridge. The preferred route would be from the MTR stations in Kwun Tong and Kowloon Bay to Kai Tak station on the Sha Tin-Central Link. The rail system is expected to be completed in 2021, subject to the detailed design. "The extended rail link looks more user-friendly and it serves the same purpose, strengthening the connection of old and new districts," the bureau's spokesman said. But the spokesman said the study was still at a preliminary stage and a lot of problems had to be solved to implement the plan. He said the government had to ensure streets in old areas were wide enough for the monorail. Construction work on the monorail could also be complicated by the busy road traffic and the public utilities carried underground. The Development Bureau will seek funding of HK$1.18 billion from the Legislative Council for the infrastructure and detailed design of Kai Tak, including a study of the monorail. The infrastructure is expected to be completed in three phases: public housing, cruise terminal and waterfront promenade in 2013; residential development, underground street to Kowloon City and San Po Kong, heliport and Kai Tak station in 2016; and monorail, stadium complex, remaining residential and commercial developments, and the last stage of the district cooling system in 2021. The first phase is expected to commence in July this year.

Green areas in seven urban districts will increase by 20 per cent to 50 per cent after the government's green master plans are implemented, the Development Bureau says. Instead of tendering all greening works to one contractor, the bureau said yesterday the greening project covering seven districts would be divided into seven contracts, so as to create job opportunities for small and medium-sized contractors during the economic downturn. A total of 360 jobs would be created during the two-year greening works. Districts selected for such work include Sham Shui Po, Kowloon City, Western District, Southern District, Eastern District, Wong Tai Sin and Kwun Tong. A total of 11,500 trees and 2.69 million shrubs would be planted. For example, scholar trees (Sophora japonica) have been chosen to decorate Sai Ying Pun, an area rich with historic monuments, educational institutions and the Dr Sun Yat-sen historic trail. Happy trees (Camptotheca acuminata) have been chosen for Kennedy Town, which is experiencing revitalisation. The bureau said it would increase the green area of those districts by 20 per cent to 50 per cent.

A leading TV actress had to be rescued by police yesterday in her luxury Kowloon City flat when her helper bit her arm and refused to let go. The maid, 24, began weeping in the Sky Garden flat in Prince Edward Road West after receiving a text message from a man in her home country of Indonesia at about 9.30am. The cries woke Sonija Kwok Sin-nei, 34, who was crowned Miss Hong Kong in 1999. She left her bedroom and found the helper sobbing in the living room. According to details given by Kwok later during a TVB (SEHK: 0511) program, in which she appeared with her left forearm bandaged, her helper asked for help but kept saying: "I don't know what happened to me." Kwok said the helper showed her the text message on her phone and became emotional. "Then she suddenly ran into the kitchen and grabbed a chopper and raised it against her neck." She agreed to hand over the chopper and Kwok gave it to her mother, who hid it under a bed, while she called police. "When I was giving details of where we were and the situation, the maid came and grabbed me. She pulled my hair, bit my arm and refused to let go. My mum came to pull her and the three of us went into a rough and tumble," she said. "The period appeared to be a long time, but it was actually about five to 10 minutes." The scuffle was only ended when police officers armed with shields arrived and subdued the maid. Kwok and the helper were taken to Kwong Wah Hospital, where Kwok was discharged after treatment. Despite her injuries and loss of hair, she went to work at the TVB studios in Tseung Kwan O in the afternoon. The helper, who has worked for the actress for about 10 months, was transferred to Kwai Chung Hospital.

Secretary for Home Affairs Tsang Tak-sing will lead a delegation to a Buddhist conference in Taipei next week - the first visit to Taiwan by a Hong Kong principal official since the handover. He will attend the second World Buddhist Forum along with the director of the mainland's State Administration of Religious Affairs, Ye Xiaowen. "Hopefully Hong Kong will play an active role in cross-strait relations. I also think this will definitely help promote Hong Kong in the cultural and religious field," the minister said of the tour. Mr Tsang has been invited by the Hong Kong Buddhist Association to head a 100-strong delegation from Hong Kong and Macau. The event will start tomorrow in Wuxi, Jiangsu, with a closing ceremony to be held in Taipei next Wednesday. Mr Tsang played down any political implications and said he was taking the tour as an ordinary visitor. "I am attending the activity in the capacity as the head delegate invited by the Hong Kong Buddhist Association. Of course I have accepted the invitation as the secretary for home affairs. The relationship should be made clear." He did not rule out meeting Taiwanese government officials during the conference. Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung said more principal officials would visit the island if there were appropriate occasions. Chung Hwa Travel Service managing director Jeff Yang Jia-jiunn - Taiwan's top representative in Hong Kong - said Mr Tsang's trip was solely a civil exchange and the Hong Kong government had not asked Taiwan to make any special arrangements. Qi Xiaofei, deputy director of the State Administration of Religious Affairs, told the South China Morning Post (SEHK: 0583, announcements, news) that senior state officials, including himself and Mr Ye, would be part of the delegation to Taiwan. "This forum is jointly organised by Buddhist groups across the Taiwan Strait. As an organiser of the event, leaders of the China Religious Culture Communication Association will participate in the trip," he said. Au Kit-ming, executive director of the Hong Kong Buddhist Association, a co-organiser of the forum, said that with Mr Ye and Mr Tsang attending, relations between Beijing and Taipei would be further improved. "Being Buddhists and Chinese, it is our duty to do our part in improving cross-strait relations. Both Mr Ye and Mr Tsang will be participating in their non-official capacities." he said. Mr Au said more than 1,000 Buddhists from 200 regions - including the politically sensitive regions of Tibet, India and Nepal - would attend the event. "Buddhism promotes harmony and there will not be any political problems." Separately, the Hong Kong government announced that the Hong Kong-Taiwan Inter-City Forum had been scheduled for April 15. Taichung Mayor Jason Hu Chih-chiang will lead a delegation of his city officials to Hong Kong and discuss issues relating to tourism and trade.

SJM Holdings said net profit fell 48.1 per cent last year and 77.6 per cent in the second half as a slowdown in Macau's casino industry prompted the firm to scrap a HK$12 billion plan to redevelop the 39-year-old Lisboa casino hotel. SJM, which completed a HK$3.85 billion initial share sale in July last year, said net profit last year fell to HK$796.1 million from HK$1.53 billion in 2007. Gaming revenue fell 12.92 per cent to HK$27.99 billion after a surprising 3.63 per cent increase in mass-market casino revenue failed to offset a 20.73 per cent slump in VIP betting volumes. Profit plunged to HK$225.1 million in the six months to December from HK$1.01 billion a year earlier after Macau's five-year casino boom ground to a halt on regional recessions, a credit crunch among high rollers and Beijing's travel restrictions. "Our industry was experiencing severe price competition for junket customers, visa restrictions on mainland visitors to Macau and the global credit crisis," SJM chief executive Ambrose So Shu-fai said yesterday. "While our operating results were significantly down from the past, we retained our leading position with market share," he said, citing a 30 per cent share of Macau's casino revenue in the year to date compared with 26.5 per cent for last year. Wagers by high rollers fell 28.8 per cent in the second half to HK$244.44 billion as junket partners curtailed credit to players, driving down net VIP winnings 33.5 per cent to HK$6.69 billion. But despite restrictions on mainland visitors, revenue from walk-in "mass-market" cash players increased 1.5 per cent to HK$5.38 billion. Macau's lopsided casino industry downturn prompted SJM to scrap HK$4.7 billion options to buy the original Casino Lisboa from controlling shareholder Sociedade de Turismo e Diversoes de Macau (STDM) and redevelop it into a HK$12 billion complex of casino hotels, residential towers and shopping arcades. SJM's listing prospectus had earmarked HK$1.3 billion of its initial public offering proceeds to acquiring the 94 per cent of the Lisboa site it didn't already own, along with a similar stake in a plot of land in the nearby Nam Van Lakes area. But the company announced late Friday it would instead jointly redevelop the site with STDM, and the parent firm would retain a majority stake in the project, originally set to begin construction this year. The two parties "do not intend to redevelop the Lisboa site for some time", Mr So said.

Casino developer Wynn Resorts is selling new shares to raise cash and pay down debt for the second time in five months. Wynn said it planned to issue up to 9.6 million new shares at US$19 each to raise about US$175 million in net proceeds. The company's Nasdaq-traded shares in New York opened 3.56 per cent lower yesterday following the announcement after closing on Monday at US$19.65. The sale marks the second time in five months that Wynn has issued new shares to raise cash partly in order to pay down debt. The firm raised US$348 million in November in an offering priced at US$43.50 per share that was increased to 8 million shares from 5 million due to strong demand. Several Macau and Las Vegas developers including MGM Mirage, Las Vegas Sands Corp and Harrah's Entertainment have struggled in recent months to raise cash and avoid loan defaults, but Wynn's balance sheet is considerably healthier. The company has only one project under development, the US$700 million Encore Macau, a 400-room hotel tower next to its existing 600-room Wynn Macau. Encore Macau is set to open early next year and is fully funded through existing bank loans. Wynn had already spent US$202 million on the project as of December, with most of the balance of the outlay set to come this year. Company-wide, Wynn is carrying about US$5.4 billion in long-term debt with US$1 billion due for repayment next year, according to Bloomberg. The firm had US$1.1 billion cash on hand as of December. Wynn booked US$210.21 million in net income last year on US$2.99 billion in revenue. But it swung to a loss in the fourth quarter on accounting charges and a dramatic slowdown in business, mainly in Las Vegas and to a lesser extent Macau. "We're underleveraged and we have a strong balance sheet, but I'm not nearly satisfied with the kind of money that is available for us to make us a profit," chairman and chief executive Steve Wynn said last month on an investors' conference call. "I think this is a period in which we're going to have to adjust to the fact that you're basically conducting a holding action and hoping that your capital structure allows you to do it." Shares in Wynn had plunged 53.5 per cent in the year to date as of Monday.

Investment firm Citic Pacific (SEHK: 0267) said on Wednesday it made a net loss of HK$12.66 billion last year on the back of bad foreign exchange bets. The conglomerate, which has interests ranging from iron ore mines to property, swung to loss from a US$10.84 billion profit in 2007, the company said. The firm booked a US$14.63 billion loss from unauthorised currency trading, which has sparked an investigation by Hong Kong’s Securities and Futures Commission into the firm’s entire board of directors. “Now that we have put the issues of last year behind us we are focused on the future,” said chairman Larry Yung, whose daughter was reportedly demoted for her part in the scandal. “For this year we face a difficult operating environment which will impact this year’s performance.” Mr Yung said that none of the firm’s directors would be taking a bonus. Revenue at the firm, which is the Hong Kong-listed arm of the state-owned conglomerate Citic Group, increased from US$38.53 billion in 2007 to US$46.42 billion last year, the statement said. The company announced in October that it faced huge potential losses from currency contracts betting on the rise of the Australia dollar to help fund its Australian iron ore projects. The company came under fire for not disclosing the losses – caused by a surprise strengthening of the US dollar against the Australian dollar – until six weeks after top executives said they became aware of them. Two executives lost their jobs in the scandal, and the company’s share price collapsed.

Li & Fung (SEHK: 0494), a leading global exporter and distributor, said on Wednesday its net profit for the second half of last year fell 41 per cent, lagging analyst forecasts, as US consumers cut spending and retailers tightened inventories amid the global slowdown. The Hong Kong-based consumer goods exporter, which supplies US retailers such as Wal-Mart and Target, posted a profit of HK$1.18 billion for July-December, compared with HK$2.01 billion in the year-ago period. The consensus forecast for the second half was for profit of HK$1.82 billion, according to 13 analysts polled by Reuters Estimates. The company posted a full-year profit of HK$2.42 billion for last year, against HK$3.06 billion in 2007. Shares of Li & Fung have risen almost 50 per cent this year, after plunging 43 per cent in the second half of last year and underperforming a 35 per cent fall in the benchmark index.

The US government's plan to buy up banks' bad assets could help revive the economy if it was implemented with adequate regulatory measures, Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong said. The United States Department of the Treasury unveiled on Monday detailed plans to persuade private investors to help rid banks of up to US$1 trillion in illiquid mortgage assets and mortgage-backed securities that are hindering economic recovery in the US. "The direction is right. The government has the responsibility to ensure the financial system returns to normal when it is malfunctioning," Mr Yam said, adding that the markets had responded positively to the plan. Hong Kong's stock market rose for a second day yesterday after a rally in the US equity market overnight. Mr Yam also said there should be measures to prevent similar troubled assets from cropping up. "It is necessary that some regulatory measures be in place along with the proposed plan," he said, adding the US might introduce new measures in the near future. Mr Yam said the US lacked a macro-level and prudent supervisory mechanism in certain financial sectors, adding the subprime loan crisis would not recur if measures such as barring banks from lending more than 70 per cent of a property's value were enacted. It was necessary for the US to strengthen its supervision across sectors, he said. "[The economy] could turn around from the currently weakening position," Mr Yam said. Meanwhile, the HKMA injected about HK$5.4 billion into the banking system last Friday and on Monday, and a further HK$3.1 billion last night, to keep the Hong Kong dollar within its trading band against the US dollar. The aggregate balance of the banking system will increase to about HK$123.1 billion tomorrow. The local dollar was strong at HK$7.7501 to the greenback late yesterday, while interbank rates were soft. The overnight rate stood at 0.05 per cent.

China: Australia’s competition watchdog cleared Rio Tinto’s US$19.5 billion tie-up with Chinalco, rejecting at least one key argument being considered by the deal’s final arbiter. The deal still needs approval from the Australian treasurer, based on the national interest, after he receives a recommendation from the government’s Foreign Investment Review Board. The board has extended its probe by 90 days to late June. The Australian Competition and Consumer Commission said it had considered whether Rio might end up working alongside mainland’s steelmakers, on the assumption that state-owned Chinalco and mainland’s steel mills are subsidiaries of the same parent, the government, and therefore might share commercial interests. It said it studied whether that could give Chinalco the ability to make Rio Tinto lower iron ore prices below competitive levels to aid mainland steel makers. “The ACCC concluded that Chinalco and Rio Tinto would be unlikely to have the ability to unilaterally decrease global iron ore prices below competitive levels,” the commission said. It also said there was little direct overlap in Rio Tinto’s and Chinalco’s bauxite, alumina and copper operations in Australia, so the tie-up would not harm competition. ABN AMRO analyst Warren Edney said there were no competition issues for the Commission to consider. “Chinalco does not have any iron ore, and aluminium is traded on the London Metal Exchange. In other worlds that’s a free market,” said Mr Edney.

"The United States is making a mistake in holding China accountable for its large trade imbalance," said Stephen Roach, Chairman of Morgan Stanley (Asia), on the sideline of China Development Forum in Beijing. "The United States is making a mistake in holding China accountable for its large trade imbalance," said Stephen Roach, Chairman of Morgan Stanley (Asia), on the sideline of China Development Forum in Beijing. "This is the fact that the U.S. economy is in very serious difficulties," Roach told Xinhuanet Monday. "The United States is making a mistake in holding China accountable for the pressures that are very real that are increasing on American workers, this is not China's fault," Roach added. When asked to comment on trade protectionism which is gaining ground amid the global financial crisis, he said, "We do have a large trade imbalance with China, but it's because America doesn't save, not because Chinese currency issues." "I have tried to say this for years to U.S. congress but they don't understand that, if America saves more, we will reduce our current account and trade deficit with all nations, including China," Roach added. Earlier, Roach pointed out in a paper prepared for the forum that America's excess consumption model is in serious trouble because the asset bubbles that have long supported it -- property and credit -- have both burst. The paper added this is a U.S. problem and one that must be addressed at home with a new and disciplined approach to monetary policy, tough regulatory oversight, and more responsible behavior on the part of consumers and businesses, alike. A bubble-dependent economy that lived beyond its means for a dozen years must now accept the reality of having to live within its means -- and not holding others accountable for this painful yet necessary adjustment. The blame game is completely counter-productive in a world in crisis and recession. On March 13, Chinese Premier Wen Jiabao said at a press conference upon the conclusion of the annual session of China's top legislature that no country in the world has the right to put pressure on the devaluation or appreciation of the Chinese currency. "The exchange rate of China's currency, the yuan, should be decided by the country itself," Wen said. The premier reiterated the country's target is to keep the exchange rate of the yuan "basically stable" at a reasonable and balanced level. The U.S. has long held that China is "purposely keeping" its currency devalued against the dollar to help exports, which "injure the interests of U.S. enterprises." According to China customs statistics, Sino-U.S. trade hit 333.74 billion U.S. dollar mark last year, up 10.5 percent year on year. China's trade surplus with the U.S. increased 4.6 percent in 2008 from a year earlier to 170.85 billion U.S. dollars. The growth, however, was 8.6 percentage points lower than 2007. In July 2005, China abandoned a decade-old peg to the U.S. dollar and allowed its currency to appreciate by 2.1 percent. Since then, the yuan has strengthened further, mostly slowly, and risen more than 20 percent against the dollar. Sponsored by the Development Research Center under the State Council, or China's cabinet, the China Development Forum was founded in 2000. It aims to support and promote policy consultation and academic research in China. Officials, entrepreneurs, scholars and leaders from other nations, international and non-governmental organizations attended this year's forum themed China's Development and Reform in the Global Financial Turmoil.

The Chinese mainland is willing to enter talks on a trade pact with Taiwan in order to help the island through the economic downturn, a mainland spokeswoman said Wednesday. "The mainland is willing to push forward such an agreement as long as it can benefit the peaceful development of cross-Strait ties, the well-being of people on both sides, and can help Taiwan's economy tide over the challenges it faces," said Fan Liqing, of the State Council's Taiwan Affairs Office.

YouTube confirmed on Tuesday its website was being blocked in China, although the California firm offered no explanation for why mainland authorities were barring access to the popular video-sharing site.

Authorities have formally arrested 12 people for violating controls on dangerous goods following a deadly blaze caused by fireworks at a high-rise belonging to China Central Television, the Beijing News said on Wednesday. The 30-storey building, just north of the spectacular, gravity-defying CCTV tower designed by Dutch architect Rem Koolhaas, burned spectacularly on February 9, China's Lantern Festival, killing one firefighter. An initial investigation found the fire was caused by fireworks banned in the city because they were so powerful. The 12 arrested include the former head of CCTV's construction office and eight employees of the Sanxiang fireworks company in south Hunan province. The charge has a maximum sentance of three years imprisonment, although in particularly serious cases the jail term can be extended to seven years. CCTV had prepared camera crews to film its fireworks, which coincided with the final day of the Lunar New Year holiday when the city sky was ablaze with smaller, legal fireworks displays. No higher ranking CCTV official has been punished for the fire, which state media initially sought to downplay. The burnt tower was home to the Mandarin Oriental Hotel, which had been due to open this year.

Premier Wen Jiabao has demanded regional governments be transparent in their plans to spend the country's 4 trillion yuan (HK$4.54 trillion) stimulus package to avoid opportunities for corruption.

China on Tuesday raised the benchmark petrol and diesel prices with the National Development and Reform Commission saying the latest rise reflected a recent sustained increase in global crude oil prices. The move more than cancels out a price cut on January 14, the last time. China changed retail fuel prices, and is equivalent to a 4.6 per cent increase in the petrol price ceiling and a 3.2 per cent increase for diesel, according to a Reuters calculation. Xinhua news agency cited the National Development and Reform Commission as saying the latest rise reflected a recent sustained increase in global crude oil prices. “It’s a surprise, because we thought there was still room for a fresh cut even though global crude has been rising recently,” said Zhu Fang, a senior analyst at China Petroleum and Chemical Industry Association. “This is sending a message to the market that China is determined to have domestic prices track global fluctuations more closely and the need to stimulate oil users to boost economic growth is to be less of a priority than energy efficiency.” Mainland’s January price cut – 140 yuan on petrol and 160 yuan on diesel – came just a month after the previous cut, part of a broader fuel price and tax reform that the authorities said would usher in more frequent adjustments in mainland prices. But many analysts were sceptical that anything would change from the old regime, which saw big, infrequent step changes in fuel prices, and growth and inflation put before efficiency. Many had also expected prices to come down further, to allow mainland buyers to get more benefits from the fall in crude prices since last summer’s peak, which has not been fully reflected in the country’s retail fuel costs. Mr Zhu said he could only find few reasons to justify the rise. “It may encourage more wholesalers to build up stocks, which would help ease the pressure on refiners from mounting stocks. As we know, the market is expecting lower prices in the future, so there is no incentive for wholesalers to build up stocks.” In Tuesday’s notice to raise pump prices, the NDRC urged the two state-owned oil producers, PetroChina (SEHK: 0857) and Sinopec (SEHK: 0386), to increase oil production to meet demands. It also called for stronger checks on price violations. Earlier on Tuesday the Beijing News newspaper reported that inventories of refined oil products rose 11.4 per cent from the end of January to the end of Februrary, leaving stock levels 36 per cent higher than a year ago.

US restaurant operator Yum! Brands said on Wednesday that had it agreed to buy about 20 per cent of mainland hot-pot chain operator Little Sheep for US$63 million from UK private equity firm 3i Group and other sellers. 3i, which led a US$25 million investment in 2006 in Little Sheep, got returns of three times its investment from the sale of its 11.32 per cent stake in the company, a source with direct knowledge of the deal said. Little Sheep said on Wednesday Yum! Brands would buy the stake at HK$2.40 per share, or an 8.4 per cent discount to its closing price of HK$2.62 on Tuesday, sending shares in Little Sheep up by more than 20 per cent. Little Sheep has a 6 per cent share of mainland’s restaurant market, according to researcher Euromonitor International. The company operated 375 restaurants across the country by the end of last year, 3i said in a statement. Yum! Brands also bought at 2.6 per cent stake in Little Sheep held by China-focused private equity fund Prax Capital, which jointly invested in Little Sheep with 3i in 2006. Other parties including some controlling shareholders of Little Sheep sold a combined 6.07 per cent stake to Yum! Brands, Little Sheep said in a statement. Yum!, parent of well-known fast-food restaurants such as KFC, Pizza Hut and Taco Bell, said on Wednesday that the deal was expected to be completed by this summer.

Workers at a Nike factory on the outskirts of Ho Chi Minh City, Vietnam, assemble shoes. On Wednesday Nike said it would stop orders to some factories, including those in mainland China and Vietnam, as the global downturn forces the company to trim output. Sportswear producer Nike said on Wednesday it would stop orders with three footwear factories in mainland China and one in Vietnam as the global downturn forces the company to trim output.

Tourists crowd along the Bai Causeway on West Lake of Hangzhou, capital of east China's Zhejiang Province, March. 8, 2009. Residents and tourists enjoyed the beautiful spring view of West Lake and the warmth of spring on Sunday. If you're wondering just what's brewing in Hangzhou this month, well the refreshing answer is that the city is poised to stage a major festival celebrating all things about tea. Billed as "The 2009 China West Lake International Tea Culture Expo" this beverage-boosting bonanza will take place from March 27 to April 17 in the city, the capital of the eastern province of Zhejiang. The event is part of the city's campaign to lobby for the inclusion of West Lake as one of UNESCO's World Heritage sites. As well as promoting West Lake's appeal to tourists, the three week long event will also emphasize Hangzhou's status as China's "Tea Capital" and its heritage as the home city for Longjing Tea or, as it is also widely known as, Dragon Well Tea. The event, sponsored by the Hangzhou city government, the China International Tea Culture Research Association, the China Tea Science Society and the Zhejiang Tourism Bureau, will also showcase Hangzhou's achievements in urban renewal, environmental development and tourism. As well as taking tea, visitors to the expo will also have the opportunity to go cruising on the lake, learn more about the city and its culture, as well as discovering something of tea's long history in China and the many ceremonies associated with it. A number of special events are promised as part of its three-week program.

Mar 25, 2009

Hong Kong: Hong Kong pop singer Janice Vidal – the twin sister of singer Jill Vidal who is at the centre of a drugs scandal in Japan – has released a new song with an anti-drugs message. Jill Vidal is currently being detained in Japan after being arrested with her boyfriend last month on suspicion of shoplifting and possession of drugs. A spokesman for Janice’s record company Amusic, told a press conference on Tuesday the anti-drug song would express a positive message to teenagers. “The song will be first be released in Hong Kong on Tuesday and then throughout Asia in three days,” he said. Janice, also known as Wei See, told reporters she was grateful to the public for its support of her sister. “I am not very skilful at speaking publicly – so I want to express my feelings through this song,” she explained. Jill Vidal and boyfriend, canto-pop singer Kelvin Kwan Chor-yiu, were arrested in Shibuya, Tokyo, on February 24. This was on suspicion they were shoplifting and possessed drugs, after a small amount of cannabis was found in their luggage. They still remain in police custody. The incident has hurt the careers of both sisters. Local media reported that a slimming company recently withdrew an advertisement featuring Janice on billboards displayed in MTR stations. Janice, 26, was born in Hong Kong and has a Filipino father and Korean mother. She performs songs in English, Cantonese and Mandarin. The singer has a contract with Amusic, a new record label, in which singer Leon Lai is a major investor.

The Securities and Futures Commission may ask individual market players to declare their short positions in a bid to boost transparency as Hong Kong follows procedures adopted in overseas markets. Consultation on the move will be held later this year, SFC chief executive Martin Wheatley said yesterday. The regulator will seek legislative backup if any rules are changed, he added. Under the current rules, the SFC only requires daily reports of total short selling data, but not details of short positions by each individual player. The US and British markets require individual participants - whether a person or a fund house - to disclose short- selling activity if it exceeds 0.25 percent of the total issued capital of a stock. "In terms of the deadline and the threshold that trigger reporting, we would not start with a strong position but let the market have its say," Wheatley said, adding there is no timeframe for implementation. Hong Kong is one of the few markets not to have banned short selling since the financial crisis began last year, although there have been calls for such a move. Wheatley, who is also chairman of an international regulatory task force on short selling, said Hong Kong is one of the markets where the practice is best regulated. A ban on "naked" short-selling and an "uptick" rule that allows investors to sell only on an upward market are enough to regulate irregularities and no new bans are needed, Wheatley said. "But never say never. We will keep a close eye and monitor market changes." Short selling currently accounts for about 7 percent of daily total turnover on the local stock market. The SFC suggestion comes after the International Organization of Securities Commissions decided to standardize short-selling rules among members. An IOSCO task force yesterday launched two weeks of consultations focusing on certain principles. The 30-page paper proposes helping develop a more consistent international approach to regulate short selling, including a reporting regime that provides timely information to the market as well as allowing certain exceptions, depending on the market situation. Market participants welcomed the move. Kenny Lei Yiu-sun, chairman of the Hong Kong Brokers Association, said: "It would help develop a more transparent market." But Lei suggested the SFC should seek detailed disclosures in both short and long positions of big players.

Chief Executive Donald Tsang Yam-kuen on Tuesday pledged to take more action to deal with recent blunders involving drugs produced by local manufacturers in Hong Kong. Mr Tsang told reporters he was well aware of public fears about the safety of some drugs. On Monday, Health Minister York Chow Yat-ngok admitted that government complacency brought about six drug blunders in the past two weeks in Hong Kong. Mr Tsang said that government departments would be investigating the drug procurement process to restore public’s confidence in their safety. “The Health Department is undertaking thorough inspections of all drug manufacturing plants. "The Hospital Authority is now going through all medicines and drugs being dispensed to patients. We are also going to have an investigation into the recent incidents,” the chief executive stressed. Mr Tsang also said the government would also review the supervisory system for drugs. “On Tuesday afternoon, we are going to announce the membership of this committee and we are going to conduct this investigation seriously and swiftly,” he said. The recent mishaps involved different types of medicines. The Hospital Authority said this week, that after a detailed review, it estimated about 10 patients had received out of date cough medicine from the Yau Ma Tei Jockey Club clinic. This had occurred between February 1 and March 20. Other recent blunders involved four companies. Unipharm Trading imported anti-depressants and packaged them illegally, and made up the expiry date on imported painkiller tablets. Christo Pharmaceutical provided unregistered diabetes drugs. The expiry date on some Marching Pharmaceutical drugs went beyond their shelf life. Some 216 products were recalled. Illegal amounts of a fungus were also discovered in Europharm’s anti-gout drug, Purinol, which has been linked to the deaths of six patients from a rare infection.

The Jockey Club announced on Tuesday that it had appointed Rocco Design Architects to oversee its Central Police Station conservation and revitalization project.

Representatives of the Taxi and Public Light Bus Concern Group protested outside the Executive Council on Tuesday morning – urging the government to streamline prices of liquid petroleum gas for all vehicles. A spokesman for the group said there were not enough dedicated LPG filling stations for public light buses in Hong Kong. Some drivers had to go to other stations for refills – where the price of LPG was often higher. He said their livelihood had been seriously affected by the global financial crisis. The group wants the government to exempt their licence fees for a year and to distribute HK$5,000 coupons for LPG to minibus drivers. Currently, Hong Kong has 58 LPG filling stations including 12 dedicated stations (those which only offer LPG) and 46 non-dedicated stations. Meanwhile, the Electrical and Mechanical Services Department on Tuesday announced a reduction in auto LPG ceiling prices for dedicated LPG filling stations from April 1 to April 30. “The adjustment on April 1 reflects the movement of LPG international prices in March. Adjusted auto LPG ceiling prices for dedicated LPG filling stations would range from HK$2.75 to HK$3.16 per litre, representing a decrease of HK$0.21 per litre,” a spokesman for the department said. The spokesman said the auto LPG ceiling prices were adjusted in accordance with LPG international and operating prices.

Punters piled into HSBC nil-paid rights (2997) yesterday, driving them up 40.7 percent in London trading. HSBC nil-paid rights were trading at the equivalent of HK$17.37 by mid- afternoon in London, while HSBC (0005) shares were up 10.1 percent to the equivalent of HK$45.86. A number of HSBC's retail investors are unwilling to subscribe to the rights issue. So they are selling their rights, which are being snapped up by speculators. Having bought the nil-paid rights at a cheap price, these short-term traders are now driving up HSBC's share price so they can offload the rights at a higher price on Friday, Fulbright Securities general manager Francis Lun Sheung-nim said. Meanwhile, on the first day for people in Hong Kong to accept the HSBC rights issue, almost 5,000 of the bank's retail investors flooded the Computershare offices in the Hopewell Centre to submit applications in person. Up to 50 elderly shareholders were already lined up outside the offices of Computershare, which handles HSBC's Hong Kong share registry, at 8.30am yesterday - half an hour before it opens. On their first day of official trading in Hong Kong, HSBC nil-paid rights jumped 20 percent yesterday to end at HK$13.20 after opening at HK$11. Trading in the rights was volatile, with their price initially falling as low as HK$10.80 - down 16.3 percent from their gray-market close on Friday - before a strong rally in the afternoon. The number of trades in the nil-paid rights accounted for 7.3 percent of all trades in the Hong Kong market. Computershare rented an extra office floor just to serve HSBC shareholders for the rights issue subscription period. Investors can also submit their rights issue applications and payments through the mail, using a prepaid envelope provided by Computershare. But most people prefer to hand in applications in person, a Computershare spokeswoman noted. About 67,000 HSBC shareholders, representing 20 percent of all the Hong Kong shares of HSBC, hold physical share certificates instead of registering their holdings in the central clearing system, she said. Lun said a lot of traders had adopted an arbitrage strategy yesterday morning, selling HSBC shares at HK$42 and buying the nil-paid rights around HK$10, which would allow them to get shares of the bank at a total cost of HK$38 each and book the HK$4 spread as profit. HSBC shares fell as low as HK$39.30 in early Hong Kong trading yesterday before closing at HK$41.70, up 0.6 percent. It is still cheaper to buy HSBC nil- paid rights and subscribe to the rights issue - for a total cost of HK$41.20 a share - than to buy shares directly for HK$41.70.

A District Court judge yesterday dismissed a case of deception against a senior assessor at the Inland Revenue Department and her husband, saying the prosecution had failed to prove beyond reasonable doubt the couple had dishonest intentions. They had been accused of claiming rental allowances totaling HK$1.3 million between 1990 and 1996 by using a shell company to buy two properties, which they then rented. Deputy District Judge Johnny Chan Jong-herng said the fact that tax assessor Irene Tsoi Chi-yi, 47, and her husband Eric Cheng Kai-sum, 48, senior director of enforcement of the Securities and Futures Commission, had consulted a chartered accountant before making the deal suggested they believed they were acting within the law. Evidence produced in court showed the couple had consulted Mark Fong, a former president of the Hong Kong Institute of Certified Public Accountants, for advice before the shell company bought the properties in Cloud View Road and Stubbs Road, Wan Chai. It is possible that they genuinely believed what they did was allowed by law, the judge said. The judge adjourned the hearing on costs to April 17. Speaking after the verdict, Cheng said he and his wife were glad the case was over. Tsoi had been on leave pending the outcome. The Independent Commission Against Corruption, which filed the case, said it is considering an appeal. A spokeswoman of the Civil Service Bureau said it will examine the court's judgment and the relevant materials before deciding on further action. Current Civil Service regulations state applicants for a private tenancy allowance cannot use accommodation in which they or their relatives have a financial interest. Federation of Civil Service Unions chairman Leung Chau-ting said the rule has for so long sowed confusion, especially among older civil servants. "Some senior civil servants are now living in fear since it was common practice in the 70s to 90s to claim allowances for homes in which they had a financial interest. It is now like a lottery as to who gets charged and who doesn't," he said. "Of course, one deserves to be punished if he commits the offense now since the regulations clearly state what is not allowed." Lawmakers, meanwhile, have asked the government to reduce the fringe benefits of civil servants amid the financial tsunami. The estimated amount for 2009/10 is HK$3.1 billion.

Closer cooperation in movie production may help restore some of the shine to Hong Kong's film industry, says an Oscar-winning producer. Barrie Osborne, who won an Academy Award in 2004 for The Lord of the Rings - The Return of the King, witnessed yesterday's signing of a memorandum of understanding between Cyberport, the Internet Professional Association, New Zealand's Wellington City Council, and its Institute of Screen Innovation. "It's time to try to revitalize. It takes a lot of effort and government incubation, so the MOU will help out," Osborne said. Setting up shop in the territory is advantageous because it offers a rich talent pool, financial and legal wisdom, and expertise, on top of excellent intellectual property controls for overseas digital media and entertainment figures looking to tap the mainland market, said Osborne, who is still hammering out details for a collaboration with a Shanghai financier and producer. Laurence Grieg, Grow Wellington's Centers of Excellence general manager and director of the Institute of Screen Innovation, said New Zealand's digital media industry in 2007 was worth HK$13.5 billion. He said they are hoping to double current digital entertainment and content, worth HK$2.492 billion, through the partnership by 2018. The global industry would be worth US$280.8 billion (HK$2.19 trillion) annually by 2012. The MOU will also include internship exchanges, more collaboration, co-investment and co- production in film, television, games, mobile and other digital content. Grieg said Cyberport will also be studied, because New Zealand plans to launch its own digital entertainment hub by 2011.

The Hong Kong Monetary Authority was forced to intervene in the money markets again yesterday, selling HK$2.713 billion against US dollars to keep the local currency within its trading band. The trade was triggered automatically when the exchange rate hit HK$7.7500 to US$1. The Hong Kong dollar will on the strong side of its trading band in coming days, forcing more HKMA intervention, said Fulbright Securities general manager Francis Lun Sheung-nim. The strength in the Hong Kong dollar is a result of the US Federal Reserve's announcement it will buy Treasury bills, according to Lun. "Everybody interprets it as the US government printing money, which will cause people to lose confidence in the greenback," he said. Yesterday marked the third time in a week the SAR's de-facto central bank took steps to defend the peg. The HKMA intervened twice on Friday, selling a total of HK$2.713 billion during New York trading hours. The aggregate balance, a measure of liquidity in the banking system, will fall to HK$120.026 billion tomorrow from HK$125.202 billion after the settlement of the trades and the issuance of HK$7.888 billion in Exchange Fund bills.

Japanese movies dominated the third Asian Film Awards Monday as "Tokyo Sonata" won best picture and Hirokazu Koreeda was named best director for "Still Walking." The movie "Departures," clinched best actor for Masahiro Motoki.

Japanese actor Motoki Masahiro (L) gives acceptance speech afer receiving for Best Actor of the 3rd Asian Film Awards at the Hong Kong Convention and Exhibition Center in south China's Hong Kong, Mar. 23, 2009.

Chinese mainland actress Zhou Xun poses with her trophy for Best Female Actress of the 3rd Asian Film Awards at the Hong Kong Convention and Exhibition Center in south China's Hong Kong, Mar. 23, 2009.

South Korean actor Jung Woo-sung gives acceptance speech afer receiving for Best Supporting Actor Award of the 3rd Asian Film Awards at the Hong Kong Convention and Exhibition Center in south China's Hong. Kong, Mar. 23, 2009.

Hong Kong directors Tsui Hark (C) gives acceptance speeches after receiving the Lifetime Achievement Award of the 3rd Asian Film Awards at the Hong Kong Convention and Exhibition Center in south China's Hong Kong, Mar. 23, 2009.

Chinese Taiwanese director Wei Te-sheng gives acceptance speech afer receiving the Edward Yang New Talent Award of the 3rd Asian Film Awards at the Hong Kong Convention and Exhibition Center in south China's Hong Kong, Mar. 23, 2009.

Chinese mainland actress Zhou Xun (L) gives acceptance speech afer receiving for Best Actress of the 3rd Asian Film Awards at the Hong Kong Convention and Exhibition Center in south China's Hong Kong, Mar. 23, 2009.

A number of institutions from Hong Kong and New Zealand on Monday singed in Hong Kong a memorandum of understanding to strengthen ties in creative digital entertainment business development. The document was signed by Hong Kong Cyberport, the Internet Professional Association, the Wellington City Council and the New Zealand Institute of Screen Innovation. The document will lead to stronger connectivity in areas like film, television, games, mobile and other digital content. It will see more participation by practitioners in future industry events, including Hong Kong's Digital Entertainment Leadership Forum and AnimFx Symposia of Wellington. The signing parties will work together and support their respective governments to conclude a film co-production treaty as well as the current negotiations between Hong Kong and New Zealand for closer economic partnership.

Macao's visitor arrivals for February 2009 reached 1.65 million, dropping by 17.3 percent over the same period of last year, according to the figures released on Tuesday by the Statistics and Census Service (DSEC). The DSEC figures showed that the number of visitor and non-resident arrivals totaled 2.25 million in the period. Same-day visitors (889,308) accounted for 53.8 percent of the total visitor arrivals. Analyzed by place of residence, visitors from the Chinese mainland reached 827,804, contributing 50.1 percent of the total, in February 2009, which decreased by 22 percent year-on-year. Visitors from Hong Kong (540,668) and Taiwan (91,218) decreased by 12.3 percent and 12.2 percent respectively, while those from Thailand (21,480) and Japan (35,265) surged by 76.1 percent and 36.9 percent in the period, according to the DSEC. The DSEC also said that the cumulative visitor arrivals totaled3.56 million in the first two months of 2009, down by 8.5 percent year-on-year. Visitors from the mainland (1.77 million) and Taiwan (194,622) decreased by 15.8 percent and 7.9 percent respectively, while those from Hong Kong (1.18 million) went up by 6.7 percent. Same-day visitors accounted for 54 percent of the total, at 1.9 million.

China: China will not stop buying US Treasuries as they make up a key part of its US$2 trillion (HK$15.6 trillion) foreign reserves outlay, central bank vice governor Hu Xiaolian said yesterday.

Chinese Premier Wen Jiabao (R Front) meets with Britain's Former Prime Minister Tony Blair (L Front) in Beijing, capital of China, March 24, 2009. Chinese Premier Wen Jiabao met here Tuesday with visiting former British Prime Minister Tony Blair. The two sides exchanged views on issues such as the international financial crisis and climate change. Blair's China visit was at the invitation of the Chinese People's Association for Friendship with Foreign Countries.

Bank of China, the country’s largest foreign exchange lender, reported a 58 per cent drop in fourth quarter earnings, weighed down by its overseas assets and exposure to recession-hit Hong Kong. Bank of China and other mainland banks are expected to face margin pressure and higher credit costs this year, with industry watchers also predicting an increase in soured loans as slowing economic growth erodes asset quality. The state-controlled lender posted October-December net income of 4.5 billion yuan (HK$5.11 billion), compared with 10.78 billion a year earlier, lagging analysts’ forecasts for 7.96 billion yuan, according to Reuters Estimates. Full-year profit of 64.4 billion yuan was an increase of 14 per cent from the 56.2 billion yuan earned a year earlier. Bank of China, hardest-hit among mainland banks by its exposure to US mortgage-related securities, booked impairment allowances against those holdings of US$4.46 billion. Overall impairment losses on assets more than doubled for the year to 45 billion yuan, but its non-performing loan ratio improved to 2.65 per cent for the year from 3.12 per cent. Its credit costs for the year rose, while net interest margins narrowed slightly to 2.63 per cent from 2.76 per cent. Its overseas flagship, Bank of China (Hong Kong), posted a second half loss of HK$3.75 billion, compared with net profit of HK$7.98 billion a year earlier. Analysts polled by Reuters Estimates had expected BOC Hong Kong (SEHK: 2388) to post a second-half loss of HK$552 million. For the full year, BOC (SEHK: 3988) Hong Kong’s earnings fell 78 per cent to HK$3.34 billion, dragged down by US$1.52 billion in provisions on its securities investments. BOC Hong Kong recommended no final dividend due to the earnings hit in the second half and the need to preserve capital. Royal Bank of Scotland said in a research note it expects that 4.5 per cent of new loans made by mainland banks between 2005 and last year could become non-performing between the second half of last year and the end of next year, higher than the 3.5 per cent seen in the 2004-2005 downturn. Mainland banks have made a flurry of new loans in recent months to support Beijing’s stimulus measures to maintain economic growth at 8 per cent or more. Spared the worst of the global downturn thanks to a relatively strong domestic economy, mainland’s three biggest listed banks – Industrial and Commercial Bank of China (SEHK: 1398), China Construction Bank (SEHK: 0939, announcements, news) and Bank of China are the world’s three most valuable lenders. Bank of China has a market value of US$113 billion. Given its exposure to sluggish overseas markets, Bank of China trades at a discount to its peers at 1.26 times book. ICBC and Construction Bank trade at 1.91 and 2.19 times book, respectively. Last week, China’s fifth-ranked lender Bank of Communications (SEHK: 3328) kicked off the earnings season for mainland banks by reporting a 2 per cent dip in fourth-quarter profit, which still managed to beat analysts’ forecasts. Shares of Bank of China have risen 12 per cent this year, outperforming the index for major mainland companies listed in Hong Kong, which was up 2 per cent. But the stock fell 28 per cent in the last quarter of last year against a 13 per cent drop on the H-share index.

China Telecom chairman and chief executive Wang Xiaochu announces the company's result in Hong Kong on Tuesday. The mainland's biggest fixed-line phone carrier said its profit for last year tumbled due to charges for shutting down an older mobile service. China Telecom (SEHK: 0728) on Tuesday reported a sharp fall in quarterly underlying profit amid growing pressure on its core fixed-line phone business, as it posted a net loss in the last quarter due to a large write-off. Mainland’s dominant fixed-line phone company is counting on its newly acquired 3G wireless network, based on the standard known as CDMA, to power its growth going forward as its fixed-line business matures. The company said that its wireline revenue grew just 0.6 per cent last year from 2007, while EBITDA margin fell 1 percentage point to 48 per cent. The CDMA mobile network on which China Telecom is pinning its hopes lost a net 60,000 subscribers last year, under previous ownership. But it got off to a strong start this year with the addition of more than 1 million subscribers in January. Reflecting its bullish plans for the service, the company set a target of 100 million mobile subscribers by 2011, more than triple the 30.63 million at the end of February. “The next two to three years will be an important strategic opportunity for us,” the company said in a statement. “3G business development will be a golden chance for us to integrate the 3G services into our … operations, so as to achieve unified deployment and steady corporate development.” China Telecom on Tuesday posted a 16.4 billion yuan (HK$18.62 billion) net loss for the fourth quarter, as it took large provisions for PHS, its low-end wireless service that it will retire soon. Excluding the PHS provision, the company reported that fourth-quarter profit still tumbled 58 per cent to 2.8 billion yuan, from a 6.6 billion yuan profit a year earlier. Six analysts polled by Reuters had forecast China Telecom would post an average fourth-quarter net loss of 15.1 billion yuan including provisions for PHS, and a 1.9 billion profit excluding them. The company posted fourth-quarter revenue of 52.45 billion yuan, up 9 per cent from a year earlier. Analysts said attracting 3G subscribers would entail huge subsidies that could squeeze profit margins going forward, while China Telecom’s core fixed-line client base could continue to shrink as business usage drops due to a slowing economy and intensifying competition. “China’s telecom market is no longer dominated by one player. We will have three players sharing this growing market,” said Sunny Wong, managing director for research at BOCI. For full-year last year, China Telecom posted a net profit of 884 million yuan, as earnings from its core business were wiped out by the PHS write-off and other charges. Shares in China Telecom fell in the fourth quarter by 7.7 per cent sequentially, faring better than the 20 per cent drop in the benchmark Hang Seng Index.

A senior official from Guangdong's Environmental Protection Bureau has hinted that a controversial oil refinery project with the Kuwaiti government might be relocated from Nansha. Chen Guangrong, deputy head of the provincial environmental watchdog, reiterated yesterday that the petrochemical plant's official designation was a Sinopec (SEHK: 0386) and Kuwaiti joint venture and that it should not be called a Nansha project. He stressed that at US$5 billion, the project was the mainland's largest joint venture and was important to the province. The Kuwait Petroleum Corporation first proposed the project in 2005, and Nansha district 68km south of the centre of Guangzhou, was selected as the site. The plant is expected to be able to process up to 15 million tonnes of oil a year and produce 800,000 tonnes of ethylene. But its location has made it hugely unpopular with neighbouring cities. It is 18km from Shenzhen, 31km from Zhuhai and 37km from the nearest point in Hong Kong. Mr Chen said: "The Guangdong Environmental Protection Bureau supports building a petrochemical plant in the province. It will be vital to our sustained economic growth, upgrading our economic structure and guaranteeing our energy security. It is a project with strategic importance. "Regarding where it should be built. We understand it will have profound environmental impact and people have grave concerns over it. Therefore, passing the environmental impact assessment is a prerequisite. Because it is an important project, whether it passes the assessment will be decided by the Ministry of Environmental Protection." The country's top environmental watchdog said last year it lacked the power to block the construction. Although environmental law gives the ministry power to rule on the assessments, it has no power to decide whether a project may be built. The South China Morning Post (SEHK: 0583, announcements, news) reported on Saturday that the authorities were considering relocating the plant, partly because of strong opposition from Hong Kong over the environmental impact, and because provincial Communist Party chief Wang Yang had a different line of thinking concerning development. Zhanjiang, a port city in western Guangdong, is one of the possible new locations reportedly being considered. Shen Jianfa, a geography professor at the Chinese University of Hong Kong, said Zhanjiang was one of the best locations as it had port facilities, and a large oil refinery would enhance the city's economy. He ruled out Huizhou, which already has a petrochemical plant, owing to safety concerns.

The rising threat of inflation in the United States is putting pressure on the yuan to appreciate, a central bank official was quoted as saying on Tuesday. The yuan is still under pressure to appreciate as there is increasing threat of inflation in the United States and the dollar has potential to depreciate, a mainland central bank adviser said in remarks published on Tuesday. The announcement by the US Federal Reserve last week that it would buy US$300 billion in Treasuries in the next six months is aimed at injecting base money, but that may not have an immediate effect on the US economy, Fan Gang, who sits on the central bank’s monetary policy advisory committee, was quoted as saying. “Inflation threat is on the rise in the United States and the trend for the yuan to appreciate may not change,” Mr Fan was quoted by the official China Securities Journal as saying. “Liquidity is increasing in the United States at a pace faster than China, and the US dollar has a potential to depreciate,” Mr Fan said, adding that a trend for the economy to recover earlier in mainland than in the United States was also adding pressure for the yuan to appreciate. Mr Fan said mainland should be able to achieve the target for its economy to grow eight per cent this year but was still faced with external adversity. He added he did not agree with suggestions to use yuan depreciation to help boost the economy. Some parts of the mainland economy showed improvement in February, such as surging investment and money supply, but the country’s exports and foreign investment remained in a steep downtrend in the month, sparking calls from some domestic circles to use yuan depreciation to help boost external trade. But senior officials, including those from the central bank, have vowed to keep the yuan stable during the current global financial crisis in a move partly to prevent competitive depreciation that may help spark mass capital outflows. The central People’s Bank of China has also used its system of yuan mid-point, or reference rate, and occasional indirect intervention in trading, to keep the yuan in a narrow range of 6.8100 to 6.8800 against the dollar since July last year.

China Overseas Land (SEHK: 0688) & Investment has revived a plan to launch a real estate fund management unit to raise as much as US$800 million for investment in the mainland property market. The Hong Kong-listed mainland developer, controlled by the Ministry of Construction, said the group would make some progress in setting up the fund this year. Last year, China Overseas Land planned to capitalise on its connections and expertise in the domestic property market through a private equity fund to compete with international investment banks such as Morgan Stanley and ING. "We planned to launch the fund last year. However, it was postponed as Europe and the US were hit by the global financial crisis [in the fourth quarter]," said China Overseas Land vice-chairman and chief executive Hao Jianmin. The initial response from potential investors was not bad, Mr Hao said, and the target size of the fund size was between US$500 million and US$800 million. China Overseas Land also announced yesterday that last year's profit rose 20.8 per cent to HK$5.05 billion on higher home sales on the mainland. Earnings included HK$1.07 billion from the revaluation of investment properties. Turnover rose 13.6 per cent to HK$18.89 billion. Earnings per share increased 13.9 per cent to 64.8 HK cents, and the company declared a final dividend of 7 HK cents, bringing the full-year payout to 13 HK cents, up from 12 HK cents in the previous year. Mr Hao said net profit from the mainland rose more than 30 per cent despite the fluctuating market. The total area of properties sold was 2.71 million square metres, up 25.3 per cent from 2007. The company hoped to make use of its position in the mainland's real estate market to attract international investors, he said. "The fund will team up with China Overseas Land to look for new mainland projects for developments," Mr Hao said. "I have not seen any fund show tremendous success so far. But our track record proves that China Overseas Land can make a good return." Looking ahead, chairman Kong Qingping said even if the mainland property market had not fully recovered, conditions would improve. This year, the company aims to sell no fewer than 3.5 million square metres, an increase of 30 per cent over last year. It also plans to complete 43 projects covering 5 million sqmetres. Since the start of the year, the company has recorded total property sales of 8 billion yuan (HK$9.07 billion), about 30 per cent of its annual sales target. In the current economic environment, the group said it would closely monitor its financial and cash-flow positions. Mr Kong said capital expenditure would total HK$31.9 billion, of which HK$12.4 billion would be for land premium payments and HK$19.5 billion for projects under construction.

China offers "one-stop" service to farmers buying subsidized vehicles - Chinese policemen are going to the countryside to give farmers easier access to driving license examinations as the government's subsidies on car and motorcycle purchasing take effect, according to the Ministry of Public Security. The ministry said in a notice Monday that it would send policemen to organize exams and set up mobile offices for vehicle registration in rural parts of China. Normally, these practices only take place at authorized driving schools or police stations in cities. More farmers could be buying cars or motorcycles as the government last week announced details on subsidizing vehicle purchases in the countryside, the ministry said. From March 1 to Dec. 31, 2009, each rural household is entitled to replacing its old motorized tricycle with one light truck or passenger car. They would get a subsidy of 10 percent of the new vehicle's purchasing price, according to the State Council, or China's Cabinet. Each household can buy two motorcycles, from Feb.1, 2009 to Jan. 31, 2013, with subsidies of 13 percent of the new vehicle's price. Central finance would pay for 80 percent of the subsidies and the provincial finance 20 percent, the State Council said. Motorcycles are now a major transport in most of China's villages, but passenger cars are still rare.

An Airbus A320 plane is assembled at a plant in north China's Tianjin Municipality, March 23, 2009. Seven A320s are being assembled here. The first plane is scheduled for delivery in June.

Mar 24, 2009

Hong Kong: The former police married quarters in Hollywood Road could be turned into a cluster of creative industries showcasing innovative ideas developed by young talent. Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan told the South China Morning Post (SEHK: 0583, announcements, news) that invitations for expressions of interest for development of the site would be launched after Create Hong Kong, an office dedicated to creative industries, set the parameters for the project. "I'm very interested in developing the former police married quarters because it is surrounded by a great environment. It is close to the historic police station and Victoria Prison, which offer artistic and cultural ingredients. It is also in the neighbourhood of Lan Kwai Fong and SoHo. All these make the site an ideal candidate," Mrs Lau said. She said it would be an ideal platform if the site could be used by emerging talent. "When they have their creative ideas turned into either services or products, we can use that site as a cluster for them to showcase their creativity to the market, introducing them to the community and tourists so as to create business for them." It was an ideal time for Hong Kong to develop projects like this, she said, adding that discussion with the Development Bureau on identifying possible sites for creative industry clusters had already begun. "While the city continues to develop, we need to preserve our heritage and roots," Mrs Lau said. She said the first task would be to identify possible sites, followed by the launch of invitations for expressions of interest. Create Hong Kong, alongside the HK$300 million CreateSmart Initiative to fund development of creative industries outside film and design, is awaiting approval from the legislature in May. Mrs Lau hoped the new cluster would be a multidisciplined one, gathering talent from different industries and providing matching services between them. She recognised that creative products and services would only develop by exposing children to the arts and creativity. While arts education would be strengthened in the new curriculum to be launched this autumn, the government would set up the Centre for Creative Science and Technology with the Hong Kong Federation of Youth Groups at the Hong Kong Science Park in November, she said. "We are targeting primary and secondary students, and we hope to make it a lively and fun experience for students to learn about innovative technology applications such as RFID [radio-frequency identification], environmental science and food science," she said. Mrs Lau hoped the initiatives could also attract interest from the community and parents so that they would support their children's career options in creative fields. She said a new trainee programme with the Association of Accredited Advertising Agencies of Hong Kong would be launched in May, offering 50 places that came with on-the-job training to local graduates. The government will draw a matching subsidy, with a ceiling of HK$4,000 per placement, from its existing funding resources without waiting for approval of the HK$300 million fund. Talent needed to be groomed not only through formal education, Mrs Lau said, but should also be exposed to creative industries, and a suitable environment established so that skills could be put to good use and potential realised. "I believe Hong Kong has the strength." She said the government had already committed more than HK$1 billion in funding creative industries ranging from film to design. By reallocating the resources and putting everything under the banner of Create Hong Kong, more significant results could be achieved.

The financial crisis will accelerate the shift of capital from the West to the East, HSBC (0005) group chairman Stephen Green said. "In the long term, it is this shift in the world's economic center of gravity that will affect the world's financial markets most profoundly," Green said in a speech yesterday at the opening of the China Development Forum in Beijing. Asia will continue to outgrow mature markets, Green said in a speech in the capital on Saturday, delivered on his behalf by HSBC China chief executive Richard Yorke. The financial crisis should not be seen as a reason for delaying China's reforms, Green said. "On the contrary, the transition from West to East means that China should seek opportunities to engage in even greater international cooperation, to place the global financial system on a more stable footing." China's moves to develop the corporate bond market are an example of how the country is building a sound financial system for the future, he explained. "The discrediting of the overly leveraged, high- risk models common among many Western financial institutions will provide opportunities for Chinese banks to fill the gap." Green said it is desirable and inevitable that more of the capital generated in fast-growing emerging markets will stay closer to home in the future. "This will be a positive factor for both developed economies and developing ones," he said, adding that the global financial system has grown increasingly unbalanced in recent years. "We must acknowledge our mistakes ... and use the crisis as an opportunity to improve." The restoration of confidence in Europe and North America will be "absolutely essential" to achieving a true economic recovery. "What is required to restore trust is nothing less than a change in behavior and corporate culture," he said, adding that a "gargantuan effort" on the part of regulators, businesses and financial institutions will be needed. Meanwhile, trading in HSBC nil-paid rights is expected to be volatile today on their first day of official trading in Hong Kong. They rose 8 percent in Hong Kong gray-market trading on Friday to close at HK$12.90, after opening at HK$12. The nil-paid rights fluctuated as much as 26 percent in London trading on Friday before ending at the equivalent of HK$12.32. The nil-paid rights can be traded in Hong Kong through March 31. American depositary receipts of HSBC fell 6 percent to the equivalent of HK$40.66 in New York trading on Friday.

Commerce minister Rita Lau says the government will insist on long-term viability for the park in any expansion plans. The government will not bow to pressure during negotiations on the expansion of Hong Kong Disneyland and ignore the sustainability of the park's operation, the minister for economic development has said. In an interview, Rita Lau Ng Wai-lan said the media had suggested that Disney's decision to lay off staff was intended to put pressure on the government. "But to me, pressure cannot be exerted through such tactical moves. "Our negotiation is for Hong Kong to sustain the operation of the theme park in the long term, which is the prerequisite," she added. The Post revealed last week that more than 30 staff had lost their jobs at Walt Disney Imagineering's Hong Kong-based team last Monday. They are mainly responsible for master planning, designing and developing theme parks. The US entertainment giant said it acted after being told by the government there was no timetable on the Hong Kong theme park's expansion. "I don't want to read too much into the company's decision, and it's also not for me to defend them," Mrs Lau said, reaffirming the government's stance that cutting staff would not help the discussions. But she said the layoffs might not be unreasonable, as the decision had been made by its parent company in the US, where the economy had been hit badly. Also, the staff might not have had any new tasks on hand after the completion of the newest attraction, It's a Small World, last year. "We have told them to reconsider the layoffs and expressed our concern, but it's impossible for us to impede its decision." She said she believed the workers would be rehired when both sides agreed on the expansion plans. "Will we stop the discussions because of [the layoffs]? We are not that irrational." Asked whether the government would speed up negotiations in light of the layoffs, Mrs Lau said it had a process for the talks and would stick to it. It is understood that the two parties commenced the complex talks less than a year ago, although Disney said the negotiations had already been going on for two years. Without any indication of a timetable, and given the need for the Legislative Council's approval, which could take three months or more, it is unlikely that the expansion could go ahead this year. Mrs Lau said negotiations on the designs had not reached the final stages, pointing out that the government needed to know what the new attractions would be and whether they would fit the market's appetite. "We have to fight for a good deal incorporated with public interests in the long run. This must be our stance. Come what may, we must keep to it."

Potential buyers browse items put under the hammer yesterday at the Novotel in Wan Chai. A Picasso for HK$23,400 is no bargain, apparently. About half the artworks and sculptures at a bankruptcy auction in Wan Chai yesterday went unsold, including a signed etching by the Spanish master that failed to attract a single bid. Many other pieces at the auction, which was heavily slanted towards Americana, went for less than estimated. The organiser, Hong Kong Auctions, was initially optimistic about the sale. The collection, from financially strapped owners in California, was brought to Hong Kong because US liquidators thought it would command higher prices here. The items included artworks by Pablo Picasso and Andy Warhol, Persian rugs, crystal, and bronze sculptures. Many of the items had no reserve price. The auction house did not release a figure for the amount raised last night, saying it was still working on it. Managing director Brian Hodgson said about half the items were sold. "We did not expect to be able to sell them all. But we are quite happy with the results. Many items went unsold, probably because American art is not very popular here." Asked about the possible impact of the recession here, Mr Hodgson said: "The rich are still there. People here are not as badly affected as people in America." The auction, held at the Novotel hotel, got off to a slow start, with 22 of the first 30 lots on offer failing to sell. Most of the time, the auctioneer received almost no response from the roughly 50 bidders in the room. And one of the lots, a photograph of American film star John Wayne estimated to sell for HK$1,200 to HK$2,000, went for just HK$200. A photograph of American golfer Arnold Palmer, which had been estimated to fetch about HK$3,900 to HK$7,800, was not sold. A French wine poster from the 1950s, estimated to go for HK$4,700 to HK$7,000, was sold for HK$800. The most expensive piece sold during the four-hour auction was a work by Pablo Picasso titled Jaqueline Black, an original lithograph on paper signed in pencil. With an opening bid of HK$125,000, the work was sold for HK$165,000 after 10 bids. Its estimated price was HK$195,000. Another Picasso, a signed lithograph titled Joy of Living, was sold for HK$12,000. Its estimated price was HK$5,500 to HK$9,400. But yet another work by Picasso, a signed etching titled Au Cirque, failed to attract any bidders. It had been estimated to sell for between HK$23,400 and HK$46,800. The unsold items will be offered at auction in Beijing on Sunday.

