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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
April 30, 2009
Hong Kong: President of the Legislative Council Tsang Yok-sing would lead a delegation of Hong Kong lawmakers to study economic and environmental development in the Pearl River Delta, a spokesman said on Wednesday. “Mr Tsang has accepted the invitation from the Guangdong Government to invite him and two Legco panels for a three-day visit to the Pearl River Delta on Tuesday,” the spokesman said. He said the delegation would include the economic development panel chairman Jeffrey Lam, and environmental affairs panel chairwoman Audrey Eu Yuet-mee. Ms Eu is also leader of the Civic Party. Twelve pan-democratic members are on the two panels. The lawmakers will depart from Hong Kong on May 15. They will stop at Shenzhen, Guangzhou, Nansha and Zhuhai. There they will visit facilities related to logistics, tourism and environment protection, including tourist spots, a logistics centre, port and airport facilities, a household waste incineration plant and power generation facilities, and a wetland park. The lawmakers will return to Hong Kong on May 18. The Pearl River Delta, is one of the fastest growing and important economic regions in Asia. It covers nine prefectures of the province of Guangdong, namely Guangzhou, Shenzhen, Zhuhai, Dongguan, Zhongshan, Foshan, Huizhou, Jiangmen and Zhaoqing, and the SARs of Hong Kong and Macau. The area had a population approximately of 60 million people in 2008 and offers the region enormous future economic opportunities.
Health Secretary York Chow Yat-ngok said on Wednesday health authorities might raise the swine flu alert in Hong Kong to its highest level if the World Health Organisation (WHO) raises its influenza pandemic alert again. Dr Chow said they were closely following overseas developments. “If the WHO raises its alert level – or if Hong Kong confirms a case of swine flu – we might raise our influenza pandemic alert to the emergency level,” he told lawmakers. On Tuesday, the WHO raised its alert level to phase 4, indicating a significantly increased risk of a pandemic. There are six levels. In response, Hong Kong raised its alert level. Dr Chow told lawmakers infectious disease experts believe a global swine flu pandemic could last from six to nine months. He said Hong Kong could possibly be affected for some six to 12 weeks. The health secretary said the authorities – especially at Chek Lap Kok international airport – would screen visitors carefully. “We are going to impose health declarations starting from May 1. This will require our visitors coming from everywhere, especially from Mexico, to fill in health declaration forms. “This indicates which countries they have been visiting and whether they might have had any contact with swine flu patients,” explained Dr Chow. He said the authorities have also asked airline staff to help spot passengers with flu-like symptoms. Airline staff will ask these passengers to undergo medical check-ups at the airport. “If necessary, visitors who have swine flu symptoms might be sent to hospital. In doing this, we hope we can screen the swine flu patients earlier as part of the containment effort,” said Dr Chow. In other developments, Centre for Health Protection (CHP) controller Thomas Tsang Ho-fai said there were no new suspected cases in Hong Kong on Wednesday. “Currently, the laboratory results showed that five people who displayed flu-like symptoms on Tuesday all tested negative,” he told reporters. “We are still waiting for the results of tests on two other people and would possibly know these results in the next 24 hours,” added Dr Tsang. He said health experts have visited the Lady MacLehose Holiday Village on Wednesday to organise preventive measures. Dr Tsang said he could not rule out the possibility of swine flu patients, still in the incubation period, coming to Hong Kong. He said the incubation period for infectious diseases was different and would usually last two to seven days. He said the authorities would try to locate these patients. “All entry points for inbound travellers will step up inspection and quarantine procedures to try to screen patients. Those who have flu-like systems, such as fevers or coughs will be asked to undergo medical check ups. They might be referred to hospital for treatment,” said Dr Tsang. According to the WHO, the US has reported 64 laboratory confirmed human cases, with no deaths. Mexico has reported 26 confirmed human cases of infection including seven deaths. Canada, New Zealand, the United Kingdom, Israel, Spain, Germany have confirmed cases with no deaths. Health authorities in New Zealand and South Korea were investigating more suspected cases of swine flu, as hastily arranged measures designed to contain the disease’s spread in Asia are put to the test. Asia, which has had no deaths so far, has introduced stringent screening at airports and transport hubs since the beginning of the week. In the United States Arnold Schwarzenegger, the governor of California has declared a state of emergency following the confirmation of 13 cases of the illness.
Is former Urban Council chairman Ronald Leung Ding-bong, as he claims, a helpless old man whose bank unfairly refused to sell his plummeting investments? Or should the 75-year-old be liable to pay Citibank almost HK$10 million in stock market losses? The answer to those questions must be examined at a civil trial, Mr Justice Andrew Cheung Kui-nung ruled yesterday, as he rejected Citibank's request for summary judgment against the retired politician. The bank argued yesterday that Dr Leung had no defense to a writ that it filed against him in December. But the Court of First Instance judge disagreed, saying there were questions about a series of telephone conversations between Citibank and Dr Leung. At issue was whether the four conversations on October 27 last year amounted to firm instructions from him to unload his margin accounts as equity markets tanked. Dr Leung claimed that if the bank had sold his investments that morning there would have been no deficit, and no lawsuit to recoup a HK$9.7 million shortfall in his accounts. But Citibank's barrister Jonathan Chang said Dr Leung waffled on the sale, and asked how much it would cost him before proceeding. Someone who buys on margin borrows money from a broker to purchase stocks. In this case, the bank called in Dr Leung's loan. Yesterday, Mr Justice Cheung questioned why the bank had allegedly told Dr Leung that he would have to come up with cash before it would sell his investments. The judge also asked why Citibank had told Dr Leung that it needed to find an outside buyer for the investment contracts, but ended up buying back the holdings itself. "He kept saying: `You are the experts," Mr Justice Cheung said. "`Isn't the ball in your court?' What should he do - `the contracts are in your hands' - call the police?" Another bank honored Dr Leung's sell instructions during the same period, the judge noted. "He kept saying he was going to die, he was sick, he was a poor man," Mr Justice Cheung said. "He is saying to the bank: `Do whatever you want to do - I just want to close my accounts.' In my view, it is arguably plain that he gave firm instructions." The judge added that he was not offering an opinion about what verdict a trial judge should ultimately reach. Citibank, he said, might have reasonable answers to his questions, "[but] I have come to the firm conclusion that there are triable issues". About one year before the investment dispute, Dr Leung successfully fought off three unidentified kidnappers at his Causeway Bay office. The trio fled when the septuagenarian bit off one of his attacker's fingertips. Deputy High Court Judge Peter Line later praised Dr Leung for his "remarkable bravery". Brandi Chiang Sai-wah, 48, the brother of a former Kowloon City district councillor, was sentenced to 14 years in prison for masterminding the crime. Dr Leung is dubbed "Dr Toilet" because of his past campaigns for clean public lavatories.
China: China said on Wednesday it would allow foreign companies to list on the Shanghai Stock Exchange and develop a greater variety of financial derivatives, elaborating on plans to make Shanghai an international financial and shipping centre by 2020. Beijing will also allow major domestic shipping companies to establish financial leasing companies and let such leasing firms trade on the Shanghai-based interbank market and issue bonds, according to a cabinet document published on the Chinese government’s website, www.gov.cn. The State Council, announced in late March that the government had decided to build Shanghai, a financial hub, into a global financial centre to reflect the country’s economic strength and the status of its yuan currency. It said the country would also build the eastern city into a global shipping centre able to allocate international shipping resources, reflecting the nation’s ambitions to gain a much bigger say in the global economic arena over the next decade as its economy strengthens. Mainland’s economy, which has expanded rapidly since the country kicked off economic reforms in the late 1970s, is now the world’s third largest, and Shanghai’s port is the world’s busiest.