Xu Jinglei (left), Jackie Chan and Fan Bingbing, who star in Shinjuku Incident, arrive for last night's opening of the 33rd Hong Kong International Film Festival at the convention centre in Wan Chai. Filmmakers will have to turn to new markets in the Middle East and eastern Europe for funding as traditional markets in the US and Europe have been hit hard by the financial crisis. Ivy Ho, deputy director of the Hong Kong-Asia Film Financing Forum (HAF), organised by the Hong Kong International Film Festival Society, said business at recent film trade events - such as the American Film Market in November and the European Film Market at the Berlin International Film Festival last month - had been slow. She said film and television content buyers, especially from the US, were becoming more cautious. "For example, a TV station would usually buy eight to 10 products at a market, but now they only buy two to three. Thus their attendance [at Filmart and HAF] will not translate into business deals being made," Ms Ho said, adding that fewer US investors were expected at this year's HAF. "We need to develop new markets that were not so active before." These new markets, said Ms Ho, included the Middle East, Turkey and Hungary. She said investors from these markets, which had good potential, would attend the HAF this week. "Demand for Hong Kong films has always been the strongest compared with other Asian films in the Middle East. Genre films and action flicks have been very popular." Ms Ho said that despite the financial crisis, investors in these markets were still keen to invest in film projects of the right genre. She said that compared with big Hollywood films, the risk of investing in Hong Kong films was much lower because of their relatively smaller scale. This year's HAF is a three-day matchmaking platform between filmmakers from 27 selected Asian film projects and potential investors from around the world. Ms Ho said projects with a fully developed script in English and a thoughtful business plan would stand a better chance of winning over international investors. The number of US and European companies taking part at Filmart, held concurrently with HAF, had also dropped, said the organiser, the Trade Development Council. The council's service promotion manager, Keith Cheng Ka-chung, said the number of exhibitors had risen from 483 last year to 503, but the number of US and European participants had fallen by 15 to 20 per cent. "The slow market has caused companies to cut their travelling budget. Many of these American and European companies use their local marketing arms or agencies to do the job for them, instead of flying in the executives," Mr Cheng said. However, exhibitors from the mainland have soared from 80 companies last year to 117. "Mainland China is a very big market that is still being developed," Mr Cheng said. Newer markets, such as Iran and Poland, were eager to boost their exposure in Asia, he said. The HAF and Filmart - running concurrently with the Hong Kong International Film Festival, which opened last night - begin today at the Convention and Exhibition Centre.

The golden era of Hong Kong cinema may return as the vast mainland market opens up and overseas filmmakers look to recruit local talent. Film producer Raymond Wong Pak-ming, who has 50 movies under his belt in a more than 30-year career, said that despite the financial meltdown his recent works All's Well Ends Well 2009 and Ip Man are favorites both in the mainland and Hong Kong. Wong told The Standard that Ip Man, which features martial artist Donnie Yen Ji-dan, has raked in more than 100 million yuan (HK$113 million) at the mainland box office and a quarter of that amount in Hong Kong. He said he is preparing to shoot a sequel and mainland investors are queuing up for a piece of the action. "In the mainland market, we dare to invest tens of millions to shoot a movie. If you confine yourself to the local market, you can only spend a few million for each movie," said Wong, who is a member of the Hong Kong Film Development Council. "In the United States, there are about 30,000 movie screens for 300 million people. But there are only 3,000 screens for the mainland's 1.3 billion population; the number of screens has been increasing by 10 to 20 percent each year." The number of Hong Kong cinemas has fallen. Wong said there are limits on what kind of movies may be shown in the mainland's tightly controlled industry, with those having themes related to triad societies, religion, sex, violence, drug trafficking and ghosts falling foul of censors. Wong, famous for his comedy series Happy Ghostin the 80s and 90s, said he could not shoot it again because of mainland restrictions. "However, I am sure there will be a motion picture rating system in the mainland to allow more movies to be shown," he said. In its 1980s heyday, Hong Kong was known as the Hollywood of the East, and Wong recalled that in 1993, 300 movies were in production at any given time compared to just 50 today. In the past, Hong Kong movies were much sought after throughout Southeast Asia, but now cinemas there are required to show locally made movies for a certain period of time. "The Hong Kong film industry's golden era will return and there are more international filmmakers wanting to cooperate with Hong Kong under Closer Economic Partnership Arrangement to get into the mainland market," said Wong, adding that Filmart, which begins today, has attracted a vast number of participants. Under CEPA, Hong Kong filmmakers can make movies for the mainland as long as one-third of the investment, actors and workers come from the mainland. In an attempt to foster more young talent in the industry, Wong called on the government to increase subsidies for films by new directors from 30 percent to 50 percent of the Film Development Fund. The government put HK$300 million into the fund in 2007 to finance productions with a maximum contribution set at 30 percent of budget capped at HK$3.6 million. "Private investors will have more confidence to invest if the administration contributes more," he said. As of March 9, 10 films have been approved under the scheme with total funding of HK$27.2 million.

The Hong Kong International Dragon Boat Regatta might be expanded into a major annual sporting event that would draw far more tourists from around the world. Rita Lau Ng Wai-lan, the secretary for commerce and economic development, said: "We may not have noticed, but although dragon boat [racing] is very much a Chinese activity, it has become an international sport. It's very popular in Canada." The chairman of the Tourism Board, James Tien Pei-chun, has already said the board was planning to submit a proposal to the government to expand the regatta from a day or two to several days next year, which would involve about HK$20 million. Mr Tien also expressed his wish to relocate the competition back to the more scenic Tsim Sha Tsui East from Sha Tin. Mrs Lau said: "Mega events are very important to Hong Kong, first because they bring economic benefits. They bring a lot to people to the city, enhance the brand of Hong Kong, and convey many actual and invisible benefits to hotels, retailers as well as the overall atmosphere." She said the government and the Tourism Board were working together and it had not yet been decided whether this year's regatta could be expanded. The annual event, which has been held since 1976, was originally organised by the Tourism Board, then handed to the Hong Kong Dragon Boat Association in 2000. It was almost called off in 2004 because of financial problems and still has difficulties getting sponsorship. The lawmaker for the tourism sector, Paul Tse Wai-chun, supports the idea. He wants the government to group the 20 to 30 dragon boat associations in Hong Kong to make the event a bigger one. He hoped the administration, instead of fully funding the event, could assist organisers to promote the regatta and get sponsors, like the Hong Kong Sevens. The Hong Kong Dragon Boat Association could not be reached for comment. Apart from the dragon boat race, the government is working on two other major events. A music festival to be held this summer will feature a wide variety of music from local, Japanese, Korean and American performers. In the autumn, the food and wine fair will involve restaurants across the city. A total of HK$100 million was earmarked in the budget this month for activities to woo visitors to Hong Kong. Mrs Lau said the government was planning to set up a vetting committee on the use of the fund. "We hope to announce the committee members after the Legislative Council's Financial Affairs Committee approves the money," she said.

The new Ocean Park home of Hong Kong's latest giant pandas awaits their arrival, with cardboard cutouts standing in for the real thing. Ocean Park has unveiled its new home for Hong Kong's giant panda cubs, Le Le and Ying Ying. The pandas' 2,000-square-metre, sunlit space features fish ponds, a "snow area" and plenty of greenery, with their new neighbours - four red pandas on loan from the mainland - just across the way. Opening at the end of next month, the Amazing Asian Animals attraction will also be home to Chinese giant salamanders, Chinese alligators, otters, birds and turtles. The endangered red pandas - two male and two female - arrived in Hong Kong last night and will be in quarantine for 30 days. They are on loan from the Chengdu Research Base of Giant Panda Breeding. Details of the mainland's offer of salamanders are being discussed. The greenhouse-like enclosure is covered with ethylene tetrafluoroethylene, the translucent plastic material used for Beijing's "Water Cube" National Aquatics Centre, and the temperature will be kept between 18 and 25 degrees Celsius. A machine will keep part of the area, separate from the rest of the enclosure, covered with snow. The space was designed with an extended panda family in mind - Le Le and Ying Ying both turn four this year and are due to reach sexual maturity next year. Ageing An An and Jia Jia, Hong Kong's first pair of pandas, will stay put in a separate smaller habitat. "Le Le and Ying Ying are approaching the time when they could have babies and we're keeping our fingers crossed ... we've built the attraction so the baby can fit in with Le Le and Ying Ying," Ocean Park chairman Allan Zeman said. The four red pandas have their own separate space, opposite Le Le and Ying Ying, and beside them, the giant salamanders. Mr Zeman played down fears of more animal deaths. The park has come under fire over the deaths of three of the 10 rare sturgeon the park received from the mainland in the past 10 months. The new attractions are expected to help boost visitor numbers, which have so far been robust despite the global downturn. Attendance over the first two months of this year improved between 5 and 8 per cent year on year, with a record number in January, according to the park's deputy chief executive, Matthias Li Shing-chung. The park has forecast 5.8 million visitors annually by 2012-13, when the HK$5.55 billion six-year redevelopment plan is completed. The park had hired about 100 staff for the Amazing Asian Animals project, Mr Zeman said. In the third quarter of this year, Ocean Park will launch a new tunnel train system. Dubbed Ocean Express, it will be parallel to the cable car that stretches between the lowland and headland sections. The train will move up to 10,000 people an hour between the two areas of the park. The Swiss-manufactured train is designed to resemble a 19th-century explorer's submarine and screens inside the train will simulate an undersea adventure.

Margaret Leung, currently HSBC global co-head of commercial banking, will take over as chief executive of Hang Seng Bank on May 6, succeeding Raymond Or. Forty-six years ago, a young girl opened her first savings account at Hang Seng Bank (SEHK: 0011, announcements, news) . That girl is now set to become head of that same bank, the city's second-largest lender. Margaret Leung Ko May-yee, HSBC (SEHK: 0005, announcements, news) 's general manager and global co-head of commercial banking, has been seconded to Hang Seng to succeed Raymond Or Ching-fai, the retiring veteran banker. From May 6, she becomes the first female vice-chairman and chief executive in the lender's 75-year history. Hang Seng Bank is 62.14 per cent owned by HSBC. But her promotion could not have come at a tougher time, with the financial sector still being buffeted by a once-in-a-century crisis. But Mrs Leung is upbeat, saying "any time is a good time" for new opportunities. Mrs Leung, 56, has set herself a target for Hang Seng earnings to outpace economic growth as well as outperform its peers. Hang Seng's net profit fell 22.7 per cent last year to HK$14.09 billion. Mrs Leung's past record of solid earnings at HSBC's commercial banking unit should stand her in good stead as she moves to boost profit at Hang Seng. HSBC's global commercial banking business achieved a US$7.194 billion pre-tax profit last year, with Asia accounting for 43 per cent of that compared with 37 per cent in 2003. For the past five years, pre-tax profit at the global commercial banking business increased 228 per cent while Asia grew 267 per cent. Mrs Leung conceded there are some cultural differences between HSBC and Hang Seng but they were not insurmountable. For example, HSBC has a more diversified management while Hang Seng is mainly managed by Chinese. "Every culture has its own merits and we can ride on it and expand further," she said. Although Mrs Leung is not your typical "macho banker", her fair and firm attitude has reportedly helped smooth her way to the top ranks of HSBC. "I hope I am in this position due to my ability, not because I am a woman," she adds. Mrs Leung agreed that it was not easy for women to climb to the top job as sometimes they have had to sacrifice their career for the family. However, she expected more and more women would take leading roles and that they would provide a different take on the corporate world. "Men usually are more aggressive while women normally are more cautious. Both have their merits." She cited a joke that circulated at the World Economic Forum held last month in Davos, Switzerland where people asked whether the economic crisis would have happened if Lehman Brothers had been named Lehman Sisters. The promotion to head Hang Seng is the second "first" for Mrs Leung. In 2005, she became the first Chinese woman in HSBC's 143-year history to become a group general manager. Mrs Leung joined the bank in 1978 after graduating in 1975 from the University of Hong Kong with a bachelor's degree in economics, accounting and business administration. She is married with two daughters, both of whom are in banking, including one at HSBC.

A Hong Kong-based financial conglomerate has told senior staff to expect a bonus equivalent of up to a year's pay - after laying off up to 10 percent of employees since November and asking senior staff to take big pay cuts. Brokerage firm CLSA Asia-Pacific Markets has also told its middle-ranking employees to expect bonuses of up to eight months' pay while junior staff can expect three months' pay, according to a source. CLSA, the regional brokerage unit of Credit Agricole SA and headquartered in Hong Kong, has 1,350 employees in 14 countries. On March 5, it laid off 90 employees, or about 7 percent of the workforce, mainly from the administrative, back- office and technology departments. CLSA laid off several workers in November last year. It said at the time it was adjusting staffing in areas of its business where there were significant declines in the number of clients or assets under management. Last October, the company asked 500 senior bankers and executives to accept cuts of 15 percent to 25 percent in salaries to be paid from January this year. The company promised they would be repaid should the situation improve. CLSA did a similar adjustment in 2003 during the SARS outbreak. Another source said CLSA is not a listed company and pays bonuses in line with turnover. As a whole, 2008 had a higher market turnover than 2007. The source said turnover this year is expected to be lower and most employees may not get a bonus next year. In early 2008, and based on 2007 figures, the company paid senior executives bonuses of up to two years' salary while the average payout for the other staff was about 10 months' pay. One reason why the brokerage has done better than many of its competitors is because it focused on Asian markets and not troubled financial firms in the United States. The source said it would not be fair to compare CLSA with giant US insurer AIG whose bonus payments have come under fire since AIG had received help from the government and was using taxpayers' money to pay company executives. CLSA hosts a large-scale investment forum in Hong Kong every September during which more than 1,000 institutional investors from 30 countries can meet a few hundred senior executives from Asian companies. Earlier this month, the Employers' Federation of Hong Kong called on company executives to tighten their belts in order to protect lower tier staff. CLSA could not be reached last night for comment.

The government is hoping Hong Kong's top athletes will be able to turn an annual grant of HK$6 million into solid gold over the next three years. It is providing the additional funding to boost training in badminton, cycling, table tennis and windsurfing to enhance Hong Kong's medal chances at this year's National and East Asian games, the 2010 Asian Games and the 2012 Olympics. "Local athletes have already approached international levels in these four sports," Secretary for Home Affairs Tsang Tak-sing said. "I hope they can win some medals in the East Asian Games." Separately, the government will earmark at least HK$10 million for training young athletes with promise this year and next. And the Sports Commission will provide an additional HK$7 million over the next three years for judo, karate and snooker as up-and-coming sports that should benefit from funding for intensive development. Tsang noted that the financial secretary had HK$50 million in his budget for the Sir David Trench Fund for Recreation. This is to finance new facilities and equipment for sports associations over the next three to four years. Tsang added that the government also hoped the community would develop "selected sports in selected districts" to identify young athletes with potential. Each successful application will be granted up to HK$3 million. A number of local athletes welcomed the funding initiative, though some said individuals who have already demonstrated their potential should be sponsored. Celebrated table tennis player Ko Lai-chak said he is happy that "the government is still willing to fund us during the hard times. I hope this funding will enhance the training of young athletes as many do not have much international exposure." Fencer Chow Tsz-ki is disappointed his sport was not on the list of recipients, "but it will not stop us if we are determined to achieve our goals." The government will outlay HK$1.7 billion on redeveloping the Hong Kong Sports Institute, to be completed by 2012. New facilities will include a 52-meter indoor swimming pool and a multi-use gymnasium.

Hutchison Whampoa (0013) is expected to say on Thursday that 2008 net profit fell 48 percent after huge one-off gains were not repeated, while Cheung Kong (Holdings) (0001) is forecast to report profit fell 41 percent on a plunge in investment income. Full-year net profit at Hutchison is expected to fall to HK$15.97 billion, from HK$30.60 billion in 2007, according to the average forecast of three analysts surveyed by The Standard. The results in 2007 were inflated by a HK$35.82 billion one-off gain on the sale of its Indian mobile business. BNP Paribas analyst Chris Zee forecast Hutchison's recurring earnings for 2008 will surge more than 1.5 times to HK$10.09 billion, from HK$3.97 billion the year before. Revenue at the ports-to-telecoms conglomerate is expected to rise 9 percent to HK$237.54 billion, from HK$218.73 billion a year earlier. All analysts expected Hutchison to maintain its final dividend of HK$1.22 per share, keeping total dividends for the year at HK$1.73 per share. Meanwhile, Cheung Kong, tycoon Li Ka- shing's property flagship, is expected to report net profit fell to HK$16.23 billion, from HK$27.68 billion in 2007, according to a survey of four analysts. Underlying earnings are expected to fall 36 percent to HK$16.32 billion. Credit Suisse analyst Cusson Leung said profits will fall mainly because of an 85 percent slide in investment and finance income to HK$719 million, from HK$4.94 billion. Some analysts predicted Cheung Kong's dividends will stay flat at HK$2.45 per share, while Deutsche Bank predicted a reduction to HK$1.91 a share and Credit Suisse forecast a hike to HK$2.50 a share. Cheung Kong's earnings from property sales are expected to rise 21 percent year-on-year to HK$6.82 billion, from HK$5.63 billion. Leung attributed the expected jump to the booking in the second half of some sales at The Capitol. "Cheung Kong is a top pick among the developers," Leung said. "The company has a sufficiently large land bank through which volume is expected to continue to come." Citi analyst Tony Tsang said Cheung Kong's strategy of focusing on asset turnover should lift its capital efficiency, making it less subject to volatility in property sales revenue than its peers.

China: The Hong Kong and mainland governments are working with the Hong Kong stock exchange and accounting regulator on a proposed rule change that will allow selected mainland accounting firms to audit the financial statements of mainland companies listed in Hong Kong. The proposal, which is still under negotiation, has triggered concern among some international investors and accountants about shareholder protection and transparency issues. All 465 Hong Kong-listed mainland companies are required to engage auditors based in Hong Kong, which is regarded by foreign investors as a reassurance that their interests will be protected. A spokesman for the Financial Services and the Treasury Bureau said the proposed change formed part of an agreement reached by the accounting bodies in Hong Kong and the mainland at the end of 2007. Under the agreement, both sides will ensure mainland accounting rules are in line with international standards adopted in Hong Kong. After this confirmation, mainland companies listed on the mainland and in Hong Kong can issue earnings results under a unified standard while the auditors from both sides can operate in either market. "Following the convergence of the accounting and auditing standards of the two jurisdictions, there was a question of whether it would still be necessary for mainland companies listed in Hong Kong to provide two sets of financial statements under the Hong Kong and mainland listing regimes," the spokesman said. He said the Hong Kong government had been liaising with the mainland authorities, the Hong Kong Institute of Certified Public Accountants, and Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) to work out a framework to determine which mainland accounting firms would qualify to audit the financial statements of Hong Kong-listed mainland companies. "There should be a mechanism to ensure quality assurance and effective regulation. There will be stakeholder consultations when the parties concerned come up with a proposal," the spokesman added. Andrew Ross, managing director of accounting firm Baker Tilly Hong Kong, was among those voicing concern over the proposed change. "The point China is making is that their auditing profession has been on the go for 20 years and they can audit as well as everyone else," Mr Ross said. "But in an economic downturn the quality of auditors is always something that comes sharply into focus and foreign investors will naturally scrutinise this decision very closely." Some fund managers are also worried about the consequences of the change for investor protection issues. "The reason you want the big multinational auditors is because if something goes wrong - if there is collusion between the auditor and management for instance - you can sue the auditor in an international court where you know they can't get out of it," said London & Capital chief investment officer Ashok Shah. "So investors need to know whether with Chinese auditors you can take them to an unbiased court that is not politically driven." But HKICPA president Paul Winkelmann said investor interests would be safeguarded by the proposed approval mechanism by which the local regulator would vet the mainland firm to ensure quality. "If the mainland accounting firms can reach international standards there is no reason to disallow them from auditing in Hong Kong," Mr Winkelmann said, adding that Hong Kong auditors would be allowed to audit on the mainland. "What is important is to make sure this approval mechanism to set at a very high standard. The institute and other parties are working on the details, which should be ready by the end of this year." Sources indicated the Ministry of Finance would shortly put forward a list of four mainland firms to be tested under the proposed mechanism, including Yue Hua and Shine Wing China. Paul Chan Mo-po, legislator for the accountancy sector, said he supported the rule change so long as investor interests were protected. "It is important to make sure Hong Kong regulators have the power to investigate and punish mainland auditors in the case of any audit failures." An HKEx spokesman said it was working with the relevant authorities on the proposed rule change.

The project requires a 1,500km pipeline to be built to export the oil from Kenya's east African port of Mombasa on the Indian Ocean. China's three largest oil and gas companies are interested in bidding for a stake in an African asset owned by Britain-based Tullow Oil in a deal expected to reach about US$500 million, market sources said. Tullow and British partner Heritage Oil own 50 per cent stakes in two blocks of an oil deposit on Lake Albert on the border between Uganda and the Democratic Republic of Congo. Tullow wholly owns an additional block. "They're looking to sell down to raise funds for development and mitigate risk," said an analyst. "There should be big enough interest and I would expect to see the Koreans and Japanese in there as well." Oil companies often sell stakes in assets so they can focus on further exploration elsewhere. How big a stake in the project Tullow was looking to raise would depend on the amount of additional money the potential buyer was willing to put up for future development costs. China National Petroleum Corp, China Petroleum and Chemical Corp and China National Offshore Oil Corp are looking at the assets but Beijing tends to choose one mainland company to move forward with a bid to avoid Chinese companies bidding the price higher. British media reported earlier this month that Tullow had spurned a takeover offer from mainland firms. A number of independent London-listed oil producers regularly attract attention from potential suitors. The project requires a pipeline of about 1,500km to be built to export the oil from Kenya's east African port of Mombasa on the Indian Ocean. Heritage has said it may bring in partners for the US$2 billion project. Earlier this year, the company arranged a US$2 billion loan and raised US$550 million from a share placement to finance development. Tullow has planned capital expenditure of about £600 million (HK$6.72 billion) on the project. The blocks are part of the Buffalo-Giraffe deposit, the largest onshore oil deposit found in over 20 years in sub-Saharan Africa. "This is greenfield exploration that's been discovered and is previously unexplored so there's huge potential in terms of scale of the reserves but it's very early days," the analyst said. Africa represents about 50 per cent of Tullow's revenue and 80 per cent of its reserves. Beyond Lake Albert, the company is developing offshore assets in Ghana and Ivory Coast. The company also owns assets on the North Sea and in Portugal, Pakistan and Bangladesh. Tullow in January scrapped the sale of an 11 per cent stake in an asset in Congo to Korea National Oil Corp after the government objected. It had hoped to raise US$435 million from the divestment. China continues its drive for natural resources despite slowing economic growth as its domestic supply in the northeast gets near the end of its productive life. Resource-rich Africa and the Middle East are high on the list of regions mainland companies are targeting. Sinopec (SEHK: 0386), the largest oil refiner on the mainland, paid US$1.8 billion for Tanganyika Oil, which owns assets in Syria. Sinochem Corp, the mainland's largest chemicals trader, paid US$465 million to Britain's SOCO International for the 16.79 per cent stake it owns in an oilfield in Yemen. China National Petroleum, however, has problems with its acquisition of Verenex Energy when a Libyan state-owned oil firm recently exercised its right to buy the firm instead.

A stallholder at a small market in the city of Yanji, Jilin province - like many on the mainland - is waiting in hope that the nation's stimulus package will translate into customers. Beijing's 4 trillion yuan (HK$4.54 trillion) stimulus package might contribute 1.5 to 1.9 per cent to the nation's economic growth this year, according to the State Council's research group. The spending would help the mainland realise its target of 8 per cent expansion this year, Zhang Yutai, director of the State Council's Development Research Centre, said at the China Development Forum in Beijing yesterday. "China has the ability to become the first in the world to step out of the crisis and keep stable growth for the mid- and long-term," Mr Zhang said. Beijing announced the 4 trillion yuan package in November to overcome the sharp economic slowdown as a result of the global financial crisis. But many critics said the central government had failed to provide details of the package and doubted if it was enough to pull the country out of the slump. At the same forum, Vice-Premier Li Keqiang reaffirmed the nation's growth target for this year, saying some industries "have seen signs of recovery". The government is hoping the stimulus spending will increase domestic demand and counter a collapse in exports that has led the world's third-biggest economy to its weakest growth in seven years. "China has the potential to further boost domestic spending," said National Development and Reform Commission deputy director Zhu Zhixing. His comment was echoed by Vice-Minister of Finance Wang Jun, who said Beijing still had a few aces up its sleeve and was ready to release more stimulus measures if it proved necessary. Mr Wang said Beijing had several contingency plans and would take measures if "unexpected events happen in future", Xinhua reported. He did not elaborate on the plans, but said Beijing could release new stimulus measures "any time the situation requires it". China announced a record 950 billion yuan budget deficit this year. But, the vice-minister said the central government's budget deficit accounted for only 2.9 per cent of gross domestic product, meaning there was still plenty of room for changes. "Conditions are favourable for us to achieve the targeted goal [of 8 per cent growth]. But it does not mean it has to be 8 per cent. As long as [the economic growth] is close to 8 per cent, it is acceptable," he said.

The number of mainland tourists in Taiwan hit a daily record yesterday after the two eased travel restrictions. Taipei's Economic Daily said tourist arrivals from the mainland hit 4,600, as a passenger ship docked in Keelung and 1,600 tourists walked ashore on a red carpet laid out in their honor. The visitors, not included in the daily quota of 3,000, are all Chinese workers for the American direct selling giant Amway. Another 1,600 Amway staff visited the island last week, making them the biggest mainland tourist group to arrive since direct flights and maritime services began in December. President Ma Ying-jeou's administration signed agreements with Beijing last June to launch regular direct flights and treble the number of mainland citizens allowed to visit Taiwan to 3,000 daily. The total number of Amway visitors is scheduled to reach 12,000 and they are expected to generate more than NT$600 million (HK$137.57million) in revenue for the island, the company has said.

China's trade with Taiwan and Hong Kong saw recoveries last month after year-on-year plunges in January, but continued to decline over last year, the latest statistics of the Ministry of Commerce showed. Data from the Taiwan, Hong Kong and Macao Department of China's Ministry of Commerce showed that the mainland had a total trade of 5.65 billion U.S. dollars with Taiwan and 10.3 billion U.S. dollars with Hong Kong in February, up by 12.3 percent and 3.1 percent respectively from January, but down by 39.4 percent and 17.5 percent year-on-year. The mainland's total trade with Taiwan and Hong Kong in January plunged 55.5 percent and 37 percent year-on-year respectively. A researcher surnamed Song on world economics in the Chinese Academy of Social Sciences, a government think tank, told Xinhua Saturday that trade volumes between the mainland and Taiwan and Hong Kong will most likely fall further in the near future due to the financial crisis, and it is hard to say if the pace will continue to slow. "The general trend of China's trade with other economies is still going downward," Song said. "Full recoveries from the ongoing world financial crisis would take quite some time." "China's trade in the first two months is normally influenced by the Lunar New Year," Song said, noting that it is difficult to predict the future based solely on figures of January and February. The Lunar New Year fell on Jan. 26 this year. Trade across the Taiwan Straits is mostly the mainland's imports of semi-manufactured or manufactured products from Taiwan to use in its exports to developed markets such as North America and Europe. Hong Kong mainly serves as a transit center in the mainland's exports to developed countries.

China and the United States signed an agreement in December 2007 that allowed Chinese travel agencies to market package tours to American destinations and permitted US destinations to advertise directly to the Chinese public. Chen Lingling, a government worker in Beijing, recently decided to postpone a long-awaited trip to France and visit Xiamen, in Fujian province, for her annual spring journey. "Considering the current economic situation, my husband and I decided to save our money," said Chen, whose spouse works for a bank. The couple bought their first car, a $30,000 Volkswagen Sagitar, last year, and have a $440 monthly mortgage on their home. "Although our jobs seem secure now, who knows what will happen?" Chen said. One of her best friends got laid off from a trading company a few days ago, reminding Chen that she might not be immune to the financial crisis. Chen and her husband enjoyed an economical vacation in Xiamen. They used their award miles on Air China to get free tickets, which saved them $1,000. For the first time, they did not check into a luxury hotel, but booked a cozy room in a designer hotel, retrofitted from an old house, for about $30 a day. They did no shopping, and hardly spent any money except for food. Like Chen, many Chinese will be traveling less or taking shorter trips this year. "Many people will decide against a trip to the US or EU in favor of a shorter journey inside China or to an Asian country because of the financial crisis," said Li Ying, a senior editor for the monthly magazine Traveler, which is affiliated with National Geographic. The magazine plans to increase its domestic tours from 40 to 60 percent this year, Li said.

The National Tourism Administration estimates that in 2009, Chinese travelers will take 1.8 billion passenger trips within Chinese mainland and 50 million passenger trips outside the mainland. Both figures are about 9 percent higher than last year. "Because of the financial crisis, China hopes to keep Chinese travelers in the country to spur the economy," Li said. Hangzhou, a scenic city in east China, released tour vouchers worth $22 million to its residents to stimulate the local economy. Hunan province and the city of Nanjing have taken similar steps, and Beijing is hatching a plan called "Beijingers Traveling in Beijing" to spur local tourism. Travel outside the mainland is becoming less popular, although travel agencies have cut the price of traveling to the US and EU countries in half, according to Guo Yu, Assistant General Manager of Beijing Mytour International Travel Agency. South Korea is still a popular destination because of the recent devaluation of its currency. "The exchange rate dropped from 80 won to the yuan to 210 won to the yuan last year," Guo said. "My agency launched a weekend shopping trip to South Korea, which was well received." American and European countries have cut their spending on media advertising, but continue to support travel agencies, hoping the agencies can bring Chinese travelers to their countries, according to Li. Major airlines are hoping to lure Chinese travelers with discounted tickets. British Airways offers round-trip tickets between China and Britain for $433; a round-trip ticket from Beijing to Washington DC currently costs $660. Some Asian countries, like Singapore, have increased their budget on both media and travel agencies. Singapore, which is nearby and Chinese-speaking, is a popular choice for a first trip abroad because of its rich variety of food and good shopping, Li said.

Mar 23, 2009

Hong Kong: Immigration Department statistics appear to reflect a trend seen by local relocation experts - expatriates are moving to Hong Kong despite the financial crisis. Arrival and departure records show there were 551,329 foreigners living in Hong Kong at the end of last year, compared to 534,427 in 2007. There was a slight rise in the number of US expatriates, up from 27,230 at the end of 2007 to 28,624 at the end of last year. The number of Canadians also increased marginally, from 19,584 in 2007 to 20,598 last year. Restaffing, reshuffling and new opportunities may explain why people are relocating to the city amid the economic downturn. "I'm almost afraid to talk about it because I'm afraid it's going to bring bad luck down, the bad mojo," said Rob Chipman, CEO of Asian Tigers, a removals and relocation company based in Hong Kong. "But we're seeing it. I'm looking at the board right now, and we colour-code it. Red is inbound and I'm seeing a lot of red. It flies in the face of every single thing I hear or read." Overall, Mr Chipman estimated that 1,000 to 3,000 expatriate families have arrived in Hong Kong since the beginning of 2008. He said the reason could be that more Asian companies were sending workers here, and companies from elsewhere may perceive Hong Kong and Asia on the whole as safer bets than other regions. Mr Chipman would not predict whether the trend would wane in the coming months. Five months ago, he asked himself: "Who's going to move to Hong Kong now?" Lance Allen, managing director of Santa Fe Relocation Services, said the firm's inbound numbers had increased 20 per cent a year over the last three to four years. This year's numbers were similar to last year's, he said. "Inbound remains strong. People are still coming in," Mr Allen said. He could not say why workers were still heading this way - especially since most people would have predicted the exact opposite amid the downturn. "For us right now, it just seems like the normal in-and-out flows of corporations doing business in Hong Kong. There are occasional accounts that have slowed down, but there are other companies who have sped up as well." Stacy Tucker, owner of Ferndale Kennels & Cattery, which transports family pets on international moves, said her company "is still getting quite a lot of imports", assisting many people from Australia and the US. "I think that people coming in are on different contracts from the ones going out ... they may be getting lower salaries and not quite so many benefits," Ms Tucker said. Shriram Chaubal, chief operating officer of GeoClicks, which owns Geoexpat.com, noted there were a "fair number of posts" on the site's "Moving to Hong Kong" forum. "There ... seems to me like there are still plenty of jobs [in Hong Kong], maybe not the high-paid jobs," Mr Chaubal said. "But we're seeing people moving in [for] all sorts of things, especially like education [positions]."

Protesters against the planned development of the Tsim Sha Tsui bus terminal into a shopping mall express their views yesterday. Activists have taken their campaign to save the Tsim Sha Tsui bus terminal to new heights - asking Unesco and international scholars to consider its historic value. Until now, the campaign has focused on the terminal's convenient access to the Star Ferry pier. Our Bus Terminal, a four-member group, will fly to Hanoi next month to present a research paper at an annual Unesco seminar on heritage issues. Their paper will argue that the government is destroying the city's historic urban landscape by removing its first public transport interchange. Meanwhile, the Central and Western Concern Group and an architecture professor from Hong Kong University will speak at the Unesco seminar about the Urban Renewal Authority's redevelopment of Central's historic Graham Street market. The terminal activists formed a network on the social networking site Facebook to promote their cause last year, after the government announced a plan to turn the terminal into a piazza with a five-storey shopping mall. It has gathered support from over 3,000 netizens. Its chairman, Leslie Chan Ka-long, said the bus terminal, which has been in operation since 1921, was the first of its kind in the city - a connection between a ferry pier, a railway station (since torn down), taxis and minibuses - which contributed to Tsim Sha Tsui's development. He is glad the forum will draw international attention to their cause. "I hope this will exert some pressure on our government to think twice before destroying the terminal and turning it into a soulless, open space." The terminal is used by as many as 3,000 bus passengers per hour on weekdays, according to a count made by his group last month. The transport flow comprised an impressive part of the urban landscape, he argued in the paper, and the government's piazza plan would "delink the historic fabric". Mr Chan's paper has won three As, one B and one C from an evaluation committee of scholars on heritage preservation organised by Unesco. "An interesting paper, especially in the choice of transport infrastructure as the unit of analysis," said a committee member who gave it an A grade. A spokeswoman for the Tourism Commission said the piazza plan was supported by the Yau Tsim Mong District Council and the tourism industry, and that a new transport interchange would be created near the adjacent Hong Kong Cultural Centre.

China: While Shanghai officials are worried the US has not signed a formal agreement to participate in the 2010 Shanghai World Expo, an American project leader has maintained his country is "100 per cent in," and should break ground on its exhibit this summer. "We are on track in fund-raising, on track in terms of architectural engineering work. The plans look good. The State Department is very supportive of everything we've shown them," said Frank Lavin, steering committee chairman for the USA Pavilion. "I think we are 100 per cent in," Mr Lavin later added. Most other nations have already signed on, but the US, under federal law, must privately raise all the money for its US$60 million exhibit area, and it is still seeking donors. Mr Lavin said the US State Department and the organising committee were reviewing steps needed to sign the formal agreement. Still, local officials are concerned that the agreement is not finalised. US participation is seen as a key test for the fair, and is likely to affect the thinking of potential participants currently sitting on the fence. Senior Shanghai government officials have repeatedly stressed that none of the 185 countries and 47 international organisations expected to participate have dropped out because of the economic crisis. However, behind the scenes, local government sources say tension is running high as the one-year countdown to the Expo approaches. Sources said the Shanghai organisers were concerned that the US may withdraw, and that could prompt other participants to shelve or scale back their plans. "We feel a lot of countries are waiting to see what the US will do before they make up their minds," a Shanghai government insider said. But Mr Lavin, a former US commerce undersecretary and ambassador to Singapore, said new developments in the past few weeks should settle any fears. US Secretary of State Hillary Rodham Clinton talked about US participation with Foreign Minister Yang Jiechi during her trip to Beijing, he said. "We're actually getting a lot of powerful signals from Washington," Mr Lavin said. Fund-raising is also on track, he said. "[Technology firm] 3M is on board. We're in discussions with a significant number of Fortune 500 companies. We're also in discussions with other various states in the US, and cities in the US want to be part of the pavilion." Organisers expect 70 million people to attend the 2010 Shanghai World Expo, which runs from May 1 to October 31.

A US survey vessel is risking another confrontation in the waters around China when it arrives in the region next week - less than a month after a standoff near Hainan Island between Chinese patrol vessels and a US Navy surveillance ship. Sections of its planned sea-floor geological survey will take place well inside China's 200 nautical mile exclusive economic zone. Maritime law experts say the ship's visit could be even more provocative than the USNS Impeccable's mission that led to the recent standoff. The fallout from that continues, with the Pentagon yesterday releasing video, shot from the US vessel, of Chinese ships closing in. At the same time, green groups are worried that the survey method - which involves firing sonic air guns underwater - could harm already endangered populations of marine mammals in the region. Sam Bateman, a Singapore-based maritime security analyst, said the mission could prove more controversial even than military activity. The UN Convention on the Law of the Sea provided sovereign immunity for naval vessels, yet made it quite clear permission from China would be needed for civilian marine research in its economic zone, he said. "I'm amazed ... it does seem potentially provocative," said Dr Bateman, a senior fellow of the Institute of Defence and Strategic Studies at Singapore's Nanyang Technological University. "When you look at the convention, this kind of mission is out of bounds unless the country claiming the zone has granted permission. If a civilian vessel was found to be unambiguously within China's exclusive economic zone (EEZ), it would risk arrest, detention and legal action." The convention allows a nation to claim a 12-nautical mile territorial zone, and a 200-mile exclusive economic zone beyond that. The US has yet to ratify the convention. Michael Jasny, a senior policy analyst with the New York-based Natural Resources Defence Council, said operating in China's waters without permission could be problematic for the ship. "There's no question that Chinese law protecting the marine environment would apply ... within China's EEZ, and China would have certain rights under international convention to enforce its law," Mr Jasny said. The EEZ does not confer sovereignty, but rights over mineral reserves, fish and marine research. Foreign civilian and military vessels have rights of passage. The operators of the research ship, the Marcus G. Langseth, from Columbia University's Lamont-Doherty Earth Observatory, have permission to conduct a seismic survey of the ocean floor from the governments of Taiwan, the Philippines and Japan, but not from Beijing. An application to conduct the Taiwan Integrated Geodynamics Research survey gazetted in the US suggested the Langseth would operate to within 10km of the mainland coast. However, an observatory spokeswoman said its plans had been revised and the ship would go no closer than 85km in the Taiwan Strait and 200km in the South China Sea. She said the alterations had been made for environmental reasons. "We are not mapping the seabed as much as looking beneath the sea floor - trying to understand the geologic processes that cause deep earthquakes. This has practical value for the Taiwanese and Chinese, who face risk from quakes and tsunami in an earthquake-prone region."

China and the United States traded blows over entertainment and software piracy as the World Trade Organisation formally ruled some Chinese practices illegal but exonerated it of other complaints. But the comments also showed that major trading powers were still ready to work within the international, rules-based system to resolve rows even if the economic crisis was increasing protectionist pressures. The WTO's dispute settlement body adopted a January 26 ruling in a case brought by the US against China for failing to protect and enforce intellectual property rights on a range of goods. "Today, the membership of the WTO agreed that China must bring its intellectual property rights enforcement regime into conformity with its WTO obligations," Ron Kirk, the new US trade representative, said. But the verdict was mixed, allowing China, too, to claim victory. The US persuaded the panel that China had violated WTO rules by barring copyright protection for films, music and books that had not been approved by state censors for legitimate sale. The panel also ruled that China must not allow the public auction of counterfeit goods seized by Chinese customs authorities. But the US failed to persuade the panel of one of its central arguments: that Chinese copyright pirates and counterfeiters have no fear of criminal prosecution because the government's threshold for bringing a case is too high. China's Commerce Ministry said the WTO had rejected most US complaints and broadly backed Beijing's stance against commercial piracy, while the findings did not affect China's right to censor content. "The expert group report rebutted the great majority of the US side's claims and broadly vindicated China's intellectual property system," spokesman Yao Jian said. The US launched the case in 2007 out of frustration with illegal copies of films, branded goods and other trademarked property openly available in Chinese cities.

Chinese President Hu Jintao (4th L) talks with an exhibitor in the 2009 China International Energy Saving, Emission Reduction and New Energy Science and Technology Expo at the Beijing Exhibition Center in Beijing, capital of China, on March 20, 2009. President Hu visited the expo on March 20.

Yuzheng 311, China's largest fishery administration vessel, is pictured as it arrives in the Xisha Islands in the South China Sea, March 17, 2009. China will send six more patrol vessels into the South China Sea during the next three to five years to curb illegal fishing in the region, an official told the International Herald Leader newspaper of the Xinhua News Agency on Friday. "A patrol vessel with a water displacement of 2,500 tons is expected to be sent next year into the South China Sea, with five more 3,000-ton vessels expected to go in the next three to five years," the agriculture ministry official who is in charge of the administration of fishery in the South China Sea said.

Mar 21 - 22, 2009

Hong Kong: Major local chambers of commerce and business associations have repeated calls for a delay to controversial minimum-wage legislation amid the downturn. The government is pushing ahead with laws to be introduced as early as the end of next year. With many companies struggling with losses and layoffs, the business community says a minimum wage should be postponed. Critics argue that setting a minimum wage would worsen unemployment as some low-skilled jobs were phased out. Hong Kong's jobless rate last month rose to an almost three-year high of 5 per cent and is expected to easily top 6 per cent this year. James Tien Pei-chun, who previously chaired the pro-business Liberal Party and the General Chamber of Commerce, said he wanted the government to shelve the controversial legislation for a year in light of the financial crisis. Clement Chen Cheng-jen, chairman of the Federation of Hong Kong Industries, which has long objected to a minimum wage, said it was appropriate to delay the legislation until there were clear indications the ailing economy was on the mend. But Secretary for Labour and Welfare Matthew Cheung Kin-chung yesterday said businesses had no need to worry. "We're not talking about introducing a minimum wage in the short term," he said. Under the government's plan, a draft of the bill will be ready by July, after which the Census and Statistics Department will do a wage study. The data will be used by the Provisional Minimum Wage Commission to help set an initial level, factoring in the impact on low-paying jobs and the city's economic development and competitiveness. "With at least 18 to 20 months to go, the earliest date for implementation of a minimum wage would be the end of next year," Mr Cheung said, adding that he hoped "the economy will have rebounded by then". With the government insisting on proceeding as planned, the chamber, which has been one of the most vocal opponents of the minimum wage, has softened its stance over the past few months. Advocating a wait-and-see approach, the chamber's chief executive, Alex Fong Chi-wai, said he would reserve comment until the government had collected relevant wage data. The Liberal Party has been largely silent about the legislation. But Mr Tien said: "The government, on its own, has decided to defer eight pieces of legislation in view of the current worldwide economic situation. They include such things as the competition policy. I feel that if the government has deferred the eight pieces of legislation, mainly dealing with business, it's also appropriate to defer this particular one for a year and then see how the worldwide economy recovers." A spokesman for the Chinese Manufacturers' Association said it was not opposed to minimum-wage legislation but that a postponement was not meaningful, since at least two years was needed to implement the legislation. But a Chinese General Chamber of Commerce spokesman said the difficult business environment warranted a delay.

Smaller increases in food prices and private housing rentals pushed Hong Kong's headline inflation rate down to 0.8 per cent in February, figures released by the government on Friday showed. Hong Kong’s headline inflation rate dropped to 0.8 per cent in February, officials said on Friday, as the economic slowdown hit demand for goods. The year-on-year increase in the consumer price index, the main gauge of inflation, was down markedly from January’s 3.1 per cent, the Census and Statistics Department said. The sharp drop was partly the result of the Lunar New Year holiday, a main shopping period, falling in January this year compared to February last year, the department statement said. Economists surveyed by Dow Jones Newswires had expected an increase of 1.3 per cent year-on-year. Screening out the effects of the government’s one-off relief measures, the underlying year-on-year inflation rate was 2.1 per cent in February, compared to 4.5 per cent in January, the government said. A government spokesman said the reduction reflected how prices were responding to the economic downturn. “[We expect] inflationary pressure … to recede further over the course of this year, as the local economy comes under the increasing impact of the deepening global recession,” the spokesman said. Smaller increases in food prices and private housing rentals were the major contributors to the drop, the statement said. Hong Kong slipped into recession in the third quarter of last year, and financial secretary John Tsang Chun-wahsaid he expected the city’s economy to shrink by up to 3.0 per cent this year.

A new exhibition in Hong Kong will recall the extraordinary life of Soong Ching Ling — the wife of Chinese nationalist leader Sun Yat-sen. The exhibition, A Sketch of Soong Ching Ling and Her Artefacts, provides a glimpse of the intimate details of Soong’s life. The exhibition is presented by the Leisure and Cultural Services Department and the China Soong Ching Ling Foundation. Secretary for Home Affairs Tsang Tak-sing said the exhibition would help people better understand Soong’s remarkable life. “The 70 exhibits on display are on loan from the China Soong Ching Ling Foundation and shown in Hong Kong for the first time,” he said. The exhibits included a wedding gift from Soong’s mother, the pen Sun used to sign his will and family testaments, as well as a wedding gift Sun gave to Soong, Mr Tsang said. Soong exerted considerable influence on 20th century mainland history. In 1938, she founded the China Defence League in Hong Kong and garnered international support for China in its war against Japan. She was active raising funds for wartime relief. After the war, Soong continued to promote education and social services for women and children before she died in 1981, at the age of 88. Lectures and activities will be held during the exhibition period. The Dr Sun Yat-sen Museum is at 7 Castle Road, Mid-levels, Central. For details, visit its website on: http://hk.drsunyatsen.museum or tel: 2367 6373.

Sealing yesterday's deal on Fairview Park Boulevard are (from left) Stanley Chiang of the Lok Ma Chau China-Hong Kong Freight Association, executive councillor Lau Wong-fat, Heung Yee Kuk vice-chairman Cheung Hok-ming and Fairview Park general manager Albert Lam (right). Fairview Park managers and nearby villagers reached a deal yesterday in their decade-old dispute over the use of a private road through the estate after two days of intervention by New Territories heavyweight and executive councillor Lau Wong-fat. They agreed that truck drivers would be able to use Fairview Park Boulevard between 10am and 6pm - and at other times if other roads were blocked by an accident. The agreement came at a meeting at which government officials said a HK$100 million road, to be opened by 2012, would be built to provide an alternative route from Tai Sang Wai village - home to a large number of truck drivers - to container parks and the Lok Ma Chau border crossing. The government will also press the Yuen Long District Council to allocate HK$1.5 million under the district minor works programme for one-off maintenance work on the boulevard. San Tin Rural Committee chairman Man Fu-wan said the committee welcomed the agreement and was pleased the dispute could finally come to an end. "Mr Lau kept appealing to us all to stay calm and live in harmony with our neighbours," he said. "This new arrangement should be able to meet different needs of villagers and the Fairview Park residents." Stanley Chiang Chi-wai of the Lok Ma Chau China-Hong Kong Freight Association said truck drivers would use the new road. "The new road is directly connected with Castle Peak Road, which is more convenient and direct," he said. The present alternative, Kam Pok Road, was not popular because drivers had to reach it by a circuitous route. Fairview Park general manager Albert Lam Kwok-fai said he hoped the estate would communicate better with the villagers in future to avoid conflict. "With executive councilor Lau Wong-fat's involvement in this incident, we believe the government will help us monitor the road-use situation more closely," he said. "The private road has been open for public use for so many years and it is reasonable for the government to subsidise the road maintenance." But Yuen Long district councillor Lee Yuet-man, who chairs the district facilities management committee, disagreed. "The government must seek approval from the committee I chair in order to go ahead with the HK$1.5 million road maintenance project. Many district councillors sitting on this committee have already told me they would not support the proposal," Mr Lee said. "Most think it is not appropriate to use public funds to solve a private dispute." Fairview Park Owners' Association committee member Chan Siu-man was also upset. "I am worried truck drivers will continue to use the private road after the new road is built. Also, will trucks be allowed to use the boulevard after the new road is built? The problem remains unsolved," he said.

Members of the public are being asked to give their own grading to more than 1,400 historic sites on a list put forward by the Antiquities Advisory Board yesterday. In a new approach to heritage preservation, they have four months to agree or disagree with the gradings proposed by the board. "The public can disagree with the proposed grading and they can suggest a higher grading for a building which they think has great historic or social value," board chairman Bernard Chan said. Apart from individual buildings, streetscapes, bridges and a war memorial are also being graded for the first time, covering seven of the sites chosen for assessment. The 1,444 sites were selected from about 8,800 potentially historic features identified in a survey begun in the 1990s, but only 543 had been graded by 2007. The proposals released yesterday review and in some cases alter those gradings as well as grading the remaining 901. Gradings are proposed by the Antiquities and Monuments Office according to experts' advice and six major criteria, covering a building's historic value, architectural value, social value, rarity, authenticity and group value. Previously ungraded sites given grade one include historic buildings and structures in Kat Hing Wai, a walled village in Yuen Long; the rickshaw parking space on Kennedy Road; Pottinger Street and Ladder Street in Central; the Cenotaph at Statue Square in Central; Ho Tung Gardens on The Peak; City Hall in Central; Old Halls at the University of Hong Kong; and the Peninsula Hotel in Tsim Sha Tsui. Antiquities and Monuments Office executive secretary Tom Ming Kay-chuen said some of the previously graded buildings had been rated higher because their historic value had increased with time. "But there are buildings of which the authenticity and integrity has decreased with time, these will be downgraded." Among those upgraded from grade two to grade one is Kom Tong Hall in Mid-Levels, site of the Sun Yat-sen Museum. They also include Haw Par Mansion in Wan Chai - which will be tendered for commercial use this year - the Tin Hau temple in Yau Ma Tei, the former Whitfield Barracks in Kowloon Park and some police stations of colonial style. Those given a lower grading include Pineapple Pass Dam at the Shing Mun Reservoir, reduced from grade one to three, and the Tin Hau temple in Shau Kei Wan and some tenement buildings on Nam Cheong Street, Sham Shui Po, which were downgraded from grade two to three. Board member Lee Ho-yin welcomed the new approach to engage the public, adding the new move was a step closer to international heritage preservation standards. "It gives regard to not just building blocks but also structures which are historic and carry collective memory," he said, pointing out the grade two Bin Mo Bridge in Kam Tin was built by a villager of the Tang clan 800 years ago to give his mother access to the farm across the river. "That's how the bridge was named." On the Web To see the assessment of the 1,444 sites, go to www.amo.gov.hk/en/aab.php

China: Chinese President Hu Jintao will attend the Group of 20 (G20) financial summit in Britain scheduled for April 1-2, at the invitation of the British Prime Minister Gordon Brown, the Chinese Foreign Ministry spokesman Qin Gang announced here Friday.

Shenzhen Development Bank, controlled by US private equity firm TPG Capital, reported a 77 per cent decline last year net profit due to loan provisions and write-offs as the economy sags. Shenzhen Development Bank’s net profit last year fell to 614 million yuan (HK$698 million) from 2.65 billion yuan a year earlier, the mid-sized mainland lender said on Friday. The result was in line with an estimate issued in January, when the bank said it would make 5.6 billion yuan in fresh bad-loan provisions during the fourth quarter following stricter guidance from the country’s regulators. Revenue rose 34 per cent last year to 14.51 billion yuan from 10.81 billion yuan. Shenzhen Development Bank and rival banks including Bank of Communications (SEHK: 3328) and China Minsheng Banking Corp face tough challenges ahead as Beijing’s interest rate cuts have squeezed margins while a slowing domestic economy increases the risk of corporate defaults.

The central government will create 50,000 teaching jobs in the country's backwater regions in a double-barrel effort to help fresh graduates get jobs and improve educational standards in rural areas. The Ministry of Education said on Wednesday that the central government would make the jobs available by the end of the year for qualified college graduates to teach in poor areas in the central and western provinces. The mainland already faces a daunting challenge to find jobs for a record 6.1 million new university graduates this year amid a worsening economic slowdown. The 50,000 posts, for "special vacancy" teachers, are an addition to a three-year initiative from 2006 to send 60,000 young college graduates to teach at grass-roots schools to bolster the level of teaching. Experts welcomed the move yesterday but said the effort should not take the focus off the low quality of teaching in rural areas. Students in rural areas have been increasingly failing to get access to quality education as the widening gap between urban and rural salaries and better working conditions lure many qualified rural teachers to more promising jobs on the affluent eastern seaboard. The growing inequality in education is reflected in a drastic fall in the percentage of college students from rural areas, a point Premier Wen Jiabao made this year when he said rural students accounted for at least 80 per cent of the university students when he was in college, but the ratio was much lower now. Chu Zhaohui, a professor with the China National Institute for Educational Research, said the special vacancy teacher scheme had the benefit of bypassing some rigid payroll controls at schools to make more jobs available for struggling college graduates, particularly those from teachers' colleges. "But pushing for quality teaching should still be the top priority even under existing circumstances," Professor Chu said. He said rural schools had had to rely in recent years on an ageing teaching staff with outdated teaching techniques and that had led to an exodus of rural students and many empty schools. The central government is expected to earmark about 1 billion yuan (HK$1.13 billion) to fund the scheme, and Professor Chu said the authorities must make the positions competitive so that more qualified teachers would be attracted to rural schools. Liang Xiaoyan, a rural-area educational consultant based in Beijing, said she understood the pressure on authorities to create more jobs for college students. In general, there were enough teachers in rural schools, she added, and harsh work conditions would stop many of the special vacancy teachers from going to where they were most needed. Ms Liang said she was also unsure what these teachers could offer. "To make the scheme provide a higher level of teaching at rural schools, it should target experienced teachers from eastern regions instead of college students," she said.

Bank of China said on Friday that it had been chosen as the lead bank for the financing of a huge bridge connecting Hong Kong with Macau and the city of Zhuhai. Banks will finance 22 billion yuan (HK$25 billion) of the 37.6 billion yuan investment, Bank of China said on its website, without giving details on what proportion of the loans it would be providing. The remaining funds will be provided by the central government along with the governments of Guangdong province, Macau and Hong Kong, the statement said. Officials have previously said that bank loans would be repaid from toll fees on the bridge, the construction of which is expected to start as early as this year. With Beijing calling on banks to support its stimulus plans, mainland’s state-owned lenders have been rushing to provide credit to big government-backed infrastructure projects that are seen as posing next to no default risk. The bridge will connect Zhuhai, a city in the southwest of the Pearl River Delta in Guangdong province, to the rest of the delta area and will slash travel times to Hong Kong. Currently, only ferries connect Zhuhai and Macau with Hong Kong.

Zhu Xinli, chairman of China Huiyuan Juice Group, would have earned a HK$7.55 billion cheque if Coca-Cola's HK$19.65 billion bid for his 17-year-old company went through. The son of a poor Shandong farming family had longed for a successful deal, and to use the proceeds to realise his ambitions in the fruit plantation business. But Beijing's rejection of Coke's bid on Wednesday now looks set to trigger a sea change underlined by an evaporation of HK$4.58 billion - based on market value - of Mr Zhu's personal wealth. Yesterday, Huiyuan's Hong Kong-listed shares plunged 42.17 per cent to HK$4.80, a level similar to the stock's price before what would have been the biggest foreign takeover of a mainland company was announced. In tandem, Mr Zhu, who owns 619.14 million shares, or 42.15 per cent of the firm, saw his fortune plummet to HK$2.97 billion. Analysts and market watchers said although there was no clear winner in Coke's failed bid, the entrepreneur, who rose to fame as a judge on the mainland version of the US reality television show, The Apprentice, and Huiyuan were the biggest losers. Bocom (SEHK: 3328) International analyst Gary Lau said if Huiyuan continued to seek a share sale, the price it could command would be at a huge discount to Coke's exceptionally high HK$12.20 per share amid globally falling asset prices. "And a possible merger or acquisition needs to be scrutinised again by the Ministry of Commerce under anti-monopoly law." Worse still, Mr Zhu had not only lost money, but also credibility among consumers, said Mei Xinyu, a researcher at the ministry's Research Institute of Foreign Trade and Economic Co-operation. "He used to be a respected entrepreneur, but his comments in public for the deal changed all this. Consumers reacted negatively to his business philosophy, which has damaged Huiyuan's brand value." Mr Zhu ignited a public outcry last September when he declared that brands should exist without borders and entrepreneurs should run their companies like they were "sons" but sell them like they were "pigs". In an interview with the South China Morning Post (SEHK: 0583, announcements, news) in February last year, he claimed he was devoted to being a responsible entrepreneur and cared about the livelihoods of mainland fruit farmers. His aide yesterday said he was abroad and unreachable for comment. Since the announcement of Coke's takeover offer, many Web commentators have branded him a "traitor" and he has been under mounting pressure from adverse public opinion for attempting to sell a homegrown brand to foreigners. With the deal scrapped, Mr Zhu is under another form of pressure: running Huiyuan, which is expected to face stiffer competition, including that from former suitor Coke, and a tougher marketplace in the economic slowdown. "Huiyuan stands to lose as Coke will proceed with its US$2 billion China expansion plan, which is more than it has spent in China since it entered the market in 1979," said a CIMB-GK report. Coke spokesman Kenth Kaerhoeg yesterday said the company would focus on developing existing brands, while continuing to innovate with new brands, including in the juice segment. The US beverage giant has been aggressive in developing non-carbonated drinks on the mainland over the last three to four years. The strong performance of its Minute Maid fruit-juice drinks has already helped Coke move to the top position in the fruit and vegetable juice sector, accounting for 11.8 per cent of the market by sales volume last year, according to data from Euromonitor International. By comparison, Huiyuan's market share in the sector slipped to 8.5 per cent last year from 10.3 per cent in 2007. In September last year, Huiyuan reported a 5.2 per cent drop in sales and 22.2 per cent slump in gross profit for the six months to June, with cash dropping to 666.25 million yuan (HK$756.33 million) from 1.29 billion yuan a year earlier. JP Morgan analyst Selina Sia forecast that its business performance this year could deteriorate further if consumption sentiment became worse. "We believe that the group's low utilisation rate and heavy working capital requirement have resulted in low returns when compared with peer group consumer companies," Ms Sia said. Speculation that Huiyuan might be running into cash-flow trouble was rife after the company released its interim results, allegations that were denied by Mr Zhu. Mr Zhu started his business with a near-bankrupt canned fruit plant in Shandong province after resigning from a local government bureau. The company was initially engaged in the export business and sold juice concentrates to Europe and the United States. It later shifted its focus to the domestic market, capitalising on the mainland's growing standard of living and demand for healthy drinks. After Coke's failed bid, Mr Zhu's days ahead are not likely to be easier, with the company's prospects and his professional reputation at stake. Talk of Mr Zhu cashing out has resurfaced. "Yes, I wouldn't be surprised if some of the major shareholders, even Zhu Xinli himself, cut back their positions amid yesterday's price avalanche," said one analyst. But if there was any comfort, the brand Mr Zhu said he painfully built remains in his hands, at least for now.