Japanese Prime Minister Taro Aso arrived in Beijing on Wednesday for a visit expected to focus on efforts to tackle the global economic crisis and sidestep a feud over a Tokyo shrine for war dead. Beijing last week slammed the outspoken nationalist prime minister for making an offering of a potted tree to the Yasukuni shrine. Beijing sees the Tokyo shrine as a symbol of Japan’s past militarism, but has adopted a more restrained tone after its initial outburst. “I have met both President Hu Jintao and Premier Wen Jiabao three times over the past six months, so it’s not new, but rather a part of our ‘shuttle’ diplomacy,” Mr Aso said in Tokyo on Tuesday. “I want to talk about exchanges among young people, and other various bilateral issues in a frank manner.” He added that swine flu is also likely to feature in his meetings with Chinese leaders. Mr Aso’s trip comes as Japan and China, the world’s second and third-biggest economies, respectively, seek to fight the fallout from the global financial crisis. The visit also follows North Korea’s April 5 launch of a rocket seen by Tokyo, Washington and Seoul as a ballistic missile test and Pyongyang’s subsequent vow to boycott multilateral talks on ending its nuclear programs. Ties between the Asian neighbours and rivals chilled during Junichiro Koizumi’s 2001-2006 term as Japanese premier, largely over his visits to Yasukuni, which honours millions of war dead, including some convicted as criminals by a post-second world war tribunal. Diplomatic relations have improved since then and Koizumi’s successors including Mr Aso have avoided pilgrimages to the shrine. But controversies over Japan’s handling of second world war memories continue to affect ties, and mutual mistrust remains deep among citizens of the two countries.
Taiwan's president announced on Wednesday that Beijing would allow the island's participation in a key World Health Organisation body, a major victory in Taipei's campaign for international recognition. President Ma Ying-jeou’s announcement that Taiwan would join this year’s decision-making World Health Assembly in Geneva as an observer comes amid warming ties between the two sides, which split amid civil war in 1949. Beijing normally objects to Taipei’s participation in any international organisations because that symbolises national sovereignty, and has successfully blocked Taipei’s participation in WHO since the early 1970s. After Mr Ma’s announcement, Xinhua news agency quoted the mainland authorities saying that Taiwan had been invited to attend the WHA as an observer this year. In Beijing, Taiwan Affairs Office Spokesman Li Weiyi told reporters that Beijing is “optimistic” about Taiwan’s participation this year’s assembly, which begins on May 18 in Geneva. Taiwanese Health Minister Yeh Ching-chuan showed Taiwanese TV stations a formal invitation to the meeting from WHO Director General Margaret Chan, suggesting that the island’s participation was a done deal. Speaking to staffers at the Presidential Office, Mr Ma said Beijing had lifted its long-time objections to Taipei’s participation. “The mainland authorities have made a friendly gesture,” Mr Ma said. Ma spokesman Wang Yu-chi said the island would participate in the assembly as an observer under the name Chinese Taipei, the same title it uses in the Olympics. Relations between China and Taiwan have improved significantly since Mr Ma’s election last March. Predecessor Chen Shui-bian was reviled by Beijing, because of his support for formal Taiwanese independence. Taiwan – including under Chen – pushed hard for WHO participation, because of the access to key medical information it provides. It used the Sars outbreak in 2002-2003 as an example, saying that Beijing’s refusal to let it participate undermined its ability to deal effectively with the deadly epidemic.
China Mobile on Wednesday said it will pay HK$4.1 billion for a 12 per cent stake in Far EasTone, one of Taiwan’s top three mobile carriers.
China has established rules allowing its companies to invest in Taiwan from May 1, an important step in unleashing potentially vast financial flows across the Taiwan Strait.