When china excluded property from 10 sectors marked for support in a three- year stimulus plan, the move signaled Beijing was more concerned with affordable housing than with shoring up the market. The snub may expose developers to further pain, especially in the overheated high end of the market. But any harm to the economy may be more than offset in the long term by a government commitment to build up the supply of affordable and low-income urban housing, which will spur consumption. And after a dizzying series of policy U-turns over the past year, the sector may be grateful for signs Beijing has settled on a consistent long-term approach. "The government is apparently hoping for some reasonable easing in property prices, which are still too high and weighing on transactions as well as consumption," said Sun Jianping, a senior property analyst at Guotai Junan Securities in Shanghai. "It's likely to take a wait-and-see attitude about any new measures to boost the market in the near term, monitoring the effects of property-friendly steps adopted late last year." Beijing ushered in a slew of steps to support the slowing property market in the fourth quarter, such as cuts in business and transaction taxes, back- pedalling from policies taken just months earlier to cool what it feared was an overheated market developing into a dangerous bubble. But it ignored property late last month when it selected 10 industries to support in a stimulus package for its faltering economy, even though property investment accounted for nearly one quarter of the nation's total investment and 11 percent of its GDP in 2007 and 2008. "The recent dip in property prices hasn't really brought them far off their sky-high levels, and the government doesn't seem to want to push them back up again right now," said Jin Dehuan, economist at the Shanghai Securities and Futures Institute. "The government will surely focus on the implementation of the long- delayed low-income housing scheme in the short term, although property will still be one of the top five industries subject to long-term support due to its weight in the economy." Jin's view was echoed by official comments. Qi Ji, vice minister of housing and urban-rural development, said last week that property prices remain too high in some eastern cities compared with average incomes. News of the apparent slight contrasted with grim data from the property market. Growth in urban property prices slowed abruptly early last year, when the global financial crisis began to ripple over the economy, winding up a five-year bull run. In December, prices fell 0.4 percent, their first annual drop since the National Development and Reform Commission, the country's economic planner, began publishing the data in 2005. The pace accelerated to a record fall of 1.2 percent last month. The fall in property prices has fuelled investor worries about a rise in banks' bad loans, as developers may default on projects that cannot generate the envisioned returns. Luxury spending fed by property speculation is also taking a hit. What's more, investment growth in the heavily weighted sector has slowed sharply, to just 1 percent in the first two months of this year, down from 20.9 percent last year. That compares with overall urban fixed-asset investment growth of 26.5 percent in the first two months. Property prices are still high when compared with urban dwellers' incomes, let alone earnings in poor rural areas. In Shanghai, last year's average per capita disposable income of 26,690 yuan (HK$30,253) could not buy even two square meters of a typical 90-square-meter, two-bedroom apartment in the city centre or inner suburbs. To ease the crunch, the country's four trillion yuan, two-year economic stimulus plan, announced in November, includes 400 billion yuan to build affordable homes. Meanwhile. the Ministry of Housing and Urban-Rural Development has targeted 900 billion yuan in spending on low-income housing over the next three years. Such spending will bolster upstream industries such as steel, cement and construction. "Property remains a pillar industry of China's economy," NDRC vice head Liu Tienan said late last month, when asked why property was excluded from the 10 targeted industries.

The global financial and economic crises has taken its toll on the Shanghai market. The city's Grade A office market slackened further in the fourth quarter, with rents plunging by 21.6 percent to an average of 8.10 yuan (HK$9.20) per square meter per day compared to the third quarter, according to property consultancy Colliers International.

Former U.S. Secretary of Defense William Cohen said here Friday that the economies of the United States and China had become directly linked. "These are very critical moments in our two nations' lives, because we are at a point that we have not been in almost since 1929," Cohen said in a speech at the China National School of Administration. Cohen attributed the problems of the U.S. economic system to "a lack of discipline, a lack of oversight, a lack of transparency, a lack of accountability, responsibility and integrity. "Right now, it seems one of the biggest problems we have is fear," he said. "President Barack Obama's major goal in the coming weeks is to rebuild the sense of confidence, because people are lacking in confidence in our system, in our banking system and political system." Speaking of bilateral cooperation in addressing the financial crisis, he said China and the United States should resolve differences and look at issues that affect both, such as economic growth and stimulating their economies. Cohen said the notion of a zero-sum game no longer applied in a globalized world. China holds 1.7 trillion U.S. dollars of U.S. debt and nearly 2 trillion U.S. dollars in foreign reserves, said Cohen, emphasizing that if the United States was not healthy, China would not be, either. "We have to cross the river in the same boat," he said. "We can see each other as partners, or as friendly competitors, and hopefully not adversaries." Cohen served as Secretary of Defense from 1997 to 2001. After leaving the Pentagon in 2001, he founded a business consulting firm called The Cohen Group with three Pentagon officials.

Magnus Bocker, president of NASDAQ OMX Group Inc., said here Wednesday he felt "relieved" to see that China's economy maintained growth momentum amid the global downturn. U.S.-based NASDAQ is a global exchange company that provides trading, technology and other services. Bocker, who visited China during a tour of Asian financial markets, said more than 20 Chinese companies listed on NASDAQ last year and he believed others would follow suit. He also said that global activity in the initial public offering (IPO) market would pick up later this year or early next year and Chinese technology, education and pharmaceutical companies might play a leading role in the next wave of IPOs.

Mar 20, 2009

Hong Kong: One of Hong Kong's largest business organisations has urged the government to launch the proposed subsidised internship programme as soon as possible to help relieve unemployment pressure. The appeal was made yesterday by Alex Fong Chi-wai, chief executive of the Hong Kong General Chamber of Commerce. "The economy is worsening quicker than expected," he said. "If there is a good scheme and it can be implemented soon, I believe it will help slow down [the rise of] the jobless rate." The government announced the program earlier this year. It is aimed at providing internships for about 4,000 university students when they graduate this summer. A monthly subsidy of HK$2,000 will be given by the administration to Hong Kong employers for every intern they hire, or HK$3,000 for those working on the mainland. Employers must offer wages of at least HK$4,000 a month. Mr Fong said if the introduction of the scheme was delayed, unemployment would rise, which would be bad not only for students but society as a whole. He said the General Chamber of Commerce was planning to offer 4,000 internships this summer, and he hoped the government could inform it as soon as possible if its interns and employers could receive the subsidies. A spokeswoman for the Chinese Manufacturers' Association said it planned to employ more than 10 interns in May or June, and hoped the government funding would be available then. Secretary for Labour and Welfare Matthew Cheung Kin-chung said the scheme could only be introduced when the government received the go-ahead from the Legislative Council's Finance Committee. Addressing the manpower panel meeting, he said: "We need to go to the Finance Committee for vetting as we need its approval." Unionist lawmaker Lee Cheuk-yan feared the HK$4,000 level would become a minimum wage for such graduates, while League of Social Democrats legislator Leung Kwok-hung said the HK$4,000 monthly wage requirement would send a "shock wave" to other job seekers. Lam Tai-fai, the legislator representing the industrial sector, said the scheme would not help university graduates, but stigmatise those who joined. "The government should be more pragmatic. Instead of offering such a scheme, it should help the industrial sector which can, in turn, create more job opportunities." Mr Cheung said the HK$4,000 was only a minimum requirement, and if the wage offered was too low, the application would not be accepted. Meanwhile, Hong Kong Polytechnic University said that about 2.2 per cent of its alumni who graduated last summer were still seeking work in December. The average monthly salary of all the PolyU employed graduates was HK$13,891 last year, up 7.8 per cent on 2007.

At the launch ceremony for Homes for Hope last night are (from left) David Pang, SCMP Group managing director and chief executive Hui Kuok, Carrie Lam, Sichuan opera master Wang Jing, Stephen Lam and SCMP Homes for Hope steering committee member Valiant Cheung. The South China Morning Post (SEHK: 0583, announcements, news) yesterday announced the launch of Homes for Hope, a charity appeal to rebuild the homes and lives of 3,000 quake victims in Sichuan. At a ceremony last night at the Island Shangri-La hotel, the charity appeal was boosted by HK$10 million from the trust fund set up by the Hong Kong government to help reconstruction in Sichuan. Homes for Hope aims to raise HK$18 million to help people in Qingquan village and Shengnan new village - two places devastated by the May 12 earthquake that killed 88,000 people and left millions homeless - rebuild houses and infrastructure. Earlier this year, Homes for Hope also received HK$3 million from Operation Santa Claus, the annual charity campaign co-organised by RTHK and the Post, as one of 14 beneficiaries. David Pang Ding-jung, chairman of SCMP Group, said the project aimed to rebuild not only homes but the lives of villagers in the hardest-hit areas. "As a leading media organisation, we have taken the responsibility to leverage our communications platform, resources and relationships to the greatest extent possible for this worthy cause," Dr Pang said. Attending were Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung, Secretary for Development Carrie Lam Cheng Yuet-ngor, corporate donors and supporters. Mr Lam said the government backed community involvement in Sichuan's reconstruction. "The Homes for Hope project is totally worthy of community and government support," he told about 100 guests. "The SCMP, as a media organisation, can reach out to many sectors in the Hong Kong community, bringing not only financing assistance but also professionalism in constructing homes and laying down infrastructure for Sichuan people." Guests enjoyed a Sichuan opera performance of bianlian, or face-changing, by Wang Jing and a classical Chinese music recital by the Diocesan Girls' School Chinese Orchestra. Over the year, various fund-raising events are planned to mobilise the Hong Kong community to raise funds for Sichuan quake victims. Part of the funds raised will buy construction materials for 970 families in Qingquan village, Mianzhu city, to build earthquake-resistant houses. The rest will help more than 500 Tibetan residents of Shengnan new village in Majia township, close to the scenic area of Jiuzhaigou, set up electricity and water supplies.

The US Federal Reserve's plan to buy as much as US$300 billion of government bonds could cause volatility in the bond market and investors should manage their risk, Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong warned. "The 10-year treasury yield plunged 50 basis points, from above 3 per cent to about 2.5 per cent, within a day and that had only happened once in more than 20 years," he said yesterday in response to the move of the United States' central bank. He said the Fed move was part of the quantitative easing needed to stimulate the economy, but it also had risks. "To stimulate the economy by 'printing money' is needed in the near term, it is not sustainable in the long term," he said, adding that investors should watch for fluctuations in the US bond market. On Wednesday, the Fed kept the benchmark US interest rate between zero and 0.25 per cent but announced a plan to buy US$300 billion worth of US Treasury bills. It said it could more than double its purchases of securities issued by Fannie Mae and Freddie Mac, the two mortgage giants, to keep the key rate near zero for an "extended period". Mr Yam expected the US central bank would continue to rely on such a policy until the US economy improved. "But what will be the impact when they exit from such a policy?" he said. Billy Mak Sui-choi, an associate professor at the department of finance and decision science at the Hong Kong Baptist University, said it was understandable that the head of the de facto central bank had asked the public to be careful. "The quantitative easing policy can push down the bond yield and push bond prices higher, but the situation can be reversed when the economy stabilises and inflation begins to rise," Mr Mak said. Dennis Wong Wai-hung, a senior manager and the head of markets at Hang Seng Bank (SEHK: 0011, announcements, news) , said Hong Kong's bond market and interest rate market remained stable yesterday despite the plunge in US Treasury yields. Meanwhile, Hong Kong banks kept their prime lending rates and savings rates unchanged after the Fed put on hold its benchmark interest rate. HSBC (SEHK: 0005, announcements, news) , Hang Seng Bank and Bank of China (Hong Kong) have their prime rate at 5 per cent, while other lenders including Standard Chartered Bank (Hong Kong) and Bank of East Asia (SEHK: 0023) offer 5.25 per cent.

Steve Forbes delivers his speech during the Republicans Abroad breakfast at the Grand Hyatt hotel in Wan Chai yesterday. Hong Kong is in a better position to handle the financial crisis than most other places in Asia, Steve Forbes, the editor-in-chief of Forbes magazine, said yesterday. In an interview with the South China Morning Post (SEHK: 0583, announcements, news) , he spoke about the world economy and the US response to the financial meltdown, as well as Hong Kong and its ability to deal with the global problem. "Obviously, Hong Kong is weathering it better than most because Hong Kong went through a terrible period in 1997 and 1998. The property market collapsed, the economy went through the wringer, unemployment became very high. And, you know, the area was hit by Sars" - severe acute respiratory syndrome, in 2003. "So Hong Kong has already taken its hits, and that's why its banking sector is strong. It made reforms a decade ago. So, while it has hurt, it's doing better than others in the region." Asked whether Hong Kong could handle further damage caused by the financial crisis, Mr Forbes said: "Better than most. When things don't go well, you get hurt - you just won't be as hurt as much as others are." This week, Mr Forbes visited Singapore, Thailand and Hong Kong, "gathering information and trying to gather revenue", he said. Yesterday, the former US presidential candidate was a special guest at a Republicans Abroad breakfast. Later, he discussed the current situation in Hong Kong and the United States with Chief Executive Donald Tsang Yam-kuen. Mr Forbes said the US stimulus package contained "good pieces" for small businesses, and electricity-grid improvements, but it was not going to do a lot of good in the long term. "It just spends money, which [raises] the question: what do you do for an encore? It doesn't lower tax rates, so it doesn't increase incentives." Mr Forbes recommended a different way to stimulate the US economy. He called for tax cuts, the scrapping of "mark-to-market capitalisation" accounting rules that devalue long-term assets, and the buying of mortgage-backed securities by the US Federal Reserve. "If the banking system is working, the US economy is starting to function again. That has collateral benefits for everybody," he said. Mr Forbes said he would not run for presidential office again. "Been there, tried that - twice," he said. "Time to move on." He suggested Republicans could strengthen their base by going "back to basic principles", including "creating an environment where people have a chance to do their own thing, start their own businesses, keep more of what they earn". Mr Forbes added: "What I think you'll see happen is that while [US President Barack] Obama's popularity will remain high for a while, the popularity of his policies won't." After being critical of former US treasury secretary Henry Paulson and current Treasury Secretary Timothy Geithner, Mr Forbes was asked what he would do if he were US president. "I certainly would have moved quickly on mark-to-market - suspended, gotten rid of that - put in the road bumps on short-selling, enforce the rules, tell the Fed to get off its duff and replace [Fed chairman Ben] Bernanke for immediate starters, and impose the flat tax, stabilise the dollar. "That would be a good start."

Education chief Michael Suen (right) visits the Oriental English College with Shenzhen counterpart Zhang Baoquan. Hong Kong children studying in two Shenzhen primary schools will be eligible for secondary places in Hong Kong under a measure launched by the cities' education bureaus. This was disclosed yesterday when Secretary for Education Michael Suen Ming-yeung met senior officials from the Shenzhen Municipal Education Bureau. An Education Bureau spokesman said it had worked with Shenzhen on a trial scheme to allow eligible pupils from Hong Kong studying at Shenzhen Oriental English College and Luohu School for Hong Kong Children in 2009-10 to take part in the Secondary School Places Allocation (SSPA) system for 2010-11. He said the move was aimed at catering to the rising number of Hongkongers who had moved to the mainland in recent years. Mr Suen yesterday visited Shenzhen Senior High School, a boarding school founded by Shenzhen's government, and the private Oriental English College. The former has about 4,000 students, including some from Hong Kong, while the latter has 3,200 students, with about 300 from Hong Kong and Taiwan. He had attended a signing ceremony for the memorandum on co-operation between the municipal government and Chinese University of Hong Kong, and a ground-breaking ceremony at its graduate school.

Cash-rich Cheung Kong Infrastructure (SEHK: 1038) (Holdings) reported a worse than expected 7.3 per cent drop in net profit to HK$4.42 billion for last year, but raised the prospect of joining with associate Hongkong Electric (SEHK: 0006) Holdings in future acquisitions. CKI chairman Victor Li Tzar-kuoi said yesterday that the group was aggressively pursuing investment opportunities since asset prices had sunk so sharply that the global mergers and acquisitions arena had become "a buyer's market". Without elaborating on potential targets, he said CKI and its 38.87 per cent-owned power utility, Hongkong Electric, could pool their cash resources to bid for projects with stable income and cash-flow and in markets with clear-cut regulatory regimes. "We are aggressively pursuing projects and vigorously studying targets, but will [if they materialise] conclude them conservatively," Mr Li said after disclosing that the company had a war chest of HK$11 billion as of the end of last year. He declined to comment on whether the potential acquisition would be the biggest in the company's history. Some analysts have speculated that the combined financial strength of CKI and Hongkong Electric could be sufficient for an acquisition as large as US$3 billion and it could be in the pipeline. CKI's net profit for last year was below analysts' consensus of HK$4.77 billion. Net profit was dragged down by a HK$631 million exchange loss from a 30-year, 30 billion yen (HK$2.43 billion) denominated loan made in 2002. In 2007, it recorded an exchange gain of HK$88 million. Foreign exchange volatility ate into bigger contributions from its overseas portfolio. Its Australia power distribution assets generated 194 per cent growth in profit to HK$850 million, and earnings at its gas and water supply business in Britain were 20 per cent higher at HK$550 million. Profit from the company's mainland portfolio, which includes power plants and toll roads, slid 14 per cent to HK$1.32 billion. But the base of comparison was inflated by a one-off gain of HK$815 million from asset disposals in the previous period. The company said toll income and traffic volume recorded growth. The final dividend was lifted 0.96 per cent to 83.8 HK cents per share, bringing the full-year payout 3.2 per cent higher to HK$1.135 per share. Earnings per share fell 7.54 per cent to HK$1.96. The stock fell 0.17 per cent to HK$29.95 after the results announcement.

Citic 1616 Holdings, a telecommunications service provider for international voice traffic, says the global financial turmoil will not have a significant impact on its business as companies are expected to cut back on overseas business trips and spend more time on the telephone. The company said yesterday net profit last year rose 26.4 per cent to HK$332.1 million, with revenue up 67.3 per cent at HK$2.48 billion. Earnings per share rose 17.5 per cent to 16.8 HK cents. A final dividend of 6.4 HK cents per share will be paid, raising the total dividend for the year to 8.4 HK cents per share, up 104.9 per cent from a year earlier. The dividend payout ratio is 50 per cent. Citic Pacific (SEHK: 0267), which holds a 52.6 per cent stake in Citic 1616, will benefit from a final dividend payment of about HK$66.5 million, based on its holding of 1.039 billion shares in the company. Citic 1616 chairman Shi Cuimin, who will retire today, said yesterday the weakening economy should not affect the company's business this year, as communications costs were low, compared with other operating costs. "Corporations will cut the number of long business trips and turn to voice and video conferencing," said Mr Shi. Chief executive Norman Yuen Kee-tong said business continued to grow over the first two months of the year. The company, which provides a platform for connecting mainland and overseas operators for international traffic, recorded 44 per cent growth in voice traffic to 8.1 billion minutes last year. Mr Yuen said the company now holds a market share of about 60 per cent in handling international voice traffic to and from the mainland, after the acquisition of rival China Motion last year. "We can have a stronger market position to set the price," said Mr Yuen. "However, the revenue per voice minute could still decline gradually." While revenue from the sector grew 39 per cent to HK$1.61 billion, revenue per minute fell 4 per cent to 19.9 HK cents from 20.7 HK cents a year earlier. The company announced yesterday that vice-chairman Xin Yuejiang would replace Mr Shi as chairman effective today. Shares of Citic 1616 rose 13.33 per cent to close at HK$1.36.

Swire Properties has reduced the number of rooms at its 6 billion yuan (HK$6.82 billion) five-star hotel and serviced apartments project in Guangzhou to tap the growing demand for larger units from business travellers. The 4.7 million square feet retail-office-hotel development, Taikoo Hui, is scheduled to be completed in 2010. The number of rooms in the hotel, which will be managed by Mandarin Oriental, will be reduced to 250 from the original 340, while the serviced apartments will be cut by half to 30. "We have witnessed more supply of luxury hotels in Guangzhou after 2002 and decided to make ours a boutique hotel with spacious rooms instead," said Peter Kok Kin-lan, general manager of Swire Properties. As a result of this change, each hotel room has now been increased to 60 sq metres from 40 sq metres originally. The size of the serviced apartments has been doubled to 160 sq metres and 200 sq metres each. The hotel will open for business in 2011. Swire Properties yesterday entered into agreements with Savills as its retail leasing agent, while Jones Lang LaSalle will lease the offices. Mr Kok said grade A office rentals in Guangzhou had been under downward pressure but prospects for retail leasing remained bright. He said grade A office rentals had dropped about 15 per cent as a result of the worsening global financial crisis. "As the supply of top-notch office buildings in Guangzhou is still low, we believe the impact of the financial turmoil on our project will be limited," he said.

China: China's top climate change official slammed a US proposal to put penalty tariffs on products from polluting countries.

A view of a residential building in Shanghai. Redevelopment has become a key concern of the city's residents.
Shanghai's municipal government has vowed greater transparency and accountability in considering the public's views, local media have reported. Mayor Han Zheng said the city would step up efforts to solicit "orderly public participation" in decision-making on "important policy issues". Mr Han said on Wednesday that greater public participation could be effective in curbing "abuses of power by certain segments", the Xinmin Evening News reported. "Open information is in itself a form of supervision, and also a form of motivation," Mr Han said, adding that he planned to strengthen the city government's transparency, including in its audits. "In the future, how do we broaden the public's orderly participation? What steps do we need to take? This is the crux of what we need to explore." Transparency and accountability have become the new mantra of Mr Han's administration in a city rocked in recent years by numerous corruption scandals. Mr Han pointed to earthquake-reconstruction funds the city sent to Dujiangyan, Sichuan, with the public needing an account of how every yuan was being spent. He also pledged complete openness about how funds raised through the auction of vehicle number plates would be used. The mayor's comments came as the city's urban planning department called for public input on plans to push ahead with the redevelopment of rundown parts of the city. It said it planned to start building high-density public housing in five central districts, and would seek approval from residents. The government has up to now been building homes on the outskirts of Shanghai, but the urban-renewal scheme has been facing resistance from residents unwilling to move away from the heart of the city. Redevelopment has become a key concern among Shanghai residents, with large areas of the old centre being revamped in the rush to put on a shiny new face for the World Expo next year. Entire blocks of old low-rise housing have been flattened to make way for a network of new subway lines throughout the city. However, the pace of redevelopment has become a polarising force, with worries raised about the loss of heritage while some critics lament inaction in some of the poorest districts. The news provoked a strong reaction from residents commenting on the city's official news website, Eastday.com. "The government pledged to redevelop Laoximen subdistrict way back in 2004. Why haven't they started yet?" said one reader posting under the name "Tough Wait". "I wish the government would do as it promised and let the people believe it is telling the truth."

Shares of China Huiyuan Juice Group fell as much as 53.25 per cent yesterday after Beijing's decision to block Coca-Cola's HK$19.65 billion takeover bid for the leading maker of pure juices spooked investors. The stock sank as low as HK$3.88 before closing down 42.17 per cent at HK$4.80, returning to the level of between HK$4 and HK$5 at which it traded before the acquisition was announced in September last year. The rejection by the Ministry of Commerce, which underscored Beijing's willingness to protect domestic brands but also raised concerns of protectionism, was devastating news to Huiyuan, analysts said. Huiyuan, which saw a slowdown in the first half of last year, will face stiffer competition, including from former potential partner Coke, and shrinking demand in the economic downturn. The ministry rejected Coca-Cola's application to take over Huiyuan under the new anti-monopoly law. The knock back came despite the United States beverage giant's fresh pledge of a further investment of US$2 billion on the mainland recently. Market watchers said a combined Huiyuan and Coca-Cola, the mainland's top juice makers with a combined 19.4 per cent market share, would not have given Coke a dominant position by international standards. Foreign ministry spokesman Qin Gang yesterday defended the decision to reject Coke's bid and said it was not in contradiction to Beijing's recent calls to other countries to avoid protectionist policies. "The government's rejection of Coca-Cola's bid for Huiyuan is an objective decision based on the anti-monopoly law," he said. "There is no change in China's policy to actively utilise foreign investment." Mr Qin then raised a bottle of mineral water made by Swiss food giant Nestle and said: "I am drinking water made by a Swiss company." Lawyers at law firm Jones Day in Beijing said the decision appeared to pose a daunting obstacle, especially for foreign firms with substantial market positions or strong brands seeking to make acquisitions. Euromonitor International said it was not surprising that many China observers found it hard to comprehend the decision. "Some suggested that this could be more a political decision than a legal verdict, given that national protectionism around the globe is indeed on the rise amid the global economic downturn." But others said the decision was not necessarily bad for Coke, although it meant the company would not gain a market lead in the pure juice sector soon. "Due to the rapid changes in the global stock market, the offer price of HK$12.20 proposed earlier was regarded as too high," Bocom (SEHK: 3328) International Holdings analyst Gary Lau said. "So the rejection is not necessarily bad because Coke can preserve more capital for future acquisitions." But for Huiyuan, which has engaged in aggressive capacity expansion since 2007, the scuttling of the takeover deal will result in underutilisation of production facilities. "It is highly likely that Coca-Cola will introduce and build its pure juice business and take on Huiyuan directly in the short to medium term," Euromonitor said. JP Morgan analyst Selina Sia said Huiyuan's business performance this year could deteriorate further if consumption sentiment worsened and consumers turned to cheaper juice drinks rather than pure juice.

China Mobile (SEHK: 0941, announcements, news) , the nation's largest mobile-telephone operator, will face slower subscriber growth this year amid fierce market competition and a weaker economy, chairman Wang Jianzhou said in Hong Kong yesterday. Mr Wang's warning came as the company reported net profit rose 29.6 per cent to a record 112.79 billion yuan (HK$128.04 billion) last year on revenue 15.5 per cent higher at 412.34 billion yuan. Earnings per share rose 29.4 per cent to 5.63 yuan. The results were in line with analysts' expectations. The company kept its dividend payout ratio at 43 per cent with a final dividend of HK$1.404 per share. Including the interim dividend of HK$1.339, the total dividend per share was HK$2.743, compared with HK$1.997 and a special payout of 10.1 HK cents last year. Mr Wang promised a steady rise in the dividend payout amount, with the payout ratio remaining at 43 per cent this year. China Mobile last year added 87.9 million subscribers, or 7.3 million per month, bringing the total user base to 457.25 million. The company accounted for an 88 per cent share of the net additions market and 72 per cent of total market share. But fourth-quarter revenue growth was 12.6 per cent, the slowest since the first quarter of 2004, and well below the full-year rate of 15.5 per cent. This reflected the negative impact of the softening economy since September last year. Average revenue per user, a benchmark of the profitability of telecommunications firms, declined 6.7 per cent year on year to 83 yuan per month, while minute usage rose 8.1 per cent to 492 minutes per month. China Mobile's January net additions fell below the 7 million benchmark to 6.67 million. "We face a big challenge in keeping strong growth in subscribers this year," said Mr Wang. "In general, we position China Mobile a stable profitable company with growth. We believe we can achieve the goal." Goldman Sachs estimated China Mobile could add 82.5 million subscribers this year and bring the total to 539 million. To cope with the growth in rural markets and 3G operations on a nationwide basis, China Mobile budgeted 133.9 billion yuan for capital expenditure this year, up from 125 billion yuan previously. Next year's spending was raised to 131 billion yuan from 109 billion yuan. For this year, 76 per cent of the spending will be on the 2G and 3G integrated network, while 24 per cent will go towards 2G network expansion to rural areas and other related businesses. The company has budgeted 375.4 billion yuan in capital expenditure for the three years to 2011. "This additional spending will add to listed company depreciation, causing about a 4 to 5 per cent earnings per share drop in 2010 to 2012," Deutsche Bank analysts wrote in a research note yesterday. China Mobile also raised its handset subsidies to 12 billion yuan this year, from 7.4 billion yuan last year, due to the launch of 3G service and customer retention. China Mobile has about 200,000 3G subscribers. Mr Wang also confirmed the company had suspended its plan to return to the mainland stock market due to poor market sentiment.

China National Offshore Oil Corp (CNOOC) aims to raise as much as 80 billion yuan (HK$90.87 billion) to fund aggressive expansion plans this year, a senior executive said. The move comes as the company faces niggling cash flow problems and plummeting revenues following the collapse in world crude prices. "We are preparing to issue mid- term notes. We have submitted the application and we will make an announcement once we hear the result," said chief financial officer Wu Mengfei, in Beijing yesterday. The debt financing will be carried out over several stages, he said, without providing further detail. He said the move would help the company - the state-owned parent of CNOOC Ltd (0883) - take advantage of falling steel and raw material costs and raise the pace of construction on a number of exploration projects along the Chinese coast. Fu Chengyu, CNOOC's chairman, revealed recently that the firm would invest a total of US$16.5 billion (HK$128.7 billion) this year, 26 percent higher than in 2008. Wu said the company was currently looking into the possibility of expanding its 12 million-tonne refining joint venture with Shell in Huizhou, Guangdong province. The first phase is due become operational this year.

Mar 19, 2009

Hong Kong: Five per cent of Hong Kong workers are out of a job - and the problem is likely to get worse. That was the bleak message from the government yesterday after 17,500 people lost their jobs last month, pushing the unemployment rate to a near-three-year high. "The short-term outlook for the labour market is obviously not bright ... the jobless rate is expected to continue rising," Secretary for Labour and Welfare Matthew Cheung Kin-chung said. A flood of fresh university graduates will join the labour market this summer. The unemployment rate rose 0.4 percentage points last month on top of a half-percentage-point rise in January. Economists have forecast it will reach 6 per cent this year - a level last seen in 2005 - but the speed at which jobs are being lost suggests their forecast is overly optimistic. At the end of last month, 171,900 people from a workforce of more than 3.68 million were out of a job. Construction, transport, import and export, manufacturing and catering were worst hit. Mr Cheung said government measures and the easing of travel to the city for Shenzhen residents would help tourism and restaurant businesses. But Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, warned of a tough few months ahead, especially for higher-end restaurants. People were choosing to eat more often at home or at fast-food outlets, exacerbating the post-Lunar New Year drop in business.

ATV chairman Linus Cheung Wing-lam with newly appointed chief executive officer Nancy Hu at an awards celebration yesterday. ATV chiefs say no more layoffs are planned in the near future despite a structural shake-up at the troubled television station - and some sacked workers might be rehired. The station dismissed 207 staff, about 20 per cent of its workforce, last month, and another 63 jobs were cut in November. But ATV senior vice-president Kwong Hoi-ying yesterday rejected rumours that more staff cuts or wage reductions were imminent. Mr Kwong also said the newly appointed chief executive, Nancy Hu Guanzhen, had started communicating with staff and had brought stability to the station. He was speaking at an ATV awards ceremony also attended by Ms Hu - who replaced Ricky Wong Wai-kay after he stepped down in December after just 12 days in the job. Asked how the previous layoffs would affect the staff, Mr Kwong said: "Staff morale is now stable and they are feeling positive about their work." He said ATV had started employing new staff as part of its reconstruction. Ip Ka-po, the station's vice-president for production administration and co-ordination, said the sales and publicity departments had hired more than 10 staff recently. "The station has been short of labour," Mr Ip said, adding that sacked staff might be rehired. "Other departments may employ more staff in future, but it depends on the progress of the company's framework reconstruction and the amount of program production."

Cathay Pacific Airways was planning to switch its fuel-hedging strategy to provide more comprehensive protection against changes in oil prices after posting a record loss of HK$8.6 billion last year.

Group chief executive Peter Sands discounts the likelihood of another fund-raising, saying he is comfortable with the bank's capital ratio. Standard Chartered group chief executive Peter Sands is the latest top banker attempting to restore the confidence of investors, announcing the London-based lender has adequate capital and has made a strong start to the year. In a rare sign of good news in the banking sector, Mr Sands declared that the bank had no plans to sack staff or reduce their salaries. Speaking in Hong Kong yesterday, Mr Sands said this year would be challenging but "it is not all bad news". He said the stimulus measures adopted by the United States and efforts by the Group of 20 leaders to find ways to solve the financial crisis would improve the economy. "We have made a strong start this year with a strong performance in January and February," he said. "Corporate lending may be affected by the economic downturns. However, the loan impairment ratio in our consumer banking in the first quarter this year will be better than the fourth quarter last year." Mr Sands is the latest top banker to give positive signals to try to assure investors that banks have started to recover from the worst financial meltdown in decades. Citigroup, Bank of America Corp and HSBC Holdings (SEHK: 0005, announcements, news) executives in recent weeks have all said they have performed well in the past two months. While Mr Sands said he would never rule out any fund-raising plans, he played down such a possibility, saying he was "comfortable" with Standard Chartered's capital ratio. The lender, which focuses on Asia, Africa and the Middle East, reported its tier-one ratio stood at 10.1 per cent at the end of last year, up from 8.5 per cent at the end of June last year. The strong capital ratio came on the heels of a rights issue in November that raised about HK$20 billion. Mr Sands said the lender had been careful to select high quality equity for its capital management.

Despite the accelerating global downturn, nearly three-quarters of Hongkongers still consider themselves happy, a survey suggests. And 69 per cent believe they are "on track towards realising their true potential", an increase of 5 percentage points from a year earlier. Still, the proportion of respondents to a Shue Yan University survey who said they were happy was down 6 percentage points from February last year, when it carried out a similar survey. Fewer people feel safe on the streets, a third expect their quality of life to fall this year and most believe the economy will worsen. The university polled 1,255 respondents by telephone last month. Seventy-three per cent of respondents described themselves as being "certainly happy" or "quite happy". Thirty-five per cent said they believed they were protected from violence and crime in their neighbourhood, a drop of 4 percentage points from February last year. Eighty-five per cent of respondents believed the economy would worsen next year and 32 per cent thought their quality of life would decline. Researchers Thomas Yuen Wai-kee and Mark Greene attributed the pessimism to the worsening world economy. Meanwhile, the Hong Kong Federation of Youth Groups has found that the proportion of young people hoping to work as civil servants has doubled, to 60 per cent, from six years ago after the outbreak of severe acute respiratory syndrome. It surveyed 300 people aged 15 to 39. Close to three in five respondents said they would choose to work for someone else rather than start their own business, up a third from the proportion in 2003. Nearly 93 per cent said they disapproved of the idea of spending money before they had earned it, indicating a wariness of living on credit. More than three-quarters did not see the idea of "making a quick buck" as being particularly smart. Federation supervisor Angela Ngai Mei-mui said the results of the survey reflected a drop in confidence about the future among young people. Because they were less confident, they tended to want jobs that were more stable. "They consider the current financial downturn was mainly caused by human greed," she said. "Many have clearly dismissed the attitude of making quick money and would exercise prudence on borrowing or spending on credit."

Developers may be a dollar or two short these days, but they never seem to be short of new promotional ideas to lure shoppers to spend their dollars at the developers' shopping malls. Ah Pak's admiration was triggered when he read an e-mail from Sun Hung Kai Properties (SEHK: 0016) (SHKP) the other day that proudly announced it had cajoled 200 tenants at eight shopping centres to offer 300 promotional activities between March 28 and May 3. Under current leasing arrangements, developers stand to earn higher incomes from their tenants if the tenants manage to increase their turnover. This fact might explain SHKP's enthusiasm about releasing the encouraging news into the public domain. Just 90 minutes later, another e-mail, this time from Great Eagle (SEHK: 0041), announced that the company had persuaded 200 tenants at its Langham Place mall in Mong Kok to join hands to offer discounts during the Easter break, from April 10-13. What a coincidence! Ah Pak was a little surprised to see that the two developers employed the same public relations firm, Wasabi Creation, for the marketing of their events. Would a PR firm pitch the same idea to rival customers? Wasabi Creation's spokeswoman said the idea was initiated by the clients.

More than 14,000 people lost their jobs in Hong Kong between November 2008 and February this year. Over the period, the unemployment rate climbed to 5 percent - the highest level in nearly three years - up from 4.6 percent in the the period from November last year to January this year, official data revealed. It means the number of unemployed increased to 171,900 in the November to February period, from the previous figure of 157,700. The job losses have mainly hit the construction, transport, trading, manufacturing and restaurant sectors. Since the beginning of the global financial crisis last summer, cumulative job losses have reached 33,800 in Hong Kong, according to Citi economist Cheng-Mount Cheng, who expects unemployment to reach above 6 percent by mid-2009, ahead of the bank's previous forecast. "A rising unemployment rate has a knock- on effect on household spending and we expect negative growth for private consumption in the first three quarters," Cheng said. "The government's job-creation program is not big enough to reverse the trend of more job losses in the coming months." Hong Kong construction workers who lost their jobs in Macau have already started returning. But Secretary for Labour and Welfare Matthew Cheung Kin-chung said the government will continue to help the affected workers and other job seekers, creating, through its schemes, 62,000 jobs and internship opportunities in the next three years. "However, its effect is uncertain for this year as it usually takes time for tenders when the government implements programs," said Daniel Chan Po-ming, vice president for consumer investment and insurance products at DBS Bank (Hong Kong). Vincent Cheng Hoi-chuen, chairman of HSBC's (0005) Asia-Pacific unit, said the 5 percent jobless rate is within expectations, adding the bank has no plans to cut salaries.

The Walt Disney Company's decision to halt design and creative work at Hong Kong Disneyland is an attempt to push the government into reaching an agreement on its expansion, a source close to negotiations claimed. The source said yesterday the move may be seen as "a way of turning the screw on the government." Although the government has asked Disney to reconsider its decision, Undersecretary for Commerce and Economic Development Gregory So Kam-leung said the laying off of 30 designers and engineers would not accelerate negotiations. Disney fired the team of Hong Kong and US designers and engineers working on the project on Monday. Walt Disney Parks and Resorts worldwide public affairs executive vice- president Leslie Goodman said the company had no choice but to suspend creative and design work on the project. "The uncertainty of the outcome requires us to immediately suspend all creative and design work on the project," she said. A Hong Kong Disneyland spokesman insisted negotiations are still ongoing. The Commerce and Economic Development Bureau said the government still hopes to reach a deal on a plan that will both enhance the park's attractiveness and serve the city's interests. Last December, Hong Kong Disneyland managing director Andrew Kam Min-ho said the company proposed to spend about HK$3.5 billion on the expansion of the park and that the government would remain the major shareholder without having to spend a cent. It was later reported that the plan involved the government foregoing part of the HK$6.1 billion it lent Hong Kong Disneyland for the initial construction. Since then, it is believed the financial tsunami has taken its toll on Disney. Hong Kong Inbound Tour Operators Association chairman Simon Hau Suk- kei said it appeared Disney is switching its focus from Hong Kong to the construction of a theme park in Shanghai.

Net profit for Hongkong Electric (0006) last year rose 7.8 percent to HK$8.03 billion on the back of earnings from its overseas businesses. Earnings per share were HK$3.76. A final dividend of HK$1.49 per share was declared. Revenue rose 2 percent to HK$12.8 billion. Profit from Hong Kong operations rose 4.2 percent to HK$7 billion and 41.6 percent from international operations to HK$1.02 billion. But unit sales of electricity in Hong Kong dipped 0.2 percent due to wetter and cooler weather last year and energy- saving measures. The power supplier said its domestic client base grew slightly, but it lost some commercial and industrial accounts. Maximum demand in Hong Kong increased 1.4 percent to 2,589 megawatts from 2,552 megawatts a year earlier. The company last year bought 50 percent of the Wellington electricity distribution network in New Zealand and raised its stake in Britain's Northern Gas Networks to 35.1 percent from 19.9 percent. "Internationally, we will continue to look for new investment opportunities," said chairman Canning Fok Kin-ning. HKE also bought 45 percent stakes in three mainland power plants last month from Cheung Kong Infrastructure (1038) - its first venture into that power market. Fok expects 2009 to be challenging amid recession and financial uncertainty. The government has approved HKE's development plan for the five years to 2013. That calls for capital expenditure of HK$12.3 billion. Its permitted rate of return from Hong Kong operations was reduced to 9.99 percent from 13.5 to 15 percent. HKE has been granted banking facilities of HK$7.45 billion and has HK$8.96 billion in deposits and cash. The net debt-to-equity ratio was 4 percent as of December 31. Its stock rose 2.6 percent to close at HK$47.40 yesterday.

China: Japanese Prime Minister Taro Aso postponed a planned visit to China because of scheduling difficulties. A Japanese foreign ministry spokesman dismissed a report that China had requested the delay because of a territorial dispute. "We wanted to have an early summit meeting, but it became difficult for the prime minister to visit in March," Foreign Affairs Minister Hirofumi Nakasone said. "This is because of circumstances in China, as well as here because of the Diet [parliamentary] session. But both sides remain committed to meeting soon," he said. The Mainichi newspaper reported yesterday that China had requested a postponement of the March 27-29 trip because of public outcry over a longstanding dispute over islands in the East China Sea. Mr Aso reiterated Japan's claim to the islands last month, prompting a statement of "strong dissatisfaction" from Beijing. Hideo Tarumi, director of the China and Mongolia Division of the foreign ministry, called the Mainichi report "totally wrong" and said it was "preposterous" to say that the territorial dispute was the cause. "We've been negotiating with China for a meeting in the first half of this year should Mr Aso be able to visit, because of elections here by September," Mr Tarumi said. "No date had been set, not even for March. We'll continue to co-ordinate for an early meeting," he said. Mr Aso may meet President Hu Jintao at the Group of 20 meeting in London early next month, Japanese chief cabinet secretary Takeo Kawamura said. The group of eight uninhabited islands, called Diaoyu in Chinese and Senkaku in Japanese, have been the subject of a long dispute between the countries, and Taiwan also claims them. They are close to gas fields and a maritime shipping lane in the East China Sea, and the holder would have rights to undersea oil reserves. China and Japan agreed to hold annual leadership meetings during a visit by Mr Hu to Japan last year.

Guangzhou will build an amusement ride that it claims will be the highest in the world as the city gears up to host the Asian Games next year. The claim is based on the fact that it will be atop a 450-metre skyscraper. Although Bryan Chan of Colliers International, the consultant in charge of the tower project, called it a Ferris wheel yesterday, it is not one in the strict sense, as it will be horizontal and consist of 16 glass capsules, each 3.2 metres in diameter, running on a track along the circumference of the Guangzhou TV tower in the city's central business district, Zhujiang New Town. Also on the tower's roof will be a 164-metre TV mast, making the building the tallest structure in Asia at 614 metres. A 629 metre transmitting mast in North Dakota is the world's tallest structure on land. Guangzhou Television Station, the project's developer, has invested 150 million yuan (HK$170 million) on the tower and the wheel so far. The tallest traditional Ferris wheel in Asia is the Singapore Flyer, which reaches a height of 165 metres off the ground. Visitors will see a panoramic view of Guangzhou from the capsules, which will each carry four to six people. A single rotation will take between 20 and 40 minutes. Construction will start in November. It is expected the work will be completed next February, and safety tests will be conducted before the attraction opens in October next year. The Asian Games are scheduled for November 12 to 27, 2010. Mr Chan said the new TV tower and the "wheel" would become icons of Guangzhou. Inspired by the Oriental Pearl Television Tower in Shanghai, the TV tower is expected to be a popular tourist destination as it will offer not only the wheel but an observation deck, cafes and restaurants. A competition to find a name for the tower will be held once construction is complete. Guangzhou, once at the forefront of the mainland's economic development, is catching up with Shanghai and Beijing on building skyscrapers. Last summer, Shanghai took over the crown from Toronto of having the world's tallest observation deck. The Shanghai World Financial Centre provides an unparalleled view of downtown, the Huangpu River and the Bund from its observation deck 464 metres above the ground. Shanghai is also building what it expects to be China's tallest building at 632 metres, making a 14.8 billion yuan bet that the global economic crisis will be just a memory when the work is completed in 2014. Beijing became the centre of experimental and avant-garde buildings, including the "Bird's Nest" (the National Stadium), the "Water Cube" (the National Aquatics Centre), the China Central Television headquarters and the National Grand Theatre. "It has aways been the case in human history that emerging cities and nations prefer using tall buildings to lure attention and showcase their economic might," said Wong Kam-sing, vice-president of the Hong Kong Institute of Architects. "They found a short cut to achieve their goals by aggressively building eye-catchingly tall buildings."

Shimao Property Holdings (SEHK: 0813) has sold a villa in Shanghai for 205 million yuan (HK$232.45 million), making it the country's most expensive residential property. The deal was clinched as the upmarket residential market in the mainland financial hub has been softening and property agents predicted the worst was yet to come. Shimao chief financial officer Lawrence Hui Wai-man said the company recently had sold two villas at Shanghai Shimao Sheshan Villas in the city's Sheshan area for 205 million yuan and 155 million yuan. Mr Hui said the 205 million yuan deal was the most expensive on record on the mainland, thanks to its location and brand. The buyer is not a mainland passport holder. "The market has slowed. But if [a property] is the cream of the cream, it will still have its market," Mr Hui said. However, he said investors should not read too much into one deal. "The record-breaking deal does not represent a recovery in the market. It just so happened there was a wealthy buyer who liked the property," Mr Hui said. There are 70 villas - each with a large private garden - in a two-phase development in the scenic tourist spot of Sheshan. More than 60 units have been sold. With a gross floor area of about 4,000 square metres, the 205 million yuan fully furnished property cost about 51,000 yuan per square metre. The average price of similar, unfurnished villas was about 38,750 yuan per square metre. Mr Hui said the house was not the most expensive on a square metre basis. That title belonged to a unit at the luxury residential project Tomson Riviera in Shanghai developed by Tomson Group, which sold for about 130,000 yuan per square metre in 2006. He said market activity had picked up last month but the outlook remained murky. Clement Luk Sheng, a director and deputy general manager of Centaline (China), said luxury property prices had dropped about 20 per cent from its peak in the second half of last year and he expected to see more downward pressure. Demand for luxury homes was slowing but activity in the mass-housing market had improved, Mr Luk said. China Vanke chairman Wang Shi earlier said prices in eastern China would continue to face pressure after the beginning of the downward cycle that began in the fourth quarter last year.

Sina Corp, the operator of the mainland's leading internet portal, warned of a slump in its online advertising business during this first quarter amid lingering economic slump.

China Development Bank (CDB) signed an agreement Tuesday with the government of the southern Shenzhen City to provide a 200-billion-yuan (29 billion U.S. dollars) credit line. CDB, a major state-owned bank, will extend the loans over the next five years to help the city develop its high-technology and cultural sectors, improve the infrastructure and ease the financing problems of small and medium-sized companies. More financing for those companies "will help the enterprises expand their domestic and overseas markets," said Shenzhen Mayor Xu Zongheng.

Workers connected China's Hainan Island to the national power grid Tuesday. The workers drew one of three planned seabed cables onshore at Linshi Isle in Chengmai, a county in Hainan Province, through Qiongzhou Strait at 3:28 p.m. from Xuwen in Guangdong Province, south China. The cable is 32 kilometers long. The 500-kilovolt seabed power transmission project is the first of its kind in China and the second in the world after Canada, according to Shang Chun, deputy general manager of the China Southern Power Grid. Two other cables will be installed in late March. All three cables, produced by Nexans of Norway, will eventually be linked up to the Fushan power transformer substation based in Chengmai County. They will go into service in late June. The project will cost about 2.5 billion yuan (about 368 million U.S. dollars) in all. The initial capacity will be 600,000 kilowatts. When the project is completed, the capacity will double. Once the project is completed, the province will be able to sell surplus electricity to the national power grid.

Mar 18, 2009

Hong Kong: The mortgage war between local lenders is escalating, as Hang Seng Bank (SEHK: 0011) joins the fray with a product offering mortgage borrowers zero interest for three months. It is the first local lender to temporarily abolish interest charges to win market share in the latest round of the mortgage war. Other lenders, like HSBC (SEHK: 0005, announcements, news) and Bank of East Asia (SEHK: 0023), have offered fixed mortgage rates for the first couple of years while Citibank and Chong Hing Bank (SEHK: 1111) are offering rate cuts and cash rebates. Analysts said banks used different mortgage packages to attract clients with different needs. "Banks have cash on hand, but they do not have a lot of good projects to lend their money to," VC Brokerage director Louis Tse Ming-kwong said. "This is why they are so aggressive in competing for mortgage loans, which are relatively lower risk than other types of lending. "This trend is likely to continue as we have seen some property owners launch new projects, and the property market has been active again recently. This provides good opportunities for banks to compete for mortgage business." Hang Seng Bank's mortgage plan started yesterday and will run until the end of next month. It allows customers borrowing mortgages of HK$1 million or more to avoid paying interest for three months. But they still need to repay the principal and they must draw down the loan before May 29. The bank did not say how high the interest rate would be after the initial three-month interest-free period, saying it would be set on a case-by-case basis. Home borrowers would save HK$7,500 with the offer - provided the loan amount was HK$1 million with a tenure of 20 years and priced at two percentage points below the prime lending rate, or at 3 per cent, a Hang Seng Bank spokeswoman said. New borrowers or homeowners seeking to refinance could apply for the offer. "The purpose of the offer is to help new homebuyers to reduce the burden of their interest payment," the spokeswoman said. The latest round of the mortgage war started last week, with HSBC announcing a plan to offer fixed-rate options for homebuyers, and other lenders quickly following suit. HSBC, Standard Chartered, Bank of China (Hong Kong), Bank of East Asia, DBS Bank (Hong Kong) and Fubon Bank (Hong Kong) (SEHK: 0636) have launched fixed-rate options for homebuyers, in addition to their traditional floating-rate options, which price the interest rate from the prime lending rate.

Passengers use the new express e-channels at Lo Wu. There are 10 of the machines in the arrival and departure halls. Four seconds might not seem much but it has been enough to attract 130,000 Hong Kong residents to a new service that cuts their time passing through immigration checkpoints at Lo Wu from 12 seconds to eight. Ten express e-channels have come into service at Lo Wu, the city's busiest control point, since March 2 as part of a HK$7 million pilot scheme. Immigration Department assistant director Jacqueline Kwan Chan Suet-mui said about 20,000 travellers were now using the new express checkpoints every day, about 18 per cent of the total e-channel use. "We are aiming to attract frequent travellers to the new service in the beginning," she said. The department's statistics have shown that about 1.2 million Hong Kong residents visit the mainland via Lo Wu at least once a month. To enjoy the faster passage through the checkpoint, smart identity card holders aged 18 or over provide their personal data including fingerprints, which are stored on back-end servers. Users of the new express e-channels put their smart identity cards on an optical reader instead of inserting them into the machine. The 10 express e-channels are now available at the arrival and departure halls at Lo Wu checkpoint. Ms Kwan said an average of 10,000 Hong Kong residents completed the enrolment process every day and she expected the service to reach the targeted frequent travellers in four months. "We will conduct a comprehensive review when the trial ends six months later and decide whether the express service should be extended to other checkpoints," she said.

The row over Macau's denials of entry to Hongkongers has escalated to the international level, with foreign consulates expressing their concerns to the former enclave's government. A day after five pan-democrats were barred while their colleagues were allowed in, the Civic Party has started a "one person, one e-mail" campaign to the Macau Immigration Department demanding the scrapping of what they called a blacklist. Maria Castillo-Fernandez, head of the European Commission's Office in Hong Kong, said it had been following the cases and "expressed concerns" to the Macau government during a meeting last month. Those concerns include whether the denial of entry for Hongkongers, as well as the passing of the Article 23 national security bill, would have any impact on future visits by European politicians who might be outspoken against China. The British consulate also said it had raised concerns with the Macau government. "Together with our EU partners, we have been following these exclusions in recent months closely," a consulate spokesman said. "We raised the issue in a meeting with the Macau government on a separate subject last week." A source in the pan-democratic camp said one western country's consulate had offered assistance after raising concerns about the issue several days ahead of a trip on Sunday which saw five activists, including legislators Leung Kwok-hung and Lee Cheuk-yan, denied entry. The rest of the 33-strong group were allowed in. Mr Lee is to appeal to the International Trade Unions Confederation, which is expected to raise the matter with the International Labour Organisation, regarding disruptions in the normal exchange between unions in the two cities. It is not the first time foreign governments have exerted pressure over the tightening of border controls in Hong Kong and Macau. During the Olympics torch relay in April last year, a diplomatic storm erupted after at least eight foreign nationals, including Danish sculptor Jens Galschiot and activists campaigning for Tibetan independence, were denied entry to Hong Kong. But legislator Chan Kam-lam, of the Democratic Alliance for the Betterment and Progress of Hong Kong, said foreign governments should not interfere in the affairs of Hong Kong and Macau. "How many people does the United States turn away every day? Macau is not the business of foreigners," Mr Chan said. A Hong Kong government source believed the situation was improving, as the number of pan-democrats who were denied entry to Macau was smaller than expected during the trip on Sunday. A Macau security police spokesman had earlier cited an internal security law and said Macau had a right to deny entry to anyone who violated the law.

The Walt Disney Company has halted all creative and design work on the expansion of Hong Kong Disneyland, cutting more than 30 jobs. The company acted after being told by the government that there was no timetable on the way forward, the US entertainment giant said yesterday. Contracts with several architectural and consulting firms would also be suspended as a result, sources said. It is understood that Disney will have to compensate the firms involved. Yesterday's job cuts reduced the size of Walt Disney Imagineering's Hong Kong-based team to a skeleton crew of about 10 staff. Those laid off included two Americans and three or four Britons, while the rest were local employees, the sources said. Their salaries were paid by Disney, based in Burbank, California. Imagineers are mainly responsible for master planning, developing, designing and engineering the company's theme parks. The redundancies come a month after Disney said an undisclosed number of its US jobs would be shed as part of a corporate overhaul and to trim its overheads amid the economic downturn and poor consumer spending. "After two years of Disney investment in creative and design work and extensive negotiations with our partner, the Hong Kong government, we have not yet reached a final agreement to expand Hong Kong Disneyland," Walt Disney parks and resorts spokesman Leslie Goodman said. "The uncertainty of the outcome requires us to immediately suspend all creative and design work on the project." Despite earlier hopes of a breakthrough in the negotiations with the government this year, the sources said senior management at Disney did not see any progress being made in the next six months. A spokesman for the Commerce and Economic Development Bureau said Disney had earlier informed the government of its layoff plans. "We consider that The Walt Disney Company's laying off of Walt Disney Imagineers who have been working on the design of Hong Kong Disneyland's expansion will not be conducive to the discussions, and are puzzled by the company's decision," the spokesman said. "We have expressed grave concern about the decision and urged the company to reconsider."

Do not drink and drive, TV actress Angela Tong Ying-ying advised motorists after she was sentenced at Kwun Tong Law Courts to 160 hours of community service and fined HK$1,200 for careless driving. Her driving license was also suspended for 12 months. "A hasty decision could lead to such a serious consequence," Tong, 33, said yesterday. She earlier pleaded guilty to drink-driving and careless driving. In passing sentence, acting principal magistrate Amanda Woodcock said she accepted the report from the probation officer. Tong's remorse was genuine and she was "very unlikely to drink and drive again." The magistrate warned Tong that if she breached the 12-month driving suspension, she may be immediately given a custodial sentence.

CLP Power will create 4,000 jobs in order to meet the 2010 emission targets it agreed with the government. About 500 of those jobs should be available in the next few months, CLP executive director Lo Pak-cheong said yesterday. The plan includes the renovation of the Tuen Mun power station, work on which began in January. Lo said the project is aimed at reducing carbon dioxide, sulfur dioxide, nitrogen oxide and particulate emissions - although he declined to comment on the specific target rates. "The government has negotiated targets with each individual company to meet the overall goal it has set for 2010. We have agreed with the government on our own goals," Lo said. "This is one of the city's largest engineering projects in recent years." The 4,000 jobs include those for engineers, technicians, specialists and project managers. "We have also commissioned two specialists from the United Kingdom to transfer their knowledge on a specialized welding process to our local workers," Lo said. Specialized welders will be needed to work on the 25-meter by 60m boilers, and overseas expertise has cut down work time and increased efficiency nearly twofold. Two specialized high-pressure welders hired for the project, Ho Hung-sing and Fu Tsak-wai, said the skills they have acquired may be passed on to workers in other industries once the project is over. "There will always be demand for welding in the city, and the skills we will be using on this project can be applied to the building of hotels, air-conditioning systems or any construction project that requires a generator," Fu said. The renovation project will be carried out in two phases, the first of which is to relocate and demolish certain existing facilities to create a ground area of 40,000 square meters. The second phase involves retrofitting of new emission control equipment and calls for 25,000 tonnes of steel and the construction of 1,100 pilings. "One of the challenges is that a reliable electricity supply needs to be maintained throughout, even though things will be moved around," Lo said. "There is a high level of complexity involved in this project - existing facilities need to be relocated, new equipment needs to be retrofitted within a plant that is operating non-stop, 24 hours a day, seven days a week."

Chinese Estates (0127) has proposed a final and special dividend totaling HK$1 per share despite a significant net loss of HK$1.49 billion in 2008 because of revaluation losses of HK$7.47 billion on investment properties.

China: China official foreign exchange reserves recorded their biggest monthly drop in at least nine years in January, a source familiar with the situation said on Tuesday. The source, who asked not to be identified, declined to say exactly how big the drop was. But he said provisional figures showed it was greater than the US$25.9 billion fall last October, a decline that surprised markets by its magnitude. China’s reserves, the largest stockpile in the world, totalled US$1.9460 trillion at the end of December, the latest date for which official figures are available. Data for the first quarter will be released in April. The source said the decline partly reflected the rise in the dollar due to safe-haven demand and repatriation of funds by banks, companies and investors hit by the financial crisis. “It eats into the value of non-dollar assets,” he said of the dollar’s appreciation. The euro fell to as low as US$1.2775 on January 30 from a high of US$1.4146 on December 31. If the January drop is confirmed, it would leave mainland’s reserves hovering around US$1.92 trillion, or even lower. It would be only the third decline since the People’s Bank of China started publishing a monthly breakdown of its reserves data in 2000. In addition to last October’s fall, the stockpile shrank US$17.11 billion in December 2003, the central bank’s official statistics show. The decline in the country’s reserves occurred despite combined inflows of US$46.6 billion in January from the country’s trade surplus and foreign direct investment. Officials have said last October’s drop was also mainly a reflection of a decline in the value of some of mainland’s non-dollar assets, especially those denominated in euros. For all of the fourth quarter, mainland went on to record a US$40.4 billion increase in its reserves. The nation’s reserves rose by US$356.2 billion last year, US$461.9 billion in 2007 and US$247.3 billion in 2006.

Rio Tinto's Yandi mine in Western Australia state. The decision to extend the review was expected given the complexity of the deal. Australia yesterday extended its review of Aluminum Corp of China (SEHK: 2600)'s (Chinalco) US$19.5 billion investment in global miner Rio Tinto Group, as major Rio shareholders voiced concern over the deal. The Foreign Investment Review Board's decision to extend its review to June was widely expected, given the deal is China's biggest offshore investment, is complex and has sparked shareholder and political concerns. Under the deal, announced last month, state-owned Chinalco would pay US$12.3 billion for stakes in Rio Tinto's key iron ore, copper and aluminium assets and US$7.2 billion for convertible notes that could double its equity stake in Rio to 18 per cent. Rio's fourth-largest shareholder, Australian Foundation Investment, raised concerns about the deal yesterday, echoing protests by Rio's top British shareholders and flagging potential conflicts of interest. "Significant influence has been given to Chinalco with no premium paid," Australian Foundation said yesterday. he fund manager owns a A$112 million (HK$574.64 million) stake in Rio. One of Australian Foundation's board members and a member of its investment committee is Don Argus, the chairman of Rio's spurned suitor, BHP Billiton. "We are deeply concerned about Chinalco becoming involved with the running of the business," Australian Foundation said, noting Chinalco was government-owned and was a customer and competitor. Rio Tinto has argued that the Chinalco deal would give it access to cheaper financing, a badly needed benefit for a company US$39 billion in debt. "Shareholders are entitled to their view, and we continue to listen to them," a Rio Tinto spokesman said. Rio declined to comment on the extension. Chinalco spokesman Lu Youqing said the delay was normal procedure for such a large deal. China's Export-Import Bank is talking to Rio about a lending facility for joint venture projects with Chinalco or other Chinese companies, according to a letter, dated February 12, signed by Feng Zengbing, a deputy general manager of the bank, and released by Rio yesterday. The review board must make a recommendation to the government on whether the Rio-Chinalco deal is in the national interest. Australian Treasurer Wayne Swan will make a final decision. The initial 30-day review period ended at the weekend. The extension had been expected given the complexity of the deal, which involves giving Chinalco two board seats and setting up marketing joint ventures. The board wants 90 more days to carry out its review, which would delay a final decision by Mr Swan and hold up a vote by Rio's shareholders. Rio had hoped to convene a meeting of shareholders in May. Rio shares fell 2.44 per cent to A$50.75 in a market that edged up 0.1 per cent. BHP fell 2.09 per cent. One hedge fund manager said the delay might not be good for Rio. "The longer it takes, the more uncertainty there is over the share price," said Tom Elliott, the managing director of MM&E Capital.

An undisclosed investor raised HK$405 million by selling 100 million China Construction Bank Corp H shares yesterday, taking advantage of the recent strength of mainland banking stocks.

Yu Rumin, chairman, Tianjin Port Development - Tianjin Port Development Holdings yesterday agreed to buy 56.81 per cent of Shanghai-listed sister company Tianjin Port Holdings for HK$10.96 billion in a deal making it the largest single-location port operator listed in Hong Kong. After the deal is completed, the seller, Tianjin Port Group, will replace Hong Kong-listed red chip Tianjin Development Holdings (SEHK: 0882) as the majority owner of Tianjin Port Development. Tianjin Port Development will pay HK$3.93 billion in cash to Tianjin Port Group and the rest in shares. That will give Tianjin Port Group a 51 per cent stake in the Hong Kong-listed port operator and dilute Tianjin Development's stake to 20 per cent from 67.33 per cent. "This transaction will lead to the integration of port assets in Tianjin and significantly increase the scale of Tianjin Port Development. We are now well positioned to weather the challenging global economic downturn," said Yu Rumin, the chairman of Tianjin Port Group, Tianjin Port Development, Tianjin Port Holdings and acting chairman of Tianjin Development. Tianjin Development would continue to book earnings from Tianjin Port Development based on its 20 per cent stake, Mr Yu said. Tianjin Port Group planned to inject a 300,000-tonne crude oil terminal into Tianjin Port Holdings after the Shanghai-listed unit came under control of the Hong Kong-listed port operator, Tianjin Port Development vice-chairman Nie Jiansheng said. Mr Nie did not give a timeframe for the potential asset injection. As the Shanghai-listed and Hong Kong-listed port operators held different assets in Tianjin, north China's busiest port, it was not conducive to growth and competitiveness, Mr Yu said. With the Shanghai-listed unit's bulk cargo assets, Tianjin Port Development's business would become more diversified and would rely less on the international container trade, better equipping it to cope with the global financial crisis, Mr Nie said. Tianjin's bulk cargo trade, mainly domestically bound, was outperforming the international container trade, he said. "After the acquisition, Tianjin Port Development will have all the good listed port assets," said Mr Nie. In January and February, Tianjin port's container throughput dropped 1.7 per cent to 1.2 million 20-foot equivalent units after growing more than 19 per cent in previous years. "Tianjin's foreign trade plunged 32 per cent in January to US$8.3 billion, as the recession deepened in the [European Union], which accounts for 35 per cent of Tianjin Port Development's throughput," KGI Securities analyst Vincent Lee wrote in a report. He expects container throughput to fall 1 per cent this year. Without taking the merger into account, Mr Lee forecast Tianjin Port Development's net profit to fall 17 per cent to HK$199 million for last year and plunge 34.7 per cent to HK$130 million this year. Citi analyst Ally Ma forecast Tianjin Port Development's net profit would drop 30 per cent for last year.

Inventec Corp, a Taiwanese contract manufacturer of laptop computers, is in talks to build a plant in western China to supply Hewlett-Packard, the world's No 1 personal computer vendor. The factory in Chongqing would have the capacity to produce more than four million notebook personal computers every year, said an official at the Xiyong Micro-electronic Park. He added that talks were in late stages and land had already been set aside for the project. "If they start construction of the factory by the first half of this year, they can start production by the second half," he said. An official at Inventec, the world's fourth-largest contract maker of notebook computers, had no comment, while an HP spokesman was not immediately available. HP had held talks with Inventec on a manufacturing tie-up at the Chongqing facility, but had not reached any specific deal yet, said an official in HP's logistics department. Inventec's move comes after HP, also the No 2 personal computer brand on the mainland behind leader Lenovo Group (SEHK: 0992), announced in October last year that it would set up a production base in Chongqing. The planned 20,000 square metre facility will start production of desktop and laptop computers for the domestic market early next year. It is also expected to help spur information technology development in the country's poorer western region and bolster HP's efforts to generate growth in emerging markets amid the growing economic crisis. Contract manufacturers and other suppliers frequently set up manufacturing facilities in areas where their clients already have large operations, a set-up that helps streamline logistics and clear supply-chain issues. HP, which set up its first mainland manufacturing base in Shanghai, does business in more than 680 cities across the country. About 7,000 domestic retail stores carry HP products, which include printers. Some analysts expressed concern about Inventec's move to set up the factory, saying any expansion plans at this point might not be a good thing for the company. "Looking at their factory in Pudong, they're still having problems there and so I'd be a little concerned about how things go with them in Chongqing," said KGI Securities analyst Angela Hsiang.

Hundreds of tourists arrived in Taiwan yesterday on the first luxury cruise ship to sail directly to the island from the mainland, boosting prospects for expanded economic and tourism ties between the rivals. But the festive event was marred by the death of a Taiwan tour guide accompanying the 1,600 employees of US sales giant Amway. Lin Hsien-da, 44, collapsed during the visit and was taken to Taipei City Hospital, where doctors tried to revive him, reports said. A hospital spokesman said high blood pressure and fatigue may have contributed to his death. The Ocean Mystery arrived at Keelung port following a two-day cruise from Shanghai, with well-wishers setting off firecrackers and performing traditional dragon dances. It is the biggest tourist group to arrive from the mainland since direct flights and maritime services began in December in a sign of rapidly improving ties between Taipei and Beijing. Amway plans to send eight more groups from the mainland. After disembarking, many of the passengers were bused to an upscale shopping mall in Taipei. Two female shoppers from Shandong province said they planned to spend up to 10,000 yuan (HK$11,335) at the mall. But they walked quickly past glossy counters of designer clothes and bags, and settled on cheap toys and candies. A few others emerged from the store empty-handed and posed for pictures. "There's much to buy, but we don't have enough time to select the goods," one woman said. Lee Chao-hsien, a store manager, declined to disclose the sales revenues generated by the visitors. "We're not counting on the mainlanders for everything but rather want to impress them with our good service," he said. Taiwan officials hope a significant increase in the number of mainland tourists may help shore up the island's economy, which contracted 8.36 percent in the final quarter last year. But mainland tourist arrivals have fallen far short of the 3,000 a day Taiwanese officials had expected, now averaging about 500 a day. Many in Taiwan have complained that President Ma Ying-jeou's Beijing- friendly policy has failed to bring real economic benefits to the island.

Mar 17, 2009

Hong Kong: A plan to renovate an underused park in Wan Chai is in jeopardy because the MTR Corporation is considering using it as a storage site for construction material. The 40,000 sq ft public garden in Harbour Road, among other parks, has been identified as a potential site as a works area for the Sha Tin-Central rail link. This would end plans by China Resources (SEHK: 0291) Property to renovate the park, sited immediately behind its office tower. Although the MTR Corp will only use the park temporarily, the railway construction work will not be completed until 2019. The property management and development company built the park 25 years ago under the requirements of its land lease, then returned it to the government to manage. It now wanted to transform the old park at a cost of about HK$20 million, the company's managing director, Winson Chow, said. "We would return the park to the government to manage. We are doing this just out of corporate social responsibility," he said. He had commissioned landscape architects Urbis - which designed the Wetland Park in Tin Shui Wai - to design the park and had appointed a consultant to look for an alternative works site for the railway. Mr Chow said his company proposed removing the surrounding walls to improve access to the park. It would transplant about half of the 70 trees to make way for cafes, rest areas and a performance area. Despite support from Wan Chai District Council, the government told the company three weeks ago that it might not be able to pursue its plan because of the railway project. The government also told councillors that more than 10 parks in Central and Western district would be occupied similarly by works for different rail links in the coming few years. But the two districts lack open space to cope with their large populations, according to data released by the Development Bureau in December. Central and Western district is short of 6 hectares, and Wan Chai, 2.3 hectares.

Actress Angela Tong appears in Kwun Tong Court on drink-driving charges on Monday. Television actress Angela Tong Ying-ying was ordered to perform 160 hours of community service, to pay a HK$1,200 fine, and had her driving licence suspended for 12 months on Monday morning. Dressed in a white jacket and grey trousers, the 34-year-old received her sentence in Kwun Tong Court, after earlier pleading guilty to drink-driving and careless driving. In passing sentence, Magistrate Amanda Woodcock noted that Tong showed remorse for her behaviour. The magistrate said she thought it was unlikely Tong would re-offend. Therefore, she said community service, a fine, and a year’s disqualification from driving were appropriate, local media reported. Outside the court, Tong told reporters she regretted drinking and driving and accepted her punishment. “I have been ordered to perform community service. I have to do something for society – as I’ve been irresponsible,” she said. “I appeal to other people not to drink and drive,” she added. The court heard that Tong, driving home at night along Hiram’s Highway in November last year, struck a motorcycle. The motorcycle, which was carrying two people, had stopped at a red light at Hong Kin Road junction. One of the passengers hit the windscreen of Tong’s car. Both passengers suffered injuries to their hands and legs, but were discharged from hospital after treatment. Tong was then given a breathalyser test for alcohol. It gave a reading of 80 micrograms. This was almost four times the legal limit.

HSBC (0005) has said it does not need a second rights issue to raise capital and reiterated the high regard in which it holds Hong Kong investors. Finance director Douglas Flint told institutional investors in Hong Kong last week that the current rights issue was not a must as HSBC's capital ratio was adequate, according to market sources. Banks need stronger balance sheets to survive the financial crisis and Flint expects the global economic outlook to remain uncertain, with US unemployment rising to 9.3 percent next year. He said HSBC's Tier 1 capital ratio, which will increase from 8.3 percent to 9.8 percent after the US$17.7 billion (HK$138 billion) rights issue, was relatively high. HSBC decided on the rights issue to strengthen its capital base to cope with the financial environment and take investment opportunities as they arise. But he said the bank has no current acquisition targets. He rejected suggestions that HSBC would be marginalized because other banks have received government capital, saying that those measures were temporary and that lenders will still be commercial operations in the long term. The HSBC finance director said the huge goodwill impairment charge to its US operations was a one-off, and that its available-for-sale securities are not a liability because many of them are asset-backed and AAA-rated. Eastern Europe has been of concern, Flint said, but the proportion of HSBC's business coming from the region was not significant and the risks involved are very low. He said the bank started to reduce risks in 2007 and is doing well in Britain. After Sandy Flockhart, chief executive of HSBC's Asian unit, sought to soothe local investors' fears last week, Flint said HSBC will not forget small investors. He said the bank is confident that the rights issue will gain the support of investors. Flint said he has not heard that Beijing had forbidden mainland banks from acting as sub-underwriters for the rights issue. He said HSBC has not sought help from the central government. He added that the unusual drop in HSBC's shares last Monday was due to some "technical trades" and the bank was not affected.

The Hong Kong Center for Food Safety (CFS) is closely monitoring the situation about the recall of chicken drink products in the United States, a spokesman for CFS said Sunday. The US authorities are recalling chicken drink products as they do not meet poultry products inspection or poultry exemption requirements in the United States. The authorities classified this as a Class II recall in which there is a remote probability of adverse health consequences from the use of the product, he said. "The CFS has contacted the local importer and understands that the products being recalled in the United States carry different batch numbers from the products currently available in Hong Kong. The Center is closely monitoring the situation and will liaise closely with the US authorities for more information," the spokesman added.

The operator of ferry services between Discovery Bay and Central has applied to renew its licence - due on April 30 - even though its application for a fare rise is still hanging in the air. The news is a relief to some Discovery Bay residents, who feared Hong Kong Resort International, the developer and owner of the ferry operator, might contract out the service if the application was rejected. A source close to HKR International (SEHK: 0480) said that although the residential development's deed of mutual covenant stipulated that the developer must provide ferry services, it did not specify whether or not the services could be outsourced. Discovery Bay Transportation Services applied in December to cut the number of sailings by 33 on weekdays and raise the price of 50-trip tickets from HK$23.20 per trip to HK$29.60. It said the company had run up a deficit of HK$120 million over the past eight years due to falling patronage and rising fuel costs. Islands district councillor Amy Yung Wing-sheung said the operator's application for renewal of its licence showed the ferry business was not as bad as it had claimed. "Oil prices have come down from US$140 a barrel last July to below US$40 lately," she said. "Even if some ferry passengers have switched to buses, they shouldn't have suffered much loss as they own the bus services as well." The cost of the marine light diesel used in ferries had dropped from more than HK$9 a litre last July to HK$3.20 in March. Ms Yung said the passenger liaison group of Discovery Bay would not accept any fare rise and reduction in services unless they were given sufficient information. If the government allowed a fare rise without further consultation, she said the group would lobby other residents of outlying islands to join a protest much bigger than the one staged in November with 1,200 participants. However, time is ticking away for the government because the Transport Department is supposed to give notice to the service provider of its decision on the application at least a month before the licence expires, and this deadline is two weeks away. At a meeting between the residents and the Transport Department last month, chief transport officer Kenneth Mok Ying-kit said the operator had proposed running more monohull ferries instead of catamarans to cut costs. But he said the department was concerned whether the smaller monohulls could cope with the morning peak-hour demand. The operator has already cut five trips a day since December as a temporary cost-saving measure, saying it can no longer afford the vessels' repair and maintenance costs.

Students protesting against the internship scheme march to the Central Government Offices. About 300 university students and activists marched to the Central Government Offices yesterday to protest against the government-subsidised internship programme that aims to relieve unemployment pressure. Waving banners and chanting slogans such as "internships are only temporary jobs" and "graduates are abused", the protesters said they were upset by the scheme, which will require employers to offer wages of no less than HK$4,000 a month. "We think such a move will affect the employment market by sending out a wrong message," said Li Yiu-kee, secretary general of the Hong Kong Federation of Students. "If university graduates can get a minimum wage of HK$4,000, what about sub-degree and secondary school graduates? The government is not helping the graduates but is making us suffer." He said university graduates on average earned HK$8,000 a month during the severe acute respiratory syndrome outbreak in 2003, when the job market was severely hit. The scheme, announced in the budget last month by Financial Secretary John Tsang Chun-wah, aims to offer 4,000 internship opportunities - 3,000 in Hong Kong and 1,000 in Beijing, Shanghai, Shenzhen, Chengdu and Guangzhou - for graduates this year. Launching in August, it will provide a monthly subsidy of HK$2,000 to Hong Kong employers for every intern they hire. Those working on the mainland will get HK$3,000, plus an allowance of up to HK$1,500 if their employers are unable to provide accommodation. Instead of giving out subsidies to encourage companies to hire, Mr Li said the government should spend the money creating jobs.

"Long Hair" Leung Kwok-hung is denied entry by Macau's immigration authorities. He was one of five, from a group of 33 pan-democrats, turned away yesterday. Chief Executive Donald Tsang Yam-kuen was urged to step up the fight for the rights of Hongkongers after five members of a group of 33 pan-democrats were turned away from the former Portuguese enclave yesterday. A political observer believed the entry denial for unionist Lee Cheuk-yan and "Long Hair" Leung Kwok-hung, of the League of Social Democrats, showed Macau was worrying about social stability ahead of the Labour Day holiday on May 1. Fellow league members Tsang Kin-shing and Koo Sze-yiu, and April Fifth Action group member Lui Yuk-lin were also turned away from the casino hub. Ivan Choy Chi-keung, a political scientist at Chinese University, said the Macau authorities had reduced the number of people denied entry to pacify Hong Kong and to give Mr Tsang face. On March 5, Mr Tsang told Macau's chief executive, Edmund Ho Hau-wah, in Beijing that he was concerned about entry denials. Mr Ho then issued a statement saying the Macau government "would not make any decisions detrimental to the normal exchanges between Hong Kong and Macau".

Glare emanates from advertising signs outside Metro City. Residents complain the lights are a nuisance and wasteful. Light pollution has spread to the outskirts of the city, with hundreds of residents complaining about glare from excessive advertising lighting at a recently renovated shopping mall in Tseung Kwan O. Residents of Yan Ming Court have been doing everything they can to block the light from the signs on the Metro City shopping mall, which faces the residential block. Some have been keeping their curtains closed, and one resident has taken the extra step of placing a board next to his bed to block the light that still manages to seep through. Local politicians and representatives of the green group Friends of the Earth have received numerous complaints since September last year, when the mall placed 12 brightly lit sign boards, each measuring about five storeys, around the mall. The new fixtures replaced a collection of advertising banners that had been illuminated by spotlights. When the mall was trying to find clients to rent the boards, the lights were left on until midnight. The mall eventually decided to switch them off at 11pm, but residents still found the glare too bright and wasteful. "Some of the boards are located in places where few shoppers pass by," Sai Kung district councillor Ng Ping-yiu said. "No one would ever look up at the boards when they are walking under them. The only audience is the residents who have to live facing them." Mr Ng said complaints had been filed with the Environmental Protection Department, though little could be done because there were no laws governing such lighting. After repeated complaints, Henderson Land Development (SEHK: 0012), which owns the mall, agreed to switch off the boards at 10.30pm. It also said it would consider decreasing the intensity of the light, though no changes have been made. Mr Ng said he was worried that other malls in the district might adopt the mall's lighting system as competition for shoppers intensified. He said he was hoping that a system for consultations and stakeholder meetings could be set up so residents and developers would have a chance to talk whenever new signage was being planned. Cheng Sze-ling, environment affairs officer of Friends of the Earth, said the problem of light pollution was no longer restricted to developed and commercial areas such as Mong Kok or Causeway Bay; it had spread to residential areas in new towns. "Light pollution is no longer endemic but has evolved into an infectious disease across the city," she said. The group would organise a seminar for local politicians to help them understand light pollution and ways of handling it, she said. It would also publish a guide on the subject. In response to press inquiries, a spokeswoman for Henderson Land Development said the company had studied dimming the glare by cutting the number of lights and would follow up on the findings shortly. A spokesman for the Environmental Protection Department said the department had received eight complaints regarding light nuisances relating to Metro City mall. He said officials had been sent to the scene and had spoken to the mall's owner to minimise nuisances. "We have encouraged them to adhere to this arrangement and to consider using lamps that were less bright," he said.

Veteran banker Raymond Or says mainland lenders may consider taking over Hong Kong banks as a way of expanding their business here. An increase in bank mergers and acquisitions is on the cards as smaller lenders struggle to compete with their bigger rivals as a result of the economic downturn and a tougher regulatory environment, according to outgoing Hang Seng Bank (SEHK: 0011, announcements, news) chief executive Raymond Or Ching-fai. The veteran banker, who has witnessed events within the industry for 37 years, said the current global financial crisis was the most severe he had ever seen. "Mainland lenders may consider taking over Hong Kong banks as a way to expand their business here and we will see more mergers and acquisitions in the local banking sector in the next few years," Mr Or said. Although most of the mainland's big lenders already had a presence in Hong Kong, some could be keen to expand their scale while second-tier joint-stock mainland banks would also like to establish their presence in the city by way of acquisitions. Helping to fuel this takeover trend, added Mr Or, was the fact that acquisition prices had fallen dramatically since the outbreak of the crisis and the collapse of Lehman Brothers in September last year. "I believe an acquisition pitched at about 1.5 times book value should now be a sensible price tag," he said. During the height of the consolidation phase in Hong Kong in 2001, Singapore-based DBS Bank paid 3.18 times book value to take over Dao Heng Bank and China Merchants Bank (SEHK: 3968) last year bought Wing Lung Bank, a family-owned lender in Hong Kong, for about three times book value. A tougher regulatory environment would also make it harder for small players, Mr Or said. The Hong Kong Monetary Authority has asked banks to submit proposals this month to separate their commercial banking and securities businesses, which will add new operational burdens on banks. The stipulation comes in the wake of the massive losses borne by investors in Lehman minibonds that were distributed by the banking sector and complaints from investors that they were misled by bank staff about the risk attached to the bonds. Among the proposals now being considered by regulators is that banks use different premises and staff to clearly separate their deposit-taking business from investment product sales. But Mr Or opposed the move and said if such a regulation was introduced, it would be difficult for banks, particularly the small ones, to conduct wealth management services. "It will also be an inconvenience to investors if they cannot handle their investment and banking services together," he said. "This is not good for Hong Kong as an international financial centre." The veteran banker said he expected Hong Kong would take a longer time to recover from the economic downturn as there were many "unprecedented" challenges for which there were no track records for reference. Mr Or, who is a general manager at HSBC (SEHK: 0005, announcements, news) and had been seconded to Hang Seng Bank since 2005, will retire as vice-chairman and chief executive of Hang Seng after the bank's annual general meeting in May. "I will rest and play golf for at least six months after my retirement. If I find it painful not to be working, then I may reconsider my way forward six months later," he said.

SBC shareholders are divided over their bank's mega rights issue but Thursday's vote is tipped to give management the approval to proceed with the fresh capital raising.

A bilingual guide on what wines to drink with which Chinese foods will soon be available for local diners. "White wine doesn't always have to go with white meat, nor do reds normally blend with red meats," Asia Wine Service & Education Centre chief operating officer Thomas Rooch said. Rooch, who worked as head of food and beverage for different hotels around the world including The Peninsula in 2007, said most Chinese dishes go well with dry red wines made from pinot noir grapes instead of those made in warmer climates. "For instance, dim sum goes nicely with a light aromatic wine but not with one with high alcohol such as the riesling white wines or the Austrian gruener veltliner. Less sweet dishes match with the fruity chardonnay white wines." He said traditional Chinese foods such as salty rice dumplings eaten during the Tuen Ng Festival should be matched with Champagne and sweeter dumplings with less sweet wine. "Steamed pot rice, which has soya sauce, can go with a fruity white chardonnay. The expatriate's Chinese dish of sweet and sour pork can be matched with a Beaujolais red," Rooch said, adding it may not be a good idea to have wine with hot and spicy dishes. Also in Rooch's guide are 10 recommended wines to drink during typhoons, another 10 to have on a junk trip and 10 when sitting on the balcony after work. He also recommends good places in the territory for wines, as well as the wines available in the market. Having realized the controversy that followed the publication of the Michelin Guide, Rooch said his booklet will be a unique wine guide for Hong Kong. Rooch grew up in Taiwan, studied at a Chinese high school and ate congee with preserved salty eggs. He will write the Chinese part of the guidebook himself. "We want to expand the wine market in Hong Kong. It should not be something snobbish, but accessible. "Wine books in the market now seem to target the elitists," WAH network publisher Richard Cook said. WAH - which stands for wine and happiness - is a publishing platform for the wine community in Hong Kong.

Taiwan has taken another step toward lifting a ban on casinos by deciding just two resorts will be licensed for gambling in the industry's first throw. The ruling Kuomintang pushed through a controversial bill in parliament in January to lift the casino ban despite fears it could lead to more crime and damage morals. The bill allows offshore islands to build casinos if they are approved by residents in referendums. Developers who win a license must build a hotel with a minimum of 1,000 rooms, the China Times reported. A third license is not expected for 10 years after the second casino resort is ready to avoid competition and reduce possible social impacts. Officials say it may take a year for government agencies to amend existing law and complete investment requirements and screening procedures. British developer AMZ Holdings and Taiwan's Penghu Bay Development have been preparing land for casino projects in Penghu, the archipelago in the middle of the Taiwan Strait. Authorities hope to attract half a million tourists each year, generating NT$100 billion (HK$22.5 billion) in gambling and tourism and creating up to 50,000 jobs. Taiwan, meanwhile, is preparing to host the biggest group of mainland tourists to visit the island since the opening of direct transport links last year. The 1,600-strong group - all employees of American direct-selling agent Amway - left Shanghai by sea and is due to arrive in Keelung today. Amway plans to organize eight more tours.

China: China may have lost more than US$80 billion of its foreign exchange reserves after buying into equities just before world markets collapsed last year, the Financial Times said on Monday. The poorly-timed investments were carried out by the State Administration of Foreign Exchange (Safe), the manager of the nation’s nearly US$2 trillion of reserves, the newspaper said. “Safe has built up one of the largest US equity portfolios of any foreign government entity investing abroad, including the major sovereign wealth funds,” Brad Setser, an economist at the Council on Foreign Relations, a US-based think tank, told the paper. “It appears Safe began diversifying into equities early in 2007 and, rather than being deterred by the subprime crisis, it continued to buy.” The report comes after Premier Wen Jiabao said last week he was “a little bit worried” about the fate of his nation’s huge investments in the United States. Any estimate of Safe’s investment portfolio has a large margin of error, since it does not tell the public where it puts its money. However, according to Mr Setser’s calculations, mainland has lost over US$80 billion on holdings of about US$160 billion in overseas equities. Beijing’s decision to diversify into equities came after growing criticism that it was not getting enough out of its traditional method of parking its forex reserves mainly in safe but low-yielding US Treasury bonds. In another bid to diversify, mainland in 2007 set up a sovereign wealth fund, the China Investment Corporation, charged with managing US$200 billion of the nation’s forex reserves. That corporation’s investment also have now come across as being badly timed, with huge losses sustained on a number of high-profile transactions, including shares in troubled financial giants Morgan Stanley and Blackstone.

The finance ministers of the Big Four emerging nations - Brazil, Russia, India and China - called at the weekend for urgent action to boost their voice and representation at the IMF, as they met on the sidelines of a Group of 20 meeting of industrialized and developing countries in England. The ministers urged action to better reflect their fast-rising economies' "real economic weights" and said a significant realignment of International Monetary Fund quotas should be completed "no later than January 2011". They said the economic crisis had led to "a massive withdrawal of private capital" this year that would likely continue next year. The four countries called on multilateral financial institutions to expand their lending to offset that significant decline. Brazil's finance minister Guido Mantega also said the four would contribute no extra money to the IMF until they had bolstered their voting power at the agency. "We will only agree to increase capital to the IMF after the reform of the quotas is carried out because there is still an imbalance in our participation in the IMF," he said. In April last year, the IMF approved an overhaul of its governance structure, boosting the quotas and voting shares of underrepresented member countries such as China. The G20 pledged at the weekend to bolster lending for emerging economies hit hard by the global financial crisis, but officials are still wrangling over how much money is needed, who will pay and how. The thorniest issue is new money for the IMF, which has said it needs an extra US$250 billion to double its reserves to help countries needing emergency loans. The agency looks set to get that, given signals from its biggest shareholders in Europe, the United States and Japan. But collecting money from the IMF's largest members sidesteps the tricky political issue of giving emerging market economies a greater say in IMF affairs. A European source said that Asian emerging countries were reluctant to lend to the IMF following the region's financial crisis in the 1990s. Some Asian countries, scarred by tough IMF terms on loans during the 1997-98 Asian financial crisis, would prefer instead to increase funds to regional development banks, notably the Asian Development Bank. The G20 finance ministers pledged at their meeting to triple the ADB's capital. The emerging countries say if they are to be expected to put money on the table, they should be given more power - or a bigger quota - on the board of the IMF. And US Secretary of the Treasury Timothy Geithner has muddied the water further, saying an additional US$500 billion was needed. "My forecast was that we needed to double our resources," IMF managing director Dominique Strauss-Kahn said. "It may go even further. Tim Geithner suggested US$500 billion. That might take time to reach, so doubling is the first priority. "But if more is needed later, I'm sure more will be provided."

New-born Siberian tigers are seen at a Siberian tiger artificial propagation center in Harbin, capital of northeast China's Heilongjiang Province, March 15, 2009. Three baby Siberian tigers are artificially fed now as their mother is lack of milk after giving birth.

China's advertisement sector generated 189.96 billion yuan (27.78 billion U.S. dollars) of revenue in 2008, up 9.11 percent over the previous year, China's State Administration for Industry and Commerce (SAIC) said Sunday. The revenue from TV commercials reached 50.15 billion yuan, an increase of 13.22 percent over the previous year. It accounted for26.4 percent of the total, the largest share of the market. Income from newspaper advertisements rose 6.36 percent from a year ago to 34.27 billion yuan in 2008. The number of foreign-funded advertisement companies in China soared 27.73 percent from the previous year to 737 by the end of 2008, which accounted for 0.4 percent of the total advertisement firms across the country, according to the SAIC.

A model performs at a fashion show during a VIP reception of Fashion Shanghai 2009, held in east China's Shanghai, March 10, 2009. The 3-day Fashion Shanghai 2009 Exposition started on Tuesday.

China investigated 56,634 trademark infringement cases in 2008, up 12.55 percent from the previous year. Statistics released by the State Administration for Industry and Commerce (SAIC) on Sunday revealed that these include 45,492 domestic cases and 11,142 foreign-related ones, up 13.74 percent and 7.97 percent, respectively. Fines from the cases reached 467 million yuan (68.3 million U.S. dollars), up 11.92 percent from the previous year, while 137 trademark-related criminal cases and 145 suspects were handed over to judicial organs, according to the SAIC. Specifically, industry and commerce authorities across the country handled 5,858 cases infringing the trademark rights of Olympic symbols last year. These cases involved 34.84 million yuan (5.09 million U.S. dollars) in value, with a total fine of 29.76 million yuan.

East Star, one of China's private airlines, was ordered to suspend flights as of Sunday because of prolonged financial and management problems, said the local government. The order was issued by the General Administration of Civil Aviation of China (CAAC)'s branch in charge of the country's central and southern areas after the government of Wuhan City, capital of Hubei Province, submitted an application for the suspension, the municipal government said in a statement. Because of East Star's unpaid debts and weak management, the city government applied to suspend the company's business "in an effort to safeguard the security of people's lives and assets", the statement read. The airliner had failed to pay due plane rental fees to GE Commercial Aviation Services (GECAS), forcing the American firm to seek help from the local government and start legal actions, the municipal traffic committee told Xinhua. Aviation authorities were arranging other carriers to help transport passengers holding East Star tickets. East Star, based in Wuhan, flew its first flight on May 19, 2006 and operated about 20 domestic passenger routes. It held about 10 percent of the market share in Wuhan. China National Aviation Holding Company, the parent firm of AirChina, was considering buying East Star, which could help its competitiveness in the central part of the country against major rivals China Southern and China Eastern, who have market share of 40 percent and 20 percent, respectively, in the city. However, East Star has not made any positive response to the purchasing bid so far. The city government has set up a team to deal with the flight suspension and purchase affairs.

China Resources Snow Breweries (Snow), China's largest brewery by output volume, said it has made an offer to acquire Shandong-based Amber Breweries (Amber) for 285 million yuan ($41.67 million) to enhance its presence in China's East Shandong market dominated by Tsingtao beer. The proposed acquisition calls for the setting up of a joint venture in which Snow will own a 90 percent interest. The remaining portion will be owned by Amber. According to the draft agreement, Snow will acquire Amber's stake in the joint venture in three years. Snow said that after the acquisition, it will inject 54 million yuan in fresh capital to upgrade Amber's production facilities to raise annual output to 300,000 kiloliter from 270,000 kiloliter. Shandong is one of China's largest beer consumption provinces. Tsingtao Beer, the nation's second largest brewery, has a stranglehold of more than 40 percent share of the market.

The mainland's first luxury train service, Tangula Luxury Trains, has postponed the launch of its service to Tibet and Yunnan province from April to spring next year, citing the global financial crisis as the reason. The situation in Tibet was not noted as a reason for the delay. The delay has resulted in about US$2 million of advance bookings being forfeited, a Tangula spokeswoman said. "We had several private charters on our books, which we had to forgo. A number of individual bookings have also been affected. We offered our clients the opportunity to reschedule their bookings, but some of them have decided to cancel," she said. Tangula is the first foreign-invested passenger train service in China, with Hong Kong-listed tourism firm Wing On Travel as a key shareholder in the company. "The financial crisis has had an impact on the level of bookings, as experienced by all sectors across the travel industry. We expect the global financial climate to improve although the recovery may be gradual," the spokeswoman said. The change of the official launch was a "very recent decision" taken earlier this month, she said. "I don't think it has anything to do with the Tibetan unrest. This is a business decision." Tibet is the subject of a security clampdown by the mainland authorities, with foreign visitors and journalists facing security checks. This is the second time the luxury train service has been postponed. The service was earlier held over from September 2008 to April this year. The reason for the previous postponement was the political instability in Tibet and the suspension of entry visas for foreign tourists, according to a Wing On interim report last year. Wing On owns a majority stake in Tangula Group, which manages the train service through Tangula Railtours, its joint venture with the Qinghai-Tibet Railway Corp, a Chinese state-owned firm. In December 2003, when Tangula Group presented its proposal for a luxury train business to Premier Wen Jiabao, he said the project was "good for China" and volunteered to be the first passenger, the spokeswoman said. To date, US$100 million has been invested in this project. Tangula offers two routes, one between Beijing and Yunnan province, and one between Beijing and Tibet which traverses the world's highest railway in Tibet. Prices range from US$3,300 to US$5,500 per person, depending on the route and season. It expects about 270 departures per year with three trains, each train containing 48 suites that can accommodate 96 guests. This translates to a capacity of 13,000 bookings a year. The company is targeting luxury travellers including wealthy Chinese, the spokeswoman said. "We look at Tangula as a long-term investment, so break even may take a while. Nonetheless, our luxury trains ultimately will be very profitable." Kempinski Hotels, a German hotel group, manages the hospitality sector of the service, she said.

Defective mobile phones and poor after-sales service were the main gripe for irate customers last year, accounting for one in 10 complaints to the government's consumer watchdog, state media reported yesterday. The mainland marked World Consumer Rights Day with acres of newsprint and a dedicated television show yesterday, a sign of growing awareness of quality issues and service standards in a country where "buyer beware" has been the traditional mantra. Figures released by the State Administration For Industry and Commerce showed that it received more than 780,000 complaints last year, up 2.6 per cent on the previous year, China Central Television reported. Complaints about mobile phones made up roughly 10 per cent of the gripes, followed by complaints about clothing, shoes and telecoms services. CCTV broadcast an extended show on consumer rights issues, focusing on key consumer grievances including unsolicited mass-marketing text messages and telesales scams. The show featured a succession of cautionary tales of how unsuspecting consumers had fallen victim to unscrupulous sales tactics and products that failed to live up to their inflated advertising claims. One such victim, identified only as Mr Jiang from Hunan, had been duped into paying 2,300 yuan (HK$2,600) for what he thought was to be a commemorative Beijing Olympics mobile phone with a 20-carat gold case. However, when the phone was delivered last month, Mr Jiang discovered "not only was it not made of gold, it wasn't even gold-coloured". Lengthy direct-marketing adverts are now common on mainland television channels, particularly late at night. World Consumer Rights Day has been celebrated since 1983, and is championed by the organisation, Consumers International. The movement for improved consumer rights has its roots in the late US president John F Kennedy's declaration in 1962 of four basic principles: the right to safety, the right to be informed, the right to choose and the right to be heard.

US President Barack Obama said on Saturday that China could have "absolute confidence" in the American economy, after Beijing pointedly questioned the safety of its huge haul of US government debt. Mr Obama was addressing comments by Premier Wen Jiabao on Friday, which represented a rare assessment by Beijing of the health of the US economy and the prospects for China's hundreds of billions of dollars in US Treasury bonds. "Not just the Chinese government, but every investor can have absolute confidence in the soundness of investments in the United States," Mr Obama said after meeting Brazilian President Luiz Inacio "Lula" da Silva at the White House. "There is a reason why even in the midst of this economic crisis you have seen actual increases in investment flows here in the US," he said. "I think it is a recognition that the stability not only of our economic system but also our political system is extraordinary." He said his comments were applicable to both US Treasury instruments and investments in the US private and industrial sectors. Mr Wen said in Beijing on Friday that he was concerned about China's huge stake in the United States' economy as it endures the worst crisis in generations. "We have lent huge amounts of money to the United States. Of course we are concerned about the safety of our assets," Mr Wen said. "To be honest, I am a little bit worried and I would like to ... call on the United States to honour its word and remain a credible nation and ensure the safety of Chinese assets." His comments caused a stir in global markets, and were the latest disturbance to the critical Sino-US relationship early in Mr Obama's administration. Beijing held US$727.4 billion in US Treasury bonds at the end of last year, just ahead of Japan, the holder of US$626 billion worth of bonds, according to US government data. As the largest creditor to the United States, China is "extremely interested in developments in the US economy", Mr Wen said. Analysts said a loss of confidence in US Treasury securities could cause a dramatic drop in the dollar and force Washington to pay higher interest rates. Most of China's foreign exchange reserves, which reached US$1.95 trillion by the end of last year, are believed to be in US dollars. White House spokesman Robert Gibbs said on Friday that "there's no safer investment in the world than in the United States". Beijing is reportedly concerned about the huge amount of borrowed money, including Mr Obama's nearly US$800 billion stimulus package, aimed at boosting US growth. Concerns are increasing in China that the stimulus plan could hurt dollar-denominated assets, with some observers urging China to cut US Treasury holdings, Xinhua said last month. Domestic critics have charged that, as a developing country, China should be investing at home instead of subsidising the world's richest country, or else diversifying into other foreign assets.

The Chongqing municipal government plans to spend 20 billion yuan (HK$22.68 billion) adding three runways over the next 11 years to increase the annual passenger capacity of the city's Jiangbei international airport almost sixfold to 60 million, according to vice-mayor Huang Qifan. The expansion plan comes as southwest China's largest city seeks to increase the pace of industrialisation and urbanisation and expects growth in international traffic to soar after declining in the second half of last year because of the global economic slowdown. "The Civil Aviation Administration of China's positioning for us is that we will have an annual passenger throughput capacity of 25 million just after 2012, between 30 million and 40 million by 2015 and 60 million by 2020," Mr Huang told a business luncheon last week. The 19-year-old airport's passenger throughput rose threefold in six years to 11 million last year, Mr Huang said. As it has exceeded its designed capacity of 8 million passengers, the airport is building a second runway and a third passenger terminal to raise capacity to 15 million by the end of next year. Mr Huang said a third and a fourth runway were on the drawing board and expected to be built by 2015 and 2020, respectively. The three runways and terminal expansion were estimated to cost 20 billion yuan, he said. Jiangbei was the mainland's eighthlargest airport by passenger throughput last year. The largest is Beijing Capital International Airport (SEHK: 0694), which has a capacity of 82 million passengers and handled 55.7 million last year. Capital Airports Holding, the parent of Hong Kong-listed Beijing Capital International Airport, owns and operates Jiangbei airport. Mr Huang expected Jiangbei to become the sixth-busiest mainland airport by 2012. In first two months of this year, its overall throughput grew 16 per cent, the mainland's fastest rate, he said. The airport is less exposed to the overseas economic turmoil, as its traffic is mainly domestic. Mainland air passenger throughput grew 17.6 per cent year on year in January to 17.47 million passengers, according to the CAAC. Domestic passenger traffic increased 13.47 per cent last month, but international volume dropped 20.06 per cent, CAAC director-general Li Jiaxiang said last week. Meanwhile, Mr Huang said the Chongqing government was pushing for the establishment of private equity funds with total capital of 30 billion yuan to 50 billion yuan. Etech Securities is setting up a fund that aims to raise 5 billion yuan, of which 2 billion yuan will be from overseas investors, 1 billion yuan from Chongqing investors and the remainder from other mainland sources. Three other private equity funds, capitalised at 2 billion yuan to 3 billion yuan, are being planned to fund technology projects. Three more funds of 4 billion yuan to 5 billion yuan each would be launched in the first half. They were led by a domestic bank, a domestic asset management firm and an overseas private equity fund, Mr Huang said, without naming them. Chongqing has also been selected by the State Council to set up the mainland's first over-the-counter stock market. "The China Securities Regulatory Commission is coming up with the implementation plan ... the market's establishment may be realised next year," Mr Huang said.

China, which triggered the biggest commodity price spike in a generation, is now making deals that could prevent another surge in the coming decade by helping finance new production during the low ebb of the cycle. While the deepening global recession has focused traders on trying to pick a bottom to the current price collapse, more far-sighted analysts have already begun ringing alarm bells over the canceled investments and delayed projects that threaten to leave the world short of raw materials once growth resumes.

China and other countries have called for closer cooperation and better coordination on implementing policies aimed at taming the global economic crisis. At a Group of 20 finance ministers meeting in Britain, China warned strongly against protectionism. Beijing also urged other participants to strengthen supervision over rating agencies, Xinhua News Agency reported, citing an accord signed by Brazil, Russia, India and China - commonly referred together as BRIC. BRIC said it is important that countries that print major reserve currencies accelerate the pace of sharing information and coordinate policy with other nations. The agreement said it is vital to narrow the gap between the increasingly global reach of financial institutions and the influence of rating agencies. It advocated better regulation of rating agencies around the world. BRIC also said all forms of protectionism should be avoided. Finance Minister Xie Xuren called for further cooperation at the macro-policy level to tackle the global crisis and strongly urged efforts against protectionism, Xinhua reported. Xie said an open, fair and orderly international financial system should be established and efforts should be made to speed up reform in the governance of international financial institutions. China's central bank governor Zhou Xiaochuan emphasized the importance of improving international financial supervision and cooperation, and called for strengthening the supervision of important financial institutions and rating agencies. The BRIC countries agreement calls for a timetable for International Monetary Fund reforms, including adding more voices from developing countries, according to Xinhua. The agreement also said the International Financial Reporting Standards should hear more views from emerging economies.

Mar 16, 2009

Hong Kong: Hong Kong was lagging behind in work on its connecting facilities for the cross-delta bridge linking it with Zhuhai and Macau, Director of Highways Wai Chi-sing said yesterday. But the project's designers said the delay would not hold up work on the bridge, which is expected to be completed before 2016. Speaking after a contract-signing ceremony in Zhuhai that signalled the start of design work on the 37.45 billion yuan (HK$42.53 billion) project, Mr Wai said work on building the bridge's border checkpoint northeast of Chek Lap Kok airport would not begin until the middle of next year. "Our highest aim, of course, is to finish our work at the same time as the main bridge structure, but we only learned that we needed to build a checkpoint in 2007, so we are lagging behind a bit," he said. Ove Arup & Partners, a partner of the China Highway Planning and Design Institute that won the tender for the design work, said six years was more than enough to build both the checkpoint and connecting roads into the city, such as the Tuen Mun western bypass. "It should take only about four years," said Arup director Naeem Hussain. The central government will oversee work on the main structure, which comprises a 6.75km tunnel, two artificial islands and a bridge 22.85km long. Each government will manage work on its own border checkpoints and connecting roads. Macau is expected to start constructing a building to house its and Zhuhai's border checkpoints this year. Hong Kong is still waiting for the findings, due in June, of an assessment of the environmental impact on Tung Chung residents of buildings for its border checkpoint. After that, the government will have to finish a second round of public consultation before it can move on to the detailed planning stage. The government plans to seek funding from the Legislative Council in June. Another Arup director, Daman Lee, said the other two governments would not necessarily finish their checkpoints first despite starting earlier. "Macau needs to work out a time schedule with Zhuhai and they also have plans to develop the area around the checkpoint, so there are other considerations." Zhang Xigang, of the China Highway Planning and Design Institute, said a consortium involving two other firms would carry out survey and design work simultaneously to ensure the preliminary work could be finished in nine months.

Vikas Swarup, the career diplomat and part-time author whose book spawned the award-winning film Slumdog Millionaire, had not intended to spend his first weekend in Hong Kong in a whirl of interviews, dinners and public appearances. The deputy high commissioner of India based in Pretoria, South Africa, and author of Q&A, which was rewritten and reissued as Slumdog Millionaire, had actually planned two days of relaxation in the city after a four-day Slumdog frenzy in Tokyo. The film, based on the novel, is about a teenager from the Mumbai slums who becomes a contestant on the Indian version of the game show Who Wants To Be A Millionaire? In hindsight, Mr Swarup says a couple of days seeing the sights and catching up with his oldest friend in India's foreign service, Hong Kong Consul-General L.D. Ralte, was probably never going to happen. After all, Slumdog Millionaire won eight Oscars and has taken about HK$18 million at the Hong Kong box office in just two weeks. "The flight home from Japan was via Hong Kong and I'd never been, so I thought it was a perfect time to catch up with Ralte and his wife," he said. "Then he called up and said there is no such thing as a free meal and there is a lot of interest in Hong Kong after Slumdog Millionaire, so are you prepared for a couple of interviews? Before I knew it I was being interviewed by most of Hong Kong." Hours after touching down from Japan yesterday, Mr Swarup found himself at the Hong Kong Cricket Club for 7.30pm cocktails followed by readings from his novel, questions from the floor, dinner and a book signing. The event was organised by the Forum of Indian Professionals in Hong Kong. Today, along with interviews with television networks, magazines and newspapers, Mr Swarup will be at a 2pm book signing session at Page One at Harbour City in Tsim Sha Tsui. The whirlwind trip ends when he flies back to South Africa tonight. Despite the success of the novel and the film, Mr Swarup has no intention of giving up his day job. "Lots of people are asking why I don't quit my day job and concentrate on writing," he said. "But I love my job, and take great pride in representing India at at time when India is the flavour of the world." He has no doubt he will return to Hong Kong - his next posting is Osaka, Japan.

Premier Wen Jiabao has reiterated the nation's support for Hong Kong, making four pledges to help the city overcome the financial crisis. Speaking at the end of the National People's Congress yesterday, Mr Wen stressed Beijing's commitment to help Hong Kong maintain its status as a financial centre. To do that, Mr Wen said plans had been drawn up for renminbi trade settlement in Hong Kong and would be implemented as soon as it was approved by the State Council. "For Hong Kong to tackle the financial crisis, the most important thing is to maintain its financial stability as its status as an international financial centre," the premier said. He vowed to speed up the construction of infrastructure connecting the mainland, Hong Kong and Macau, adding that work on the Hong Kong-Macau-Zhuhai bridge would start this year. Mr Wen also announced that a new supplement to the Closer Economic Partnership Arrangement would be signed this year, with initiatives to further increase Hong Kong access to the mainland's service sector. The Cepa free-trade deal has allowed tariff-free exports of hundreds of Hong Kong goods to the mainland and opened 38 mainland service sectors to city companies. The premier said Beijing would strengthen regional co-operation in the Pearl River Delta and help Guangdong, Hong Kong and Macau to make the most of their advantages. Mr Wen said Beijing was prepared to introduce measures to help Macau to diversify its economy. "Hong Kong and Macau have experience in countering the Asian financial crisis. "We fully believe that citizens in the two places are capable of tackling the financial crisis, overcoming difficulties and maintaining the cities' prosperity (SEHK: 0803, announcements, news) and stability under the leadership of the two special administrative region governments." Echoing his government work report, which the NPC passed yesterday, Mr Wen said: "The motherland will always provide strong backing to Hong Kong and Macau. We will fully support Hong Kong and Macau's economic development." Raymond Ho Chung-tai, a local delegate to the NPC, welcomed the premier's four pledges for Hong Kong, especially the introduction of renminbi trade settlement, which he said would both benefit financial services and be a big step towards the internationalisation of the currency. Another local deputy, Fei Fih, said she hoped the Hong Kong NPC delegation would do more work on Pearl River Delta co-operation. She has proposed a visit to the region to study unemployment and other economic problems at the end of this year.

The much-hyped HK$37 billion Hong Kong-Zhuhai-Macau bridge will start from a 130-hectare artificial island off the east side of the airport at Chek Lap Kok. Initial thinking was that the bridge could start from the west side of the airport, government insiders said. But then mainland experts pointed out that water flow of the Pearl River could be affected by more than the expected 10 percent if that went ahead. Also, putting the base on the east side would smooth transportation links and mesh more comfortably with the airport rail link planned between Hong Kong and Shenzhen when it came to customs and checkpoint procedures. An environmental impact assessment will soon be completed to address the consequences of landfill procedures and other concerns. Construction on the artificial island will be low rise and will not block views of Tung Chung residents. A consortium of international and local firms, led by Britain's Ove Arup & Partners Hong Kong, is now drawing up preliminary designs for the 29.6-kilometer bridge. They are expected to be ready in nine months. The bridge is slated for completion by 2015-2016. About two thirds of the cost - or HK$22 billion - will be financed by syndicated loans, with mainland institutions Bank of China, China Construction Bank, Industrial and Commercial Bank of China and China Development Bank believed to be signed on as main agents. There is also a provision that guarantees smaller financial institutions in Hong Kong and Macau a fair chance to bid as syndicates for the loan. The loans will be issued with 10- and 35-year maturities. Under the 10-year loans, a provision requires winning bidders to match their interest to market rates for the duration of the loan. There are also movers toward a temporary license scheme for drivers making cross-border trips for personal purposes. Testing of the temporary license scheme for Hong Kong drivers will take place at the Shenzhen Western Corridor. Traffic flow, excluding the temporary license scheme, is estimated to reach 60,000 vehicles and 250,000 passengers per day by 2035. Toll fees will be based on the principle "the lower the better," sources said. As to the Hong Kong-Shenzhen Airport Rail Link, the government will commission the Hong Kong Airport Authority to assess and optimize the logistics of the entire network. Hung Shui Kiu, in the vicinity of the railway and held as a development zone, will enjoy a connection to the rail network. Qianhai will also be one of the intermediate stations on the route and will offer airport check-in facilities. In addition, the Guangzhou-Shenzhen-Hong Kong Express Rail Link, with West Kowloon Station as Hong Kong's terminal, is being developed in conjunction with the other two projects. Construction is expected to begin by the end of this year and completed by 2015. Once the network is connected with mainland systems, Hong Kong to Beijing can be done in 10 hours, Shanghai in eight and Wuhan in five.

University graduates joining the government-subsidised internship programme may receive a housing allowance up to HK$1,500 per month, the Labour Department says. The allowance will be given to those taking internships on the mainland in case their employers are unable to provide accommodation. As a measure to provide jobs, the government promised to offer 4,000 internship opportunities - 3,000 in Hong Kong and 1,000 in Beijing, Shanghai, Shenzhen, Chengdu and Guangzhou - for graduates this year. Some 19,700 students are expected to graduate with bachelor's degrees in Hong Kong this year. The programme, which will be launched in August, will provide a monthly subsidy of HK$2,000 to Hong Kong employers for every intern they hire, while those working on the mainland will get HK$3,000 per month directly from the department. The department requires Hong Kong employers to offer wages at no less than HK$4,000 per month to interns. However, there is no such requirement for mainland employers. A Labour Department spokesman said it had taken the current economic situation into account in deciding the minimum wage. "In reality, we believe, most employers will make a higher offer than that," he said. The department and the universities will assess the salary, the nature of the job and training that may be provided before positions are referred to students. However, some local university unions complained that the HK$4,000 minimum wage would mislead the market. "It gives the market the wrong message that university graduates are `cheap labourers'. It's also an excuse for bosses to cut salaries for fresh graduates," said Chan Yi-ngok, student union chairman of the University of Hong Kong. The average monthly salary of university students who graduated in 2007 was more than HK$10,000. Hundreds are expected to attend a march organised by the League of Social Democrats against the minimum wage tomorrow. Wong Yuk-man, chairman of the league, said students would hold a protest at the Central Government Offices.

Pay-television operator i-Cable Communications (SEHK: 1097) was considering submitting a tender for the Hong Kong broadcasting rights to English Premier League football matches, chairman Stephen Ng Tin-hoi said after announcing a net loss for last year yesterday. The net loss of HK$110.27 million for the 12 months to December was the company's first since listing in 1999. The result compared with a net profit of HK$181.85 million a year earlier. Revenue fell 9.71 per cent to HK$2.08 billion. Loss per share amounted to 5.5 HK cents, compared with earnings per share of 9 HK cents a year earlier. The company will not pay a dividend. The results were in line with analysts' forecasts, as the company had issued a profit warning in January. I-Cable's revenues have suffered since 2007, when the company lost the exclusive rights to show English Premier League matches for three seasons to PCCW (SEHK: 0008)'s Now TV. While the number of i-Cable pay-television subscribers rose 3.97 per cent to 917,000, revenue fell 15 per cent to HK$1.35 billion. Mr Ng said the company was considering bidding later this year for the rights to the next three seasons. The league authority has yet to announce the timetable for the tender of the next contract. "Investment for the premier league rights is not cheap," Mr Ng said. "[But] we should go for it. It's worth the investment." Mr Ng said i-Cable was cash-rich, with net cash of HK$690 million by the end of last year and free cash flow of HK$150 million. The company will not need external funding if it bids for the rights later this year. PCCW was rumoured to have paid about HK$1 billion for the contract, which will end in May next year. I-Cable has already won the exclusive broadcasting rights to the UEFA Champion's League football matches from the second half of this year. At present, these air on the ESPN Star Sports channel on Now TV. The company also has the rights for the World Cup football tournament in South Africa next year and the London Olympic Games in 2012. To avoid revenue depletion from users of illegal set-top boxes, i-Cable is upgrading its transmission network this year. The new system will require subscribers to change set-top boxes. Tsuen Wan will be the first district to get the new access system. The company has also more than doubled capital expenditure this year to HK$300 million from HK$140 million last year. Hong Kong's increasing reliance on digital-television systems has also made it more difficult for illegal users to tap into pay-television networks. Losses from piracy amounted to US$20 million last year, down from US$26 million in 2007, according to a survey by the Cable & Satellite Broadcasting Association of Asia. Despite the economic downturn, i-Cable aims to increase its subscriber base to 1 million this year. Mr Ng said the firm would not lay off staff but would try to cut costs by increasing in-house production rather than using outside studios. "We hope the company will return to a small profit this year," he said. I-Cable appointed former Asia Television chief executive Ho Ting-kwan yesterday as an independent non-executive director with effect from Monday. I-Cable's shares rose 5.66 per cent yesterday to 56 HK cents.

China: The French Foreign Ministry reiterated on Friday that France does not support Tibet independence. Foreign Ministry spokesman Eric Chevallier made the remark after Chinese Premier Wen Jiabao urged France to clarify its position on Tibet-related issues. "We have absolutely not changed our position. That is, we support the territorial integrity of China and refused to accept separatism and Tibet independence," Chevallier said. Earlier on Friday, when answering a question raised by a reporter from the French newspaper Le Figaro at a press conference after the closing of the Second Session of the 11th National People's Congress in Beijing, Premier Wen urged the French side to clarify its position on Tibet-related issues to facilitate the restoration of Sino-French relations. "This serves not only the interests of both China and France, but also the interests of China and the European Union," Wen said. Sino-French relations were strained after French President Nicolas Sarkozy insisted on meeting with the Dalai Lama last December when his country held the rotating presidency of the European Union.

The Chinese prime minister, Wen Jiabao, spoke in unusually blunt terms on Friday about the “safety” of China’s $1 trillion investment in American government debt, the world’s largest such holding, and urged the Obama administration to offer assurances that the securities would maintain their value. In Beijing on Friday, Chinese military delegates arrived for the closing session of the Chinese legislature’s annual meeting. Speaking ahead of a meeting of finance ministers and bankers this weekend near London to lay the groundwork for next month’s Group of 20 summit meeting of the nations with the 20 largest economies, Mr. Wen said that he was “worried” about China’s holdings of United States Treasury bonds and other debt, and that China was watching economic developments in the United States closely. As the financial crisis has unfolded, China has become increasingly vocal about what it perceives as Washington’s mismanagement of the global economy and financial system, joining a chorus of foreign critics of unbridled American capitalism. On Thursday, for example, France and Germany rebuffed American calls to coordinate a global stimulus package at the G-20 meeting, saying financial regulation should come first. In January, Mr. Wen gave a speech criticizing what he called an “unsustainable model of development characterized by prolonged low savings and high consumption.” There was little doubt that he was referring to the United States. Mr. Wen sounded similar themes in his remarks on Friday, which came in response to questions at a news conference at the end of the Chinese Parliament’s annual session. While refraining from direct criticism of the Obama administration’s economic policies, he reminded Washington of China’s status as its largest creditor. With budget deficits mounting rapidly, the United States needs China if it is to finance all that new debt at low interest rates. “President Obama and his new government have adopted a series of measures to deal with the financial crisis. We have expectations as to the effects of these measures,” Mr. Wen said. “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” He called on the United States to “maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.” What he did not mention was that Chinese investments in the United States helped drive the debt-fueled boom of the last decade, during which China grew increasingly dependent on the American market — a point that was driven home earlier this week when China reported a record 26 percent drop in exports in February. He stopped short of any threat to reduce purchases of American bonds, much less sell any of them, underscoring the two countries’ mutual dependency. Some specialists say that China’s investment in American debt is now so vast that it would be impossible for Beijing to unload its Treasury securities without flooding the market and driving down their price. Still, it is rare for any world leader to raise questions about the safety of United States Treasuries. Both the White House and Treasury Department issued reassuring statements. Robert Gibbs, the White House press secretary, said, “There’s no safer investment in the world than in the United States.” Foreign investors would be reassured if Congress adopted the president’s budget plan, he said, because it would put “us on that path to fiscal responsibility.”

The central government had invested an unprecedented amount of manpower and resources in the cross-delta bridge given its political importance and technical complexity, project designers said. Zhang Xigang of the China Highway Planning and Design Institute, the project's lead design firm, said it was the first time it had handled a job that combined a bridge, tunnel and artificial islands. "Apart from technical challenges, the Pearl River estuary is also one of the busiest navigation channels and habitat of the Chinese white dolphin. We needed to put in our best team and technology," he said, adding that they would avoid working in the dolphin breeding season. Up to 70 engineering experts, including 15 from overseas, will participate in the bridge's preliminary work. The head of the project's advance work co-ordination group, Zhu Yonglin, said a lot of advanced technology would go into the bridge, which was being designed to last 120 years. Naeem Hussain, director and fellow of the institute's partner Ove Arup & Partners Hong Kong, said his firm would carefully control the number and dimensions of the bridge's columns to maintain current flow and minimise the work's impact on ship movements and the white dolphins. Mr Hussain said another challenge was wind speed, which could reach 95 metres a second during a typhoon - 10 times as high as on a normal day. But he said Arup had experience in tackling such challenges from its work on the Stonecutters Bridge, expected to be finished by the end of this year. The cross-delta bridge's design and survey work will begin on Sunday.

Mar 14 - 15, 2009

Hong Kong: Li Ka-shing continued his slide down the ranks of the world's billionaires this year, falling five places to 16th, but fellow tycoon Stanley Ho Hung-sun positively plummeted 588 places down Forbes magazine's annual list, to joint last. Five Hong Kong residents left the ranks of the billionaires altogether, leaving the city with just 21 - the same number as India. Hong Kong's super-rich weren't the only ones hit by the global economic downturn: worldwide, 355 on last year's list of US dollar billionaires have dropped off, and the 755 survivors saw their total wealth fall by US$1.4 trillion, to US$2.4 trillion. Thirty-eight people broke into the billionaire bracket, for a total of 793. Forbes released its list of Hong Kong's richest 40 people last month, but not their world rankings. Mr Li, 80, saw his wealth drop from US$26.5 billion to US$16.2 billion, making him Asia's third-richest man. Second in Hong Kong were the Kwok family behind Sun Hung Kai Properties (SEHK: 0016), who fell nine places, to 32nd. Next came Lee Shau-kee, of Henderson Land Development (SEHK: 0012), who fell 14 places, to 43rd. Robert Kuok, of the Kuok Group - controlling shareholder of SCMP Group, publisher of the South China Morning Post (SEHK: 0583, announcements, news) - rose from 97th to 62nd, despite seeing his wealth shrink by US$2 billion, Forbes said. The net worth of Tsai Eng-meng, who recently invested in Hong Kong broadcaster Asia Television, rose by US$1 billion, to US$2.6 billion, making him the 246th-richest in the world. Mr Tsai heads food producer Want Want China Holdings. Microsoft co-founder Bill Gates regained the top spot despite seeing his fortune shrivel to US$40 billion, a drop of US$18 billion. He traded places with Berkshire Hathaway titan Warren Buffett. Forbes devoted particular attention to the rapid rise and fall of mainland entrepreneurs. Having had none in 2003, by last year it boasted 42 people in the 10-digit wealth bracket. Yet, like other emerging markets, the mainland saw a big drop in wealth this year; only in Turkey, India, Russia and the US did more billionaires lose their status. The mainland is left with 30, but five are newly minted and Forbes is bullish about its prospects.

Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) will suspend its controversial 10-minute closing auction after huge swings in the price of high-profile stocks raised suspicions of trading abuse. The suspension takes effect on March 23. It follows uproar over a plunge in HSBC (SEHK: 0005, announcements, news) 's share price during the auction on Monday that contributed to the banking giant losing 24.14 per cent - HK$127 billion - of its market value that day. "The HKEx is concerned about the appearance of abuse during the closing auction session," said its chief executive, Paul Chow Man-yiu, after a board meeting last night. "There is a need to maintain public confidence in the orderliness and fairness of the market in light of recent price volatility during the session." He denied the move was made only in response to the HSBC share-price slump, even though the suspension coincides with the start of a period in which HSBC shareholders who do not want to subscribe to a rights issue can sell those rights in the market. HSBC rights will be traded from March 23 to 31. The suspension of the auction is subject to Securities and Futures Commission approval. If it goes through, the stock market will go back to its traditional 4pm close; futures markets will close at 4.15pm. The 10-minute closing auction was introduced in May to bring Hong Kong into line with international practice. Unlike normal trading sessions that continuously match orders, it allows traders to tender for shares, with the biggest tender determining a stock's closing price. Since its launch, brokers have complained about swings in stock prices of up to 30 per cent during the auction. As a stop-gap measure, the exchange last week said it would cap price swings at 2 per cent from June 22. But after what happened to HSBC's stock, the exchange yesterday decided to suspend the system entirely. The SFC has begun investigating whether market manipulation was behind a single, massive sell order made during the last few seconds of the auction on Monday that was responsible for almost half the one-day fall in the stock's price. Permanent Secretary for Financial Services and the Treasury Au King-chi said the government supported the suspension of the auction. She said she had discussed concerns about auction volatility with HKEx and the SFC. "The UK needed several years to develop the closing auction system and it is worthwhile for HKEx to suspend the system and think of a better way to develop it over the long term," Miss Au said. Mr Chow said the government had not put pressure on HKEx to suspend the auction, but did say: "We felt the pressure from the public." HSBC is among the most widely held shares in Hong Kong. Mr Chow said the HKEx board had no timetable for bringing back the auction. The exchange would consider how to deliver a system the market could accept. Shareholder rights activist and former HKEx director David Webb said most modern markets had a closing auction, but most had random closing times, not a fixed one. "Closing auctions are an important source of liquidity," he said. Legislator Chim Pui-chung said the exchange should scrap the auction system entirely.

Hong Kong and Macau banks will have the opportunity to take part in the financing of a bridge linking the two cities with Zhuhai under the financing framework scheduled to be announced later this month. Engineers from Hong Kong will also take part in the preliminary design for the cross-delta bridge because a Hong Kong engineering consultancy firm that forged a partnership with a mainland design institute had been chosen for the job. The governments of Hong Kong, Macau and Guangdong will name a bank later this month to lead a consortium for financing the 22 billion yuan (HK$25 billion) loan for the construction of the 29.6km bridge. A Hong Kong government source said the bank spearheading the consortium was required to provide a level playing field for banks from Hong Kong and Macau to take part in the financing. The consortium will provide a 35-year long-term loan and 10-year short-term loan for the project, which is expected to be completed in 2015-16. Representatives of the three sides in the bridge's advance work co-ordination group are to attend a contract-signing ceremony in Zhuhai today for the start of the preliminary design for the bridge, which will cost a total of 37.5 billion yuan. China Highway Planning and Design Institute, which forged a partnership with Ove Arup & Partners Hong Kong, has won the tender for the preliminary work, due to be completed in nine months. An environmental impact assessment of the checkpoint facilities on reclaimed land of about 130 hectares to the northeast of Chek Lap Kok airport is to be completed in June. The source said the construction of the Guangzhou-Shenzhen-Hong Kong express rail link was expected to start by the end of the year. The Hong Kong section of the link is expected to be completed in 2014-15, but the Hong Kong government is aiming at 2014. Customs facilities will be built in Qianhai, Shenzhen, on the rail link connecting the two airports. Premier Wen Jiabao said in the annual government work report delivered last week that the central government would speed up the construction of cross-border infrastructure such as the Hong Kong-Macau-Zhuhai bridge, the rail link between Hong Kong and Shenzhen airports and the Guangzhou-Shenzhen-Hong Kong express rail link.

The Chinachem Charitable Foundation may change its position concerning two men who allegedly saw a will that gave tycoon Nina Wang Kung Yu-sum's massive estate to a fung shui master, a court was told yesterday. Lawyers for the billionaire's foundation said they would amend their case concerning evidence from solicitor Winfield Wong Wing-cheung and Chinachem sales executive Ng Shung-mo. They did not reveal details at the Court of First Instance hearing. Mr Wong and Mr Ng were expected to supply key evidence to determine whether Chinachem or Tony Chan Chun-chuen was the rightful heir to Wang's fortune, estimated to be as much as HK$100 billion. Mr Wong's lawyers argued that the pair had been present when Wang signed a 2006 will that left her money to Mr Chan, cancelling an earlier will that left her estate to the foundation. Chinachem claimed that Wang had been so ill that she could not have been mentally capable of switching her estate's beneficiary before she died in 2007. Mr Justice Johnson Lam Man-hon agreed to extend by one week the deadline for Chinachem to supply Mr Chan's legal team with medical experts' reports. No more extensions would be allowed, he said. The fung shui master's lawyers had fought the move, saying it would leave them only six weeks to prepare a response to the medical evidence before a trial scheduled to begin on May 11.

Pop star Edison Chen Koon-hei, who is at the centre of a sex-photos scandal, will make a scheduled promotional visit to Singapore next month, despite a threatening letter containing a 9mm round being received by Cable TV on Wednesday and another being received by Apple Daily publisher Next Media (SEHK: 0282) yesterday. Peter Lam Kin-ngok, the head of Media Asia, said yesterday the beleaguered star did not deserve death threats and would definitely attend publicity events for the movie The Sniper. It is Chen's first film since the celebrity sex-photos scandal broke early last year. The film, produced by Media Asia, will open in Hong Kong on April 9 and Southeast Asia around the same time. The date of Chen's promotional visit to Singapore has yet to be finalised, and there are no plans for him to promote the movie in Hong Kong. "We never thought of having [Chen] promote the film in Hong Kong," said Mr Lam, adding that Chen's continued absence from the city had nothing to do with the threat, but was Chen's preference. A threatening letter, which contained a 9mm cartridge, was sent to Cable TV on Wednesday. The letter said it was a "final warning" for Chen and told him not to make any public appearances after April 4 or his life would be at risk.

Swire Pacific (SEHK: 0019) will spend HK$13 billion in the next five years to expand its investment property portfolio by 50 per cent after reporting a 77.5 per cent drop in net profit last year. The blue-chip conglomerate yesterday announced a net profit of HK$5.9 billion for the year to December due to a HK$3.55 billion loss from Cathay Pacific Airways (SEHK: 0293) and a 99.08 per cent decline in revaluation gain on investment properties to HK$177 million. On Wednesday, Cathay, of which Swire owns 40 per cent, reported a record loss of HK$8.56 billion for last year. Although Swire's profit beat the median estimate of HK$3.85 billion from 15 analysts polled by Thomson Reuters, it was the smallest since 2003 when it reported a HK$4.92 billion profit. Excluding the revaluation gain on the investment properties, Swire's underlying profit fell 48.52 per cent to HK$5.29 billion from a year earlier, despite a disposal gain of HK$1.71 billion from the sale of its stake in the Swire Sita waste management business. The group proposed to cut the final dividend 36.48 per cent to HK$1.48 per share. "There is no question that the picture of aviation at the moment does not look good. Falling demand and falling yield in Cathay will affect the group's results this year," said chairman Christopher Pratt. However, he said other core businesses such as property and Swire Pacific Offshore were expected to perform well this year. Keith Kerr, chairman and chief executive of Swire Properties, said the majority of the HK$13 billion capital outlay would be used in expanding its mainland investment property portfolio. He said by 2013 the group's investment properties would increase to 24 million square feet, of which the mainland would account for 8 million sqft and Hong Kong 16 million sqft. At present, Swire owns a portfolio of 15 million sqft of office and retail properties and 1 million sqft in Beijing. "Last year's rental income almost entirely came from Hong Kong as contribution from the mainland was small," said Mr Kerr, who will resign in May. Gross rental income rose 22.3 per cent to HK$6.79 billion as turnover grew 14.46 per cent to HK$24.67 billion. Mr Kerr said current office rentals in Pacific Place in Admiralty were HK$80 per square foot, HK$70 at Pacific Place Three and a "low HK$30" at One Island East in Quarry Bay. Benjamin Lo, regional head of conglomerate research at Nomura International (Hong Kong), said the current downturn in the office and retail leasing market would not affect Swire until next year as its properties were virtually fully let. "We will see more leases due for renewal next year," said Mr Lo. Swire said about 12 per cent of tenancies by floor area at its office portfolio and 14 per cent at its retail properties were due to expire this year. Separately, Mr Pratt said Swire had no plans at present to restructure the business of unit Hong Kong Aircraft Engineering. Shares of Swire rose 2.92 per cent to close at HK$45.75.

Hong Kong people overwhelmingly support the introduction of a standardized food labeling law despite opposition from some in the retail industry. A survey of 1,200 people by the Centre for Food Safety has found more than 80 percent back the law, due to come into effect in July 2010. The poll, conducted between June and July last year, also found nearly half of people were dubious about nutrition claims on labels. Most are concerned with the amount of sugar, total fat and calories in food, but less worried about saturated and trans fats, which can trigger cardiovascular disease. The food labeling requirement was passed into law last May, despite opposition from food traders, who claim it will limit consumer choice because some food suppliers will choose not to export foods of limited demand to Hong Kong to avoid the labeling requirement. The center's consultant, Ho Yuk-yin, said all foods will have to comply with the labeling law. "No matter from which country of origin, all food has to comply with the labeling law without any exceptions," Ho said. He said workshops will be held in the mainland for traders and authorities to explain the law and its requirements. Under the law, pre-packaged food suppliers are required to provide eight elements - energy, protein, total fat, saturated and trans fat, carbohydrates, sugars, dietary fiber, and sodium - to consumers. The center will reinforce regulations and closely monitor food suppliers as the law comes into force. An online calculator will be introduced on the center's website within one to two weeks to help food suppliers produce standardized labels. Despite the fact 50 percent of food suppliers already provide food labels, Ho said only some of them comply with standards.

A new body headed by two senior civil servants is to be created in a bid to speed up works projects designed to help the city through the financial crisis. The Development Opportunities Office will be responsible for projects which are for the long-term benefit of Hong Kong and its work will not overlap that of the Town Planning Board, Secretary for Development Carrie Lam Cheng Yuet-ngor said. The new body was proposed in Financial Secretary John Tsang Chun-wah's budget speech. Yesterday, Lam consulted the Land and Building Advisory Committee and said it has accepted the idea and agreed that the administration will restructure the committee to become the Land and Development Advisory Committee. The current committee - which completes its term at the end of this month - is composed of 18 people, including architects, engineers, surveyors and real estate developers. It reviews public and private land use, monitors and assesses policies, considers the adequacy of land development programs and gives advice to the government. Lam said she has not set a limit to the number of the new committee members and will appoint people from a variety of sectors such as medical, logistics, tourism and environmental protection in addition to the existing sectors. She added the new committee will work with the new office to help landlords redevelop their land and deal with government departments. "The committee and the office will not deal with pure property projects but projects that will be of long-term benefit to Hong Kong - for example in terms of tourism and cultural heritage," Lam said. Land and Building Advisory Committee chairman David Lung Ping-yee said the new arrangement can offer one-stop service to landlords who can consult the committee in advance on their development projects.

Hongkong and Shanghai Hotels (0045) - owner and operator of The Peninsula hotel chain - said last year's net profit fell 93.7 percent to HK$216 million, after revaluation deficits and increases in impairment provisions.

China: China Automation Group believes it has found the key to the mainland's coveted but tightly controlled railway sector, which is expected to spell multibillion-dollar opportunities in Beijing's pump-priming drive. The firm's trump card is the various business licences it acquired through the 77 per cent stake it accumulated in Beijing Jiaoda Microunion Technology between 2007 and last year that will give it access to the rail signalling market, chief executive Kuang Jianping said. "Half a per cent of rail investment goes to signalling systems. This is a small percentage, but in absolute terms, this market is big," he said. The Ministry of Railways says total spending on mainland railways from this year to 2011 will be 3.5 trillion yuan (HK$3.97 trillion). The McKinsey consultancy says mainland spending on transport technical systems, including rail signalling systems, will jump to as much as US$130 billion in the next five years from US$30 billion in the past five years. Spending on transport equipment, including rolling stock, will leap to as much as US$130 billion from US$40 billion, it says. Such figures make the mainland rail equipment and systems market the world's biggest and a huge draw for private and foreign firms. But breaking into the industry for a slice of the pie is a different story. Foreigners were restricted to joint ventures in the rail equipment sector, including carriages and rolling stock, Phillip Securities Research analyst Carmen Wong said. The reason was the government wanted the local partners to develop their own rail technologies, she said. "It isn't simply collaboration, but the Chinese players will have a high degree of localisation after digesting others' skills. This situation is not likely to reverse in the short term, as China is eager to develop its own high-end technology. This concept was emphasised and reiterated at the National People's Congress last week," Ms Wong said. There are no restrictions for the technical systems sector. In any case, state-owned giants have an edge. For instance, China South Locomotive & Rolling Stock Corp and China Northern Locomotive & Rolling Stock, which hold a combined 95 per cent of the mainland rolling stock market, owned the requisite business licences by virtue of their status as state-owned firms, Ms Wong said. The purchase of rolling stock by the Ministry of Railways, which accounts for all such purchases, soared 66.6 per cent to 55.3 billion yuan in 2007 from 33.2 billion yuan in 2006. Analysts said Beijing was unlikely to open the market to foreigners in the next five years. "China has to protect its companies," said Barry Chan Tsang-shing, an analyst with CSC Securities HK. In January, Philippe Mellier, transport president and executive vice-president of Alstom Group, was quoted in a Financial Times article as urging western countries to close their markets to sales of Chinese trains in response to Beijing's restrictions. But to salvage any damage to business ties, Alstom chairman Patrick Kron stressed in Beijing later that the article did not reflect the company's position on the Chinese market, which generates orders worth €1 billion. Alstom has joint ventures with both China South Locomotive and China Northern Locomotive. The mainland is not alone in shielding its railway equipment industry from foreign competition. "The rail markets in many countries, like Russia and Canada, are pretty closed to foreign investments. China is already allowing foreign companies, albeit with restrictions, such as requiring joint ventures and technology transfer," said a rail expert.

China is looking to build a train line linking the mainland with Taiwan to boost trade ties, the mainland railways minister said. Liu Zhijun said the government was "actively planning" the rail link, which would allow train travel all the way between Beijing and Taipei, according to Xinhua News Agency. "The railway network is expected to lay a foundation of transport infrastructure for the cross-straits economic zone," Xinhua reported. The rail line may stretch between Xiamen, in Fujian, and Taiwan. Xinhua did not specify how the trains would be carried across the 180-kilometer Taiwan Strait. The Taiwan government said last month it is considering building a bridge from Kinmen, one of its islands, to the mainland. The bridge would span 8.6 kilometers and link Kinmen with Xiamen. However, a spokesman for President Ma Ying-jeou denied reports that the president had ordered the bridge's construction, saying the final decision.

The Shanghai World Expo Executive Committee said here Sunday it was considering pavilions for Chinese private enterprises and small and medium-sized companies (SMEs). "I will do what I can to make this happen," said Zhou Hanmin, vice director of the committee and a standing committee member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), a political advisory body. Zhou made the remarks on the sidelines of the annual CPPCC session, in response to a suggestion by a political advisor that such pavilions would be a very good platform to showcase China's private enterprises and entrepreneurs. "The problem is that we are on a tight schedule." Zhou said all the Expo pavilions would start construction by May 1. Altogether 185 countries and 46 international organizations have so far confirmed to participate in the Expo, Zhou said. The World Expo 2010, with the theme of "Better City, Better Life", is due to be held from May 1 to Oct. 31 next year and expected to attract 70 million visitors.

Mar 13, 2009

Hong Kong: Sun Hung Kai Properties (SEHK: 0016), Hong Kong's largest developer by market value, reported the worst interim results in 20 years as a severe property downturn sent net profit plunging 94.92 per cent. The developer announced net earnings of HK$692 million for the six months to December, compared with HK$13.63 billion a year earlier. The sharp fall was mainly due to a revaluation deficit of HK$4.34 billion on investment properties, compared with a revaluation gain of HK$5.84 billion a year ago. "It is the poorest result for more than 20 years," said Eric Yuen Chi-fung, the head of research at Dao Heng Securities. He recalled SHKP's full-year earnings in 1986 were HK$750 million. But he emphasised the net profit, which included the revaluation on investment properties, did not reflect the real performance of SHKP. With an investment property portfolio of about HK$155 billion the developer's net profit would be wiped out by HK$15 billion if property prices declined 10 per cent, he said. Residential prices fell about 20 per cent last year. Office rentals dropped 14 per cent in the fourth quarter. "For professional investors, there will be more concern about its underlying earnings," he said. SHKP's underlying net profit, excluding the effect of the revaluation deficit, dropped 26.85 per cent to HK$4.53 billion from a year ago as a result of a 52.28 per cent decline in property sales to HK$1.78 billion, much below market expectations. Profit contributions from hotels decreased 20.9 per cent while earnings from its communications business dropped 51.3 per cent. Rental income rose 24.05 per cent from a year ago to HK$3.52 billion. Turnover increased 26.95 per cent to HK$15.12 billion. An interim dividend of 80 HK cents will be given, the same as last year.

Hundreds of shoppers lined up for hours in Guangzhou yesterday for the first Hong Kong product fair. Inside the exhibition hall, shoppers scrambled for goods, with some grabbing the display models instead of waiting for new items. Angela Choi, business development manager of a homeware company, said: "The pillows were sold out hours after we opened this morning. We are distributing coupons now so the consumers can come back to pick up the pillows in the coming days." A couple who gave their name as Mr and Mrs Li said they had spent about 1,000 yuan (HK$1,135) in the morning and planned to return on the last day of the fair to get some bargains. Mrs Li said: "We have bought some snacks, clothes and electrical appliances. Our daughter has taken some of the things home already because we have bought quite a lot. Unfortunately, the stocks are running out. We trust Hong Kong goods; they represent high quality, reliability and are trendy. We shop in Hong Kong from time to time, now they have a trade fair in Guangzhou. Of course, we come to buy." The four-day product fair has been organised to promote the city's products to consumers in southern China and to help Hong Kong firms open up the mainland market. About 250 Hong Kong brands, with products ranging from apparel, toys and watches to electronics, cosmetics and food, are on sale at the fair organised by the Trade Development Council and the China Council for the Promotion of International Trade. Two more expos to promote Hong Kong brands are planned, in Wuhan in May and Chongqing in November.

Workers from the Buildings Department take down a signboard in Jordan as part of a special operation meant to create 170 jobs. The government has launched an operation to remove 5,000 abandoned signboards as businesses shut down amid the economic downturn. But a surveyor said a registration plan for all signboards that was shelved six years ago should be re-examined in the long run to ensure pedestrian safety. The signboard-removal operation, announced in the budget last month, would give priority to business areas such as the Yau Tsim Mong district, Causeway Bay and Wan Chai and improve safety and the cityscape, assistant director of buildings Pang Tat-choi said yesterday. "We will review the operation in one year to see if it needs to continue," Mr Pang said. About 10 per cent of the 200,000 signboards across the city are abandoned. Mr Pang said shop owners were responsible for removing their signboards when quitting the premises, but in the past the government had been unable to contact about half the owners. In such cases the government would bear the clearance cost, and it would do the same for the latest operation. A signboard will cost HK$2,000 to remove. The scheme will cost HK$18 million and create 170 jobs. Anyone who wants to install a signboard is required by law to obtain the Building Authority's approval. If signboards installed without such approval fall and injure passers-by, the owners' corporation of the building to which the signboard was attached is liable. Temple Street resident Yuen Man-kai welcomed the new measure. He said many bars and hot-pot restaurants in the area had closed down in recent months and left their signboards unattended. "They were irresponsible to leave the burden to the owners' corporation," he said. Mr Pang said the government would soon start requiring new signboards to be inspected to ensure safety, but the measure would not cover existing signboards. David Chan Wah-wai, who is studying the issue on behalf of the Institute of Surveyors, said many signboards had been installed without approval and the government should set up a registration system, which was shelved in 2003 because of execution technicalities. The system would require all signboard owners to register and enable them to insure the signboards against accidents, he said, freeing owners' corporations of liability.

Actor Michael Tse Tin-wah lost his licence, and received a fine and suspended jail term in his sentencing hearing for drink-driving yesterday. Tse, 41, whose real name is Tse Hing-wah, received a six-week jail sentence suspended for one year, and was ordered to pay HK$9,500 and give up his licence for 1-1/2 years. He was sentenced in Eastern Court yesterday after pleading guilty last month to one count of drink-driving and one count of careless driving. His sentencing comes ahead of singer Angela Tong's sentencing hearing, also for drink-driving and careless driving, which is scheduled for Monday. Acting Principal Magistrate Bina Chainrai said Tse, who received his licence in 1993, committed a speeding offence in 1996 and almost every year since 2000, though the speeds involved were not the most serious of their kind. When Tse lost control of his car in the Western Harbour Tunnel, he collided with another vehicle, and it was only by the greatest fortune that no one was hurt, she said. Before sentencing, Tse's defence lawyer, Steve Chui, asked Ms Chainrai not to impose a community service order even though a report recommended it as suitable for Tse. Tse, despite being willing to agree to such an order, might be unable to attend at times "because of the nature of work" and "filming day and night", which would lead to his case returning to court. "As you know, in the film industry, it's not just the defendant who has to film, it is also many actors," Mr Chui said. Tse was driving home in the early hours of December 6 when he lost control, cut into another lane and collided with another vehicle. A breathalyser test showed he had 47 micrograms of alcohol per 100 millilitres of breath, more than double the 22mcg/100ml legal limit. Both vehicles were damaged.

Gillian Chung is protected as she sends fans and photographers into a frenzy while making her way to a Bauhaus store in Mong Kok to promote a jeans brand yesterday.

Cathay Pacific Airways (0293) posted a "deeply disappointing" net loss of HK$8.56 billion last year, hit by soaring fuel costs and weak passenger demand amid the global crisis. It was the carrier's first annual loss since 1998. Cathay reported unrealized mark-to- market losses of HK$7.66 billion and a realized hedging loss of HK$309 million last year. Costs for jet fuel, including paper-hedging losses, soared 92 percent to HK$47.3 billion with gross fuel costs climbing 54 percent to HK$39.3 billion. The loss per share was HK$2.175 and no final dividend was declared. "Cathay Pacific expects an extremely challenging year in 2009. Passenger and cargo demand are expected to remain weak and, if fuel prices remain at their present level, further losses on fuel hedging will be incurred," said Cathay chairman Christopher Pratt. As cash preservation is the "absolute priority," the airline plans to dispose of five Boeing 777 aircraft and will not renew leases on two Airbus planes when they expire in June and October. Three Boeing 747s will be taken out of service. The airline announced in January it was suspending construction of a cargo terminal at Chek Lap Kok for two years. Chief executive Tony Tyler said capacity and routes are under review and he did not rule out the possibility of a decline in capacity this year, while Cathay will continue to defer delivery of new planes. He said staff were offered unpaid leave."If the Brent [crude oil] price is at a level of US$45 (HK$351) per barrel over 2009, 2010 and 2011, then the group would be required to pay a total of about US$1.4 billion to settle these contracts and the profit would be further reduced over the three years," the company said. Cathay also made a provision of HK$1 billion for the hedging loss of its 18 percent-owned associate Air China (0753), which posted a mark-to-market loss of 6.8 billion yuan (HK$7.68 billion) last year. Shares of Cathay rose 5.9 percent yesterday to close at HK$7.41.

Financial Secretary John Tsang Chun-wah has dismissed lawmakers' criticisms that the uncertainty surrounding the possible retirement of Hong Kong Monetary Authority head Joseph Yam Chi-kwong was hurting the city's financial stability.

Bank of East Asia (0023) has lowered its interest rate in a fixed-rate mortgage program and shortened the period for early repayment penalty in a bid to stand out from a crowd of competitors.

China: China industrial output growth ground almost to a standstill at the start of the year, coming in below market expectations, but a continued surge in bank lending in February spurred optimism that business activity could soon rebound. Retail sales also slowed in the first two months, though only slightly, showing that consumers, like the broader economy itself, remain in better shape than their counterparts around the world. Mainland’s annual industrial output growth slowed to 3.8 per cent in January and February from 5.7 per cent in December, the National Bureau of Statistics (NBS) said on Thursday. The median forecast of 25 economists polled by Reuters was for a rise of 6.4 per cent. But production growth in February alone – when there were five more working days than in February last year – was 11.0 per cent. “Industrial output is recovering fast, as can be seen in the February figures,” said Yuan Yuedong, a Bank of China economist in Beijing. “The government’s measures are beginning to have an effect.” Annual growth in mainland’s broad M2 measure of money supply rose to 20.5 per cent in February from 18.8 per cent in January, the central bank said on Thursday. New yuan loans in February totalled 1.07 trillion yuan (HK$1.21 trillion), down from the record of 1.62 trillion yuan in January, but still very high by historical standards. With 10 months to go this year, mainland is already more than halfway towards reaching its goal of at least 5 trillion yuan in new bank lending. “Given how the Chinese government is keen to extend credit at the start of the year in order to support the stimulus projects later in the year, that’s not too big of a surprise,” said Sherman Chan, an analyst with Moody’s Economy.com in Sydney. China’s state-owned banks have been answering the government’s call to provide a huge chunk of the financing for the 4 trillion yuan stimulus package designed to keep the country on track for 8 per cent growth despite a collapse in exports and a slump in the domestic real estate sector. Annual growth in the country’s retail sales slowed to 15.2 per cent in the first two months from 19.0 per cent in December, the NBS said. But since the figures are nominal and do not account for the fall in consumer prices thus far this year, consumption has actually been relatively steady in inflation-adjusted terms. “Consumption is particularly strong despite uncertainties about future income levels. You can see the role being played by the government’s policies to boost consumption,” said Lin Songli, an economist with Guosen Securities in Beijing.

US Secretary of State Hillary Clinton meets with Chinese Foreign Minister Yang Jiechi in Washington on Wednesday. The United States and China agreed on Wednesday on the need to reduce tensions and avoid a repeat of a confrontation between American and Chinese vessels in the South China Sea, Secretary of State Hillary Rodham Mrs Clinton said. While neither side yielded in their conflicting version of events, Mrs Clinton said she and foreign minister Yang Jiechi assented that similar episodes should be avoided in the future. “We both agreed that we should work to ensure that such incidents do not happen again,” Mrs Clinton told reporters after meeting Mr Yang at the State Department, signaling that the two countries were still at odds over the exact circumstances of what happened. “We have each stated our positions, but the important point of agreement coming out of my discussions with minister Yang is that we must work hard in the future to avoid such incidents and to avoid this particular incident having consequences that are unforeseen,” she said. Mrs Clinton told reporters that Mr Yang’s visit was a “very positive” development, and she looked forward to continuing discussions that she started with him during a trip to Beijing last month to build a “positive, cooperative and comprehensive relationship.” Before their private meeting, neither Mrs Clinton nor Mr Yang mentioned the dispute, even as the foreign ministry in Beijing fired back for a second consecutive day at US complaints that Chinese vessels harassed a US navy mapping ship in international waters on Sunday. Mr Yang will meet on Thursday with President Barack Obama and his national security adviser James Jones and White House spokesman Robert Gibbs said he expected the dispute would be discussed then but not dominate the conversation. “The incident involving the boats of the two countries will be on the agenda but I don’t think that will overshadow” discussions on larger issues, Mr Gibbs said. At the Pentagon, Defence Department press secretary Geoff Morrell said the US hopes that “face-to-face dialogue in Beijing and in Washington will go a long way to clearing up any misunderstanding about this incident.” Even if diplomatic efforts by Mrs Clinton and Mr Yang are successful in toning down the dispute, however, it may be only a temporary lull in a larger military disagreement. Beijing has long complained about US surveillance operations around China’s borders. Without better communications between the two militaries as they operate in the South China Sea, the possibility for future conflict will remain. On Wednesday, Beijing reiterated that the US claims are “gravely in contravention of the facts and unacceptable to China.” Beijing says the US ship was operating illegally in China’s exclusive economic zone.

China Southern Airlines, the largest mainland carrier, issued a second profit warning yesterday for last year's results, saying it needs to make provisions for the decrease in market value of aircraft to be disposed of this year. China Southern, which issued an earlier warning in January, said the impairment losses of the aircraft to be displaced this year would have a negative impact on results. The company added that the losses were non-cash item and would not affect operations. The airline earlier forecast a loss for last year without giving figures, compared with a 1.85 billion yuan (HK$2.1 billion) gain a year earlier. China Southern planned to sell 12 McDonnell Douglas MD82 aircraft and four Boeing 777-200s, said Daiwa Institute of Research transport analyst Kelvin Lau. "The impact of the impairment loss on other mainland carriers will be smaller if they do not have huge disposal plans." Shrinking demand for international air travel has prompted mainland carriers to divert excess capacity to domestic routes, resulting in lower fares. Domestic air passengers increased 13.47 per cent last month, following 11 per cent growth in January. However, international traffic declined 20 per cent year on year in the month. China Southern has secured shareholder approval to place 3 billion yuan worth of new shares to state-owned parent China Southern Air Holdings. Government aid will help the cutting of debt levels. Separately, China Southern appointed Zhang Zifang as an executive director. Mr Zhang was vice-president and vice-party secretary of the company. China Southern shares rose 2.5 per cent to HK$1.23 yesterday.

China's exports last month fell by a greater-than-expected 25.7 percent in February from a year earlier - but capital spending rose due to a 4 trillion yuan (HK$4.53 trillion) stimulus plan. The percentage drop in exports was the biggest on record, and 5 percent higher than market forecasts. It was dismal versus January's fall of 17.5 percent. The export plunge came as demand from the United States and Europe fell further as they grappled with recession. Customs data showed imports shrank by 24.1 percent, compared to 43.1 percent in January, narrowing the monthly trade surplus to US$4.8 billion (HK$37.44 billion) in February from US$39.11 billion in January. However, China's fixed-asset investment grew 26.5 percent from a year ago in the first two months this year, picking up from a pace of 26.1 percent in 2008 as the effects of the stimulus plan kicked in. Investment in urban areas in fixed assets such as roads, power plants and apartment buildings rose by 26.5 percent, beating market forecasts of a 21.5 percent rise, in the first two months from the same period a year ago, the National Bureau of Statistics said. Central government-backed project spending rose 40.3 percent. Economists said the poor trade data mean Beijing is now counting on fiscal stimulus and domestic demand for growth. The rebound in investment came faster than Goldman Sachs initially expected, said the investment bank's China economist Yu Song, who added she might revise her forecast on domestic demand growth. The trade flow was disappointing, said Wang Qing, China economist at Morgan Stanley. "The extreme weakness in external demand has slashed exports, denying the rebound anticipated amid the Lunar New Year effect." Wang said the February data highlights how the mainland economy "will remain reliant on government stimulus initiatives for growth support this year."

China's industrial output grew 3.8 percent in the first two months this year, with a rise of 11 percent in February, the National Bureau of Statistics said Thursday. China's retail sales grew 15.2 percent to 2 trillion yuan (293.8 billion U.S. dollars) in the first two months this year, the National Bureau of Statistics said Thursday.

Mar 12, 2009

Hong Kong: Regulators are under pressure to fast-track curbs to the stock exchange's controversial closing-auction session after a last-minute plunge in HSBC Holdings (SEHK: 0005, announcements, news) shares on Monday wiped billions of dollars off its market value. Hong Kong's financial chief, legislators and brokers have expressed concern over the tumble in HSBC's share price in the last few seconds of the auction session on Monday that contributed to a 24.14 per cent, HK$127 billion market loss. That loss may result in restrictions being brought forward to the auction session that has been blamed for wild swings in other share prices during the last minutes of each trading day. Financial Secretary John Tsang Chun-wah yesterday said: "A lot of Hong Kong people hold HSBC shares so the government is concerned about its ups and downs." Mr Tsang said he had met officials of the Securities and Futures Commission, which said it was making inquiries into the trading. "The commission is closely monitoring the closing-auction session in relation to the movement of HSBC's share price and we are making inquiries," an SFC spokesman said. A single sell order made during the last few seconds of the auction session on Monday sent HSBC shares down a further 12.47 per cent, with the stock closing the auction at HK$33 compared with HK$37.70 at the 4pm normal trading close. Legislator Chim Pui-chung, who represents the financial services sector, said this was another example of how the closing-auction session could be easily manipulated by big players. He called on the exchange to bring forward a plan to add a 2 per cent cap on bidding prices. The 10-minute closing auction, introduced in May last year, is aimed at matching international practices but has resulted in some stocks swinging 20 to 30 per cent during the final minutes of the session. The session, held after the normal trading close at 4pm, allows traders to input tender prices. The highest number of matching orders then determines the closing price. The exchange last week announced it would tighten the system by adding a 2 per cent cap either way from June 22, subject to SFC approval and market tests. "We cannot rule out the possibility of pushing the plan forward if the testing show, announcements, news) spokesman. "But we will not change the implementation timetable just because of one or two unusual orders during the closing auction period." Mr Chim said: "Some investment funds may have sold short HSBC or had issued derivatives on the stock and therefore wanted to push its closing price down." Kenny Lee Yiu-sun, the chairman of the Hong Kong Stockbrokers Association, said HSBC would have only dropped to HK$36.95 on Monday if the 2 per cent cap had been in place.

HSBC (SEHK: 0005) stock bounced back yesterday, rising the most in four months as senior management stressed the lender's historic ties with Hong Kong, and the government promised to review last-second trading that battered shares on Monday. Shares in the bank rose by as much as 15 per cent before finishing up 13.94 per cent at HK$37.60. The rise was nearly double that of any other blue-chip yesterday and contributed 179 points to the Hang Seng Index's 349.47 point, or 3.08 per cent, gain to 11,694.05. "We have a special place in Hong Kong and we are very honoured and we treasure that. And I don't believe that we have lost that," said Sandy Flockhart, HSBC's chief executive officer for Asia-Pacific. "The lion is very much still out there and [has] still got a roar in its belly." Financial Secretary John Tsang Chun-wah announced yesterday that the Securities and Futures Commission would review trades made during Monday's market closing. HSBC on Monday suffered its worst drop in more than two decades, falling 24.14 per cent to HK$33 and edging close to the HK$28 price set for new shares in its forthcoming rights issue. Considered a substantial discount when it was announced last week, the price has seemed less enticing to some investors as HSBC and the financial sector as a whole have been affected by selling pressure. Mr Flockhart ruled out making last-minute changes to the rights issue ratio, saying it was a huge offering from the bank, affectionately known as the "elephant". "The elephant just can't turn on a thimble. The elephant's out there walking pretty hard at the moment." Louis Wong, a director of Philip Capital Management, said: "I'm afraid the sell-off may not be over yet because [yesterday] HSBC was only tracking other financial shares in the US and Europe. The short-term performance will hinge on how financial stocks fare in overseas markets." Mr Wong said HSBC could hold above the rights issue price and trade within a range of HK$30 to HK$40 this month, barring any substantial deterioration in the global financial sector. In London, HSBC closed up 14.33 per cent at 399 pence, while its American depositary receipts in New York were up 12.9 per cent at US$27.39 at midday. Local trading turnover in HSBC was relatively thin during yesterday's 10-minute closing auction period, with only 2.94 million shares, or 4.66 per cent of the daily turnover, changing hands. Mr Flockhart said HSBC's sudden 12.47 per cent share price drop during the auction on Monday was the result of "technical trades". Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) said yesterday that it may move forward plans to introduce price fluctuation caps on the auction period if the market can upgrade its trading system. The closing auction period was introduced last year by HKEx, extending trading hours by 10 minutes and allowing investors to determine closing prices through the use of tenders. The settlement price is determined by whichever level has the highest trading volume.

Canto-pop star Gillian Chung puts on a brave face as she meets the media yesterday. She says she is not ready to quit showbiz. Canto-pop singer Gillian Chung Yan-tung, the scandal-hit star of the Twins pop duo, put on her new-found tough image to meet the press for the first time in more than a year, telling the world that she was prepared to live showbiz life despite criticism. But Chung's mask of toughness almost came off as tears welled up in her eyes when she spoke of her Twins partner Charlene Choi Cheuk-yin, who had been left to go it alone because of the sex-photos scandal. Chung made her official return to showbiz yesterday with a press conference attended by more than 100 journalists and photographers to announce her new role as ambassador for local fashion brand Bauhaus Tough Jeansmith. Ironically, the press conference was held in the same hall at the Hong Kong Trade and Exhibition Centre in Kowloon Bay where her ex-boyfriend Edison Chen Koon-hei made his public apology for the scandal in February last year. Chung was one of several stars embroiled in the scandal after photos of them having sex with Chen were put on the internet. Wrapped in a grey, knee-length coat, Chung strode on stage with a show of confidence. She admitted that she was nervous and thanked her family, friends and colleagues for their support through a tough year. "I have grown up a lot and [this experience] has made me tougher," Chung said, adding that after visiting earthquake victims in Sichuan she realised that what happened "to me was really not a big deal". Chung hoped that the Twins could return to the stage as soon as possible. "Charlene has been handling this on her own and that wasn't easy. She looked exhausted on TV and I called her to apologise," Chung said, trying to hold back tears. "She told me to stop apologising. I must not let her down again." Chung said she saw fellow photo scandal victim Cecilia Cheung Pak-chi's interview on Cable TV, in which Cheung hit out at Chen for not personally apologising to the victims. "She was very good [in the interview]. She was very brave," Chung said, adding that she supported Cheung's return to the silver screen. She refused to comment on Cheung's remark about Chen. Chung was also particularly grateful to her fans. "They never abandoned me, and they have been fighting this battle with me, arguing with other people," Chung said, referring to criticisms about her comeback posted online or complaints lodged with the Broadcasting Authority. The authority has so far received 494 complaints about Chung's appearance in an interview with TVB (SEHK: 0511) last week. Chung said that she has been trying to ignore the criticism. "I know that there are people against me. It's expected, and I know the future is going to be tough. But I'll do my best." The Canto-pop star's next move will be a public appearance at the Bauhaus store in Mong Kok this afternoon. She said she was already prepared for the event. Chung also made it clear that she did not want to quit show business just yet. "[My money] is not enough to support my family for the rest of their lives. Besides, I really like this business," she said.

Rail operator MTR Corp saw underlying profit decline 4.55 per cent to HK$8.18 billion last year, cushioned by a merger with Kowloon-Canton Railway Corp, but Hong Kong's deepening recession threatens to derail its prospects. In the first set of full-year results following the HK$12.4 billion merger with KCRC in late 2007, MTR said its net profit, including investment property revaluation deficit of HK$146 million, tumbled 45.43 per cent to HK$8.28 billion. In 2007, there was an investment property revaluation surplus of HK$8.01 billion. The merger catapulted the underlying profit from MTR's rail and related business to HK$2.49 billion last year from HK$487 million in 2007. Profit from its property management and related business grew 51.64 per cent to HK$1.85 billion. Property development profit plunged 43.8 per cent to HK$4.67 billion. Although fare revenue ballooned 61.2 per cent to HK$11.47 billion, fare cuts and the lower profitability of the KCRC operations squeezed MTR's earnings before interest, tax, depreciation and amortisation by 2.4 percentage points to 52.9 per cent. MTR paid a HK$750 million annual rental fee for KCRC's network as a key term of the merger. Chief executive Chow Chung-kong warned yesterday that commercial, advertising, telecommunications and property rental operations at the company's stations would feel the pinch of the recession this year. "Our rail business is defensive in nature, but unemployment will keep people off our rail network," he said. Mr Chow also said slumping property prices had forced the company to delay bidding for property projects in the first half of this year. Sales of two residential projects - the Lake Silver luxury apartments at the Wu Kai Sha station and mid-market apartments at the Tai Wai maintenance centre - have been put on hold. Analysts said MTR would have to pin its hopes for growth on the mainland, where Beijing's 4 trillion yuan (HK$4.54 trillion) economic stimulus package had ignited a government-led spending spree on rail and road infrastructure. MTR finance director Lincoln Leong said the corporation had recently obtained long awaited approval from the National Development and Reform Commission for the Line 4 subway project in Shenzhen. He said the Shenzhen municipal government had promised to grant an undisclosed amount of cash to the project instead of granting land as a subsidy. MTR holds a 100 per cent stake in the project, which was expected to cost 6 billion yuan at 2005 prices. The final dividend was lifted 9.7 per cent to 34 HK cents a share, taking the full-year payout 6.7 per cent higher to 48 HK cents a share. MTR's underlying profit fell just short of an analysts' consensus of HK$8.35 billion. Earnings per share dropped 45.96 per cent to HK$1.47. MTR shares rose 30 HK cents or 1.83 per cent to HK$16.66 yesterday before the results announcement.

The hotly contested Wedding Card Street redevelopment has been put on hold because of the economic turmoil. Developers will be asked to reconsider their interest in co-developing the project, centred on Lee Tung Street in Wan Chai, by the Urban Renewal Authority. "The economic environment has completely changed since developers were asked to express interest in the redevelopment project last August," a spokesman for the authority said yesterday. "It's not fair if we commence the tendering exercise now." The authority has been pressing ahead with the project despite vehement protests from activists and residents against the destruction of the street, famed for its profusion of wedding card shops. Developers were asked to express their interest in August last year and 15 submissions were received. The authority had been expected to shortlist qualified companies and invite them to submit tenders for joint development. But instead of starting the tendering exercise, the authority said yesterday that it would invite developers to express interest again. "In view of the recent changes in the market environment, we deem it appropriate to invite interested parties to submit [expressions of interest] afresh for the project since the last exercise was done quite a while ago," the authority said. The spokesman refused to speculate on the likely demand but said the authority still believed the project had redevelopment potential. Surveyors said postponing the tendering exercise would ensure the project's profitability. "If the authority presses ahead with the project, it might not be able to recover its huge redevelopment cost as the market is going down," said Raymond Chan Yuk-ming, chairman of the public and social affairs committee of the Hong Kong Institute of Surveyors. Developers might not provide a good offer even if they were willing to participate in the tendering exercise, he said, adding that most developers were still assessing the trend of the property market. The project, to cost more than HK$3.5 billion, is expected to offer 1,415 flats in a "wedding city" theme, with traditional wedding shops in preserved tenement buildings. The managing director of Savills Valuation and Professional Services, Charles Chan Chiu-kwok, said the project still looked appealing to developers because of its urban location. He said flats in J Residence, another Wan Chai redevelopment project in the neighbourhood, had changed hands at reasonable market values in recent months. Henderson Land Development (SEHK: 0012) and Sun Hung Kai Properties (SEHK: 0016) said they would have to study the details before making a decision. A Sino Land spokeswoman said it would announce its decision after making a submission to the authority.

China: Commerce Minister Chen Deming promised yesterday to speed up applications by troubled mainland-based Hong Kong manufacturers who want to do business with domestic buyers.

The Pentagon's disclosure of Sunday's confrontation between a US Navy surveillance ship and five Chinese vessels in the South China Sea reflected a contradiction with the soft-line policy expressed by Secretary of State Hillary Rodham Clinton, military experts said yesterday. The People's Liberation Army is building what will become the Chinese navy's biggest submarine base in Hainan. That has alerted the United States, Japan and other countries in the region, so the US Navy sent the surveillance ship USNS Impeccable to the South China Sea to gather military information, analysts added. "I guess maybe the Pentagon has increased its alertness against China's military threat, so it sent the spy vessel Impeccable to Hainan to try to collect information about the submarine base," said Andrei Chang, chief editor of the Canadian-based Kanwa Asian Defence Monthly and a long-time observer of China's military development. "It was because the PLA Navy has become more aggressive since last year. Besides setting up the base, its first deployment of three vessels to escort Chinese ships in pirate-infested waters off Somalia, sailing through Japan's Tsugaru Strait to the Pacific Ocean for the first time and ... other behaviour have all attracted attention from the US, Japan, India, Vietnam and other countries." But Mr Chang stressed that these small skirmishes on the high seas were common. "I just wonder why the Pentagon highlighted such a small incident, because actually, it was not a big issue," he said. "But of course, some small issues can develop into big incidents on the diplomatic level, while big affairs can also be played down through skilful compromise." Retired PLA general Xu Guangyu said he had speculated that some "war hawk" in the Pentagon had attempted to use this incident to upset Sino-US diplomatic policy. "What Mrs Clinton has done to promote co-operation between China and the US to cope with the global financial turmoil has contradicted the Pentagon's traditional hegemonism, which might harm the country's image," Mr Xu said. "I think they may seek to use this affair to influence President Barack Obama's foreign policy." He said the US' "arbitrary act" on the high seas had also sparked an outcry by the PLA. "The Chinese vessels just wanted to tell the US that waters off Hainan are not the Gulf of Mexico, where they could enter and exit freely," he said. Serving PLA top brass also condemned the action. "The location where the confrontation occurred is our economic territory, where we have sovereignty," Rear Admiral Zhang Deshun said on the sidelines of the annual National People's Congress meeting in Beijing. "It's nonsense that the US, which offends international law, should complain about us first." However, an Australian international law and military expert said the incident had also exposed China's interference with the freedom of navigation by peaceful foreign warships on the high seas. "There is no evidence that, for example, the US vessel was involved in piracy or some other unlawful activity which would permit China to interfere with the Impeccable," said Ben Saul, director of the Sydney Centre for International Law at the University of Sydney. "It is difficult to know the motives of the Chinese vessels. But of course, it could be designed to demonstrate China's growing naval strength in the area and to deter US vessels from operating in the seas near China." Dr Saul stressed that China's actions could also increase regional fears about its military build-up. "[The incident] will stimulate further naval arms races in the [Asia-Pacific] region," he said. "Australia ... is considering purchasing more submarines soon, partly to counter the build-up of naval weapons by regional powers such as China."

Chinese home prices fell by a record last month, paced by a 15 percent plunge in the southern export hub of Shenzhen, where factories closed as growth in the world's third- biggest economy slowed. The 1.2 percent decline in prices in 70 major cities is the most since the government started issuing the data in August 2005, according to Bloomberg's compilation of National Development and Reform Commission figures. New home prices fell 1.8 percent, the commission said on its website yesterday. "The downtrend is more evident," said Hingyin Lee, director of research and advisory at Colliers International in Shanghai. "We expect the price downtrend to continue because of supply - there are still a lot of unsold apartments." The drop in prices reflects cuts by developers to lure buyers as China's economy expanded at the slowest pace in at least seven years and exports declined by the most in almost 13 years. Chinese builders reported higher sales transactions in February, after a smaller advance in January, when markets were closed for the week- long Lunar New Year holidays. "We focus more on transactions. While its still too early to say there is a recovery, some signs of stabilization have emerged in some cities," said David Ng at Royal Bank of Scotland in Hong Kong. Prices in Shenzhen dropped the most, losing 15.7 percent, the NDRC said. Home prices in February fell by 4.4 percent in Guangzhou and 2.4 percent in Shanghai. About 40 percent of the factories in Guangdong, which accounts for 12 percent of China's gross domestic product, extended their Lunar New Year holiday this year because of the global recession, Stanley Lau, vice chairman of the Federation of Hong Kong Industries, said last month. This year the holiday ran from January 26 to February 9. The public holiday ended February 1, and factories usually reopen the next day. Prices will probably reach a bottom this year, but definitely not in the first half, said Colliers Lee.

Mar 11, 2009

Hong Kong: Hong Kong-listed HSBC shares plunged 24 percent Monday in its biggest single-day drop in history, dragging the Hang Seng Index down 4.84 percent, as the global lender headed towards its deeply discounted rights issue this week. As market heavyweight and one of world's biggest banks and financial service institutions, HSBC shares nearly doubled its daily loss during Hong Kong's closing auction session to close at 33 HK dollars, the lowest in nearly 14 years. Coincidentally, HSBC's higher HSI weighting took effect on Monday, raising HSBC's free-float adjusted HSI weighting to 15 percent from 9.17 percent. In plain terms, based on current HSBC share price, every one HK dollar's fall in HSBC translates into roughly 39 points fall for HSI. Hong Kong's benchmark index ended 576.94 points lower at 11,344. 58 on Monday, with HSBC alone accounting for a 409.47 points drop. Last week, HSBC reported a 70 percent drop in 2008 net profit as bad debts rose in the U.S. consumer business. The banking giant said it will raise 17.7 billion U.S. dollars from its shareholders through a large rights issue priced at 28 HK dollars per rights share in Hong Kong. The stock went into a tailspin, shedding approximately 42 percent during last week, wiping off 37 billion U.S. dollars off its market value. Some analysts believed that short sellers dumped the stock on Monday on hopes the price would slide further after the bank completed the rights issue.

HSBC suffered its worst drop in more than two decades yesterday, losing over HK$127 billion in market value following a last-second sell-down as investors scrambled to cash out of the embattled lender ahead of its rights issue. It dropped HK$10.50, or 24.14 per cent, to HK$33 in Hong Kong, against the HK$28 offering price set for the rights issue. The fall contributed 409 points to the Hang Seng Index's 576.94 point - or 4.84 per cent - fall. Selling pressure reached fever pitch during the 10-minute closing auction period when a single transaction in the final seconds of trading sent HSBC falling by 12.47 per cent. "Investors are quite concerned about its financial strength and are still worried about whether there will be another rights issue," said Teresa Chow, a fund manager at RBC Investment Management. "Some probably feel that they don't want to participate in this rights issue [and so] they just dump the shares they have." The single transaction shocked the market with 4.71 million HSBC shares dumped during the last few seconds of the auction, pushing the share price down to HK$33 after the bank had finished at HK$37.70 in normal trading hours. Traders said the transaction was executed as a "market" order three seconds before the market closed at 4.10pm. Because its volume exceeded other tenders, the entire 11.86 million shares priced in the auction were settled at HK$33. The markdown wiped out more than HK$48.4 billion in HSBC's market value. "When it reached HK$33, I thought it was a joke," said Francis Lun Sheung-nim, a general manager at Fulbright Securities. "There is strong evidence or suspicion of market manipulation." In London, HSBC closed 3.26 per cent lower at 349 pence, while in New York its American depositary receipts were trading 5.06 per cent lower at US$24.21 by midday. HSBC Holdings (SEHK: 0005, announcements, news) ' credit rating outlook was changed to negative from stable by Moody's Investor Service yesterday. David Wong, chairman of the Hong Kong Securities and Futures Industry Staff Union, suggested yesterday that Hong Kong Exchanges and Clearing (SEHK: 0388) abandon the auction pricing mechanism immediately and launch an investigation into the unusual price movement of HSBC in Hong Kong. The closing auction period was introduced last year by HKEx, extending trading hours by 10 minutes and allowing investors to determine closing prices through the use of tenders. The settlement price is determined by whichever level has the highest trading volume. Market watchers speculated that the sudden sell-down in HSBC could have been part of an attempt to disrupt its forthcoming rights issue. "[The seller] apparently made some noise that HSBC is under panic selling pressure," said one "long-only" fund manager. "We have stopped lending HSBC shares to hedge funds for short selling even though they paid us an 8 per cent interest cost." Panic selling hit other local lenders yesterday as well. Hang Seng Bank (SEHK: 0011, announcements, news) and Bank of East Asia (SEHK: 0023) fell 8.97 and 7.36 per cent respectively. BOC Hong Kong (Holdings) (SEHK: 2388) fell 4.55 per cent.

Financial Secretary John Tsang offers a bleak forecast to the Joint Business Community Lunch yesterday. Hong Kong will face the full force of the global downturn and may need more government action to help shore up the economy, the financial secretary has told business leaders. "As a small, open and services-led economy, Hong Kong will be affected by global downturns," said John Tsang Chun-wah. "We've seen it before in varying degrees. But this time it is clear that, with all the numbers streaming in, we are going to be hit very hard. "We are hurting now, but we have not seen the bottom. The worst is yet to come. I mention this not to be overly gloomy or pessimistic. Some might even say I am using scare tactics. I am not." Addressing the Joint Business Community Lunch yesterday, Mr Tsang presented a dire outlook. He rejected criticism of a miserly budget, saying the government would continue to tackle problems arising from the rapidly changing global economy. Since delivering his budget almost two weeks ago, headlines around the world have been dominated by more news of record corporate losses, government bailouts and deteriorating global trade. The government would reassess the need for further measures in a mid-year update of Hong Kong's economic health and prospects, he said. "Depending on the economic situation then, and the extent of the prevailing risks, I may have to consider further assistance for our community at that time. "In terms of managing public finances, some may feel I have so far been too cautious. Some have even called me gwoo hon, or a miser, but I think you would agree that it's the duty of every financial secretary to be prudent and conservative when managing your tax dollars. "There is a great deal of uncertainty out there. So much has happened within just one week of the budget. That is why I do not believe that you want me to give away too much of your hard-earned money, too readily and too fast." The budget's HK$10 billion package of relief and job-creation measures was widely criticised for not going far enough, especially since the city's reserves will total an estimated HK$488 billion by the end of this month. But Mr Tsang stressed the need to remain financially prudent. "My approach has proved unpopular with some people. But, I believe, for the sake of future generations, for the sake of our young people, it is wise to keep the reserves up our sleeves for the time being. "It is about our ability to survive during this crisis period that is full of uncertainty and volatility and our ability to achieve a soft landing in this turbulent environment." Asked to clarify details of his initiative on issuing government bonds, he said the funds raised could be used for infrastructure or environmental projects, but not for recurrent expenditure. "We don't really want to spend the borrowed money, but rather we want to spend the profits we could make on the money that we borrow. This is for a much longer term, but we will be disclosing more of the details as we proceed."

Since the beginning of the credit crunch, Swiss bank UBS has axed more than 8,000 jobs, including a few hundred staff in Hong Kong. UBS has lost a huge chunk of one of its most successful Hong Kong investment banking teams after paying bonuses in Asia that were in many cases 95 per cent below the performance pay cheques staff received a year ago. The co-heads of the bank's equity derivatives practice, Min Park and Kenneth Pang, resigned last Friday with 10 of their staff. The entire team is understood to be joining rival Credit Suisse, although neither Swiss bank would confirm this. Mr Park and Mr Pang, who were both managing directors at UBS, refused to comment. Sources said the pair could get sued by UBS if they talked publicly about their move. Sources said the two bankers were likely to have been guaranteed multimillion-dollar bonuses for this year by Credit Suisse. They are thought to have left UBS after being dissatisfied with their payouts for last year. Across Asia, insiders and headhunters said most UBS bankers received a bonus for 2008 of just 5 per cent of the 2007 amount. "That figure is about right, though some performers got more and some non-performers got less," a source confirmed. A senior UBS banker based in Asia said he and some of his team were also keen to leave the loss-making Swiss institution as their shrivelled bonus cheques had made them feel angry and undervalued. "The situation here is very unhappy," the banker said. Separately, Goldman Sachs, JP Morgan and Deutsche Bank are thought to be eyeing UBS' prized mainland joint venture UBS Securities to see if any of its capital markets bankers are willing to jump ship. UBS was a big victim of the credit crisis, suffering a US$17 billion loss last year, the largest in Swiss corporate history. Credit Suisse made a comparatively smaller US$7 billion loss. Since the onset of the crunch, UBS has axed more than 8,000 jobs, including a few hundred in Hong Kong. In October last year, it received a US$60 billion bailout package from the Swiss government. In common with many other banks taking state aid, UBS greatly reduced staff bonuses to placate taxpayers and politicians. Worldwide, UBS paid less than 2 billion Swiss francs (HK$13.38 billion) in bonuses for last year against 9.5 billion francs for 2007. Equity derivatives are complex financial instruments that hedge funds and large financial institutions use to bet on the future performance of share prices. Under Mr Park and Mr Pang, UBS topped trade magazine Asiamoney's annual structured products poll every year from 2004 to 2008. Last year, Credit Suisse came second in the rankings.

The volume of cargo passing through Hong Kong's ports shrank 6 per cent in the fourth quarter of last year compared with the year before, reversing a 9 per cent increase in the third quarter. Census and Statistics Department figures showed port cargo throughput fell 6 per cent year on year to 61.3 million tonnes, as global trade succumbed to the credit crunch and deepening recession. Of this total, imports and other inward shipments, such as trans-shipments, declined 6 per cent to 34.4 million tonnes, while outward-bound cargo dropped 5 per cent to 26.9 million tonnes. Significantly, the quarter-on-quarter decline was 10 per cent, of which in-bound cargo dropped 8 per cent and out-bound shipments fell 12 per cent. For the whole year, total port cargo rose 6 per cent to 259.4 million tonnes. With the deepening downturn sapping global demand and consumer spending, many factories in the Pearl River Delta are idle as orders dry up or are delayed. The throughput of iron and steel recorded double-digit declines. Incoming shipments fell almost one-third year on year in the fourth quarter of last year, while out-bound shipments dropped 21 per cent. Last year, inward and outward iron and steel throughput shrank 15 per cent and 10 per cent, respectively. But other commodity throughput continued to grow in the fourth quarter, including petroleum, live animals and edible animal products, as well as stone, metal scrap and waste paper. River transport in the Pearl River Delta area increased 8 per cent in the fourth quarter year on year, but the growth was far slower than the 25 per cent jump recorded in the third quarter. Seaborne cargo by vessels outside rivers declined 11 per cent year on year compared with a 3 per cent rise in the third quarter. For the whole year, the river trade improved 17 per cent but seaborne cargo edged up only 1 per cent.

Almost 40 members of the Hong Kong General Chamber of Commerce have signed up to provide more than 100 trainee jobs for this year's graduates as part of a government-backed scheme to get young people into work. Cheung Kong (Holdings) is among those of the chamber's 4,000 members to have signed up and is offering the largest number of posts. Some 53 one-year internship posts are up for grabs at its hotels, 20 of them in housekeeping, food and beverage, engineering, front desk and purchasing. The remainder will have rotating positions. Among other places on offer within companies so far slated to take part in the chamber's graduate trainee campaign are: investment analyst and actuarial analyst at Watson Wyatt; MPF scheme associate at Bank Consortium Trust; management trainee at CSL; merchandiser and product designer at Harilela Group; customer services ambassador at China Resources Property; assistant surveyor at Colliers; regulatory assistant at Cable & Satellite Broadcasting Association of Asia; and graduate trainees at Towngas and CLP Power. No positions on the mainland have been made available so far.

China: The Shenzhen municipal government has begun seeking opinions from developers about their land purchases before officially releasing sites for sale this year, sparking speculation it may change the land auction system. Developers said the government might remodel land sales from the open auction method to a system similar to the application list in Hong Kong to ensure there would be buyers. "Last month, they asked us a number of questions like: `Do you want to buy land sites now? Where do you want to buy? What kind of land plots will lure your interests?'," a senior manager at a local developer said. "I have a feeling they are preparing to launch a new land sale system modelled after Hong Kong." Under Hong Kong's application list system, a developer can trigger an auction of a site in the land reserve list by making a guaranteed bid that is at least 80 per cent of a site's minimum price. "[The government] started seeking our opinions at the end of last year," the manager said. With the ailing property market, developers are less aggressive in triggering sites for auction and site withdrawal by the government can harm market sentiment further. The application list system will ensure government sites for sale will not be withdrawn. Poor land sales in Shenzhen last year might prompt the government to ask the questions, the manager said. However, the government had not disclosed any plan to change the land sale system, he added. Shenzhen launched 20 residential and residential-commercial sites last year. Of the sites, nine, all in the suburbs, were withdrawn after failing to attract builders' interest. Wang Wenjin, an executive vice-president of China Vanke, the largest developer on the mainland, also confirmed that Shenzhen had tested their buying interest recently. Mr Wang believed the government would gauge developers' interest before it announced the land sale system. It would not openly launch anything that would harm the market, he said. The municipal government did not comment on the issue and a spokesman said the city's land sale system through public auctions and tenders remained unchanged. Meanwhile, sales volume has shown a strong improvement in Shenzhen's residential market since November last year. Last month, 488,840 square metres of residential space were sold. This compares with average monthly sales of 339,600 sqmetres last year, according to soufun.com.

Vice-Premier Wang Qishan yesterday poured cold water on mainland companies' overseas acquisition ambitions amid plunging asset prices worldwide, urging Chinese entrepreneurs to think carefully before embarking on bargain hunting. Mr Wang's remarks on the issue, the first by a policymaker, have reflected the concerns of the central government over the apparent rush by mainland firms to buy distressed assets offloaded by western banks and companies. Mainland firms have recently increased overseas mergers and acquisitions, led by a US$19.5 billion investment by Aluminum Corp of China (SEHK: 2600) for a stake in Anglo-Australian mining firm Rio Tinto Group. Although most of the deals so far have been confined to energy and resources, there have been mounting calls for mainland manufacturers and financial institutions to buy into overseas assets. The mainland leadership is under increasing pressure at home to diversify its foreign exchange reserves worth almost US$2 trillion, of which more than US$1 trillion has been invested in the low-yield US government securities. Mr Wang, in charge of economic and financial affairs in the State Council, issued the warning in a group discussion with Hunan deputies to the National People's Congress yesterday. Xiang Wenbo, the chief executive of one of the mainland's most successful heavy machinery manufacturers, directed his question to Mr Wang and pleaded for more government assistance, including bank credit to finance possible acquisition deals. "Are you sure of your managerial skills? Have you analysed the corporate culture differences between the two parties? Do you understand how to deal with unions and their relations with management in the country [where your target company is based]?" Mr Wang reeled off a string of questions in an apparent sceptical tone to Mr Xiang of Hunan-based Sany Heavy Industries, according to the China News Service. "If you don't know your target and yourselves well, your ambition really scares me. "The success of a company depends on personal connections and the environment. You are successful in Hunan and China but not necessarily so in a foreign country. "We should be adventurous but, at the same time, we have to be reasonable. "If you need the money, I will give you the money but you should first study your target company thoroughly before I can tell you my answer." Chinese enterprises and financial services companies have a poor record in overseas investments. China Investment Corp, the country's US$200 billion sovereign wealth fund, has been regularly criticised for disastrous investments in Morgan Stanley and Blackstone. CIC has up to 90 per cent of its overseas portfolio, amounting to US$90 billion, in the form of cash or other highly liquid assets, Jesse Wang Jianxi, its vice-president, said on the sidelines of the annual plenary session of the Chinese People's Political Consultative Conference. "Asset prices, such as shares in HSBC (SEHK: 0005, announcements, news) and Citi look enticing but we can't make purchases simply because of low price," Mr Wang said. Analysts believed the risk aversion was a response to ferocious public criticism of the heavy losses, although on paper, that the mainland companies incurred on their previous investment moves.

Capital expenditure on a nationwide 3G mobile network for the mainland is expected to exceed 400 billion yuan over the next three years. A price war in the mainland's mobile communications market has started to heat up ahead of the launch of 3G services later this year. China Mobile (SEHK: 0941, announcements, news) cut its prepaid monthly usage fees last week for a 60-minute voice package as much as 68 per cent to as little as 3 yuan (HK$3.40) following rival China Telecom (SEHK: 0728)'s introduction of a cut-price rate plan to lure new subscribers. China Mobile said its prepaid service, Xinzhouxin, would charge users in Beijing 3 yuan per month for 60 minutes and 5 yuan per month for 40 text messages, targeting the low- usage market. The charge per minute thereafter would be 40 fen. Charges under this prepaid plan would be capped at 10 yuan per month. Previously, China Mobile Beijing charged users 5 yuan per month for 30 minutes. With this package, China Mobile has lowered its per-minute usage fee to as little as 5 fen, down from 16.6 fen in previous plans. China Mobile has also launched a new 1 yuan roaming package for prepaid users. Users paying 1 yuan per month will enjoy a 39 fen per minute domestic roaming usage fee for both receiving and making telephone calls. Non-subscribers to the package need to pay 60 fen per minute for making a call and 40 fen per minute for receiving a call when travelling outside their hometown. The carrier has also cut mobile internet usage fees for prepaid users by lowering the entry level to 5 yuan per month for 30 megabytes of usage. Previously, prepaid users paid 5 yuan per month for 10 megabytes. The company offers a series of mobile internet packages from 20 to 200 yuan per month for 150 to 5,000 megabytes. Market watchers said China Mobile's lower fees were in response to rival China Telecom charging users as little as 11 fen per minute for voice service and offering free unlimited mobile internet usage until June. "China Mobile and other mobile operators are capturing market share in the new competitive landscape," an industry watcher said. "It could be the best way for China Mobile to retain customers and lure new users." The unfolding price war among mainland mobile operators has been sparked by the soon-to-be-launched nationwide 3G mobile network. China Mobile, China Telecom and China Unicom (SEHK: 0762, announcements, news) are busy preparing for the new service, with capital expenditure on the new network expected to exceed 400 billion yuan over the next three years. China Mobile, which holds more than 80 per cent of the cellular market, has enjoyed a head start in the 3G market over rivals, with the company already operating services in 10 cities based on homegrown TD-SCDMA technology. However, customers have not responded well to the service, with complaints about poor-quality handsets compared with telephones made by foreign vendors. China Mobile chairman Wang Jianzhou said the company would provide 600 million yuan for research and development on TD-SCDMA-compatible handsets in collaboration with international vendors to improve quality. Credit Suisse analyst Jeffery Tan wrote in a research note yesterday that equipment makers were facing funding difficulties owing to slow commercialisation and the financial market turmoil. "The TD-SCDMA network in Beijing has become more stable, but the main challenge is still on the handset side," Mr Tan wrote in the note. "There are currently 40 TD-SCDMA handset models in the market, but this is still far below the variety of models being offered by other 3G standards."

China Vanke, the country's largest locally listed property developer, aims to achieve higher unit sales and revenue this year by improving the competitiveness of its products and cutting administrative expenses and operating costs by 20 per cent. The company reported yesterday a 16.7 per cent fall in net profit to 4.03 billion yuan (HK$4.57 billion) for the year to last December, from 4.84 billion yuan in 2007. Sales rose 15.3 per cent to 38.6 billion yuan. Vanke declared a final dividend of 5 fen per share, compared with 10 fen in 2007. Executive vice-president Xiao Li said that excluding a write-down on the value of some projects, the company's earnings last year were similar to those of 2007. Vanke took a 1.23 billion yuan charge to reflect the reduced value of 13 projects, cutting after-tax income by 920 million yuan. "Housing prices in 2008 in major cities generally declined," Vanke president Yu Liang said. "As many projects to be booked in 2009 came from the sales in 2008, the gross margin of the housing industry is expected to drop sharply this year." Vanke cut the prices of homes it sold by an average of 10 to 15 per cent last year. The mainland developer also reduced the amount of floor space it completed by 33 per cent to 5.23 million square metres. The company said in a statement it would continue to face challenges because of the uncertain economic climate, but it still hoped sales in terms of floor space would rise this year. The developer plans to complete 6.19 million square metres of home building this year, a 17 per cent increase from last year. Chairman Wang Shi said the slump in the mainland property market might have bottomed out. However, there could be declines in certain areas such as the eastern regions, he said. Mr Wang said the Pearl River Delta market could see the bottom after having fallen for more than a year, while ruling out a slump in prices in northern China. Vanke's sales in February rose 150 per cent from a year earlier to 3.9 billion yuan, said Ms Xiao. The company said home sales rose 19 per cent in January from a year earlier, the first increase in eight months since Vanke trimmed prices.

China Green Agriculture Inc., the first Chinese company listed on the new New York Stock Exchange Amex market, opened for trading on Monday. Green Agriculture, which produces and distributes humic acid based liquid compound fertilizer, is also the first Chinese company to list on NYSE Euronext markets in 2009. "Today is an exciting milestone in the company's continued growth," said Tao Li, chief executive officer of China Green Agriculture. "Since becoming a public company last year, we have devoted a great deal of resources to improving our corporate governance and level of oversight in order to meet the requirements of a more senior exchange," he added. So far, NYSE Euronext has 66 companies listed from Greater China, including 56 companies from mainland China listed on the NYSE Euronext, 5 from Hong Kong on NYSE Euronext Markets, and 5 Taiwanese companies on NYSE Euronext Markets. The total global market capitalization of NYSE Euronext-listed companies from the mainland China is 1.1 trillion U.S. dollars, and 1.2 trillion for all companies from Greater China.

China plans to launch 15 to 16 satellites this year, Zhang Jianqi, deputy chief commander of the manned space project, said here Monday. "Though the global financial crisis is taking toll on world economy, it has no impact on China's space programs," Zhang, a deputy to the National People's Congress (NPC), the country's top legislature, told media. China is at present "batch-producing" the three spacecraft, Shenzhou-8, Shenzhou-9 and Shenzhou-10, according to Zhang. "This is the first time for the country to conduct researches and production on three spacecraft at the same time," he said. China plans to launch Tiangong-1, an unmanned space module, into orbit by the end of 2010, he said. The country plans to launch the Shenzhou-8 and Shenzhou-9 spacecraft in 2011, a former chief designer of the manned-space project said earlier. Zhang said the country is selecting a new batch of taikonauts, which may include the country's first female taikonaut. China has sent an average of eight satellites into space annually during the first two years of its 11th five-year-plan (2006-2010), and the number was 1.5 before its ninth five-year-plan (1996-2000), figures from the China Academy of Space Technology showed.

China, Singapore invest in new Tianjin Eco-city - Photo taken on March 6, 2009 shows the Rainbow Bridge connecting the central districts of north China's Tianjin city and the new Tianjin Eco-City. China's National Development and Reform Commission (NDRC) has recently approved the establishment of the startup area of the new Tianjin Eco-City, a project with 12 billion yuan's investment sponsored by both Chinese and Singaporean companies.

Mar 10, 2009

Hong Kong: More than 3,000 Hong Kong factories in the Pearl River Delta region are closed or idle because they have no orders, despite expectations that they would have reopened by now after an extended Lunar New Year holiday. Danny Lau Tat-pong, chairman of the Hong Kong Small and Medium Enterprises Association, said he estimated that about 3,200 factories, or 5 per cent of the 65,000 Hong Kong-invested factories in the delta, had not resumed operations after the holiday. "With workforces ranging from a few to thousands of employees ... these factories have halted operations because they have no orders," Mr Lau said, adding that many toy and clothing manufacturers had been hit hardest. "Some may have their bosses or a few staff returning to the factories to guard machinery ... but their businesses are idle." Factories normally reopen on the 15th day of the first lunar month, which this year was February 9. But many factories had sent workers home on extended holidays because of a lack of orders before the Lunar New Year, as orders from throughout the world diminished in the face of the global financial crisis. "In some streets [in delta industrial towns], there are only 20 to 30 per cent of factories operating," Mr Lau said, adding that about 5,000 factories had closed since the financial crisis began last year. He said about 40 per cent of 65,000 factories had resumed production at 50 per cent of capacity, reducing workers' hours or operating only parts of their production lines. Orders had plunged by half compared with the same period last year. About one-fifth had lost 30 per cent of orders, he said, while about 30 per cent had lost 10 per cent of their business. Gordon Chan Yan-ting, president of the Hong Kong Auto Parts Industry Association, said he had heard that many Hong Kong-owned toy and garment factories on the mainland would remain shut until next month because of declining overseas orders. "According to industry sources, many factories are adopting a wait-and-see approach because the cost is lower if a factory remains closed than if it opens but without orders," Mr Chan said.

Chan Kam-hoi demonstrates the workings of an electronic records system that was recently installed at Yan Chai Hospital. A new electronic system to help busy doctors hand over patient information to peers on the next shift has been introduced to support the Hospital Authority's work reform. The authority's director of cluster services, Cheung Wai-lun, said public doctors used to work long hours to care for the same patients. "While public hospitals are cutting doctors' continuous work hours, the handover of patients from one doctor to another is very important in picking up high-risk cases," Dr Cheung said. Chan Kam-hoi, associate consultant in medicine at Yan Chai Hospital, where the electronic handover system was introduced this year, said the system helped doctors identify high-risk patients. The same system is also used at Pok Oi and Tseung Kwan O hospitals. Doctors at public hospitals were very busy and might not have the time to meet to hand over cases, he said. "This electronic system allows doctors to put down details of high-risk patients to remind their peers on the next shift. Both doctors and nurses can log on to the same system," he said. "In the past, night doctors used to carry pieces of paper about high-risk patients, information in their pockets, and sometimes they just lost them when they were busy running around." The authority has also recently introduced a scoring system to assess patients' needs for emergency care. The modified early-warning score system keeps track of patients' vital signs. Dr Cheung said it served as a "common language" for doctors and nurses to communicate more effectively, especially over the phone, about a patient's condition.

Hong Kong's economy is being battered and bruised as banks lay off high-earning staff and western private equity and hedge funds shut up shop and leave. But as property prices retreat to reflect falling demand from top-paid earners, a new breed of value investors are being lured to town. Duet, a London-based hedge fund and private equity investor that manages US$2 billion of assets, will launch a Hong Kong-based China Fund in the final quarter of the year. It plans to hunt for rich pickings in the mainland's troubled real estate sector. Co-chairman Henry Gabay said Duet planned to raise US$400 million from pension funds and wealthy individuals. Duet is not a traditional vulture investor - the asset traders who buy distressed companies' debt for cents in the dollar, wait for a bankruptcy settlement and then convert the loans into shares. However, it is the latest in a line of similar investors setting up shop in Hong Kong and plans to hunt for cheap development land that cash-strapped property firms want to sell off quickly, potentially turning others' pain into a gain. Another is MCapital, founded last year by Mark Devonshire, Merrill Lynch's former senior debt trader, who left Merrill to set up the firm to buy troubled companies' loans. Edwin Wong, previously the head of special situations investing at Lehman Brothers, has also started a hedge fund to invest in troubled businesses. He left Lehman shortly after it stumbled into Nomura's arms last September. Duet is likely to attract investors. It performed well last year, a time when most money managers plunged deeply into the red, recording a 3 per cent performance gain. Mr Gabay confirmed in an e-mail exchange that the money manager was launching on the mainland and would focus on real estate and other private equity opportunities, and wanted to raise "US$300 million to US$400 million". The shares of mainland property developers have crashed in recent months in parallel with the country's slowing economic growth. Guangdong luxury home builder Hopson Developments Holdings, for example, has plunged 46 per cent since the start of the year and Zhong An Real Estate, which builds offices and hotels along the Yangtze River Delta, is down 35 per cent. Vulture funds may not be to everyone's liking, but they do employ laid-off bankers, import wealthy expats, and often restructure or inject cash into businesses that would have otherwise failed. Mr Gabay said it was too early to discuss hiring plans. Western money managers are divided on their Asian strategies. Some, like Duet, see falling company valuations as an opportunity. But others are retrenching to their home markets as the global recession makes them want to cut costs. GSO Capital Partners, which is owned by American buyout giant Blackstone Group, closed its local investment desk last month. American hedge fund Cerberus is also closing its Hong Kong office after less than two years in the city.

Twenty Hong Kong journalism students and four teachers returned to the city yesterday after seven days in Beijing covering the congresses. The trip was organised by the Journalism Education Foundation and participants came from the University of Hong Kong and Chinese, Baptist and Shue Yan universities. With the support of the South China Morning Post (SEHK: 0583) , Sing Tao Daily, Hong Kong Economic Times and Commercial Radio, the students were given first-hand experience in covering the two major national events. Students went to the openings of the Chinese People's Political Consultative Conference and the National People's Congress, and joined the hundreds of reporters covering briefings held by officials and regional delegations. They also met journalism students from Peking and Tsinghua universities. Apart from working with reporters to get quotes and pictures, the students also wrote for their own publications. Baptist University students uploaded articles to the website of their department's publication. Adrian Wan Chun-ho, a third-year Baptist University student, said it was a wonderful experience. "I have never seen, nor reported on, such a big event," he said. "It is an eye-opening experience." The chairman of the Journalism Education Foundation and editor of the Post, C.K. Lau, said the programme offered students a chance to broaden their international perspective and would help give them a better understanding of the country, so they would not merely cover news from Hong Kong's perspective.

Michelin-star chefs and culinary celebrities are expected to highlight Hong Kong as a gourmets' paradise in October with a series of food and wine tastings, demonstrations and other festivities as part of a new tourism event. The two-week event will be launched with an outdoor wine carnival in West Kowloon. At weekends, Lan Kwai Fong and SoHo will host food and wine street parties, with music performances and tastings. The areas would be pedestrian-only zones, a Hong Kong Tourism Board spokesman said. In January, the board said it intended to spend HK$112.1 million, or more than a third of its proposed budget, promoting the city's shops, restaurants and hiking trails to visitors, with a particular focus on food and wine. The new World of Food and Wine festival, which is expected to become an annual event, will coincide with the Trade Development Council's Hong Kong International Wine Fair in early November. Lan Kwai Fong founder Allan Zeman who is meeting government and tourism officials tomorrow to discuss the event, said the government was looking at ways to enhance Hong Kong following the launch of the Michelin guide's local edition late last year.

Financial Secretary John Tsang Chun-wah will review the economy in the middle of the year to see what further complications Hong Kong will face if conditions worsen globally. Tsang is under pressure to provide additional relief measures since the release of his budget 12 days ago. He hinted at considering additional assistance if conditions worsen. Speaking on the radio program Letter to Hong Kong, Tsang said given the unpredictable global markets, it is difficult to say what further complications the economy will face. "Because the global economic crisis is still evolving and evolving quickly, I will constantly review the situation," he said. The only certainty is that it is vital for Hong Kong to err on the side of caution, and prepare for even more shocks ahead, he warned. Tsang reiterated the HK$300 billion spending plans and relief measures proposed in the budget are enough. "At this point in time, I firmly believe that, yes, it does go far enough," Tsang said, adding he had to strike a careful balance between stimulating the economy and promoting a caring community. The 23 legislators of the pan-democratic camp have threatened to veto Tsang's budget if he does not further open the public purse. They proposed an extra HK$20 billion package for an unemployment assistance scheme, increasing the transport allowance scheme, and creating an extra 60,000 jobs. They will take the proposal to Tsang this week. Apart from the nine Democratic Alliance for the Betterment and Progress of Hong Kong lawmakers who had said they will vote for the budget, most lawmakers have not defined their position. Despite the 120,000 jobs and internships that the government will create, Tsang is expecting the unemployment rate in the coming months to rise above the current 4.6 percent. Last week, Vice President Xi Jinping predicted Hong Kong's unemployment rate will surge above 6 percent. Tsang called for patience to give the government time to create jobs and to stimulate the economy. "Although revenue will shrink next year, government spending will not. With so much uncertainty in the air, we cannot risk exhausting our ammunition so fast that we limit our room to maneuver in the months ahead." He added that once the economy begins to recover, he sees new opportunities in high-tech and creative industries as well as the green economy.

Government staff who ignore data protection guidelines will face disciplinary action, Secretary for Security Ambrose Lee Siu-kong warned yesterday in reaction to the latest loss of data through file- sharing software Foxy.

Compulsory drug testing may be introduced in schools to combat a growing number of young abusers, RTHK's City Forum heard yesterday.

Cyberport is confident of continuing its positive cash position, although rental income is set to be dented by the financial crisis, said Hong Kong Cyberport Management Company chief executive Nicholas Yang. "We have not seen the worst yet," Yang said. "It's going to be a tough year." He expects office rentals to fall by a further 10 percent this year. Rent for commercial space slid 40 percent over the past eight months. "Unfortunately, we have to follow the market," Yang said. Unlike the government project Hong Kong Science Park, Yang said Cyberport is a private limited firm and does not have an official rent level. Although the economic downturn hit rental income, Cyberport expects sustained growth in operating profit excluding income from its residential project, it said in a report to lawmakers this month. Yang said the company has cut costs over the past year including its energy bills by 10 percent but it has no plan to sack workers. He said Cyberport had outsourced about 50 jobs since 2003 and now directly employs 50. The office occupancy rate went up to 87.9 percent as of January 31 from 86.8 percent a year earlier. "We delayed rental payment to help small tenants to weather the financial crisis," Yang said. As of January 31, 19 of 52 office tenants were small- and medium-sized enterprises. The occupancy rate of Cyberport's shopping arcade slid to 83.6 percent in January from 84.8 percent year-on-year, while the number of retail outlets dropped to 29 from 31. Operating profit before financial cost, tax and depreciation, excluding income from residential project Bel-Air, amounted to HK$103 million for the year ended March 31 last year, nearly triple the HK$36 million a year earlier. Cyberport has four office buildings, a hotel, an arcade and residences developed by Richard Li Tzar- kai's Pacific Century Premium Development (0432).

Cathay Pacific Airways (0293) is expected to post a record net loss of HK$8 billion for 2008, hit by mark-to-market fuel hedging losses, analysts say, adding that lower fuel prices may not offset the decline in traffic income.

China: Top China leaders are concerned that the United States still has not committed itself to the 2010 World Expo, Shanghai organisers said yesterday. Wan Jifei, director of the event's executive committee, said the US had not given a formal, written commitment to take part in the expo, but had made a verbal promise. "Our state leaders have conveyed concerns about the participation of the US. The Chinese ambassador in the US has also expressed the concerns," Mr Wan said in Beijing. The absence of the US would deal a huge blow to the expo - billed as the biggest international event in the nation since the Olympic Games last year. Beijing is keen to use to event to promote the country's growing clout on the world stage. The Los Angeles Times reported in January that the US might not take part in the expo because organisers were struggling to raise funds for a national pavilion, with sponsorship drying up amid the global economic crisis. Shanghai World Expo Co-ordination Bureau deputy director Zhou Hanmin said the US pavilion preparation team's announcement last week that 3M Corp had become a sponsor was a positive development. None of the 231 countries and organisations that had pledged to attend the expo had pulled out, despite the financial crisis, Mr Zhou said. He said the expo would "at least be able to make ends meet" and hoped 62 million tickets costing 160 yuan (HK$181) would be sold. "We expect expo visitors to make 70 million trips, which is a conservative estimate. About 5-10 per cent will be overseas visitors including [those from] Hong Kong and Macau. Most of the rest will come from the Yangtze River Delta," he said. The event has a budget of 18 billion yuan for venue construction and 10.6 billion yuan for operating capital. Funding would come from the central government, the Shanghai government and corporate sponsors, Mr Zhou said. The mainland won the right to host the World Expo in 2002, a year after Beijing succeeded with its bid to host the 2008 Olympics. Authorities hoped the two international events would showcase the nation's rising influence. It is still not known whether the Olympics were profitable or not. The Olympic organising committee had promised to make ends meet, or to make a slim profit. The nation's top auditor has admitted that his office had not yet looked into the spending for the Games. Information on the Olympics budget has been controlled tightly. While Beijing says the organising committee's operating costs and spending on venues totalled more than US$4 billion, overseas media has estimated a cost of US$43 billion.

Payments from bonds used to finance loan transfers may be a problem. ICBC has 313 billion yuan of bonds that mature next year and 2011. China's two biggest banks will invest about US$2 billion for up to 49 per cent stakes in asset management companies that are expanding into securities brokering, trusts and insurance, sources said. The new money, however, will do little to deal with the massive debt burden at the two asset managers. "The asset managers will have the largest capitalised banks in the world behind them who are interested in their expanded business so there are valid business reasons why this should happen," a source said. Industrial and Commercial Bank of China (SEHK: 1398) would inject at least US$1 billion into China Huarong Asset Management, which bought the bank's bad debt 10 years ago, while China Construction Bank (SEHK: 0939) Corp would also pay at least US$1 billion to buy into China Cinda Asset Management, the money manager responsible for its debt.

The effort by Shenzhen and Hong Kong to overcome the financial crisis would strengthen the partnership between the cities, Shenzhen's mayor said in Beijing yesterday. Xu Zongheng said the flow of people and cash between the two cities would increase in the coming year thanks to a new visa agreement and building of cross-border transport and economic infrastructure. Mr Xu said that the number of Shenzhen residents who qualified for the simplified tourism visa application procedure could reach nearly 9 million by May. Among them, more than 2 million citizens holding the city's permanent residence permits would be allowed to apply for multiple-entry tourism visas, a measure experts see as greatly encouraging tourism. Citizens without the permit, such as migrant workers from inland provinces, would be eligible to apply for single-entry visas. Previously, they had to return to their place of birth to get approval from public security bureaus there. "Our government has done a huge amount of work to make it happen and I think the new policy will have a positive impact on Hong Kong's prosperity (SEHK: 0803) and social stability," Mr Xu said. Experts from the cities are compiling a proposal to build cross-border facilities, including customs, and it would be submitted to Beijing when the first stage was completed. But he did not give a specific timeline or further details.

The city of Wenzhou in eastern China, an export-oriented manufacturing mecca, is experiencing an economic recovery thanks to Beijing's stimulus measures and the capacity of privately owned local firms to address challenges. Renowned for its free-wheeling entrepreneurs, Wenzhou is a barometer of the mainland's industrial economy. Businessmen from the city, in Zhejiang province south of Shanghai, have invested in property across the country and set up shop around the world. Shao Zhanwei, the city's Communist Party secretary, said Wenzhou was targeting 9 per cent growth this year, up from 8.5 per cent last year, which was below the national rate of 9 per cent. "I'm sure that things will turn better in March as compared with the first two months, and in the second quarter as compared with the first quarter," Mr Shao said on the sidelines of the National People's Congress. "The economy will keep accelerating quarter by quarter." A recent survey of 7,300 big local firms showed that about 74 per cent had been running at full capacity since the Lunar New Year holidays ended a month ago, while electricity consumption had gradually picked up and was almost back to pre-slowdown levels by the end of last month, Mr Shao said. "On the one hand, the global financial crisis has yet to bottom out," he said. "On the other hand, companies are better able to expand into new markets and look for alternative ways to address the crisis." Mr Shao said Beijing's 4 trillion yuan (HK$4.54 trillion) stimulus package and accompanying measures to boost 10 key industries would benefit local firms such as Chint Group. Nan Cunhui, chairman of Chint, which makes power-distribution and communications equipment, said orders last month were up by two-thirds from a year earlier and by 92 per cent from January. The timing of the Lunar New Year holiday, which fell in February last year and January this year, is a cause of volatility in orders and output. But Mr Nan said of the jump in new business: "This shows we are feeling the impact of the country's infrastructure investment." Chint plans to invest 2 billion yuan this year to upgrade its factories producing high- and low-voltage electrical gear. It will also plough 5 billion yuan into a solar energy project launched last year in Hangzhou, the provincial capital, he said. Mr Shao said the main concern of Wenzhou right now was the outlook for exports; shipments of leather shoes to Russia were falling, and barriers were going up overseas against Chinese-made goods, he said. Net exports account for almost 40 per cent of Wenzhou's economic growth. Another recent survey, this time of 873 local firms, showed almost one-third were experiencing falling orders, particularly from overseas; a further 9.3 per cent of respondents said they were getting next to no new business at all. But compared with other parts of the mainland, Mr Shao said, companies in Wenzhou would be the first to emerge from the global crisis. The city's exports fell 1.4 per cent in January from a year earlier, compared with a nationwide drop of 17.5 per cent, and shipments to the United States and Europe actually rose because of their low prices, he said. Wenzhou's private businesses typically fund themselves through informal financing channels, not through bank loans.

Another Chinese delegation of businesses and industry leaders, led by the Ministry of Commerce (MOC), left for four European countries Saturday for investment and economic cooperation, the MOC said. The business delegation, following purchases totaled more than 10 billion U.S. dollars in Europe by a Chinese procurement delegation in late February, are heading for the same destinations of Germany, Switzerland, Spain and Britain. The new delegation will explore investment opportunities on areas of automobile, machinery, textile, food, electronics and technologies relating to energy saving and environment protection. An MOC official said "the move would further strengthen cooperation between Chin and Europe and create a win-win result in tackling the global economic downturn." The delegation are composed of more than 20 top Chinese companies, as well as several national trade associations and government officials.

Development of new energy should be established as an important strategy for China to address energy shortage and environmental woes, Zhang Guobao, head of the National Energy Administration, said Saturday. To develop new sources of energy has become an important strategy for many countries to fight for a dominance in the combat against climate change, and China should closely follow global developments in this area, beef up R&D of new energy technologies, and invest more in the industry, said Zhang. "If we fail to address the development of new energy from a higher horizon, we will regret to find ourselves falling behind others within 10 years," said Zhang, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC). Zhang's advocation is echoed by Ouyang Minggao, who underlined the use of new-energy vehicles at the same plenary meeting of the top political advisory body. "The promotion of energy-efficient and new-energy vehicles is a necessary step in the country's energy development and in the revival of the auto industry," said Ouyang, a Tsinghua University professor. In China, coal makes up about 70 percent of its total energy consumption, 40 percentage points higher than the world average. The country is seeking the development of other energy sources than coal to shift its heavy reliance on coal and reduce pollution. Premier Wen Jiabao said in the government work report delivered to lawmakers Thursday that the country will "energetically develop a circular economy and clean energy." The country would promote R&D on technologies in new energy sources and develop clean energy such as nuclear, wind, and solar power this year, according to Wen's report. Yang Qi, honorary president of the Nuclear Power Institute of China and a CPPCC National Committee member, urged the country to develop new technologies to conserve energy and reduce emissions. He said the country is stressed by targets to improve energy efficiency and reduce emissions, as the country is expected to initiate more projects under the huge 4-trillion-yuan stimulus plan. Premier Wen said Thursday the country's energy consumption per unit of GDP fell by 4.59 percent from the previous year, chemical oxygen demand down by 4.42 percent, and sulfur dioxide emissions down by 5.95 percent. Over the past three years, total energy consumption per unit of GDP dropped by 10.08 percent, chemical oxygen demand down by 6.61 percent, and sulfur dioxide emissions down by 8.95 percent, according to the Premier. China aims to cut energy consumption for every 10,000 yuan (1,298 U.S. dollars) of GDP by 20 percent from 2006 to 2010, with emissions to drop 10 percent.

General Motors ended the second-worst fiscal year of its 100-year history with an annual loss of 30.9 billion U.S. dollars in 2008. Its earnings in China are still unknown, but vehicle sales climbed 6.1 percent in China while global sales plummeted 10.8 percent from 2007. GM is the epitome of a handful of transnational corporations (TNCs) whose China earnings have partially offset trouble in the global recession and even saved some smaller multinationals from closure, analysts say. "China is one of GM's most important markets. A success in China will be crucial to the company's global business," says a GM(China) spokesman. Although on the brink of bankruptcy, GM is expanding in China because of the sales growth, in contrast to the U.S., where it's shutting plants and seeking government bailouts. The auto giant planned to introduce at least 10 new models to the Chinese market in the next two years. Toyota Motor, the Japanese auto giant, sold 17 percent more vehicles in China last year while its global sales tumbled 5 percent from 2007. Growing China sales have become a highlight in the annual fiscal reports of many multinationals. Some, such as Siemens, PepsiCo, Coca-Cola and ABB, have even announced new investment in China. "A company will be able to resist the global financial crisis only after its products are sold and it has the money to weather financial difficulties," says Zhang Hanya, an economist with the National Development and Reform Commission (NDRC), the country's economic planner. China has an irresistible attraction for TNGs because of the huge population and increasing buying power, Zhang says. Despite the economic slowdown, urban per capita disposable income increased 8.4 percent year on year in 2008, and rural per capita net income rose 8 percent, according to an NDRC report submitted to the National People's Congress, China's top legislature. Retail sales climbed 21.6 percent to 10.85 trillion yuan (1.59 trillion U.S. dollars), it said. Large TNCs considered China to be the most attractive destination for future foreign investment, because of market size, higher market growth rates and cheaper labor, according to the World Investment Prospects Survey 2008-2010 by the United Nations Conference on Trade and Development. Tesco, Britain's top retailer, opened four new stores in China in the first two months this year, bringing its total to 64 since 2004. "We value the development outlook of the Chinese market as well as the government's resolution and ability to fight the financial crisis," says Zhuang Nanbin, vice president of Tesco (China). "China is one of Tesco's most important markets," Zhuang says. The company planned to increase its presence in relatively undeveloped central and western inland areas. "The TNCs are like ships on the ocean. When a storm comes, they will find a safe port," says Wang Zhile, director of the Research Centre on Transnational Corporations affiliated to China's Ministry of Commerce. China is considered safe because the impact of the global financial crisis has been relatively small and the performance of enterprises the TNCs established in China is better than their global average, Wang says. Meanwhile, overseas investors are more optimistic about the market as the government's economic stimulus plans boosted confidence. Since late last year, the government has announced aggressive measures to ease the domestic impact of the global downturn. These included a 4-trillion-yuan stimulus package, a plan to expand rural home appliance purchases and support plans for key industries. "China is viewed not only as a buffer against global financial meltdown, but also a platform to recover from the crisis," Wang says. However, China's actual use of foreign investment plunged 32.67percent year on year to 7.54 billion U.S. dollars in January. Foreign investment use has fallen since October, when a 2.02-percent annual drop was recorded. "There are some multinationals remitting profits or withdrawing investment to help ease fund shortages at home," Deng Xianhong, deputy director of the State Administration of Foreign Exchange, has said. "But this does not mean they have lost confidence in the Chinese market." On Dec. 31, the Union Bank of Switzerland (UBS) sold 3.378 billion H-shares in the Bank of China when the lock-up period expired. The Royal Bank of Scotland Group and Bank of America followed suit, offloading stakes in Chinese lenders. Lu Suiqi, vice director of the China Financial Research Center of Peking University, says the foreign banks need funds to offset ugly results elsewhere and the sales will bring impressive profits as the Chinese banking industry had been growing steadily. UBS gained 841 million U.S. dollars from its transaction, while the Bank of America netted 2.8 billion U.S. dollars after selling a 2.41-percent stake in the China Construction Bank. Analysts believe the multinationals still have a big role to play in China. Wang says the government should guide them to contribute more to the country's efforts to ensure economic growth, boost domestic demand and adjust industrial structure.

Somali mission ships to be replaced in two months - The Chinese naval fleet currently fighting pirates in the Somali waters will likely be replaced by new ships by the end of April or in early May, a senior naval officer told China Daily on Saturday.

Mar 9, 2009

Hong Kong: A public consultation will be launched next month on extending deposit protection scheme coverage to integrated bank accounts that offer overdraft facilities on a secured basis, such as credit card payments. It means that deposits in integrated accounts used for collateral for mortgages, credit card payments or stock settlements might be covered by the full deposit protection scheme - a temporary measure introduced in October to protect depositors from bank failures. Under the Deposit Protection Scheme Ordinance, deposits that are secured against other assets are not guaranteed, while fixed deposits of longer than five years and offshore deposits are also excluded. In a meeting between two Democratic Party lawmakers and Deposit Protection Board chiefs yesterday, the board was urged to amend the law to extend coverage to depositors whose savings are used as collateral for overdraft facilities. Lawmakers quoted the board's chief executive, Raymond Li Ling-cheung, as saying it would start a public consultation in April on extending coverage of the scheme, in an attempt to revise the ordinance this year. A Hong Kong Monetary Authority spokeswoman confirmed a consultation document on the deposit protection scheme would be issued next month. "The consultation will cover the whole scheme in general, including the long-term development of the length and coverage of the deposit protection." But the spokeswoman declined to disclose details of the consultation timetable. The full deposit protection scheme - which only covers each depositor up to HK$100,000 per bank - will run until the end of next year. But doubts have been raised over whether the integrated accounts, which cover a range of services, including deposit service and overdraft facilities, would be protected. Democratic Party legislator James To Kun-sun, who attended yesterday's meeting, said the banks had failed to clarify to their clients whether their deposits in such integrated accounts were protected. A spokesman for the board said yesterday that not all integrated accounts would be excluded from the protection scheme. "It depends on whether the bank terms indicated the deposit would be used for collateralising the overdraft facilities," the spokesman said. The spokesman added that banks were required to inform their clients before May if their deposits were not protected.

The central government yesterday waded into the row over Macau's repeated denial of entry to visitors from Hong Kong, a day after Chief Executive Donald Tsang Yam-kuen raised concerns about the issue with his Macau counterpart. Comments by the director of the central government's liaison office, Gao Siren, came as pan-democratic lawmakers said they were planning a "cultural exchange" trip to Macau on March 15, in effect giving a 10-day ultimatum for the two governments to sort things out. Speaking after a meeting with Hong Kong deputies to the National People's Congress in Beijing, Mr Gao said he was looking into recent incidents in which Hong Kong politicians, academics and a South China Morning Post (SEHK: 0583) photographer were barred from entering Macau. "At the liaison office, we collect, analyse and study Hong Kong citizens' opinions, and channel them to the central government," Mr Gao said. "In the past few days, there have been incidents in which Hong Kong citizens were denied entry to Macau. We are looking into the situation, and will raise the issue with the relevant departments of the central government." Speculation has increased in recent days that Beijing will step in and resolve the crisis, which analysts believe is related to Macau's sanctioning this week of an Article 23 national-security law. After wide outrage in Hong Kong political circles, with parties from across the spectrum demanding stronger action by the government to protect Hong Kong residents' rights, Mr Tsang officially raised his concerns with Macau Chief Executive Edmund Ho Hau-wah during the national legislature's session on Thursday. After a meeting yesterday, pan-democrat lawmakers in Hong Kong decided on their foray to Macau on March 15, described by meeting convenor Cyd Ho Sau-lan as "a cultural event" to study Macau's social development. Major parties among the pan-democrats - some of them previously barred from visiting Macau - will send representatives. They planned to invite Secretary for Security Ambrose Lee Siu-kwong to accompany them. But a Security Bureau spokesman said last night that "we don't believe it would be a good solution to the problems" if Mr Lee accompanied the pan-democrats on the trip. Democrat Lee Wing-tat said: "We are going there in 10 days' time, and this will serve as an ultimatum for the Hong Kong and Macau governments to sort things out. It will look truly ugly for Macau if it turns us away on March 15." Civic Party lawmaker Ronny Tong Ka-wah said a scheduled trip by party secretary general Kenneth Chan Ka-lok to an academic conference next Thursday would be a test case - Dr Chan has previously been barred. In Beijing, Macau's member of the NPC Standing Committee, Ho Iat-seng, said recent denials of entry to Macau of Hong Kong residents were "individual incidents" and should not obstruct Hong Kong- Macau ties. He said that only a few Hongkongers were not allowed into Macau and that the problem would be resolved at government level.

The first Hong Kong brand expo in Guangzhou will open on Wednesday to promote the city's products to consumers in southern China. The four-day product fair was organized to help Hong Kong firms open up the mainland market, Trade Development Council assistant executive director Benjamin Chau Kai-leung said. About 250 Hong Kong brands whose products range from apparel, toys and watches to electronics, cosmetics and food will join the trade fair, jointly organized by the TDC and the China Council for the Promotion of International Trade. "In the past, we kept urging Hong Kong exporters to explore the mainland market. However, as the US and European markets were booming, they were indifferent to our suggestion," Mr Chau said. "Now, as the developed economies are badly hit by the financial crisis, Hong Kong companies are keen on coming to the mainland." He said the mainland would be the TDC's focus for the next two years and it had earmarked 25 per cent more resources for activities there. Two more expos to promote Hong Kong brands are planned, in Wuhan in May and Chongqing in November. A Hong Kong-themed gallery is also due to open in Beijing's Wangfujing Avenue in June to showcase the city's brands and designs.

Investors loaded up on HSBC Holdings (SEHK: 0005) stock yesterday to track a quarterly rebalancing in the Hang Seng Index, but that could not save the financial giant from skidding to a 12-1/2-year low after a fresh wave of downgrades from major brokerages. HSBC slid HK$1.30 or 2.9 per cent to HK$43.50, sparking a decline that sent the index slumping below 12,000 points for the first time since October last year. The stock extended its decline in London, falling 4.44 per cent to close at £3.6075 (HK$39.75). "HSBC has come under intense selling pressure given the impact of falling asset values and the gloomy outlook for the US operating environment," said Patrick Yiu Ho-yin, the managing director of CASH Asset Management. "But it may see less price volatility next week, [as] value investors may join the rights issue at the last minute on Wednesday as they find HSBC oversold." About 125.37 million HSBC shares changed hands yesterday, the most since August 1998, when the Hong Kong government bought stock in blue-chip companies to bolster investor confidence. More than 33 per cent of yesterday's trading activity took place in a frenzied 10-minute closing auction period that pushed up the lender's closing price just 25 HK cents. Tracker funds added shares in the lender to trace an increase in its benchmark weighting to 15 per cent from 11.33 per cent previously. But traders also reported an offsetting selling pressure from wealthy investors and small funds eager to cash out of some of their positions in HSBC to raise funds for the rights issue. The weighting of HSBC could climb to about 17.3 per cent at the close of trading next Wednesday, when its market capitalisation increases to account for the new share offering, said Vincent Kwan, the general manager at Hang Seng Indexes. "Index funds [will] have to do something to track close to the weight changes on that day," Mr Kwan said. HSBC has endured a punishing week, falling 23.62 per cent in four trading days after announcing it would issue new shares to shore up capital. Analysts have revised down their earnings forecasts and price targets for the lender. CLSA cut its price target for HSBC by 31.71 per cent to HK$28 and reiterated its "sell" call. The revised level is equivalent to the cost of new shares in HSBC's proposed rights issue. The brokerage also cut its profit forecasts for HSBC by between US$2 billion and US$3 billion a year for next year and 2011, citing a growing toll from its North American units. "We [also] assume sharper rises in provisions in Asia, Hong Kong and South America and more subdued fee income and operating costs," CLSA analysts wrote in a report, adding the economic environment would worsen this year and might not improve much next year. Credit Suisse said in a report HSBC's revenue could be squeezed by low interest margins this year. Earlier this week, Macquarie lowered its forecast for the lender's earnings per share 31 per cent to 42.5 US cents. The Hang Seng Index yesterday dropped 289.72 points or 2.37 per cent to 11,921.52. The benchmark fell 6.95 per cent for the week, its third weekly drop in the past four weeks. "But it doesn't reflect the underlying level of the Hang Seng Index," said Andrew To, a sales director at Taifook Securities. "Right now, the selling pressure is focusing on HSBC but after the [rights issue] there will be less selling pressure."

Hong Kong's two medical schools have pledged to "break the wall" between them, and will soon work out plans to pool some of their teaching and research. Leaders of the medical faculties at the University of Hong Kong and Chinese University have started talks on how to mix some of their teaching subjects and medical services, and send students to each other's classes and teaching hospitals. It means students at Chinese University can for the first time have clinical attachments at Queen Mary Hospital, while University of Hong Kong students can be taught at Prince of Wales Hospital. The dean of medicine at Chinese University, Fok Tai-fai, said the two schools could have a "division of labor". He said some subjects or services areas could be merged to better utilize the universities' resources and strengths. "Medicine is a very broad subject; there is no way one single school can teach all subjects. The teaching of some subjects can be merged and taught by either one school - the same with clinical services." Joseph Sung Jao-yiu, associate dean of medicine at Chinese University, said he would soon arrange formal meetings for the two schools to work out detailed plans. He said exposing medical students to different clinical settings would make them better doctors. "I hope that we can jointly organize some small-group teachings. Just inviting each other's academics to hold a lecture is not enough. Small-group teaching can bring a more human touch." Professor Sung admitted that the two schools were now rather fragmented. "It is well known that the two schools are territorial; we now want to break the wall between us." Lee Sum-ping, dean of medicine at the University of Hong Kong, said it had been "heartbreaking" to see two medical schools "divisive" and "isolated". The schools have been at odds in recent years. Six years ago, the former dean at HKU, Lam Shiu-kum, attacked Chinese University over its handling of the outbreak of severe acute respiratory syndrome.

Hong Kong should leverage keen mainland and overseas interest in fung shui and develop a one-stop "fung shui street", tourism sector legislator Paul Tse Wai-chun said. Fung shui attracts local, mainland and overseas followers, who come to Hong Kong regularly for advice on everything from moving house to marital bliss. "I've been eyeing Sheung Wan as a possible location," Mr Tse said. "I also like the Central market." He plans to meet government officials next week about the proposal. A spokesman for the Hong Kong Tourism Board welcomed the idea. "Fung shui is one of the key areas that the HKTB has been promoting to showcase the cultural diversity of Hong Kong. We will look into contributing to the development of the project from a tourism promotion perspective, as and when appropriate," the spokesman said. The board is expecting mainlanders to account for about two-thirds of Hong Kong's total visitors this year. Fung shui master Mak Ling-ling, who supported the idea, said mainland visitors now accounted for about 70 per cent of her customers, up from some 40 per cent a few years ago. But if the street became a tourist magnet, it might be difficult for practitioners to do business there, she said. "It's OK if people go there to shop around for fung shui products. But if it's flooded with tourists wanting to meet with us, we may not be able to handle everyone," Ms Mak said. Celebrity fung shui master Peter So Man-fung said he had wanted to create a "fung shui mall" years ago. The mall would have featured shops providing different fung shui products and services, he said. But the idea fizzled amid difficulties in acquiring and developing properties. He also pointed out that Hong Kong already had such a street in Temple Street in Jordan. "Temple Street has plenty of shops with fung shui practitioners and is always full of tourists. I'm just a little worried about their authenticity. If people are just curious or looking for a bit of fun, Temple Street is fine," Mr So said. "But for fung shui experts who are established in their profession, a fung shui street is probably not the ideal place to do business. I certainly would not set up shop there." Chartered surveyor Teddy Ng Chun-wah, International Fung Shui Federation vice-president, welcomed the idea but said the cost of land would make it difficult to realise.

The government is inviting preliminary applications for the design and building of the cruise terminal building at Kai Tak. Application details have been gazetted. Forms can be obtained from the Architectural Services Department and must be submitted by March 31. The department will then "prequalify" four candidates to take part in the tender exercise. The Tourism Commission said it was working simultaneously to prepare for the invitation of tenders for the site formation and the cruise terminal building. The move will shorten the construction lead time. The government will seek funding approval from the Legislative Council later this year for carrying out the site formation work, which is expected to begin before the end of the year. It is hoped the first berth can begin operation by mid-2013. A Development Bureau spokesman said the 320-hectare development would include residential and commercial buildings, a sports stadium, a cruise terminal and a park. The site has been vacant since the new airport opened in 1998. The Kai Tak project - drawn up 10 years ago with plans to reclaim about 200 hectares - underwent a major review in 2004 after a court ruled that harbour reclamation had to pass a test of overriding public need. The development scale was reduced to avoid reclamation, and building heights were lowered.

A plan to ask four starlets involving in the Edison Chen Koon-hei sex photo scandal to testify in court has been abandoned after Cecilia Cheung Pak-chi broke her silence in an interview aired on television last week. The decision to abandon the request for testimony came after Cheung - one of the four women identified in the scandal - addressed Edison Chen in an interview with i-Cable (SEHK: 1097) on February 27, where she questioned the sincerity of his remorse. An application was to be heard before Chief Magistrate Tong Man next Monday to decide whether the four women could testify as defence witnesses in the trial of computer technician Sze Ho-chun, who allegedly played a role in leaking the photos. Kelvin Lai, defending Sze, confirmed that the application was withdrawn on Thursday. "After we came back from Canada, we reviewed [Edison Chen's] evidence and decided that it was no longer in line with our case to call the women," he said yesterday. He said another reason for the withdrawal was Cheung's interview. "After I watched that, I thought the decision to withdraw was right." Following Cheung's interview, a second victim, Gillian Chung Yan-tung, also broke her silence on a television show on Thursday. "We think Gillian's evidence may not be very significant to our case after we considered the matter," Mr Lai said. Sze's trial, where he faces three charges relating to dishonestly obtaining access to a computer, is scheduled to start on April 6.

China: Under draft medical reforms to be announced when the two congresses end, doctors may be allowed to register at more than one hospital, increasing their mobility to practice, a CPPCC delegate says. The delegate, who asked for anonymity until the plan is revealed, said the draft would "explore and study the multiregistration of doctors". They would then be free to practice in more than one registered hospital or clinic, as they are restricted to now. The doctors would also be available to practice in lower-level facilities. Mainland law governing practicing doctors demands that they are registered to practice in one place only. Some local health authorities have been flexible, though, allowing doctors to practice in hospitals other than their registered facility if approved by supervising health authorities. "Most doctors are in county-level hospitals and, if they are allowed to register in town hospitals, they will be able to treat more patients at the grass-roots level," said the delegate, a senior surgeon at a top hospital in Beijing. He said reform would raise overall health care efficiency and standards at grass-roots-level hospitals because more doctors from higher-level hospitals practiced there. But it would also require formulation of new regulations and proper supervision. Medical reform has been brewing for more than two years. A rough draft was put up in October for public consultation. Guidelines on the reform were announced in January but were criticized for being too vague and difficult to implement. Premier Wen Jiabao reiterated the guidelines in his annual report and earlier conceded that the most difficult aspect of getting the reform accepted would be in the area of public hospitals. That would include raising incentives for doctors. The Chinese People's Political Consultative Conference delegate said the new measure would partly achieve that because doctors would be motivated to increase their income.

Chinese actress Zhou Xun channeled her inner self in her latest film, The Equation of Love and Death, a thriller written and directed by Cao Baoping. Zhou plays Li Mi, a lovelorn taxi driver who has been searching for her missing fiance, Fang Wen (Deng Chao), for four years. Zhou said she felt most connected to the character's obsessive craving for love. "My philosophy about love is similar to Li Mi's. Once I fall in love with someone, I'll give it everything I can without regret or second thoughts," said Zhou, who is in a relationship with Taiwanese stylist Li Daqi. Playing the part of Li Mi also brought out other aspects of Zhou's character. "Li Mi is stubborn, crazy, and sometimes paranoid. I'm usually an easygoing person, but playing Li Mi brought out that crazy side of me, which I usually keep buried. I enjoyed revealing that part of me and I don't think it will go away again," said Zhou. In the film, Zhou's character Li Mi only becomes a taxi driver to find her fiance. She keeps a photo album of him in her taxi in the hopes a passenger might recognise him. "It's not just love she's looking for. She's looking for an answer that will allow her to have closure and move on. But the film shows that even if you can change your destiny, things don't always fall into place as you would like," she said. "Everyone has different views of love and expectations. I'm impressed by Li Mi's ability to love so passionately. She made me believe true love wins in the end." Zhou, 32, has starred in more than 30 films and television dramas, but said this role was one of her most stressful. "I had to keep pushing myself to the limit so that I could feel the desperation and anxiety the character experiences." Zhou said at times it was difficult for her to leave the character behind. "Sometimes after the filming of intense emotional scenes, I couldn't pull myself out of character. I couldn't stand or stop crying," she said. "It was crazy, but that explosion of love and emotion is very addictive." Mental exhaustion was just one result of the sacrifices Zhou made for the part. She also revamped her wardrobe, ditching feminine attire and opting for grungy shirts borrowed from her boyfriend, jeans and canvas sneakers. She also had makeup artists put freckles on her face and dark circles under her eyes. "Li Mi is unlike other city girls. She doesn't wear makeup or get dressed up. She can't live a normal life until she finds her fiance," Zhou said. Zhou appears to be an experienced driver in the movie, but she didn't even have a driver's licence when the director first approached her. "I got my driver's licence for this film and now I don't even drive in Beijing," said Zhou. The 98-minute film features a number of car chases, which were a daunting experience for Zhou. "Driving on the mountain paths in Yunnan province where we were filming can be very dangerous. But I didn't think too much about it. I just stepped on the gas and didn't look back. Of course, we took safety precautions, but everyone in the cast and crew was still very nervous," said Zhou. Zhou's performance earned her a best leading actress nomination at this year's Asian Film Awards. The results will be announced on March 23. She said it was an honour to be nominated and to compete with top actresses from all over Asia.

China Telecom Corp, the country's largest fixed-line operator, has offered free internet access for its mobile-telephone service in Beijing to attract users.

China property developer Shanghai Forte Land plans to sell homes worth 5.5 billion yuan (HK$6.24 billion) this year and raise 1.9 billion yuan from a proposed bond sale to cut debt and bolster its capital base. With a land bank of 6.85 million square metres in 11 cities, including Shanghai, Beijing, Wuhan, Hangzhou and Changchun, the firm is aiming for contract sales of 625,000 sq metres this year. That is about 75 per cent more than the 356,000 sq metres sold last year. Chief executive Fan Wei said the firm would release more new projects for pre-sale, as property sales had rebounded recently in some cities after the authorities launched support measures including lower mortgage rates and a reduction in transaction costs. "As sales are picking up, a further downward price adjustment for new projects will be unlikely. But the firm's pricing strategy will be based on the market conditions in different cities," Mr Fan said. The company generated 350 million yuan from sales of 60,000 sq metres over the past two months, he said. Forte's new projects could be sold at an average of 8,000 yuan per square metre, about 12 per cent below the 9,000 yuan level a year ago. Forte would budget 5.2 billion yuan for capital expenditure for this year, including 1.2 billion yuan for land purchases and 4 billion yuan for construction. The company's planned 1.9 billion yuan sale of domestic bonds should obtain approval from the China Securities Regulatory Commission this year to help reduce debt levels, he said. Forte's total debt stood at 8.44 billion yuan at the end of last year, and the gearing ratio was 71 per cent.

Trains on the Beijing-Shanghai high-speed railroad under construction will run at 350 km per hour, the fastest in the world, said Li Heping, a researcher at the China Academy of Railway Sciences on Friday. The 1,318-km-long railway line, with a designed speed of 350 kilometers per hour, will beat the fastest rails in the world at present, which has a designed speed of 320 kilometers per hour, he said. Trains will take less than five hours to make the run from the capital to Shanghai, which is now at least 11 hours. The new rail line would be used for passenger service, while the existing one for cargo transportation, according to Li. "The railway traffic strain will be greatly eased by 2012 as the country will increase investment and build faster rails and trains," he said. The Ministry of Railways has said it planned to invest 1.2 trillion yuan (about 175.44 billion U.S. dollars) to improve the railway system, aiming to have 13,000 km of passenger lines by 2012. According to Li, 8,000 km of the lines would allow trains to travel between 200 to 350 km per hour, and 5,000 km for trains with a speed from 200 to 250 km. The money is part of the 4-trillion-yuan stimulus package announced by the government late last year, the ministry said. Currently, there are not enough seats for all the people who want to travel, especially during the Lunar New Year every year, when millions are on the move for family reunion. "Research on high-speed trains are going on smoothly," he said. The new trains would be batch-produced after trial operations in 2012. China was developing trains that would run at a designed speed of 350 km per hour, and the speed for test might exceed 380 kilometers, according to Li. China aimed to put 120,000 km of rail lines in service by 2020,of which 16,000 km would be dedicated to only passenger services, according to the Ministry of Railways. To meet the 2020 target will require about 5 trillion yuan, the ministry said.

China is ready to cooperate with the United States and other countries at the April G20 summit in London in an effort to put the world economy back on track of recovery, Foreign Minister Yang Jiechi said in Beijing on Saturday. Yang confirmed that President Hu Jintao and US President Barack Obama will meet for the first time since Obama took office in January on the sidelines of the April summit. "The pressing task now is that all countries must work together to make the upcoming financial summit in London a success," Yang told a press conference on the sidelines of the Second Session of the 11th National People's Congress (NPC), China's parliament. "In this regard we are ready to work with the United States and other countries to weather the storm and make joint efforts to overcome the difficulties brought by the financial crisis," Yang said. "We believe the summit should play a role in boosting confidence, strengthening coordination on macroeconomic policies, stabilising financial markets, (and) undertaking necessary reforms in the global financial system and regulatory regime. The Chinese top diplomat said Beijing is ready to work with the new Obama administration to improve bilateral ties, especially against the backdrop of worsening international financial crisis. China and the United States share broad common interests, Yang said. "I hope the two sides could accommodate the core interests of each other and further improve exchanges, coordination and cooperation," Yang said.

China has named its first home-made jumbo jet C919, which will take off in around eight years, its chief designer Wu Guanghui said on Friday. "C represents China as well as COMAC, the abbreviation for Commercial Aircraft Corporation of China, Ltd," said Wu, who is also the deputy general manager of COMAC, the manufacturer of C919. "The name also reflects our determination to compete in the international market for jumbo jet. C919 comes after Airbus and Boeing, so you will have ABC in the aviation industry," said Wu, apolitical advisor who is here attending the annual session of 11thNational Committee of the Chinese People's Political Consultative Conference. The first 9 in the name implies forever in Chinese culture, while 19 means the first jumbo jet produced by China will have 190seats, he said. Wu said that his company will choose suppliers of engines, airborne equipment, and materials through international bidding, and will encourage foreign suppliers to enter into partnership with Chinese manufacturers. "We will choose foreign-manufactured products like engines at the beginning phase, but we will also independently do the research and manufacturing work at the same time," noted Wu. The Shanghai-based COMAC was set up in May, 2008 after approval in early 2007 by the State Council, China's Cabinet. It has a registered capital of 19 billion yuan (2.78 billion U.S. dollars), with the State-owned Assets Supervision and Administration Commission as the biggest shareholder. Wu said the jumbo jet project now involves 47 institutions from China and abroad, and that the preliminary general technical design plan and commercial feasibility study have been completed.

Mar 7 - 8, 2009

Hong Kong: Premier Wen Jiabao has pledged all-out efforts to help Hong Kong and Macau counter the global financial crisis.

Gillian Chung Yan-tung thought about killing herself - but only for a fleeting moment. The Canto-pop star's girl-next door image was shattered after explicit sex photos of her and actor-singer Edison Chen Koon-hei were posted on the internet last year, and her future career looked bleak. But, she said yesterday, "If I died, all my problems will be passed on to the people around me, the people who care about me." So she abandoned the idea, and picked herself up for a grand return to showbiz. Speaking to TVB (SEHK: 0511) general manager Stephen Chan Chi-wan on his show Be My Guest yesterday, Chung was the second victim of the scandal to break the silence, following actress Cecilia Cheung Pak-chi, who accused Chen of not protecting the victims as he promised in a television interview aired last week. Chung's long-awaited interview was shot yesterday at the Repulse Bay mansion of tycoon Albert Yeung Sau-sing, owner of Emperor Entertainment Group to which Chung belongs. Chung said that after the outbreak of the sex-photo scandal, she lost all her dignity. "There's no privacy any more," she said. "I showed everything to everyone, and no matter what I do, I'll get the blame. But dignity is the most important." Last February, when the scandal was still at its peak, Chung said that she was too naive and silly. A year later, she still has not changed the way she thought of herself - or her appearance; her dark straight hair was centre-parted, just like the way she looked a year ago. "I blame myself for doing such a foolish thing," she said, tearfully. When asked why she took the photos, Chung gave a puzzling answer. "I don't know ... maybe I don't want to lose ..." But she did not elaborate on what she did not want to lose. After the outbreak of the scandal, Chung attempted to continue her work as usual, making an appearance on a TVB charity variety show, but it attracted more than 2,000 complaints from the public. Mr Chan said it accounted for a quarter of the total number of complaints the station received a year. "I called my mother, and I cried really hard. I said to my mother, 'I'm exhausted. I can't stand it any more'. She was being very supportive and said, 'If you want to quit, then quit'," Chung said. Chung will make an official comeback next Tuesday as the regional ambassador for local fashion chain Bauhaus' TOUGH Jeansmith for which she will earn a seven-digit sum. A Bauhaus' spokesman said that the company approached Chung for the job in the middle of last year, believing her toughness and willingness to face challenges fitted with the brand's corporate image. The full interview will be aired on TVB Pay Vision on Saturday.

Donald Tsang Yam-kuen expressed his concern yesterday to Macau's chief executive about the city's repeated barring of visitors from Hong Kong when the pair met in Beijing. Macau Chief Executive Edmund Ho Hau-wah said his administration would not do anything unfavourable to normal exchanges between the two special administrative regions, but insisted Macau authorities had legitimate reasons to enforce its laws. Politicians in Hong Kong have accused the Macau authorities of overreacting, and pressure is growing for the central government to step in. Mr Tsang said he had formally raised the matter with Mr Ho. Both men are in Beijing for the annual session of the National People's Congress. "I have channelled the concerns of the Hong Kong people to Mr Ho and he has listened to our views. I believe the chief executive will understand our feelings," Mr Tsang said. Mr Ho said: "From the perspective of port management, there are laws governing the procedures. It is difficult for me to comment on each case ... I believe we will not do anything unfavourable to normal and beneficial exchanges." The Macau chief executive had said on Wednesday he was not aware of the details of the turning away of Hongkongers - including pan-democrats, academics and a South China Morning Post (SEHK: 0583) photographer. However, he did say the denials of entry had nothing to do with Macau's national security law - passed last week to comply with Article 23 of its Basic Law. In December, pan-democrat lawmakers who planned to join a protest in Macau against its national security legislation - which was going through the legislature at the time - were turned away by immigration officers. Other politicians and activists, and academics including Johannes Chan Man-mun, dean of the University of Hong Kong's law faculty, have since been barred. Post photographer Felix Wong Chi-keung has twice been refused entry despite having Macau government accreditation to cover a court case. A Hong Kong government source said Mr Tsang had taken charge of the issue and was adopting a subtle approach rather than heeding calls by some lawmakers for retaliation. Pan-democrats will today discuss how to put more pressure on Mr Tsang's administration over the issue. A Beijing-loyalist politician said central government officials may call on the Macau government to relax the restrictions for the sake of good relations with Hong Kong.

One of the devil-beaters pounds a paper effigy with a shoe under the Canal Road flyover during the White Tiger Festival in Wan Chai. Curses echoed around a wet Wan Chai yesterday as crowds gathered for the annual White Tiger Festival, a ritual in which people take revenge on their enemies by beating paper effigies. Dozens of people were already lining up in heavy rain at 6.30pm under the Canal Road flyover, taking it in turns to vent their anger. For about HK$50 a time, ritual performers battered paper effigies of workplace enemies while shouting appropriate curses. Ms Leung, who is in her 50s, acted as one of the devil-beaters but complained of slow businesses. She said she had only had 10 to 20 customers since setting up her stall in the morning. "Business was heavily down on last year ... The economy is bad. Some people got better business, but not me." Another devil-beater, known only as Ah-ching, who is in her 30s and relatively new to the business with just three years' experience, said her customers usually came to condemn "bad people" from all points of the compass. Ah-ching, who preferred hammering the effigies with a shoe heel to produce a louder sound, in preference to using traditional slippers, said the price for a package of paper offerings had not increased this year. "People still come [to beat these devils] even if the economy is not good ... I even got customers who were only 10 to 20 years old." Ah-ching said people came not only to drive their enemies away, but also to pray for good luck and health for themselves and their family members.

Perennial philanthropist Li Ka-shing has again made it onto the list of the Asia-Pacific region's greatest givers. Mr Li, the city's richest man and chairman of Cheung Kong (Holdings) (SEHK: 0001), was among four Hong Kong tycoons to make it onto Forbes Asia's second annual "Heroes of Philanthropy" list. But his was the only local name to survive from the first edition of the list, published last year. Mr Li donated more than HK$1.1 billion to various causes last year and has pledged HK$2 billion to Shantou University over eight years. Also named this year were Hang Lung Group (SEHK: 0010) chairman Ronnie Chan Chi-chung, Eric Hotung and Yu Pang-lin, who sprang to prominence last year when he donated the late Bruce Lee's former home to create a museum honouring the martial arts hero. Out of the list this year were Centaline Property chairman Shih Wing-ching, Henderson Land Development (SEHK: 0012) chairman Lee Shau-kee and CLP Holdings (SEHK: 0002) chairman Sir Michael Kadoorie. Mainland recycling king Chen Guangbiao led the list of donors from across the border, many of whom concentrated on relief efforts after last year's Sichuan earthquake. Former Asia-Pacific Philanthropy Consortium chairman Darwin Chen Tat-man, who sits on the boards of a number of major mainland charities and is also co-chair of Habitat for Humanity China, said some were well known for their generosity. "There are many wealthy people in Hong Kong who are extremely generous," he said. "But there are many donors whose support for philanthropic causes has not been so well publicised." Causes on the mainland and Hong Kong drew great support from the city's high-fliers, he said. However, the bleak economic climate would affect donations by rich individuals and corporations. "During these difficult times, they will have to be careful with their philanthropy as well as with all other facets of their business," Mr Chen said. "But they will still give a lot because they understand that, in tough economic times, the underprivileged need even more help." Donations to environmental causes would probably suffer as philanthropists directed their attention to ordinary people's hardships, he said. "The dollar for the environment has never been huge and it is true that, during periods like this, other human services will be more of a priority," Mr Chen said. "However, there are donors who have a real passion for environmental causes, so it will still receive some attention."

News that 2 million Shenzhen residents will be allowed to visit Hong Kong freely has left Macau businesses green with envy, but a long-lasting crackdown by the central government on Macau visits shows no sign of easing. Civil servants in Guangdong are allowed just one private Macau visit per year, with exceptions having to be approved by their department heads, according to mainland government sources. Ordinary Guangdong residents can apply for a Macau travel permit once every two months - a rule slightly softer than the limit of one trip every three months reported by travel agents last October. The permit enables single entry and a seven-day stay in Macau. It appears that travel curbs targeting civil servants have been further tightened while ordinary Guangdong residents are finding it slightly easier to visit Macau. This may partially explain why VIP gambling businesses in Macau have taken a hard hit while mass market revenues hold up well. On Tuesday, Hong Kong chief executive Donald Tsang Yam-kuen unveiled measures for Guangdong-Hong Kong co-operation which included an arrangement for Shenzhen residents to enjoy year-round multiple-entry permits for Hong Kong. About 2.6 million Shenzhen residents will be eligible for such permits starting from April 1. Macau government economist and legislator Lao Pun-lap said a joint proposal by the governments in Guangdong, Hong Kong and Macau to ease travel curbs had raised hopes among Macau businesses. On February 19, officials from the three regions announced that they would ask the central government to allow Guangdong residents multiple-entry permits for visiting Hong Kong and Macau. Mr Lao said he was hopeful that the travel curbs targeting Macau would be eased later this year after the joint proposal. "We have to be patient," he said. "The central government has continually stressed its support for Hong Kong and Macau." The travel curbs and the global financial crisis have dealt a double blow to Macau's economy, knocking it off track from its stellar growth. Last June, Guangdong residents were restricted to visiting Macau once a month instead of once a fortnight. From July, they were restricted to visiting once every two months. Since September 1, mainland travellers to Hong Kong have had to get a separate permit to visit Macau. Previously, it was possible to visit both cities on a Hong Kong permit. In October, travel agents in Guangdong said residents had been limited to one trip every three months. The VIP casino revenue, which accounted for 67.8 per cent of the market last year, fell 7.52 per cent from a year ago to 15.61 billion patacas in the fourth quarter. That compares with growth of 8.2 per cent in the more profitable mass market during the same period. In Macau's internet forums, netizens have expressed disappointment that Hong Kong benefits from favorable travel policies while Macau has been left out in the cold. As a Chinese saying goes, a crying baby gets milk. Some netizens attribute Hong Kong's favorable treatment to its relative disobedience towards Beijing. But gaming analyst Zeng Zhonglu said the differential travel policies for the two special administrative regions were a result of gambling-related problems. "Social problems don't arise from Hong Kong visits by mainland residents," said Professor Zeng, of Macau Polytechnic Institute. He said the easing of travel curbs would depend on how well Macau could answer the central government's call to diversify its economy and rely less on gambling.

The uncertain economic outlook has hit the property sector hard, with the net increase of occupied flats plunging 65.3 percent last year to the lowest in 30 years.

China stocks rose in very heavy trade yesterday despite some disappointment that Premier Wen Jiabao did not announce any expansion of a 4 trillion yuan (HK$4.53 trillion), two-year economic stimulus package.

China: Wen Jiabao veered away from the sensitive issue of Taiwanese independence and instead focused on cross- strait financial and economic cooperation amid the global financial crisis. "The mainland will remain committed to the goal of peaceful development of cross-strait relations," Wen said, adding Beijing is ready to hold talks on political and military issues to end the state of hostility and to conclude a peace agreement. Reacting to Wen's speech, a Taiwan presidential spokesman said cross-strait relations will be developed on the basis of the 1992 consensus, in which both sides recognize there is only one China, but agree to differ on its definition. He added the development of cross-strait relations can be facilitated should both sides express goodwill. Earlier, Wen pledged to accelerate signing a comprehensive agreement on economic cooperation with Taiwan in a deal similar to Hong Kong's Closer Economic Partnership Agreement. He also wants to strengthen cross-strait industrial and agricultural cooperation. "We will accelerate normalization of cross-strait economic relations and gradually establish economic cooperation mechanisms tailored to both sides of the strait," Wen said, acknowledging the major breakthroughs in cross-strait relations last year. Association for Relations Across the Taiwan Strait chairman Chen Yunlin said earlier he would visit Taiwan again later this year for discussions on cross- strait economic cooperation with his agency's counterpart, the Straits Exchange Foundation. Both sides signed agreements last year on direct shipping, air cargo, food safety and postal service.

The executive in charge of construction at China Central Television's new headquarters in Beijing received 80,000 yuan (HK$90,800) from the company whose fireworks destroyed the building that housed a major hotel last month, a mainland magazine claimed. Beijing-based Caijing said in a story published on Monday that the official investigation into the deadly fire at the complex had found clues related not only to dereliction of duty but also to corruption. It said Xu Wei, in charge of the construction office and CCTV's deputy chief engineer, was the first person taken away by police about an hour after the fire and among the first 12 people detained. The blaze was ignited by an unauthorised fireworks display during the Lantern Festival that severely damaged the 30-storey building, part of CCTV's complex, and destroyed the nearly-completed Mandarin Oriental Hotel. It killed a fireman and injured at least seven people. The Beijing procuratorate announced a few days after the fire that it was launching an investigation into whether there had been dereliction of duty. Mu Ping, president of the Beijing procuratorate, said yesterday that according to the documents released by police so far, no evidence of dereliction of duty had been found. But Caijing's source said Mr Xu had admitted problems that involved not only dereliction of duty but also economic issues related to tenders for the construction project. "We are not sure who will be found [related to the case] next," the source was quoted as saying. The headquarters project was widely thought to cost about 5 billion yuan, but according to Caijing's investigation, the project initially received 7.66 billion yuan worth of investment in 2001. Up to February, the total investment for construction alone was 12 billion yuan, and another 7 billion yuan was for new equipment, Caijing reported. Mainland residents have closely followed the investigation, especially on the internet. On Wednesday night, there were reports in chat rooms and e-mail groups that Caijing was ordered to delete its investigative story from its website and withdraw the print magazines that had not been distributed. "It was just a rumour," a Caijing public relations employee said. "The publication of this issue was as usual." Nevertheless, for at least three hours in the morning, the story could not be found on Caijing's website, and all comments on it were deleted immediately after being posted. The Caijing employee said she did not know why it had disappeared. It reappeared at about 1.30pm. Mainland websites reported that the content of the original story had been deleted or was under investigation.

Wen Jiabao and Hu Jintao share a light moment as they prepare to leave the Great Hall of the People after the opening of the annual NPC session. Beijing will run up a record deficit, Premier Wen Jiabao said yesterday, and predicted this year would be "the most difficult so far this century". The government is hoping higher public spending can revive the flagging economy. The work report he delivered on the opening day of the annual session of the National People's Congress contained no fresh stimulus measures - despite the expectations of stock market investors. Still, Mr Wen pledged to "significantly increase" spending to counter the effects of the global economic downturn - though most of the measures he laid out were included in the 4 trillion yuan (HK$4.54 trillion) economic stimulus package announced in November. Mingchun Sun, chief China economist with financial services group Nomura International, said he read from the firm tone of Mr Wen's speech that the government was determined to cope with the international financial crisis and had the ability to do so. "While the headline stimulus package was unchanged, the strong increase in total fiscal spending, plus its leverage effect, should result in a much larger stimulus than the headline number suggests," Mr Sun said. Shanghai's stock market seesawed for much of the day before closing up 1 per cent as investors bet the government would announce additional stimulus measures if needed. That followed a 6.1 per cent rise on Wednesday. Governments at all levels will run a 950 billion yuan deficit this year - seven times more than last year and equal to 3 per cent of 2008 economic output. "We will significantly increase government spending. This is the most active, direct and efficient way we can expand domestic demand," Mr Wen told the 3,000 NPC delegates. Higher public spending would allow the government to aim for economic growth of 8 per cent, he said. He forecast urban unemployment of 4.6 per cent - it was 4.2 per cent at the end of last year - and inflation of 4 per cent; the consumer price index rose 5.9 per cent last year. The mainland economy is growing at its slowest pace in more than a decade. Output rose 9 per cent last year, against 14 per cent in 2007. Mr Wen used his speech to spell out the main thrusts of government policy this year. It would invest a record 908 billion yuan in education, health care and cultural programmes. Spending on rural areas would rise by 20 per cent, to 716 billion yuan, and spending on social welfare would grow by 17.6 per cent, to 293 billion yuan. Another 130 billion yuan will be earmarked for the reconstruction of areas hit by May's devastating earthquake centred on Sichuan. Around 42 billion yuan will be spent on job creation. More than 20 million migrant workers have lost their jobs as factories in the export-oriented Yangtze and Pearl River delta regions shut their doors amid plunging orders from overseas. Seven million university graduates will enter the job market this year. Rising unemployment has stoked fears of social unrest during a politically sensitive year marked by several anniversaries. Mr Wen reaffirmed Beijing's wish to reach a peace deal with Taiwan, pledged to strengthen efforts to combat corruption and promote clean government and said the central government would spare no effort in helping Hong Kong and Macau weather economic hardship.

Providing export credits and more value-added tax rebates to help exporters are deemed less politically sensitive than yuan depreciation. Premier Wen Jiabao said yesterday the country "must not loosen its grip on exports" even though trade protectionism was rising and the global financial crisis had yet to hit bottom. In his address to the National People's Congress, Mr Wen outlined seven ways to strengthen exports, a pillar of the economy. They included increasing the foreign trade development fund to help small and medium-sized businesses export, boosting export credits and expanding services outsourcing. "We must emphasise expanding internal demand and must not loosen our grip on exports," he said. "Facing a sharp contraction in external demand and the chronic emergence of global trade protectionism, we must step up our efforts at adjusting trade policies." Among the export-friendly policies, Mr Wen vowed to expand the size of the foreign trade development fund and help smaller enterprises enter international markets. He said the upgrade on processing trade manufacturing would be accelerated, hinting that Beijing would liberalise a list of commodities previously deemed forbidden or subject to restrictions. Services outsourcing will also be expanded to reduce reliance on processing trade, in which imported materials are assembled to make export products. The industry has been criticised for relying on low-cost labour, using vast amounts of energy and polluting the environment. Mr Wen would encourage expanded imports, such as energy and raw materials, and called for a better international trade environment, pushing for a resumption of the Doha round of trade talks, and the implementation of free-trade strategies. He also gave a strong push to the development of export credit mechanisms to help repair the shattered global trade finance system. He called on mainland financial institutions to offer export credits to exporters to ease their cash flow. It was a move economists said would allow the country to avoid touching the politically sensitive issue of lowering the value of the yuan. Johnson Chan, OCBC Bank's head of structured trade finance for north Asia, said looser export credits would fuel the risk of rising non-performing loans at banks, since many exporters were small enterprises. "It is a viable option to boost trade, but it has to be facilitated with improvement in claims mechanisms, the co-operation of banks and a comprehensive database on the credit profile of exporters and their overseas clients," Mr Chan said. "The existing trade insurance system is notorious for the insured to obtain claims." While heralding fiscal policies such as higher rebates of value-added tax on exports, Mr Wen urged exporters to tap new markets and pry open the mainland market. Commerce Minister Chen Deming later promised more rescue measures to a Hong Kong business delegation led by Chief Executive Donald Tsang Yam-kuen, who sought ways to help Hong Kong exporters tap the mainland market. Mr Chen said a fresh round of value-added tax rebates on exports were in the pipeline after three rounds of increases since August. He conceded that mainland exports continued their decline last month and this month following a bigger than expected drop of 17.5 per cent in January and 2.8 per cent in December. Imports plunged 43.1 per cent in January and 21.3 per cent in December. Last month's trade figures are due next week.

Mar 6, 2009

Hong Kong: Vice-President Xi Jinping has warned that the worst of the financial crisis is yet to come, and that unemployment in Hong Kong is likely to rise to 6.5 per cent as exports drop by a double-digit percentage this year. Mr Xi painted the gloomy picture in a speech yesterday to more than 100 Hong Kong and Macau delegates to the Chinese People's Political Consultative Conference, as they met in Beijing for the national advisory body's annual plenum. "More complex situations and severe challenges may lie ahead. According to the assessment by the Hong Kong government, Hong Kong's economy will shrink this year, with exports possibly dropping by a double-digit percentage in the first half of the year and the unemployment rate going up to 6.5 per cent or even higher," the state leader said during the two-hour, closed-door discussion. The assessment had not been made public in Hong Kong. Hong Kong's unemployment in January stood at 4.6 per cent, the highest level since October 2006. Mr Xi warned that the worst of the financial crisis had yet to come, but expressed confidence that the two cities would overcome the economic challenges. "Both the Hong Kong and Macau SARs enjoy advantages under the `one country, two systems' formula. They can rely on the motherland ... and enjoy strong, powerful backing of the motherland." Mr Xi reiterated the central government's deep concern for the two cities, noting that President Hu Jintao had ordered various government departments to support Hong Kong and Macau in their efforts to tackle the financial crisis. The vice-president also laid out three expectations for Hong Kong and Macau delegates: to boost confidence and help their cities develop their advantages; to "stay in the same boat" and to tackle challenges; and to plan for the long term and change crises into opportunities. He called for all sectors in Hong Kong to put aside politics and support the government's measures to counter the financial crisis. Mr Xi met Chief Executive Donald Tsang Yam-kuen later in the evening to discuss the latest developments in Hong Kong, according to a source close to Mr Tsang. Separately, Mr Tsang visited Tianjin yesterday and met the city's party secretary, Zhang Gaoli. Meanwhile, Henderson Land Development (SEHK: 0012) vice-chairman Peter Lee Ka-kit warned that the impact of the global financial downturn may last for five years. He said he could not rule out laying off staff and cutting wages. Mr Lee was responding to a call by CPPCC chairman Jia Qinglin on Tuesday for companies not to lay off staff or slash pay levels. Mr Lee is attending the national advisory body's annual plenum in Beijing as a Hong Kong delegate. "We will try our best" not to lay off staff and cut wages, he said. "Enterprises do not act for the short term. The effect of the financial crisis may well last for five years, and companies have to consider ways to prepare for so many years" of bad business. Mr Lee said he made his five-year prediction because of the lack of capital liquidity in the market. Banks had been reluctant to lend in Hong Kong, on the mainland and in other countries, he said. Mr Lee said the Hong Kong government had done all it could to encourage banks to lend, and the economy had to wait for banks to resume lending before it could recover. "Is there any company in the world which does not need to borrow money from banks?" he asked. "When banks are unwilling to extend loans, firms can't do business.

Security chief Ambrose Lee reassures Legco the government is concerned about the entry issue. Lawmakers across the political spectrum urged Secretary for Security Ambrose Lee Siu-kwong to get tough with Macau for repeatedly denying entry to Hong Kong politicians, academics and journalists. The call came as Macau casino mogul Stanley Ho Hung-sun said it was "absolutely correct" for the Macau government to close the door on the people concerned because they were troublemakers who "stirred up s***". Macau Chief Executive Edmund Ho Hau-wah rejected the claim the entry refusals were tied to the newly implemented national security law. Pan-democratic lawmakers are calling on the government to retaliate by banning Macau officials from visiting Hong Kong. Democrat James To Kun-sun said Legco should move a no-confidence motion against Mr Lee if he failed to intervene. In an adjournment debate last night to discuss the issue, pro-government lawmakers joined their pan-democratic colleagues in criticising Macau. Lau Kong-wah, executive councillor and vice-chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, said the refusals surprised him. Mr Lau said the recent denials involved an increasing number of Hong Kong residents from all walks of life. He said Mr Lee should go to Macau to look into the matter, a suggestion that Mr Lee said he would consider. Regina Ip Lau Suk-yee said Macau's practice was ridiculous. "This is a question of human rights. The Macau authorities are tightening our freedom," she said. Mr Lee should seek help from Chief Executive Donald Tsang Yam-kuen if he could not handle the issue, the former secretary for security said. Liberal Party vice-chairman Vincent Fang Kang urged the government to seek an explanation from Macau, otherwise ties could be damaged. Several Hong Kong politicians have been barred from entering Macau since December, when they tried to join a protest opposing its Article 23 bill. University of Hong Kong professors Johannes Chan Man-mun and Law Chi-kwong were the latest Hongkongers turned away. South China Morning Post (SEHK: 0583, announcements, news) photographer Felix Wong Chi-keung was twice barred despite having media accreditation from Macau authorities. Professor Chan was among those who opposed a Hong Kong version of the bill in 2003. Speaking in Beijing, Stanley Ho, who was attending the annual session of the Chinese People's Political Consultative Conference, said Macau was "absolutely right" in banning some Hongkongers from visiting. "These people are all troublemakers," the Macau casino tycoon said. "They have stirred up s*** in Macau before and there is evidence. The 500,000-person march was also fanned by them, led by a person named Ho. How can we let them in?" He was apparently referring to Democratic Party chairman Albert Ho Chun-yan, whose party was an organiser of the July 1, 2003 demonstration in Hong Kong. Stanley Ho said it was "wonderful" Macau had the new security law because it maintained order. "It will be a huge loss for Hong Kong. Without the article, Hong Kong will be less safe," he said. Edmund Ho said he knew little about Professor Chan being denied entry to attend an academic function. "Our police have done things in accordance with the law and there is no need to report to me on some occasions. It has absolutely nothing to do with Article 23.

Tycoon Joseph Lau Luen-hung yesterday revealed he and "friends" had bought a US$200 million stake in PCCW (SEHK: 0008), but that he was not the subject of a vote-rigging investigation involving the privatisation of the telecommunications company. The Chinese Estates Holdings (SEHK: 0127) chairman said they had bought the shares in three phases: when the deal was announced in November, when a sweetened offer was announced in December, and when the deal was approved at a controversial meeting of shareholders last month. However, he did not reveal the identity of his "friends". The PCCW buyout deal, launched by chairman Richard Li Tzar-kai and China Unicom (SEHK: 0762, announcements, news) Group, secured the approval of independent shareholders on February 4, but has since faced allegations that the voting was rigged. The Securities and Futures Commission is investigating those allegations, before a High Court hearing set for April 1. Mr Lau yesterday held a press conference in Hong Kong to clarify that he had just one vote in the PCCW shareholders' meeting because most of his shares were held by nominees in the Central Clearing and Settlement System. To exercise all his voting rights he needed to register the shares under his name. "I regret that I did not transfer my shares, or my company's shares in PCCW under my colleagues' names, so that I could have over 1,000 votes in the shareholders' meeting to vote in favour of the deal," Mr Lau said. He said the voting arrangement was outdated as he "held so many shares but only one vote". Bloomberg data shows the stake held by Mr Lau and his friends accounted for about 6 per cent of PCCW's market capitalisation of HK$26 billion yesterday. Mr Lau said he was not on the list of those being investigated by the Securities and Futures Commission. He also declined to comment on how many shares he or his company held. In a further revelation, Mr Lau alleged incidences of vote-rigging involving other companies in Hong Kong. He disclosed he had paid HK$20 million after being blackmailed by someone who threatened to block a buyout deal of his own company 18 years ago. Separately, he said someone had urged him to arrange for 200 people to attend a shareholders' meeting regarding the buyout of Shaw Brothers (Hong Kong) last week to vote against the resolution, but he declined. He said the regulator should be fair and investigate not only votes in favour of buyouts, but those against deals. Mr Lau said he bought PCCW's shares at an average price of HK$3.80 per share and aimed to make a profit from the HK$4.50 being offered in the privatisation. Minority shareholders who had held PCCW shares for a long time opposed the HK$4.50 offer price, complaining it was too low when compared with the record high of HK$130 per share in 2000. PCCW shares have lost more than 90 per cent since listing in 2000 at the height of the dotcom boom, meaning losses for many of the city's small investors.

Exhibitors don't expect glittering sales at this year's Hong Kong International Jewellery Show, at the Convention and Exhibition Centre. This year's Hong Kong International Jewellery Show has attracted a record number of exhibitors, more than 2,300, but far fewer buyers than last year as demand for jewels and precious stones dwindles due to the global economic downturn. Some exhibitors at the five-day trade show, one of the region's biggest, say about 6,000 or 7,000 buyers will attend this year. That is down about 80 per cent from last year's show, which the event's organiser, the Trade Development Council, said had 2,306 exhibitors and 31,333 buyers. The council has allocated HK$80 million to help bring overseas buyers to its fairs this year by sponsoring airfares and hotel accommodation. It expects that to be enough to attract about 10,000 buyers, mainly from emerging markets such as the Middle East, Russia, Eastern Europe and North Africa. Many exhibitors believe a clearer picture about the health of the jewellery industry to emerge when the show ends on Sunday at the Convention and Exhibition Centre. A relatively poor performance in terms of buyers and orders could signal a long road to recovery. "Just look around the fair. Before, it used to be crowded with people. Now, the number of buyers is probably down by 80 per cent," said one local jewellery manufacturer. "We're not expecting to get any orders this time. Consumers are spending on food and daily necessities rather than jewellery. Depreciating foreign currencies like the euro are also hurting business and a recovery is likely still a few years away." Overseas buyers, even from emerging markets like the Middle East, were generally cautious about placing orders. Hemant Jhaveri, a buyer for Al Sulaiman Jewellers in Doha, Qatar, said business had slowed and might translate into fewer orders depending on the price. Michael Neuman, of Sydney-based pink diamond specialist Mondial Neuman, and a regular at the fair, also warned that orders might be affected by the economic downturn.

Unauthorized works on an island site were for a greening project to attract tourists and most parts complied with the law, the site's owner said yesterday. But the owner admitted that some of the drainage work on Ma Shi Chau in Tolo Harbor might have encroached on government land and said they were willing to dismantle it to rectify the problem. The response came a day after a geological conservation group exposed the unauthorized works at Shui Mong Tin, a site of special scientific interest on Ma Shi Chau. The Lands Department said the works, while mostly on private land, still occupied some government land and the contractor had started clearing some unauthorized structures on that land. A South China Morning Post (SEHK: 0583) investigation revealed that the work was closely related to a local politician. Government land records show the site is owned by Union Lucky Development, which has two directors: Lo Sam-shing, a Tai Po district councilor; and Cheung Bik-fong. The company bought the two lots for HK$1 million each in September last year from Mr Lo, who had inherited one from his father and had bought the other lot. Mr Lo said they were responsible for the works, which were part of a greening project. His business partner, Ms Cheung, said the site would be planted with valuable trees such as Buddhist pines and tourists would be charged to visit. She said they had told the Environmental Protection Department about the greening project, but the department denied it had been contacted. "Why has no one ever come to stop the work after we began last September?" she said. Ms Cheung said the greening plan been planned for a long time and the land clearance was in line with private land use for agricultural land, although she admitted some drainage work could have encroached on government land. "We never had any plan to build houses or turn the site into a barbecue area," she said. "They are all polluting developments and we indigenous villagers won't do that." Ms Cheung, who is not an indigenous villager, insisted that no rocks were damaged, although two trenches on the shell beach had been filled to make it safer to walk on. "The villagers are always protecting the rocks," she said. "Without them, the rocks could not remain the same as they were a million years ago." No old trees had been cut down, she added. Alan Leung Sze-lun, senior conservation officer from WWF Hong Kong, said the government should look into conservation problems on private land within and close to country parks or special areas. "In the short term, the government should extend the outline zoning plan to cover the site of Shui Mong Tin and, in the long term, it should consider buying out the private land on the island," he said.

Hutchison Telecommunications International (SEHK: 2332) Ltd (HTIL) plans to distribute shares in its Hong Kong unit as an interim dividend for this year, as the company expects to cut its cash payout. HTIL has applied to the Hong Kong stock exchange for a listing of the unit, Hutchison (SEHK: 0013) Telecommunications Hong Kong Holdings. The unit, which includes the Macau operation, will be listed through an introduction that does not involve raising money. Trading is expected to start in May. "The board has studied the proposals for months and we think [the spin-off] could reflect the actual valuation of the Hong Kong business," said Dennis Lui Pok-man, the chief executive of HTIL. The new unit's stock would provide a good yield, given that the business had recorded steady growth, while HTIL would become a high-growth player, Mr Lui said. Goldman Sachs is advising the proposed spin-off. HTIL yesterday said net profit fell 97.2 per cent to HK$1.88 billion for the year to December from HK$66.88 billion a year ago, as it lacked exceptional gains to match the sale of its Indian mobile assets in 2007. It did not propose a final dividend. HTIL would be unable to pay high cash dividends in the coming years, Mr Lui said. The company's customers rose 11.3 per cent to 2.7 million last year, half of whom subscribed to its 3G mobile-telephone services. The operator has signed up 100,000 users for Apple's 3G iPhone since the product was launched in July. Turnover in Hong Kong and Macau rose 12.6 per cent to HK$5.38 billion, driven by data services. Sales at its Hong Kong fixed-line business grew 10.6 per cent to HK$2.69 billion. The company's Vietnamese and Indonesian operations were unprofitable because of heavy capital expenditure, Mr Lui said. HTIL is planning HK$7 billion in capital spending this year, most of which will be for the two emerging markets.

China: Struggling Hong Kong manufacturers were slammed for lacking long-term vision for their business development after they complained of unfavorable Guangdong government policies to the province's vice-governor yesterday. Wan Qingliang said that the provincial government did not have policies on forcing labour-intensive enterprises to quit, and told them they lacked competitive advantage. He made the remarks during a meeting set up to introduce Guangdong's latest measures on easing Hong Kong manufacturers' liquidity problems. Measures include suspending all fees and charges levied on manufacturers, and a loan guarantee fund to facilitate bank loans. Guangdong came up with 30 measures to help Hong Kong, Macau and Taiwanese manufacturers after tens of thousands folded and the surviving ones complained of a deteriorating business environment. Participants at the meeting included the Hong Kong General Chamber of Commerce, the Federation of Hong Kong Industries, the Chinese Manufacturers' Association and the Chinese General Chamber of Commerce. "You don't have competitive advantage over branding, technology and cost while the competition, internal and external, will be tougher and tougher," Mr Wan said. "In December alone, 222 foreign-invested enterprises have folded. It is impossible to save them. I suggest you think clearly about the real causes of your problems and which ones can be resolved by government polices, and which can only be resolved by yourselves." He also suggested enterprises think of their futures. "The reason we want to see manufacturers upgrading their businesses is because we want to improve the business environment," he said. The central bank's Guangzhou branch told manufacturers their suggestion that Hong Kong collateral be used for mainland loans was unrealistic because of mainland laws.

Premier Wen Jiabao said on Thursday that Beijing is ready to hold talks with Taipei on political and military issues aimed at ending hostility with the rival island.

The core assets of the disgraced state-owned dairy giant Sanlu Group were bought by Beijing-based Sanyuan Foods yesterday for 616.5 million yuan (HK$700 million) in a five-minute auction held in a courthouse in Shijiazhuang, Hebei province. Sanlu was one of 22 mainland dairies whose products were found laced with the industrial chemical melamine in September. Six babies died and nearly 300,000 fell ill. Sanlu was declared bankrupt in February, and former chairman Tian Wenhua was jailed for life. Bidding started at 600 million yuan. The assets included land-use rights, buildings and equipment, as well as Sanlu Linhe Dairy, Xinhua reported. Most media were barred from Shijiazhuang Intermediate People's Court. Critics said the auction would make it impossible for affected families to obtain compensation from Sanlu.

China Investment Corp (CIC) will continue to buy shares in three state-controlled banks, underlining Beijing's resolve to support the stocks against selling pressure.

Air China (0753) has applied for a 3 billion yuan (HK$3.4 billion) capital injection to bolster its cash flow. The move came as China's largest international carrier said it was uncertain whether it would turn profitable this year.

China, which triggered the biggest commodity price spike in a generation, is now making deals that could prevent another surge in the coming decade by helping finance new production during the low ebb of the cycle. While the deepening global recession has focused traders on trying to pick a bottom to the current price collapse, more far-sighted analysts have already begun ringing alarm bells over the canceled investments and delayed projects that threaten to leave the world short of raw materials once growth resumes.

Mar 5, 2009

Hong Kong: Asia’s largest listed bourse operator, Hong Kong Exchanges & Clearing, posted a smaller-than expected decline – of 44 per cent – in fourth quarter profit, sending shares in the exchange operator nearly 8 per cent higher. But shrinking turnover signalled further profit declines this year, said analysts. Battling slumping global equity markets and a drop-off in new equity issues, HKEx (SEHK: 0388, announcements, news) ’s earnings have fallen for three successive quarters. Daily average turnover, a key indicator of the exchange’s trading fees that in turn make up nearly a fifth of its revenue, slid 18 per cent to HK$72.1 billion last year as international fund flows froze amid the contagion in the global financial markets. HKEx reported a net profit of HK$1.2 billion in the quarter to December 31, topping the average forecast of HK$950 million from 14 analysts polled by Reuters Estimates, but sharply lower than the HK$2.16 billion a year earlier. The exchange operator slashed its final dividend by 47 per cent to HK$1.80, bringing the annual dividend down 17 per cent to HK$4.29. The earnings decline looked particularly stark as HKEx’s performance in the worst leg of last year’s bear market came a year after the peak of the 2007 bull run. Listing fees in the exchange, which prides itself as the world’s gateway to mainland China, shrank 21 per cent, stricken by a raft of cancelled and shelved IPOs as global markets tanked. Investment income fell 42 per cent, owing to corporate funds’ losses in fair value after logging gains in 2007. But income was still above analyst’s expectations due to high interbank rates in the final quarter of last year. Analysts predict tougher times for the exchange operator this year, with turnover expected to fall by as much as 50 per cent and other revenue streams also hard hit. New initiatives from the exchange, including the launch of Hong Kong Depository Receipts and gold futures and the pending launch of carbon futures this year, are unlikely to prop up the company’s dented top line, according to analysts. HKEx did better than its rival Singapore Exchange which reported a 52 per cent drop in its second-quarter net profit in January, hurt by lower trading volumes and a dearth of new share issues. HKEx shares fell 21 per cent in the final quarter of last year, in line with losses on the benchmark Hang Seng Index. The stock was up 1.4 per cent at HK$56.70 on Wednesday before the results were announced. Shares in the exchange operator, the world’s second largest by market value, plunged earlier this week after Morgan Stanley slashed its target price on the stock to HK$33 and warned that turnover could nearly halve this year. “Given the weakness in the markets and the reduced activity of market participants, our estimates could still prove too optimistic,” said Morgan Stanley’s Anil Agarwal. HKEx is trading between 17 times and 27 times its estimated earnings this year, according to different estimates, while the broad market is still languishing at a valuation last seen during the Asian financial crises of 1997-98.

Hong Kong-based pop singers Kelvin Kwan and Jill Vidal have been arrested in Japan for marijuana possession, a crime that carries up to five years in jail, Tokyo police said on Wednesday. Police arrested 25-year-old Canadian national Kwan and 26-year-old Briton Vidal for possessing 0.2 grams of cannabis while they were out in Tokyo’s Shibuya district on Tuesday last week, police told reporters. “Police searched them and found the marijuana among Kwan’s belongings, and they said it belonged to both of them,” said a Tokyo police spokesman. The storekeeper called police after suspecting they were shoplifting and officers then found the marijuana, the spokesman said, although he was unable to confirm whether they had actually committed theft. Japanese media reported that the marijuana was found rolled in a cigarette.

A woman – who was allegedly persuaded to invest HK$6 million in Lehman Brothers minibonds and subsequently lost the money – on Wednesday sued seller Citic Ka Wah Bank to seek a full refund. Claimant Lau Wai-lan accused the bank of failing to inform her about the true risks involved when bank staff persuaded her to buy minibonds in 2006. A writ was filed on the High Court on Wednesday by her younger sister Lau Wai-ping. The sister said Lau Wai-lan was sick and could not be present at the court herself. The younger Lau said her sister lost all of the HK$6 million when Lehman Brothers collapsed in September last year. Lau Wai-lan was now penniless, her sister added. Bank staff had only told Lau Wai-lan that investing in the minibonds would be more profitable but had not mentioned the risk could be high, Lau Wai-ping said. “Had she realised the risk involved, my sister would not have invested in the minibonds,” she said. Lau Wai-lan had also filed complaints with the Monetary Authority, which told her to wait until its investigation into the minibond saga was completed. “There is no other way. What she can do now is to take the case to court and hope this can help her get back the money,” the younger Lau said. Minibonds are not corporate bonds, but high-risk, credit-linked derivatives marketed as proxy investments in well-known companies. Some 43,700 Hongkongers invested HK$15.7 billion in derivatives issued or guaranteed by Lehman Brothers. So far, only a small number of investors have reached settlements over compensation with sellers of the products.

This shopper in Causeway Bay was not prepared yesterday to support the start of the "No Plastic Bag Day" campaign. A campaign by major stores to stop giving out plastic bags got off to a lukewarm start yesterday. Some shoppers said they were either unaware of the new measure or found it inconvenient to carry their own bags. Others said they had a right to receive free plastic bags. More than 2,000 stores from 18 retail chains are taking part in the campaign, which extends the current "No Plastic Bag Day" from a weekly to a daily event. Shoppers will not receive a plastic bag at cash counters unless they ask for it. They will not be charged for the bags, although some retailers will encourage shoppers to make donations to green groups. The aim is to save 400 million bags a year. Caroline Mak Shui-king, chairwoman of Hong Kong Retail Management Association, said people needed time to adapt. "It takes time to change the consumer's behaviour, but we are optimistic about that." Ms Mak said 12 other retail chains had recently promised to join the campaign and she hoped more media reports and publicity could attract greater attention.

Hong Kong music student Rainice Lai Wai-man is one of 90 musicians from around the world who have been picked to perform at New York's Carnegie Hall with San Francisco Symphony music director Michael Tilson Thomas and Chinese pianist Lang Lang next month. The 17-year-old percussion student at the Academy of Performing Arts was one of the 3,000 amateur and professional musicians from more than 70 countries who submitted clips in an online audition which began in December. The YouTube Symphony Orchestra has been billed as the world's first collaborative online orchestra. She is the only performer from Hong Kong to be chosen to play. Rainice said she was thrilled with the news, as she only entered the competition after her teacher had encouraged her to do so. "I received an e-mail and a call from the YouTube PR [public relations officer]. I was very surprised and happy. I was only giving it a try," she said. She said that she played Tchaikovsky's Romeo and Juliet overture in her one-minute audition video, as did all those who auditioned. Rainice started playing percussion four years ago and credited her teacher, Fiona Foo, for encouraging her to continue learning. Rainice will perform with musicians ranging in age from 17 to 55, after three days of classes and rehearsals next month, in an April 15 concert at Carnegie Hall conducted by Thomas. They will perform mainland composer Tan Dun's Internet Symphony No1, Eroica, a piece specially arranged for the occasion. "I will be playing crash cymbals in the performance," Rainice said. "I'm a bit nervous now so I'll keep practising." Rainice first had to impress a panel of judges from orchestras such as the London Symphony Orchestra and the Hong Kong Philharmonic Orchestra, a partner in the project, who whittled the group down to about 200 semi-finalists. Then she had to get the nod from netizens who voted via YouTube. Finally, music director Thomas made the ultimate selection. "We are excited about the talent, variety and adventurousness of the musicians who are coming together from around the world to form the YouTube Symphony Orchestra," he told the Associated Press.

Singapore's first casino, Marina Bay Sands will be ready by the end of the year, despite the ongoing economic downturn, Las Vegas Sands Corp announced on Wednesday. Las Vegas Sands, which suspended construction last year at two sites in Macau, said on Wednesday it’s on schedule to open a US$5.4 billion Singapore casino resort in December. The casino operator said most of the 2,500-room Marina Bay Sands will be ready by the end of the year. It will be Singapore’s first casino. In addition to gambling facilities, the resort will feature an art and science museum, 300 retail stores, and three 55-story hotel towers connected at the top with a pool, restaurant and observation deck. Last Vegas Sands is counting on the Marina Bay Sands to help boost its overall revenue and avoid a debt default. Sands, which owns the Palazzo and Venetian resorts in Las Vegas, had to shut down building in Macau after financing dried up. “What happened in Macau certainly won’t happen here in Singapore,” said Bradley Stone, the company’s president of global operations and construction. “This project is fully-funded.” The resort is part of Singapore’s effort to develop a marina area next to downtown into an entertainment and tourist attraction. But the city-state expects tourism revenue to plunge as much as 19 per cent this year as a global economic slowdown undermines spending on travel. “We know the economic situation,” said Nigel Roberts, president of Marina Bay Sands. “But we have a product that’s going to be stupendous and will override that.”

The fall in rents for luxury residential properties in Hong Kong shows no signs of abating as a sharp decline in leasing demand and abundant supply keep up the pressure on landlords to offer discounts and preferential terms to lure tenants, say property consultants. A freeze on hiring imposed by most multinational corporations, coupled with lay-offs of expatriates in the financial sector and reduced housing allowances, meant an end to the retreat in the leasing market was still not in sight, they said. Edina Wong, a senior director for residential leasing at Savills, said that after a steep fall of as much as 20 per cent last year, luxury residential rents had dropped a further 5 to 6 per cent so far this year. "And rents will continue to tumble because international companies have virtually halted the practice of sending their expatriates overseas. That means no new demand for new leasing," Ms Wong said. To attract good tenants, landlords were now not only cutting rents but also offering more flexible terms such as a one-month rent-free period, she said. The market doldrums have seen Swire Properties chairman Keith Kerr cutting the asking rent for his privately owned 3,479 square foot house in Deep Water Bay Road by 10 per cent. Joseph Tsang, the head of the residential department at Jones Lang LaSalle, the leasing agent for the Deep Water Bay house, said the asking monthly rent was now HK$200,000 or HK$57 per square foot, about 10 per cent lower than the original target. Simon Lo Wing-fai, a director at Colliers International's research and advisory division, said prestigious properties pitched at monthly rents of HK$200,000 or higher would be hardest hit by the market turmoil arising from the global financial crisis. "Worst-hit areas include the Peak and Island South, as most corporates have substantially revised housing allowances for top management downward. It is now difficult to find tenants with a budget of HK$300,000 to HK$400,000 a month," Mr Lo said. According to Colliers' survey of five prestigious residential districts of Hong Kong, the average rent dropped to HK$37.68 per square foot a month in January, the lowest level for 18 months. The five districts are the Peak, Island South, Mid-Levels, Happy Valley and Island East. Although data for last month has not yet been released, Mr Lo believed they would show rents coming under further severe downward pressure this year. He expected that rents in the top-end market would decline about 15 per cent after falling about 20 per cent from their peak levels in July last year, when the average rent rose to HK$46.31 per square foot. Landscape Surveyors' managing director Koh Keng-shing said the decline in luxury rents would continue to accelerate because of plentiful supply. "Owners who bought their luxury apartments in 2007 and 2008 have shifted to leasing instead of selling in view of the correction in home prices," he said. Mr Koh said luxury flat owners on the Peak and Island South would suffer most as senior executives of financial institutions and investment banks were badly hurt by the global economic crisis. He hopes rents will stabilise when the leasing market enters the traditional peak season from May to July. A positive outcome of the decline in luxury housing rents was an increase in transaction volumes, Mr Koh said. "Our company saw 10 to 15 per cent increase in transactions compared with the period before the global financial crisis began in mid-September," he said. Patrick Wong Ting-kit, a senior district manager at Centaline Property Agency in West Mid-Levels, said rents at Bel-Air Residences in Pok Fu Lam were under downward pressure as 600 new units were offered for lease recently. Rents in the luxury housing estate have dropped about 40 per cent from the peak to HK$22 and HK$30 per square foot a month, he said. "The rapid drop stems from desperate landlords trying to secure a tenant before a further fall in demand and rents," he said.

Government contracts help soften the impact of the financial crisis, says Lai Yam-ting. Finding opportunities amid the economic slump, Hong Kong-listed information technology service provider Automated Systems Holdings has won more than HK$170 million worth of government contracts during the past five months. They include large-scale projects with the Hospital Authority, which manages the city's public hospitals, and the Office of the Government Chief Information Officer, the agency overseeing local information technology policy and development. "These sizeable government contracts provide us with a cushion to soften the impact of the financial crisis, which has affected enterprises across many industries," said Automated's managing director, Lai Yam-ting. "The government sector accounts for about half of our total revenue." Mr Lai said the value of government projects secured by Automated between October last year and last month was about 10 per cent higher than the amount it obtained during the same period a year ago. Government information technology spending for the 12 months to March this year was set at HK$5.49 billion, up from HK$4.09 billion the previous fiscal year. According to market research firm International Data Corp (IDC), the government, financial services and telecommunications sectors in the Asia-Pacific will continue to be big spenders on information technology during this economic downturn. IDC estimated the Hong Kong information technology market would manage to grow 2.9 per cent this year to US$5.6 billion, less than the 6.7 per cent projected earlier. The company's strongest competition in tenders for government technology services projects comes from Hewlett-Packard, International Business Machines Corp and PCCW (SEHK: 0008). The Hospital Authority contract, worth more than HK$43 million, is meant to support the authority's Clinical Management System Phase III project, which includes development of a city-wide system for sharing electronic health records, within 48 months starting from January this year. The HK$15.26 million project for the office of the chief information officer comprises the supply and installation of computer hardware, software and related services for the agency's electronic procurement system. A spokesman for Automated declined to identify the other contract the company had won, which included an on-site help desk support service project, a two-year maintenance contract for an electronic document management system and a three-year network support and maintenance contract. Automated, which was founded in 1973, has 1,300 employees in Hong Kong and Macau. The company posted a 10 per cent year-on-year increase in revenue to HK$733.5 million for the six months to September last year. Its net profit, however, fell HK$2.6 million year on year to HK$23.1 million.

Top Independent Commission Against Corruption officials insist it was pure coincidence that it took them "a day or two" to act on a request for information from the phone taps watchdog - by which time the documents he wanted had been destroyed. Lawmakers yesterday expressed concern over the claim that summaries of an ICAC surveillance operation were destroyed a day after Justice Woo Kwok-hing, the Commissioner on Interception of Communications and Surveillance, had inquired about them as part of a probe into possible breaches of the principle of legal professional privilege. The principle normally relates to legally protected conversations between a lawyer and his client. "It's a pure coincidence that the letter clashed with the destruction of the information," ICAC commissioner Timothy Tong Hin-ming told the legislative panel. He added some of the officers had not been alert enough to the importance of the incident and made a wrong judgment. ICAC director of investigation (government sector) Ryan Wong Sai-chiu told legislators: "The letter was addressed to the commissioner himself. After reading the letter, it will be sent to the head of operations before being passed prior to reaching the assistant director." Wong added that the officers usually destroyed the records "gradually" before the deadline, and not on it. But legislators were not totally convinced. "An e-mail can immediately do the command," said League of Social Democrats Leung Kwok-hung, adding, "it's terrible and ridiculous that it took two days for a message from the commissioner to reach frontline staff."

China: China official manufacturing index rose smartly in February, gaining for the third month in a row and suggesting the country could be on the brink of a recovery despite a slump in global demand. The official purchasing managers’ index (PMI), released on Wednesday, rose to 49.0 from 45.3 in January, the China Federation of Logistics and Purchasing (CFLP) said. It was the fifth straight month that the index was below the no-change line of 50 that marks the difference between expansion and contraction. But the index is now well clear of a record low of 38.8 plumbed in November. “China’s economy is possibly on the road to a sustainable recovery,” said Zhang Liqun, a government economist who comments on the survey for the logistics federation. “Policies are beginning to show their effectiveness, supporting quite fast economic growth,” he said. The government has ramped up investment, pledging 4 trillion yuan (HK$4.5 trillion) in stimulus spending, to step into the breach left by a collapse in exports and a downturn in the domestic property sector. Optimism that the economy could be bouncing back has been fuelled by a surge in lending, with new local currency loans hitting a record 1.6 trillion yuan in January. Local media reports on Wednesday said that banks lent closer to 1 trillion yuan in February, a sum that is still extremely high by historical standards. But the explosion in credit has been greeted with some scepticism by analysts, who say that part of the lending has been channeled into risky stock investment rather than production. The jump in the PMI also drew a sceptical eye. “There’s still good reason for caution. The manufacturing sector overshot last year in cutting inventories, and a bounce was inevitable,” said Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong. “Factories will struggle to sustain the increase. I think we’ll bounce along at low rates of activity for the next six months or so,” he said. The official PMI jumped well ahead of a similar manufacturing survey produced for brokerage CLSA, whose index registered 45.1 in February, also up on the previous month but more firmly in contractionary territory. The official survey is generally regarded as more of a leading indicator than the CLSA survey, which is seen as a better reflection of current manufacturing conditions. Every sub-index in the official PMI rose in February. Output and new orders climbed to 51.2 and 50.4, respectively, both returning to mild growth after shrinking for four months. New export orders rose to 43.4 – still in negative territory but a 9.7 point leap from January. “Indicators clearly show that the Chinese economy is trending to a recovery from its low point,” Zhang, the government economist, said. Cutting against the grain of good news, though, mainland’s purchasing managers’ index for non-manufacturing sectors fell to 41.9 in February from 51.0 in January, the CFLP said. The non-manufacturing sector includes retailing, airlines, transportation, construction and catering.

China enterprises have been given the green light to travel abroad in search of buying opportunities. A delegation will go to Europe this week to check on investment possibilities, including mergers and acquisitions, Commerce Minister Chen Deming said. Chen said the group will travel to Switzerland, Spain, Britain and Germany - the same countries that a mainland purchase mission visited last month. Countries suffering from the economic slump have rolled out the red carpet for cash-rich mainland firms, hoping they can help revive recession-hit industries. And while China Life Insurance (2628) - the mainland's largest life insurance firm - has withdrawn from bidding for the Asian unit of embattled US insurer American International Group, it is still eyeing international opportunities, chairman Yang Chao said in Beijing. "We are always in talks to invest overseas because many foreign assets are attractive," Yang said. "There is no timetable. We act when the right time comes." It was revealed last month that China Life pulled out after coming close to buying a 5percent stake in Wing Hang Bank (0302) last August. Yang confirmed that overseas banks are among the acquisition targets. Industrial and Commercial Bank of China (1398) president Yang Kaisheng said it would not change its overseas investment strategies to build an international network especially in emerging markets. However, China Merchants Bank (3968), as well as COFCO, the mainland's largest food distributor, said they have no plans yet for overseas acquisitions. Qin Xiao, chairman of China Merchants Group, said its parent has increased its stake in the Shenzhen-based lender in the past month and will continue doing so.

Military delegates leave Beijing's Great Hall of the People after a National People's Congress preliminary session on Wednesday. China announced plans on Wednesday to boost military spending by 14.9 per cent this year. China announced on Wednesday its defence spending would rise by 14.9 per cent this year but insisted its expanding military power posed no threat to the rest of the world. “China’s defence expenditure for the year will increase modestly,” the spokesman for China’s parliament, Li Zhaoxing, told reporters. The defence budget for this year is 480.686 billion yuan (HK$544.9 billion) an increase of 62.482 billion yuan from the previous year, he said. The rise is slightly smaller than last year’s increase of 17.9 per cent. The United States, Japan and their allies have long expressed concern about China’s military build-up, warning that the Chinese government has not been transparent on its intent behind the expansion. Mr Li said these concerns were misplaced. “China’s limited military powers will be solely used for the purpose of safeguarding its sovereignty and territorial integrity,” he said. “This will not pose a threat to any country.” He emphasised that China’s military spending was small relative to the size of its population and national territory, accounting for 1.4 per cent of China’s gross domestic product. This compared to 4.0 per cent for the United States and 2.0 per cent for the United Kingdom and France, he said. Mr Li said the increase was due in large part to the need to ensure that living standards for its estimated 2.3 million service men and women rise along with the rest of society. However, he said it also would be used to upgrade the military’s information technology and its ability to engage in disaster response and anti-terror missions. The figure given by China has “little association with reality”, said Ralph Cossa, head of the Honolulu-based Pacific Forum of the Center for Strategic and International Studies. He said military-watchers widely estimate actual defence spending is three to four times larger than what Beijing says. “The question is: what’s included in the figure? The transparency of what China is spending this money on is what is really hard to gauge,” Mr Cossa told AFP. The Pentagon in recent years has raised concerns over China’s development of cruise and ballistic missiles, its testing of an anti-satellite weapon in 2007 and an apparent rise in cyber-espionage by the Chinese military. The mainland has typically responded to the transparency demands by saying it posed no military threat to other countries and alleged some in the West were trying to pump up fears of a “China threat.”

China Life (SEHK: 2628) has withdrawn from the bidding for American International Group’s Asian unit due to worries about the quality of the business, the mainland insurer’s chairman said on Tuesday. The withdrawal further dashes hopes for an auction of the unit, American International Assurance (AIA), which AIG has struggled to sell amid challenging capital markets and worsening economic conditions. “We are no longer bidding for AIA. AIA’s asset quality, business direction and brand have all changed,” China Life chairman Yang Chao told reporters before a meeting of a parliamentary advisory body in Beijing. AIG had no comment on the matter. Hopes for a bid by China Life were rekindled last week after the vice chairman of the China Insurance (SEHK: 0966) Regulatory Commission said mainland firms would decide on purely commercial grounds whether to bid for AIA. Vice Chairman Li Kemu also said the regulator had a favourable view of AIA assets, especially in mainland and Hong Kong. AIG, which is trying to sell assets to pay back the US government after a massive rescue, aimed to sell the business for between US$20 billion and US$40 billion, depending on the size of the stake sold, people close to two parties that have looked at AIA said. AIG said on Monday it had received preliminary proposals for all or part of AIA and was also considering a full or partial initial public offering for the unit. The deadline for bids expired last Friday. AIG plans to put AIA and American Life Insurance, another large foreign life insurance business it has been trying to sell, in trusts and give the US government preferred ownership interest in them. The insurer hopes to reduce the outstanding balance of a Federal Reserve credit line by up to US$26 billion in return for preferred shares in these operations. Plans to sell up to 49 per cent of AIA, considered AIG’s crown jewel in Asia, were first put in place last fall, shortly after the US government saved AIG from collapse. AIG posted a record quarterly loss of US$61.7 billion on Monday and said the government had agreed to revise its bailout package, giving the company access to a new US$30 billion equity commitment. Officials concluded that letting the insurer fail would imperil the world financial system.

Beijing Capital Land, a developer controlled by the city's government, plans to increase its sales target 60 per cent to 6 billion yuan (HK$6.8 billion) this year. The developer generated 3.74 billion yuan from contracted sales totalling 337,942 square metres in gross floor area last year, down about 53per cent from the previous year. It blamed the decline on poor market sentiment and the Sichuan earthquake, which affected property sales in Chengdu. Tong Jun, the president of Capital Land, said the company aimed to increase its sales by launching nine projects with an aggregate gross floor area of 637,003 sq m. "We have generated more than 5 billion yuan from property sales in the first two months of this year, 92per cent more than a year earlier," Mr Tong said, adding that the property market had become active. Capital Land aims to complete nine projects with a total gross floor area of 824,696 sq m this year. About 30 per cent or 250,000 sq m of the floor area has been sold. The 1.9 billion yuan generated from the sales will be booked this year. The developer secured government approval to issue up to 1.8 billion yuan in corporate bonds in November last year. Mr Tong said the company could issue the bonds in the first half of this year. Despite the new bonds, the company plans to reduce its net gearing ratio to 80 per cent from 110 per cent last year by improving its loan structure and increasing property sales. Chairman Liu Xiaoguang said property prices in Beijing's city centre had stabilised owing to the limited supply of residential units and strong demand, but prices in the suburban areas were still under pressure. Wu Xuan, an analyst at China Merchants Securities, said the developer might not achieve the sales target of 6 billion yuan, as it might be forced to slow development work owing to its high gearing ratio. "And the property market will not have a major improvement until the second half of this year, when the government's stimulative measures begin to take effect," said Mr Wu. He said he expected net profit to drop 17 to 18 per cent from 383 million yuan last year. Shares in Capital Land jumped 9.21 per cent to close at 83 HK cents yesterday.

The central government is studying the feasibility of giving cash coupons to 1.3 billion people in the mainland, according to Minister of Commerce Chen Deming. Chen, talking to reporters at the annual Chinese People's Political Consultative Conference, which opened yesterday, said exports would continue to downtrend and there were no signs yet of a recovery, making domestic spending stimulus packages necessary. He said cash coupons may stimulate consumption, but "we will have to see how the poor people and the tourism industry think about them, and we will make suitable adjustments." Some mainland cities such as Hangzhou and Chengdu have issued cash coupons recently. Taiwan has done the same. Meanwhile, Inner Mongolia Autonomous Region delegate Wang Rungang said he hopes the government will introduce policies to protect and give more support to private enterprises. "Most export-oriented private enterprises are experiencing hard times and face bankruptcy, creating joblessness and destabilizing society," Wang said. CPPCC chairman Jia Qinglin focused his opening speech on employment and the spurring of domestic consumption. The mainland economy has become the most pressing concern of CPPCC members as most of the 265 proposals submitted are related to it, Jia said. "We encourage people from the non- public sector to shoulder their share of social responsibilities and work hard to ensure that no employees in their enterprises are laid off, suffer from pay cuts and wage arrears to create harmonious labor relations," Jia said. It is believed fewer than 10 percent of mainland university graduates have been offered jobs - there will be 6.5 million graduates entering the job market in the coming months. An estimated 20 million migrant workers have lost their jobs as demand for exports drops. Jia described 2008 as an unusual year. "We must face the complex and severe economic situation," he said. "We must do everything in our power to resolve issues affecting the well-being of the people and promote social harmony and stability." He added more forward-looking studies should be done, especially on how to stimulate consumption, stabilize imports and exports and assist small and medium enterprises. As for Hong Kong and Macau, Jia praised the CPPCC members for enhancing patriotism and unity in the two special administrative regions. Before the conference opened, People's Bank of China deputy governor Liu Shiyu said it is watching to see if there is a special need for more interest rate cuts. Fellow deputy governor Su Ning said he is confident China's economy will "very likely" see a recovery in the first half, which would be way ahead of market expectations.

Zhang Yimou (2nd L, Front), member of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC), arrives at the Tian'anmen Square in Beijing, capital of China, March 3, 2009. The Second Session of the 11th National Committee of the CPPCC opens on Tuesday. Chinese movie director Zhang Yimou, who dazzled the world with his Beijing Olympic opening and closing ceremonies, said Tuesday he is planning a movie to celebrate the 60th anniversary of the founding of New China. The script of the movie is being worked on, the Oscar-nominated director said on the sideline of the annual session of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC) that started Tuesday afternoon. Zhang, member of the 11th National Committee of CPPCC, told Xinhua he may also consent to invitations from government agencies to orchestra a fireworks showcase gala for the anniversary celebration. China is expected to hold grand celebration activities for the 60th founding anniversary, including a military dress parade in Tian'anmen Square on Oct. 1, the same day when the People's Republic of China was founded in 1949.

Chinese singer Zhang Liangying attends a press conference at the Foreign Correspondents' Club of Japan, in Tokyo, Japan, Feb. 27, 2009. Zhang arrived here on Friday to promote her first concert in Japan which would be held in one month.

Mar 4, 2009

Hong Kong: Two Hong Kong's Canto-pop singers have been arrested in Tokyo last week over alleged possession of marijuana, local media reported on Tuesday. Kelvin Kwan Chor-yiu and his girlfriend singer Jil Vidal, also known as “Wei Si”, were arrested last Tuesday, Japan’s Kyoto News Agency reported. The arrests occurred during an investigation into an incident at a shop in Shibuya, when the owner accused the pair of stealing goods. Police were called and officers discovered Kwan had some marijuana among his possessions. Kwan told police the drugs were believed to have been brought into the country from Hong Kong. But Ms Vidal said she “did not know it was marijuana”. Kelvin Kwan was born and raised in Canada. His father is was a former executive of major music recording company and his godfather is a famous Hong Kong Canto-pop singer Alan Tam Wing-Lun. He became a singer in 2004 and his debut album IF was released on October 2006. His girlfriend Jill Vidal is also a pop singer in Hong Kong. Jill’s twin sister is Janice who is an emerging pop singer in Hong Kong and Asia. Singer Leon Lai-Min, who is also a spokesman of Ms Vidal’s record company, Amusic, told local media he had sent staff to Japan to help the pair.

Five marketing campaigns have been launched since the end of last year to stimulate visitor flow at Terminal Two. New campaigns are scheduled to begin later this month. More shops at Chek Lap Kok airport's Terminal Two have closed, increasing the number of vacant lots at the shopping mall to more than 10 per cent of the total. Eleven out of 100 shops on levels five and six of the terminal's SkyPlaza were closed after a period of less-than-average visitor flow. But in the passenger-packed Terminal One, all shops have been leased out. A sales assistant at a boutique in Terminal Two said business was miserable and that they only had one or two transactions a day. "Every shop in this terminal is like that. No one seems to know that this terminal exists," she said, adding that business at other branches in the city was much better than at the terminal. The mall was virtually empty after 6pm. "There are too few check-in counters here, and most passengers walk back to Terminal One after checking in," she said. But there were more visitors on weekends, as local tours came through or Tung Chung residents visited for lunch. "Restaurants here are slightly cheaper than those in Tung Chung. But eaters rarely stay around to shop," she said, adding that she hoped the Airport Authority would do more to promote the terminal. An assistant at another boutique said most shoppers did not know where Terminal Two was, and that they preferred shopping after passing through immigration checkpoints. "Most passengers are in a hurry. They only relax and shop once they have entered the restricted area," she said. A local couple said it was the third time they had visited Terminal Two. "This side of the airport is less crowded, so we like to hang around here. Sometimes we dine at the restaurants, but we never buy things," the husband said. A visitor from Shanghai said that although he used Hong Kong airport quite frequently, it was his first visit to Terminal Two. "I never knew there was another terminal. It seems like just another shopping centre," he said. An Airport Authority spokeswoman said relief programmes had been offered to all shops at Terminal Two, and that five marketing campaigns had been launched since the end of last year to stimulate visitor flow. She said new campaigns were scheduled to begin in the middle of the month. Terminal Two opened in February 2007. It handles check-in services for about a dozen airlines and 10 per cent of all departing passengers, according to the Airport Authority. After checking in, passengers need to take an automated walkway to Terminal One as all gates are located there.

Standard Chartered, the emerging markets bank, said on Tuesday that its net profits jumped a fifth to US$3.41 billion last year, leaving it well-placed to tackle the Asia slowdown. Despite the lift in profits after tax, Standard Chartered was not immune to rising bad debts linked to the credit crisis, as it wrote off US$1.79 billion last year, more than double the amount of US$818 million in 2007. “To deliver record results in this exceptional environment is a great achievement,” the bank’s acting chairman John Peace said in the group’s earnings statement. Chief executive Peter Sands said the best way to continue delivering shareholder value was through Standard Chartered’s “rigorous focus on Asia, Africa and the Middle East” in addition to a “prudent approach to liquidity and capital” and “continued discipline in cost and risk management”. Mr Sands said Asian banks were far better placed to withstand the financial crisis than their western peers that are losing billions of dollars because of the credit crisis and issuing new shares to boost capital. “While Asian banks are feeling the stress, as dollar liquidity dries up and the credit environment deteriorates, they are on the whole in much better shape than many counterparts in the west,” Mr Sands said in the statement. “The ingredients of the banking crisis in the UK and the US, the over-leverage, overcomplexity and opacity, are not present to nearly the same extent.” A company is described as highly “leveraged” if it finances its activities by relying heavily on borrowed money. Mr Sands added that it was “also unwise to draw too many analogies” to the Asian financial crisis of the 1990s. “In fact, the resilience of Asia owes much to lessons learnt from that experience. This time most countries have substantial foreign currency reserves and strong fiscal positions. This time most businesses have relatively conservative balance sheets,” he stressed. As for Standard Chartered, Mr Sands said that the second biggest British banking group after HSBC (SEHK: 0005, announcements, news) “was focused on building balance sheet strength and on maintaining high levels of liquidity”, adding that it is “on a firm footing for the challeges and opportunities that will come during this year”. Standard Chartered were up 3.6 per cent at 608 pence (HK$66.80) by 5.40pm HK time, down from a high at 661 pence but still the top gainer on London’s blue-chip FTSE 100 index and outperforming a 1.5 per cent fall for European peers.

A customer brings her own bag to a Causeway Bay supermarket in support of the No Plastic Bag campaign on Tuesday. To encourage Hong Kong customers to use their own shopping bags and stop using plastic bags, a 'No Plastic Bag Day' has been launched by major retail chains. The Retail Management Association said that from Wednesday, about 2,000 outlets would no longer offer plastic bags to customers – unless they asked for them. Among them are major supermarket chains, drugstores and convenience shops. These include 7-Eleven, city’super, ParknShop, ThreeSixty, Watsons and Mannings. The association expects the plan would help to reduce the number of plastic bags used annually to around 400 million. This represents a 50 per cent decrease from the 820 million plastic bags distributed in 2005. The association said they hope to attract more member companies to join. Consumers have mixed feelings about the plan. One shopper, who had bought a lot of fruit and vegetables, said she felt it was quite inconvenient. She told local television she was not prepared and had not brought her own shopping bags. Others said they would support the programme and bring their own shopping bags. “I have to do something to reduce the usage of plastic bags, as the world is getting warmer and warmer,” one female customer told local television.

HSBC Holdings (SEHK: 0005) will tap shareholders for US$17.7 billion in new funds and cut 6,100 jobs after its investment in the US subprime lending market resulted in a 70 per cent drop in 2008 net profits. Europe's biggest bank by market value said yesterday it would raise money to shore up its balance sheet through a discounted rights offering that will rank as the third largest by any company on record. For the first time in at least 15 years the bank will slash its dividend payment by 29 per cent, affecting more than 210,000 shareholders of whom management estimates some 20 to 30 per cent are in Hong Kong. The London-based lender reported net income of US$5.73 billion for 2008, down 70.06 per cent from US$19.13 billion a year earlier. For the six months to December, HSBC suffered a net loss of US$1.99 billion, its first loss since at least 1995. News of the rights offering and the dismal financial results pushed HSBC's shares down 18.78 per cent to 399 pence at the close of trading on the London Stock Exchange. Investor concern about HSBC and American International Group, which posted the biggest quarterly loss in US corporate history, dragged down London, European and US markets. In London, the FTSE 100 slid 5.3 per cent to its lowest closing level in nearly six years at 3,625.83, while in New York the Dow Jones Industrial Average slipped below the 7,000 level, falling 3.12 per cent to 6,842.31 in early afternoon. HSBC's drastic moves to raise new funds and conserve cash come as the bank suffered a one-time US$10.56 billion write-down on its personal finance business in the US, a market it entered six years ago in a US$15 billion deal. "With the benefit of hindsight, the group wishes it hadn't made this investment," group chief executive Michael Geoghegan said yesterday. HSBC's 2003 acquisition of US subprime mortgage lender Household Financial, since renamed HSBC Finance Corp, has cost the bank tens of billions in write-downs and bad-debt provisions since the onset of the global financial crisis. Management said it would close most of its 800 retail consumer credit branches in the US and lay off about 6,100 employees. It said it would cut its losses in the US, cease all new household, car and personal finance lending and slowly wind up its portfolio of US loans by waiting until they were repaid or trying to sell them on to other investors. Net operating income fell 7.69 per cent to US$27.33 billion in the second half from a year ago, after provisions against bad or doubtful loans soared 36.55 per cent to US$14.88 billion in the six-month period. HSBC's massive rights issue will follow similar moves by rival lenders including RBS and Fortis. The bank is offering existing shareholders five discounted new shares for every 12 shares currently held. "HSBC is not the first one doing a rights issue, so it's not [too] surprising," said Mona Chung, a fund manager at Daiwa Asset Management. "The most important thing is whether the bank will be changing its dividend policy [for 2009] going forward." HSBC announced yesterday a 10 US cents per share dividend payment for the fourth quarter of last year, cutting the full-year payout for the first time in more than a decade to 64 US cents per share from 90 US cents per share in 2007. Management said it would pay a dividend of 8 US cents per share for each of the first three quarters of this year and set the fourth-quarter payout based on performance. For the rights issue, a holder of one Hong Kong board lot of 400 shares can subscribe to 167 new rights shares at HK$28 apiece, a discount of approximately 50.83 per cent from Friday's closing price of HK$56.95 per share. The total cost for the rights subscription works out at HK$4,676 per board lot of HSBC shares.

HSBC Holdings, which walked away from a US$6.3 billion agreement to buy a South Korean bank last year, continues to watch for deals in the country, its Asia chief executive said on Tuesday.

HSBC to ax 6,100 staff in goodbye to US consumers - HSBC (0005) yesterday declared a bloody end to its six-year love affair with US consumer finance. It will sack 6,100 American employees as it withdraws from the business after posting a US$15.53 billion (HK$121.13 billion) pretax loss in 2008 for its North American division.

Many Hong Kong tycoons, businessmen and small investors say they support HSBC (SEHK: 0005) 's rights issue because it offers a good opportunity to buy shares in the bank at a cheap price. Lee Shau-kee, chairman of Henderson Land (SEHK: 0012) Holdings, through his personal investment arm Shau Kee Financial Enterprise, will act as sub-underwriter for HK$2.4 billion of the rights issue. "I believe HSBC is a very strong and prudent bank. Its tier-one capital, after the rights issue, will be 9.8 per cent, which is very strong," Mr Lee said. "The subscription price, at HK$28, is very cheap." Allan Zeman, chairman and founder of Lan Kwai Fong Holdings, has also agreed to subscribe to the rights issue. "I have decided to go ahead with the rights issue offer as I think the price is very good. I think this is a good buying opportunity," Mr Zeman said. "I have been an investor in HSBC for more than 30 years and I consider the bank very well managed. It is a good bank and I believe the money I pay for the rights issue would be used to good purpose. When it needs to raise capital, it is time for me to show my support." Bank of East Asia (SEHK: 0023) chairman and chief executive David Li Kwok-po said he would subscribe to the rights issue as a personal investment. "HSBC is a good investment and I am positive about the outlook," Mr Li said. Hospital Authority chairman Anthony Wu Ting-yuk was another potential subscriber. "I will definitely accept the rights issue offer." David Tung Wai, Hong Kong's oldest stockbroker with more than 60 years experience, said he would support the rights issue. "I have invested in HSBC since 1972 and I have full confidence in the stock. The funds raised from the rights issue are not for debt repayments but for its expansion," Mr Tung said. "I have many clients who have invested in HSBC for 30 to 40 years and they also said they would subscribe to the rights issue. I will recommend that they do so as the issue price is reasonable and it is a good investment for the long term," he added. Legislator Chim Pui-chung, who represents the financial services sector, said he did not have any HSBC shares but would buy the stock now to join the rights issue. "When I was a broker in the 1970s and 80s, HSBC shares kept on rising. In recent years it has gone over HK$140 per share. The current price of about HK$50 is very cheap and the rights issue price is even cheaper. I think this is a good opportunity," Mr Chim said. However, not all investors were as quick to say yes. Hong Kong Exchanges and Clearing (SEHK: 0388) chairman Ronald Arculli, an HSBC shareholder, said he would study the terms before making a decision. Other investors had reservations. Centaline Property chairman Shih Wing-ching said: "Every stock has its own life cycle and nobody should hold any stocks for a long time. If you hold it for long it may end up as wallpaper." An investor surnamed Lau, who has held HSBC shares for two years, said he would not participate. "I will not accept the rights issue because I think the overall investment market is not good and banking stocks are all doing badly. I won't sell my current holdings of HSBC but also I won't take part in the rights issue," he said. "Cash is king during the financial crisis and I will keep my cash on hand in case HSBC shares go below HK$30 or so. I will buy it directly from the stock market then."

Hutchison Telecom operates 3G and 2G mobile-telephone services in Hong Kong and Macau, with more than 2.3 million subscribers. Shares in Hutchison Telecommunications International (SEHK: 2332) surged more than 10 per cent yesterday after the company confirmed it was in advanced talks to spin off its Hong Kong and Macau telecommunications businesses. Hutchison (SEHK: 0013) Telecom said in a clarification announcement that it and its advisers were in discussions concerning a possible spin-off and a separate listing by way of distribution in specie not involving any raising of new capital. "No decision has been made by the board up to the date of this announcement," it said. Hutchison Telecom shares yesterday rose 10.99 per cent to close at HK$2.02. The share rise was in response to a South China Morning Post (SEHK: 0583, announcements, news) report that the company could announce the plan as early as tomorrow when the company announces its final results for last year. Hutchison Telecom operates 3G and 2G mobile-telephone services in Hong Kong and Macau, with more than 2.3 million subscribers. It also has a fixed-line operation under Hutchison Global Communications. "The spin-off should help realise the value of the Hong Kong and Macau operations," a fund manager said yesterday. "However, in such a competitive market, pure telecommunications plays in Hong Kong may not raise investor interest." Hutchison Telecom also had no immediate cash needs within Hong Kong, the fund manager added. CLSA estimated the spun-off assets could be valued at HK$10 billion to HK$12 billion. Locally listed telecommunications companies with core operations in Hong Kong include PCCW (SEHK: 0008), SmarTone Telecommunications Holdings (SEHK: 0315, announcements, news) , City Telecom and Hutchison Telecom. PCCW, the city's biggest telecommunications firm jointly owned by chairman Richard Li Tzar-kai and China Unicom (SEHK: 0762, announcements, news) Group, is pending a HK$15.9 billion buyout deal to take the company private.

A consortium of three mainland and two foreign companies has been chosen to design the HK$82 billion Hong Kong-Zhuhai-Macau Bridge, with work scheduled to begin in December. CCCC Highway Consultants, a subsidiary of the Hong Kong-listed China Communications Construction; CCCC First Harbor Engineering; the Shanghai Tunnel Engineering and Rail Transit Design and Research Institute; Britain's Ove Arup and Partners Hong Kong; and Danish company Cowi bid HK$200 million to win the project. A source told The Standard government officials from Guangdong, Hong Kong and Macau met in Zhuhai last week to vet the three bids before selecting the consortium. Tenders were called last December. Construction will officially commence on or about December 20 - the 10th anniversary of Macau's handover - though the source said reclamation work in seas off Macau and Guangdong may begin as early as July. The project's completion date is set for 2015. The bridge design will include the route and relevant facilities along the route, the main bridges, the tunnels, the man-made islands, transport engineering, landscape and environmental protection facilities. Officials at last week's meeting also confirmed the overall construction cost of 72.6 billion yuan (HK$82.23 billion), which is much higher than the original estimate of 40 billion yuan. The majority of the payment will be met by a syndicated loan up to 56.9 billion yuan offered by the Bank of China, China Construction Bank, the Industrial and Commercial Bank of China and the China Development Bank. The Hong Kong government will contribute about 6.75 billion yuan, the Beijing government 5 billion yuan, Guangdong 2 billion yuan and Macau 2 billion yuan. The 29.6-kilometer bridge is expected to run from San Shek Wan on Lantau Island to Gongbei in Zhuhai and A Perola in Macau. The connecting roads in Hong Kong are about 12.6km while those in the mainland will be 13.9km, according to the government. The construction and related works are expected to create 18,000 jobs for Hong Kong residents, according to government estimates. Travel times between Hong Kong and Macau and Zhuhai will be cut substantially.

Macau's next big casino resort will open this year despite the global financial meltdown that has put the brakes on the city's gaming boom. The joint-venture City of Dreams project led by Melco Crown Entertainment, partly owned by Lawrence Ho Yau-lung - son of casino tycoon Stanley Ho Hung-sun - and Australian gaming mogul James Packer, is confident of success despite the slowdown. City of Dreams resort president Greg Hawkins said they will hire 7,000 people, a fifth of whom will be from overseas, including Hong Kong. The resort will be home to Macau's 32nd casino and will operate just a stone's throw away from its main competitor, The Venetian Macao on the Cotai Strip. It will be the only large-scale entertainment development slated to open in the enclave this year, Hawkins said. He told The Standard that their master plan will not be altered by the credit squeeze. All their financial support was secured years ago before the crisis, he added. The resort will boast a Crown Casino, Grand Hyatt hotel, Hard Rock, a permanent Dragone show, and Asia's only multimedia 360-degree visual attraction called The Bubble. The first two phases, including a 420,000-square-foot casino and 1,400 hotel guest rooms, will open within the year. Although Hong Kong workers with expertise in hotel, casino management or information technology will still be hired by the resort, the days when Hong Kong senior management were lured with double or triple their previous salaries to work in Macau are over. "They should focus on promotion in career development rather than being salary driven when they come to work in Macau," said Hawkins, the former chief executive officer of the Crown Macau on Taipa Island. Hawkins said they have not lowered turnover or occupancy targets, confident they can still capture a share of the market as long as their products and services are in line with market expectations. He also believes the situation will improve by the time their development opens in the second half of the year. "Macau is a fantastic example of real- life market-driven competition where ultimately the consumers are the ones who are winning," Hawkins said.

China: Christie's auction house declined to comment on Monday after a Chinese collector refused to pay for two relics he bought in an auction of the collection of late fashion designer Yves Saint Laurent.

The new US envoy on North Korea arrived in Beijing on Tuesday for talks on how to coax the reclusive Communist country, which is thought to be preparing a missile launch, into fresh steps towards nuclear disarmament. The Chinese capital is the first stop on Stephen Bosworth’s first visit to Asia since he was nominated last month for the job of overseeing protracted nuclear negotiations with North Korea. Swedish Foreign Minister Carl Bildt, also in Beijing, said Chinese officials were also worried about a possible North Korean missile launch. “They [the Chinese] are obviously concerned with the risk of raising tensions,” Mr Bildt said. No breakthroughs are expected on Mr Bosworth’s first visit. “Ambassador Bosworth wants to signal that the United States will not be tested by North Korea,” said Kim Sung-han, Korea University professor of international relations. “From the North Korean point of view, they do not make concessions under any circumstances. From Stephen Bosworth’s point of view, he needs to send a clear message to North Korea that even if North Korea test-fires its Taepodong missile, that will not automatically lead to North Korea-US bilateral talks.” Bosworth has become the chief US envoy at a tense time, with North Korea repeatedly threatening in recent weeks to reduce the South to ashes. Six-party talks between the two Koreas, China, Japan, Russia and the United States on the North’s nuclear weapons programmes have stalled, with implementation of an initial energy-for-disarmament deal stuck on Pyongyang’s refusal to allow nuclear material to be taken abroad for tests. “At present, there are some new and complicated circumstances in the denuclearisation process,” Chinese Foreign Ministry spokesman Qin Gang said of the talks without elaborating. “We hope these difficulties will be temporary.” US and South Korean officials have said North Korea is preparing for a test flight of its Taepodong-2 long-range missile, which could carry a weapon as far as Alaska but has never successfully flown. Japan is considering deploying its two ballistic missile interceptor warships to the Sea of Japan ahead of any test launch, Kyodo news agency reported on Tuesday. Japan will be co-operating with the US military, which also has anti-ballistic missile ships stationed there, Kyodo quoted the official as saying. But a spokesman for Japan’s Defence Ministry said nothing had been decided as yet. Pyongyang has said it was preparing to launch a satellite and it had the right to do so as part of a peaceful space program. Mr Bosworth would meet Chinese Foreign Minister Yang Jiechi and Vice Foreign Minister Wu Dawei during his stay, Mr Qin said. Mr Bosworth, a former ambassador to South Korea, will later in the week fly to Tokyo and Seoul, where he will also meet Russian officials. US Secretary of State Hillary Clinton last week said Bosworth’s tour was to “move the six-party process forward”. Since taking on his new job, Bosworth has not publicly discussed how he will approach the negotiations. He did not speak to reporters on arrival in Beijing but said he would make a statement later. But early in February, he visited North Korea while still dean at the Fletcher School of diplomacy at Tufts University. After that visit, he said North Korean officials said they wanted to advance nuclear disarmament steps if their aid demands were met.

Some of China's largest real estate developers may be at risk of defaulting on their debt this year because of liquidity problems and a challenging environment, according to Standard & Poor's.

Sanlu Group, a Chinese dairy company at the center of a milk contamination scandal and declared insolvent by court, will be auctioned on Wednesday at a court in this capital of north China's Hebei Province. The auction company, the Hebei Jiahai Auction Co. Ltd., on Tuesday declined to disclose how many dairy producers will attend the bidding. The share price of Sanlu's potential buyer, the Beijing Sanyuan Foods Co Ltd., rose by the daily limit-up of 10 percent on Tuesday, as the auction drew near. Sanyuan was among the first batch of domestic dairy makers to express interest in buying Sanlu's remaining assets, a move encouraged by the central government to consolidate the industry. The Beijing Sanyuan Group Co. Ltd., the parent company of the Beijing Sanyuan Foods Co Ltd., said Tuesday it would make a joint bid with the Hebei Sanyuan Foods Co Ltd., the subsidiary of the Beijing Sanyuan Foods Co Ltd., told Xinhua on Wednesday. "We submitted an application for bidding to the auction house today and paid 200 million yuan (29.4 million U.S. dollars) as a deposit," said Fan Xueshan, a board director of the Sanlu Group. He said he would attend the auction on behalf of the joint bidder. Sanyuan estimated the Sanlu's assets at 800 million yuan and Fan was authorized by a temporary shareholders meeting to make a bid of no more than 880 million yuan, he said. "If the bid is higher than 880-million-yuan limit, then we have to hold another shareholders meeting for discussion," he said. The Beijing Evening News quoted its source as estimating Sanlu's assets at 726 million yuan. The auction company said Sanlu's land use rights, buildings, machines and equipment will be up for bidding at Wednesday's auction at the Intermediate People's Court of Shijiazhuang. The same court declared Sanlu bankrupt on Feb. 12 on charges of its failure to repay outstanding debts, which surpassed its assets. On Dec. 19, the group borrowed 902 million yuan to pay the medical fees of children sickened by baby formula tainted with melamine and to compensate victims, which increased its debt to 1.1 billion yuan. Sanlu stopped production on Sept. 12. Its melamine-tainted baby milk powder was found to have caused the deaths of at least six children and sickened more than 300,000 other children. Sanlu leased its plants to a subsidiary of Beijing Sanyuan Foods Co. Ltd. in December, days after the bankruptcy petition was accepted by the Shijiazhuang Intermediate People's Court. It was fined 49.37 million yuan by the Shijiazhuang court. The same court also imposed a life sentence for Sanlu chairwoman Tian Wenhua.

China's largest offshore oil producer, CNOOC, has started construction of a 5-billon-yuan chemical complex in Hainan province, a move that would further boost its investment in southern China. The 2-million-ton deep catalytic cracking (DCC) project is located in Dongfang and is scheduled to begin operations in 2011, local media reported. The project will produce propylene, liquefied petroleum gas and naphtha. South China, especially the Pearl River Delta region, has always been an important region for CNOOC. A large portion of the company's oil reserves is in the South China Sea, analysts said. The company's projects in the region include a 12-million-ton refinery and an 800,000-ton ethylene production plant. It also has oil reserve capacity of 5 million cu m there. CNOOC plans to operate its first giant refinery in Huizhou, Guangdong province this month. The 240,000-barrel-a-day plant is now undergoing testing, an official with the company said yesterday. The refinery was scheduled to start operations by the end of last year, but was delayed due to market uncertainty, the official, who declined to be named, said. Construction of the Huizhou plant began in late 2005. It is CNOOC's first large oil refinery project, involving a total investment of over 20 billion yuan. The company plans to boost its annual capacity to 22 million tons from the current 12 million during the 12th Five-Year Plan (2011-15) period. CNOOC's sales revenue in 2008 rose 22.4 percent from a year ago to 98.3 billion yuan. The company's listed arm, CNOOC Ltd, said on Jan 20 that it planned to raise its 2009 crude and gas production by 16-18 percent, when new projects go on stream this year. CNOOC's total capital expenditure is expected to touch $6.76 billion this year, an increase of 19 percent year-on-year. Liu Gu, energy analyst with Guotai Jun'an Securities in Shenzhen, had earlier told China Daily that she expected the company's profit to decrease by 20 percent this year, chiefly due to falling oil prices.

Mar 3, 2009

Hong Kong: Southeast Asian leaders yesterday vowed to curb lingering protectionist instincts as they pledged greater co-ordination to tackle the worsening global financial crisis. The 10 leaders of the Association of Southeast Asian Nations ended their annual summit in Hua Hin, Thailand, by recommitting to plans to form a European Union-style economic community by 2015. A final statement by the leaders of the 570 million-strong bloc called for "bold and urgent reform of the international financial system" to tackle the worsening crisis. They also agreed to "stand firm against protectionism". The leaders urged developed and developing countries to show "more co-ordinated action ... to restore financial stability and ensure the continued functioning of financial markets". The statement followed three days of talks on the impact of the global crisis on their export-dependent economies and fears that recovery could take longer than had been expected. The meeting followed confirmation that Singapore was now in recession and that the economy of Thailand, a major exporter, shrank in the last quarter of 2008 as demand for consumer goods slumped in developed-world markets. Some sources warned of residual protectionist instincts, with some leaders and their ministers said to be weighing new trade barriers to help their struggling industries. Malaysian Prime Minister Abdullah Badawi arrived at the meeting saying protectionist instincts were "normal". Philippine Trade Secretary Peter Favila said there was reluctance to push ahead with the goal of dropping all trade barriers by 2015. "But those are just sentiments," Mr Favila said. "You know everybody has to follow the leaders' instructions: do it by 2015." The summit chairman, Thai Prime Minister Abhisit Vejjajiva, insisted the grouping was focused on free trade despite Asean's reputation for glacial progress on the issue. "Asean countries are firmly committed to free trade and will do whatever we can to make sure that no countries resort to protectionist measures to try to ease their way out of the crisis," Mr Abhisit said. The leaders "have sent a clear signal about our guidelines to solve economic problems in the region", he said. Asean members would be staying in closer touch over economic developments and watching for fresh signs of protectionism. The summit produced no specific initiatives, but leaders gave full backing to the expansion of an emergency regional currency fund from US$80 billion to US$120 billion. Some analysts warned that the lack of substance reflected a sense of helplessness as the crisis engulfed key trading partners. The grouping is largely reliant on international trade, with trade flows among Asean members growing but still small. "They can try to keep a brave face. There's not much collective action they can take," David Cohen, a Singapore-based economist with research house Action Economics, said. "I don't think [the statement] will make very much immediate difference. The problems are so overwhelming right now."

Hutchison Telecommunications International (SEHK: 2332) Ltd is planning to spin off its Hong Kong fixed-line and mobile telephone businesses, valued at as much as HK$12 billion, in an initial public offering in the city later this year, sources said. Investment bankers said it was hard to estimate the deal's size, but some suggested HTIL, controlled by Li Ka-shing, could raise about HK$2 billion from the share sale. Both Goldman Sachs, which was hired to arrange the deal, and HTIL declined to comment. With local listing activity having ground to a halt, this is likely to be one of Hong Kong's most keenly watched flotations of the year. But the deal could be a hard sell amid a tough market environment. Hutchison (SEHK: 0013) Telecom (Hong Kong), the mobile service run by HTIL, operates both 2G and 3G services, the latter under the brand-name "3". The company won a high-profile contract to sell Apple's iPhone in Hong Kong last year. However, analysts said the operations had little room for growth in the city's saturated mobile and fixed-line telephony markets. "The fixed-line business in Hong Kong is a steadily declining market. The mobile side of the business is very saturated," CLSA analyst Elinor Leung said. Ms Leung estimated the fixed-line and mobile businesses together had an enterprise value of between HK$10 billion and HK$12 billion. Hutchison Global Communications is the fixed-line business. The unit was taken private three years ago when minority shareholders were bought out for HK$2.4 billion. Hong Kong is one of the most crowded and competitive mobile-telephone markets in the world. There are five mobile operators in the city sharing 11.48 million users, the Office of the Telecommunications Authority said. This represents 1.6 mobile phones for each resident. Net profit at SmarTone Telecommunications Holdings (SEHK: 0315, announcements, news) , one of Hong Kong's biggest mobile operators, plunged 68 per cent in the six months to December from a year earlier. SmarTone's management cited deteriorating market conditions. Some investors and bankers speculate that Mr Li wants to cash out of Hong Kong's mature telephony market and spend the money on cheap communications assets across Asia. "The spin-off could help HTIL realise the valuation of the Hong Kong business. I do think they would like to cash out [through the share offering] and then reinvest in the region, as everything is selling cheap in the market," said Winson Fong, the managing director of SG Asset Management (Hong Kong). A local investment banker added: "Assets are very cheap right now. So I would not take these spin-offs as evidence Hutchison needs more money to fund its own operations. The company is very well funded." Mr Li's approach to cashing out of Hong Kong's tough telecommunications market is markedly different from that of his son Richard Li Tzar-kai, the chairman of local telecommunications firm PCCW (SEHK: 0008). The younger Mr Li wants to take his business private so he can restructure it away from the public glare and potentially sell it to trade or private equity buyers when the local economy improves and company valuations are higher. Richard Li and China Unicom (SEHK: 0762, announcements, news) Group have offered HK$15.9 billion to minority shareholders in the buyout proposal. The scheme is hanging in the balance after a court challenge by the Securities and Futures Commission on allegations of improper share transfers. It is uncertain how Li Ka-shing and Goldman Sachs will try to sell the Hong Kong telecommunications assets to the public. They could offer a high dividend. The units have stable cash flows, but being very mature, they do not need to set a lot of money aside to invest in future growth. This could make them a neat portfolio replacement for retail investors who are disappointed at the PCCW buyout. Many PCCW minority investors bought shares in Hong Kong Telecom - before that was taken over by Richard Li in 2000 - for its high and stable dividend. HTIL owns 100 per cent of the Hong Kong fixed-line business through HGC and operates the mobile business through Hutchison Telecom, with more than 2 million subscribers. It announces its annual results on Wednesday, where it could also confirm the share-offer plans.

Gourmet Master, the operator of coffee and bakeshop chain 85 Degree Bakery Cafe in Taiwan, plans to spin off its mainland and Hong Kong businesses through an initial public offering on the Hong Kong market next year that could raise at least HK$900 million. Sources familiar with the preparations for the float say the private equity unit of Goldman Sachs is close to taking a pre-float 5 per cent stake in the firm as a strategic investor. The Taiwanese cafe and bakeshop operator is also in discussions with other venture-capital investors to sell further minority stakes before the company goes public. "Goldman Sachs is close to signing a formal mandate with the firm for the planned share sale," one source said. Commenting on talk of Goldman Sachs' 5 per cent strategic stake in the firm, Gourmet Master vice-president David Sun confirmed the firm had held talks with potential investors but would not identify them. He confirmed the company planned a public float. "We are preparing for an offering. We want to keep all the mainland stores self-owned to make sure our brand image is under control," Mr Sun said. He said the cafe and bakery chain aimed to have 90 to 100 outlets on the mainland by the end of this year, up from 34 at present. The chain would make its first foray into Hong Kong later this year, he added. Each outlet costs between 1.5 million yuan (HK$1.7 million) and 2 million yuan to set up, he added, and it took only a "very short time" for each new store to break even. A market source said each of the 85 Degree shops took about four months to break even and thereafter generated strong cash flows to fund further store openings. The company opened its first store in Shanghai at the end of 2007 and quickly attracted customer attention through its rapid expansion and value-for-money offerings. A cup of coffee at the store costs from 8 yuan to 12 yuan, below prices charged at rival Starbucks. "We want to attract customers by offering quality products at lower prices," Mr Sun said. "This type of value-for-money offering will appeal to price-conscious customers amid the economic downturn and can help to quickly grab market share." Established in Taiwan six years ago, the cafe and bakery chain has since expanded its sales network to 326 outlets on the island through franchising its brand to owner-operators. But Mr Sun said the chain would insist on owning all its stores on the mainland to control quality. He said 85 Degree aimed to become the No1 cafe brand among the world's Chinese community by offering five-star quality coffee, cakes and bread at affordable prices and in a friendly environment.

In a move to combat parallel traders, the MTR Corporation (SEHK: 0066) will prosecute passengers who ignore warnings to move on and linger too long on platforms at Lo Wu and Sheung Shui stations, railway officials said yesterday. The announcement comes as the MTR Corp has noticed increasing numbers of parallel-import traders waiting on station platforms to meet their collaborators - who bring goods to them bought in areas around the stations. To save ticket fees, traders often stay on the platforms. Yesterday, temporary barriers were set up on the two stations' platform areas that connect the second, third and fourth cars of Lo Wu-bound trains. The barriers separate boarding from alighting passengers. "Our staff will first advise people to leave if they stay on the platform for a long time, and will prosecute them if they continue to stay after repeated advice," MTR deputy operations director Li Yun-tai said. Asked how long a wait on a platform would lead to prosecution, Mr Li said it would depend on the "actual situation". The maximum penalty for ignoring such warnings is HK$2,000 under MTR Corp bylaws. The measure would be reviewed in a month. Dozens of staff would be recruited to implement the measure, Mr Li said. "We are looking for people with prosecution experience, and we will also hire from security service companies." Democrat lawmaker Andrew Cheng Kar-foo said the measure was an understandable effort to tackle the problem of the traders, but the MTR Corp should specify how long a wait would trigger prosecution. Meanwhile, at Lo Wu station the firm will install turnstile gates to crack down on fare dodgers. The existing ticket gates, which make passage easier for passengers carrying large-size luggage, will be replaced early next month. One gate will be retained at both the departure and the arrival concourses. Fare dodgers walk close together so they can both get through using only one Octopus card. Mr Li said turnstiles would be more effective in deterring fare dodgers. The MTR Corp said more than 27,000 cases of fare dodging were detected last month, and 29 station employees were assaulted during ticket inspections last year. Attempts to cheat were particularly prevalent at stations along the East Rail Line. As a result of MTR Corp staff and police working together to crack down on fare dodgers last month, no staff members were assaulted, Mr Li said. The number of fare dodgers dropped slightly from 2,772 in January to 2,623 last month.

Hopewell Holdings said net profit plunged 82 per cent to HK$931 million for the six months to December last year while turnover edged up 1per cent to HK$1.53 billion.

It's decision time for HSBC (0005) investors, who must now make up their minds whether or not to snap up new shares of the bank - expected to be offered at the bargain-basement price of HK$32 to HK$36 - as part of the huge rights issue HSBC is tipped to unveil this week.

The free movement of vehicles, allowing Hong Kong people to invest in mainland stocks and further relaxation of yuan trading controls are among the items to be raised this week by Hong Kong representatives at the Chinese People's Political Consultative Conference and the National People's Congress in Beijing.

Compared with parent HSBC Holdings (0005), Hang Seng Bank (0011) will likely report more favorable earnings results due to its focus on local operations and limited exposure to toxic investments, analysts said. Hang Seng Bank is today expected to announce a HK$15.58 billion net profit in 2008, down 14.58 percent from a year ago, according to 18 brokers polled by Thomson Reuters. Analysts anticipate Hang Seng Bank's final dividend to be flat in 2008 at HK$6.30 per share. Macquarie analyst Nick Lord expects the dividend to fall about 10 percent to HK$5.70 in 2009. BNP Paribas said in a report: "We don't expect any shock" from Hang Seng Bank's second-half 2008 results. But the lender is expected to reveal its exposure to Washington Mutual Bank. "We don't expect significant writedown from its debts investment apart from WaMu, which we factor in impairment losses of HK$1 billion to be recognized in the profit and loss account," said JPMorgan analyst Michael Chan. Daiwa Institute of Research forecasts the bank to go from recording a trading profit of HK$224 million for the first half last year to recording a trading loss of HK$500 million for the second half. JPMorgan expects, on a full-year basis, total fees income to contract by 30 percent year on year and total non-interest income to decline by 32.1 percent. It also predicts the bank's second-half results will show a deterioration across multiple revenue streams. Net interest margin is tipped to shrink by six- basis points in the last six months from the first half. Meanwhile, Hang Seng Bank is today also expected to announce the retirement of Raymond Or Ching-fai as chief executive and vice chairman in May. HSBC general manager and global co- head of commercial banking Margaret Leung Ko May-yee is expected to replace him. "Or's efforts are highly appreciated, but there should be no big change for Hang Seng as it is a large bank," explained Ample Finance Group director Alex Wong Kwok-ying.

The Hong Kong Film Development Council said Sunday it has been trying to tap opportunities in the regional market for Chinese language movies, such as the mainland and Taiwan, as well as Singapore and Malaysia. It is necessary for the local movie industry to join hands with the Chinese mainland, Taiwan, as well as Singapore and Malaysia and to pool resources of the places to develop the film industry of the region, said Jack So, chairman of the council. "The market for Chinese language films can be expanded through co-operation in areas such as financing, production and distribution, etc.," he said. The Film Development Council is an industry promotion arm of the Hong Kong Special Administrative Region (HKSAR) government established in March 2007. A delegation of more than 20 people led by the council visited Singapore and Malaysia, which was part of the "Hong Kong Film: New Action" project launched last December by the council to promote Hong Kong films. ingapore and Malaysia, with the population of the Chinese community totaling over nine million, is one of the important markets for Hong Kong movies, said a statement released Sunday by the council. The visit followed similar trips by the Film Development Council and new generation directors to the neighboring mainland province of Guangdong and Taiwan in December. The council said it also planned to hold large-scale business forums and promotional sessions during the Hong Kong International Film & TV Market in March.

China: China's first lunar probe crashed into the moon yesterday afternoon in a controlled collision after completing a successful 16-month mission, Xinhua reported. The Chang'e I lunar satellite hit the moon at 4.13pm as previously planned, the report said, citing sources at the State Administration of Science, Technology and Industry for National Defence. The satellite, under remote control from two observation and control stations in Qingdao, Shandong province, and Kashgar, in Xinjiang, started to reduce its speed at 3.36pm, Xinhua said. It hit the lunar surface at a pre-designated angle to formally end the first phase of China's three-stage moon mission, which would lead to the landing of a rover vehicle around 2012, Xinhua said. Chang'e I was launched into space on October 24, 2007, and sent the first full map of the moon's surface back to China one month later. It successfully carried out a series of tests while it was in orbit. The planned impact was designed to help the programme amass experience for the landing of China's second lunar probe, Xinhua said. "The second phase of the space programme is aiming for a soft landing, and preparation is in progress," Wu Weiren, chief designer of the lunar probe programme, said. In the third phase, another lunar rover will land on the moon and bring back mineral samples for scientific research in 2017. Apart from the lunar mission, China is also preparing to launch an unmanned space module next year and carry out the country's first space docking in 2011 as a step towards the eventual goal of building a space station, according to Xinhua. The Tiangong I, or "Heavenly Palace I", is scheduled for launch late next year and will dock with a Shenzhou VIII spacecraft early in 2011. The module will be designed to provide a "safe room" in which future astronauts will live and conduct scientific research in zero gravity. "Weighing about 8.5 tonnes, Tiangong I will be able to perform long-term unmanned operations, an essential step towards building a space station," the report said.

Taiwan and the mainland will look at ways to set up a joint crime-fighting system to stamp out cross-strait criminal activity, according to Justice Minister Wang Ching-feng. She said the two sides wanted to eradicate cross-strait crime and the mainland would hold talks with Taiwan on the issue. "We hope to work out a mechanism to help each other to fight crime, which has been on the rise amid rapid exchanges between the two sides," Ms Wang said. "We will send our ministry's officials to participate in the talks." The joint crime-fighting effort will be high on the agenda when Taiwan's top negotiator, Chiang Pin-kung, and his mainland counterpart, Chen Yunlin, meet for a third round of talks due no later than June. Ms Wang said that although the two sides had signed the Kinmen Agreement for repatriation of criminals and illegal immigrants, a more comprehensive co-operation programme was necessary to deal with the growing number of cross-strait crimes, including phone scams, drug trafficking and smuggling. The Kinmen Agreement was inked in 1990 to deal with the large number of illegal mainland immigrants held in Taiwan. The two sides later agreed to use the Kinmen pact to repatriate criminals, including mainland hijackers and major Taiwanese criminals. Under the agreement, Taiwan had repatriated 38,570 illegal immigrants and 18 hijackers back to the mainland as of January, while the mainland repatriated 366 major criminals, including some of the island's top 10 most-wanted. Due to long-standing hostilities and the absence of formal ties between the two sides, the mainland has become a haven for Taiwanese criminals. Taiwanese outlaws have also worked with their mainland counterparts to smuggle narcotics, untaxed cigarettes, liquor and other illegal products to the island. In the past several years, phone scams have also mushroomed and some Taiwanese groups involved in the fraud schemes have even moved their bases to the mainland to avoid Taiwanese police crackdowns. According to Taiwan's Mainland Affairs Council, the island's top mainland policy planning body, the mainland is most eager to talk to Taiwan about joint efforts to tackle phone scams and drug trafficking. Ms Wang said her ministry wanted to talk to the mainland about "exchange of information, provision of evidence and information about crimes and help with investigations". "We also want to talk about the seizure and freezing of assets and gains obtained through criminal activities, and recognition of official documents," she said. Ms Wang said drug trafficking and addiction were also serious problems in Taiwan and as well as stepping up efforts to eliminate the scourges on the island, her ministry had introduced a rehabilitation program for local drug addicts. "The programme includes helping former drug addicts find jobs, and providing the necessary medication and help they need to not resume their habits," she said. The program includes a 24-hour toll-free hotline started yesterday to help addicts wanting to quit. To ease pressure on Taiwan's congested prisons, Ms Wang said a community service system was set to come into effect on September 1 to allow minor offenders sentenced to less than six months in jail to do community service rather than time behind bars. Taiwan now has 63,000 prisoners in a prison system which is designed to accommodate no more than 54,924.

The central government issued a strongly worded ban yesterday prohibiting officials from taking publicly funded overseas trips or sightseeing junkets. In a circular jointly issued by the Communist Party's Central Committee and the State Council, Beijing said the ban was aimed at protecting "the positive image of the party and government" and maintaining social stability. "Chiefs and heads at various levels of government must set themselves up as good examples, practise strict self-discipline and play a leading role ... in choosing not to organise or participate in overseas travel and sightseeing funded by public spending," the decree said, according to Xinhua. The decree requires all overseas travel by officials to be strictly reviewed and states that under no circumstances can such trips be handed out as a bonus or reward. It also states that funds for overseas missions must be managed as a separate item in the government budget and put under close scrutiny. "[The ban] is meant to effectively uphold an excellent image of the party and government, and better unify and lead the people to cope with the impact and difficulties caused by the global financial crisis ... and push for social harmony and stability." The ban came a day after the National People's Congress Standing Committee - the country's top official body - amended criminal laws to ban relatives or those who have close relations with government employees from taking bribes or seeking preferential government treatment. The new law not only targets family members of government officials but also their lovers, classmates and other acquaintances, and puts detailed curbs on "power-for-money" transactions and financial crimes. Offenders in "very serious cases" could face a minimum jail term of seven years under the amendment. In a separate development yesterday Vice-President Xi Jinping, addressing the opening ceremony of the spring semester of the Central Party School, urged party leaders to make efforts to improve their political integrity and competence. Mr Xi, also president of the school, said the party and the people were the key to coping with the impact of the global financial crisis, maintaining steady and relatively fast economic growth, and safeguarding social stability and harmony. President Hu Jintao has said the fight against corruption is linked to the survival of the ruling Communist Party and has pledged to curb official graft, which has become a source of widespread social dissatisfaction. The moves come amid preparations for the yearly meetings of the political elite in Beijing to discuss major policies and set agendas for the government. The Chinese People's Political Consultative Conference, the top national advisory body, will start its annual session tomorrow. The meeting of the National People's Congress, or legislature, will start on Thursday. The events provide opportunities for the political elite from around the country to voice their views and lobby for preferential policies. The economy and maintaining social stability are the top issues to be discussed this year. Keeping rampant corruption in check would be crucial to the success of both. A survey conducted last week by various media revealed that corruption and social injustice were the number one source of public discontent.

Beijing will launch a space module next year, and carry out the nation's first space docking in 2011 as a step toward its goal of building a space station. The Tiangong-1, or "Heavenly Palace-1" is scheduled for launch in late 2010, and will dock with a Shenzhou-8 spacecraft early the following year, Xinhua News Agency said yesterday, citing officials with China's space program. The announcement of the Tiangong mission came as China's first lunar probe, the Chang'e-1, impacted the surface of the moon yesterday after a nearly 16-month mission photographing and mapping the lunar landscape. The Tiangong-1 module is designed to provide a "safe room" for Chinese astronauts to live and conduct scientific research in zero gravity. "Weighing about 8.5 tonnes, Tiangong-1 is able to perform long-term unattended operation, which will be an essential step toward building a space station," the report said. Officials previously said China is expected to place in orbit several modules like the Tiangong, and link them up to form a semi- permanent space platform. It was not immediately clear if the Tiangong-1 would eventually serve as China's first manned space station, or whether it would be a base to test docking and space station technology. The planned 2011 docking would be remotely carried out by scientists on the ground, and would not involve astronauts. The Chang'e-1 which hit the moon was launched in October 2007, signaling China's rising space ambitions, and Beijing's participation in a renewed race against Asian rivals Japan and India to explore the moon. The probe, named after a Chinese goddess, is the first stage of the lunar program, which includes landing an unmanned rover on the surface by 2012, and a manned mission by about 2020. China put astronaut Yang Liwei in space in 2003. Last September, the Shenzhou-7, piloted by three astronauts, carried out the nation's first space walk.

Chinese Premier Wen Jiabao concluded his two-hour online chat with netizens at 5 p.m. Saturday jointly hosted by the central government website and Xinhua website. This was the first online chat involving Wen and the public, facing questions from nearly 300,000 netizens and mobile phone users ranging from unemployment, wealth gap, social justice to democracy.

China has launched its most advanced maritime patrol ship off the coast of Weihai city in eastern Shandong Province, said an official with the Ministry of Transport Sunday. It is a 114-meter-long patrol vessel equipped with a helicopter. Nicknamed "Haixun 11", the ship was completed Saturday. It will be put into use in June, said Liu Gongchen, deputy director of the maritime bureau under the ministry. The ship is capable of carrying out maritime search-and-rescue missions, monitoring coastal waters, and serving as a command post, he said. The launch of the vessel would enable the country to expand its maritime patrol scope and have longer and more regular patrols. "Haixun 11" can sail as far as 6,000 nautical miles (6,900 miles) on one fuel supply. Its top speed reaches more than 40 km per hour.

Mar 1 - 2, 2009

Hong Kong: The Court of Appeal on Friday dismissed the Town Planning Board’s second appeal over a High Court judgment which had ordered it to grant a Swire subsidiary permission to build a development in Mid-Levels West. The development is a mega residential tower, but it is controversial and has been dubbed by its critics as “toothpick tower”. International Trader – the Swire Pacific (SEHK: 0019) subsidiary behind the project in Mid-Levels – has been seeking a judicial review against the Town Planning Board’s decision not to ease the height restriction on a plot of land in Seymour Road, local media reported. International Trader wants to build a 54-storey block of flats in Seymour Road on a parcel of land that includes one plot – abutting Castle Steps – which is limited to a 12-storey building. Other plots on the site, involved in the development and owned by the same company, have no height restrictions. However, the application for the company to ease height restrictions on a plot of land in Seymour Road was turned down by the planning board. The board argued it had the statutory power to refuse the company’s application to remove the 12-storey limit on the site. This was because impact of traffic and visual considerations were in the public interest. But Mr Justice Michael Hartmann on Friday dismissed the Town Planning Board’s appeal. He ruled that traffic and visual considerations were not relevant in the planning board’s rejection to allow the company to ease the height restriction in a plot of land in Seymour Road. He said the planning board only can work in accordance with the outline concept plans and he further pointed out that if the board rejects the company’s applications for the sake of public interest, it has already exceeded its power. A spokesman for the Town Planning Appeal Board said it would study the court judgment and decide whether it would appeal again.

A Provisional Minimum Wage Commission – headed by senior counsel Teresa Cheng Yeuk-wah – has now been formally established, Secretary for Labour and Welfare Matthew Cheung Kin-chung said on Friday. He said that later this year, the commission would conduct a study involved with 10,000 companies and about 60,000 employees. The commission would ask them about their work, education levels and salaries with the view to proposing a practical minimum wage for Hong Kong. The commission would then pass on its findings to Chief Executive Donald Tsang Yam-kuen. “I expect the minimum wage could be implemented by the second half of next year,” he told local media,” Mr Cheung said. He said it would be a challenging task for the committee. It has to recommend appropriate minimum wages level which should not be too low, but at the same time have to strike a balance between Hong Kong’s competitiveness and economic development. But Mr Cheung said he had confidence in the commission. Teresa Cheng is a senior counsel in private practice. She is also the first Asian woman to be elected president of the Chartered Institute of Arbitrators.

Cigarette prices have gone up by as much as HK$10 despite the hike announced in the budget being only HK$8. Street hawkers have tacked an extra HK$2 to the HK$8 per pack increase resulting from the rise in tobacco tax announced by Financial Secretary John Tsang Chun-wah on Wednesday. A number of hawkers said their distributor, Goldpoly, has ordered the HK$10 increase on all products. Calls to Goldpoly and its executives Chan Pang-ching, Hung Ka-leung and Kevin Ng Kar-chun were not returned. A Japan Tobacco spokeswoman said the company was still monitoring the situation and had not ordered any price increases. A spokeswoman for Philip Morris Asia said price increases would hit HK$9 to HK$10 per pack. The hike was in response to a "significant tax increase and an anticipated drop in duty- paid tobacco products which will increase per unit cost base," the Philip Morris Asia spokeswoman said. She added a 135 percent increase in tobacco tax in Singapore from 2000 to 2005 had led to a jump in contraband cigarette seizures. Convenience store 7-Eleven introduced HK$8 increases on all its cigarettes as of midnight yesterday but Circle K was still waiting for directions from its suppliers. "The tax aims to put off young smokers, not earn money," Tsang told a budget forum yesterday. "The tax is levied for the sake of public health. Surveys said the majority of [Hong Kong's] 670,000 smokers are youngsters. Increasing the tobacco tax 10 percent can effectively reduce the number of young smokers to 6.3 percent," he added. Radio station callers attacked Tsang, saying the duty would hit them in the pocket and encourage smuggling. Following dashes to convenience stores immediately after the budget announcement that left many cleaned out, retailers said business had fallen off. A seller of smuggled cigarettes in Western District told The Standard regular customers are introducing desperate smokers seeking cheap smokes. "But I'm not selling to them, they may be undercover customs men," he said. "Do you smoke? Better buy five cartons now because we may not be able to get more stocks [at the current price]." Prices of "cheap" cigarettes range from HK$80 for a carton of an unpopular brand and HK$180 for popular brands versus the legal cost of HK$260. About 73 million cigarettes worth HK$110 million were seized in 2008, evading HK$68.7 million in taxes.

The value of new mortgages in Hong Kong fell last month by 62 percent year on year due to the economic downturn and rising unemployment. According to the Hong Kong Monetary Authority, new mortgage loans approved in January dived to HK$11.2 billion from HK$29.4 billion in the same month last year. New mortgages last month, however, showed an increase of 8 percent from December. The month- on-month rise was due to a 20.2 percent, or HK$1.4 billion, increase in approvals for secondary market deals. New mortgage loans drawn down, or used, in January dropped 74 percent to HK$6.1 billion year on year. Last month's number shows a slide of 15 percent from December. The outstanding value of mortgage loans last month decreased by 0.1 percent to HK$587 billion from December. The proportion of new mortgage loans priced with reference to rates other than the best lending rate, mostly Hong Kong interbank rates, increased to 28.4 percent last month from 17.7 percent the previous month. According to mortgage brokerage mReferral, the 28.4 percent shows an almost two-year high, since March 2007. "I expect the proportion of HIBOR- related mortgage plans to climb further in the future, reaching 30 percent in later months," said mReferral chief economic analyst Sharmaine Lau Yuen-yuen.

China: Beijing's five-month suspension in US-Chinese military contacts to protest Washington's arms sales to Taiwan has ended with the visit this week of a US Defense Department official, a top mainland officer said on Friday. However, in opening the discussions, the defence ministry’s head of foreign affairs said military ties remained in a “difficult period,” and demanded that the US remove unspecified obstacles to improvement. “We expect the US side to take concrete measures for the resumption and development of our military ties,” Major General Qian Lihua was quoted as saying by Xinhua news agency. Such routine calls are generally seen as a form of protest against US military contacts with self-ruling Taiwan. Beijing put military exchanges on hold in October over a US$6.5 billion (HK$50 billion) US arms sale to Taiwan, including such advanced weaponry as Patriot missiles and Apache attack helicopters. Beijing said the sale interferes with internal Chinese affairs and harms its national security. Mainland diplomats cancelled a US visit by a senior Chinese general, other similar visits, and port calls by naval vessels. It also indefinitely postponed meetings on humanitarian assistance, disaster relief and stopping the spread of weapons of mass destruction. Writing in the China Daily, Rear Admiral Yang Yi said formal contacts would resume with the exchanges on Friday and Saturday between top officers and David Sedney, US deputy assistant secretary of defense for East Asian security affairs. However, Yang said Beijing would continue to protest arms sales to Taiwan and rejected US criticisms over a lack of transparency in China’s military buildup. “China will not tolerate any infringement into its core national interests and will make no concession on this principal issue,” Mr Yang wrote. “China’s reasonable military development and military transparency has long been an outstanding issue in Sino-US bilateral relations,” he said. Mr Yang also contended that improved relations between Taiwan and the mainland over recent months have “deprived the US of any excuses for continued arms sales to the island.” The US embassy said the two-day defense policy co-ordination talks being co-chaired by Mr Qian and Mr Sedney were closed to the media, but that a briefing would be held on Saturday. Nearly 20 years of annual double-digit percentage increases in the mainland’s defense budget have raised concerns from the US and China’s neighbors, although Beijing says any worries are unfounded. That figure will be closely scrutinized when the national legislature opens for its annual session next month, amid from falling exports and declining tax revenues.

Beijing lawyer Liu Yang (right) working on the return of Chinese artefacts and his French colleague Renlin Shi stand outside the Grand Palais in Paris before the Christie's auction on Wednesday. Chinese lawyers who failed to halt the sale of two imperial bronzes are trying to identify the anonymous buyers in an ongoing campaign to get the relics back, one of the lawyers told reporters on Friday. Representatives of 81 Chinese lawyers incensed by this week’s sale by Christie’s auction house in Paris will seek to learn the identities of the buyers and possibly sue for their return, Beijing-based Li Xingfeng said. “We will try to find the buyers and try to negotiate with them and then [if that fails] to sue,” Li said. The auction house has not revealed the identities of the mystery buyers of the pieces – bronze heads of a rat and a rabbit that were part of the personal art collection of late French fashion designer Yves Saint Laurent and his partner Pierre Berge. They sold on Wednesday for 15.7 million euros (HK$157 million) each. The fountainheads, dating from the Qing Dynasty (1644 to 1911), were looted from the palace in October 1860, towards the end of the second opium war – by British and French troops. The China Daily on Friday separately quoted Chinese lawyers saying they planned to file two new lawsuits, one in France and one in China, against Christie’s and Berge. Beijing lashed out on Thursday after the sale, accusing Christie’s of repeatedly selling smuggled Chinese relics. A company statement in response said: “Christie’s abides by all international and local laws affecting us in our sale jurisdictions.” China’s State Administration of Cultural Heritage has warned that the sale will harm Christie’s business in the country and vowed to step up checks on its operations. A Christie’s spokeswoman said in an e-mail to AFP that the auction house had minimal operations in China. “We have been holding previews and exhibitions in China for a few years, but we are not the first foreign auction house to have held them in China. We don’t hold sales in the country either, as we don’t have a license,” said Alexandra Buxton. In the run-up to the sale, China had demanded the relics be returned, but the French government said it received no official request and a Paris court threw out a last-ditch legal bid.

Huiyuan chairman Zhu Xinli told a conference in Beijing on Friday that there was internal opposition from some of Coca-Cola’s board members over their takeover bid of the mainland firm. The chairman of Huiyuan Juice Group, the country’s top juice maker, said he would meet with Coca-Cola executives next week to discuss their US$2.5 billion bid for his company. Huiyuan chairman Zhu Xinli told a conference in Beijing that Coke’s board supported the deal, although there was internal opposition from some of Coca-Cola’s board members. “In light of the financial crisis, I asked Coke if their interest in the deal would change, and they said it would not,” Mr Zhu told reporters. “But there are rising voices within [Coke’s] board against the deal,” he said, without elaborating. Anti-trust regulators in Beijing are still reviewing the bid for Huiyuan, which was proposed last September, before the worst of global financial crisis took hold. While Huiyuan and Coke wait for the government’s March 23 deadline for the review, including important anti-monopoly considerations, Mr Zhu said he would meet Coke executives next week to discuss the deal. But Mr Zhu said pricing would not be a part of the discussions for what would be the largest acquisition of a mainland firm by a foreign rival. “That is not possible,” said Mr Zhu. “You can’t casually negotiate the price like that.” Coca-Cola said in December it had filed an application for anti-trust approval in China, which is closely being watched by analysts and lawyers since the case is the first to test the nascent law. Coke agreed to pay HK$12.20 a share in cash, nearly three times its HK$4.14 price before the deal was announced last September. The share was trading at around HK$9.00 on Friday.

Debt-laden Australian miner Oz Minerals, target of a takeover bid by mainland’s Minmetals, posted a full year loss of A$2.5 billion (HK$12.60 billion) on Friday. But the company was thrown a lifeline by its lenders who granted an extension on loans – a precondition for the A$2.6 billion takeover bid to proceed. Australian government approval of the takeover of the diversified miner by the government-backed Minmetals now looms as the last real threat to the deal. The A$2.5 billion loss compared with a net profit of A$305.8 million a year earlier by Oxiana, which then merged with Zinifex in July last year to create OZ Minerals. Oz Minerals said it made an operating loss of A$66.4 million for the year but the bottom line was impacted by asset write downs and one-off items of A$2.57 billion. Revenue for the year rose 8 per cent to A$1.22 billion, from A$1.12 billion a year earlier, and the miner posted no final dividend, compared to four cents posted a year earlier by Oxiana. Oz Minerals chief executive Andrew Michelmore said earlier this week the company would go into receivership if the takeover offer from Minmetals did not go ahead. While some Australian politicians have expressed unease at mainland investment in the country’s resources sector, he said the offer had saved his company. “Absolutely, at this point in time, having stared down the barrel of receivership or voluntary administration at least three times in the last few months, this is the best outcome for our shareholders,” Mr Michelmore said. The proposed Oz Minerals deal came days after mainland’s state-owned aluminium firm Chinalco said it was putting US$19.5 billion into another troubled Australian mining giant, Rio Tinto.

 *News information are obtained via various sources deemed reliable, but not guaranteed

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