April 29, 2009
Hong Kong: Hong Kong Monetary Authority (HKMA) chief executive Joseph Yam Chi-kwong said on Tuesday that disclosing "blacked out sections" of an investigation into the minibonds saga might not be a good idea. Mr Yam said it might not be in the best interests of investors pursuing legal action against banks over the sale of financial products linked to Lehman Brothers. The Legislative Council subcommittee, investigating the sale of these products, has publicised part of the blacked-out sections of the HKMA’s investigative report. This features summary observations of more than 102 cases which the authority investigated. It involves cases where complex and risky investments products were sold by banks to vulnerable investors. They included elderly, people with mental illnesses and low-educated people. Mr Yam said disclosing the blacked-out sections of the report, before the investigation was finished, could be unfair to complainants. “It may have a negative effect on the complainants who are pursuing civil cases against the banks,” he told lawmakers.
Health workers watch a bank of monitors which display information on the temperatures of incoming passengers at the International Airport in Hong Kong on Monday. Global airlines face a bumpy ride if a new swine flu outbreak becomes a pandemic. Global airlines could face an even bumpier landing than during the 2003 Sars crisis if a new swine flu outbreak becomes a pandemic, hitting an industry that is already reeling from the global economic downturn. Airline stocks in Asia continued a sell-off on Tuesday on concerns about the outbreak that began in Mexico, with Cathay Pacific (SEHK: 0293) falling 1.7 per cent in Hong Kong after dropping 8 per cent the previous day. In Taiwan, China Airlines and Eva Airways fell 4 per cent and 7 per cent, respectively, after dropping 7 per cent in the previous session in one of the markets hardest hit by the Sars outbreak six years ago. “Airlines are already in a weakened position with the global crisis sapping demand for corporate travel,” said Stone Lin, an airline analyst at Yuanta Securities in Taiwan. “The summer months of July-September are typically the peak season for most airlines, with most bookings beginning right now. With sentiment so weak, and worsened by the swine flu issue, it’s unlikely anyone is going to go rushing to book holidays or corporate travel, which means the second half of this year won’t be pretty for most airlines,” he said. The outbreak of severe acute respiratory syndrome (Sars) in 2003, centred in Asia, provides a chilling example of what could happen if swine flu follows a similar course. During the Sars outbreak, which began in mainland and quickly spread to Hong Kong, Taiwan and Singapore, global airline traffic halved. Airline stocks responded in kind, with carriers such as Cathay, Japan Airlines and Korean Airlines tumbling 25 per cent or more. Ratings agency Standard & Poor’s also warned of potential disruption to the airline industry depending on how the current outbreak unfolds. “Though swine flu has not yet caused health problems on a similar scale, we believe airlines are at risk of suffering reduced traffic because of government-imposed quarantines and travellers’ fears,” S&P credit analyst Philip Baggaley said in a note. A spokeswoman for Cathay Pacific declined to comment on how the crisis might impact earnings, but said the airline was reminding colleagues to monitor the situation. Most analysts said it was still too early to say how big the risk could be to airlines. “The overall situation is weaker now … because there are two headwinds the airline industry is facing: one is the global recession and now this outbreak of swine flu,” said Daphne Roth, analyst at ABN Amro private bank. But she added the current situation is also different from SARS as information about the illness was coming out in a much more timely and transparent manner. A swine flu crisis could have less impact on Asian airlines than Sars since it originated and is currently concentrated in North America, said Viwat Techapoonphol, strategist at Tisco Securities. “The Sars outbreak was here in Asia and badly hit the tourism industry at that time because governments worldwide issued warnings to avoid coming to Asia. This time round, swine flu is far away in Mexico and, relatively, the impact to Asia should be smaller,” he said. Asian companies stepped up precautions, restricting travel and advising staff how to protect themselves from the deadly virus. “We're limiting all non-essential travel to places that have seen cases of swine flu, and staff members returning from those areas will be quarantined for a period of time before being allowed to enter our factories and facilities,” said Edmund Ding, a spokesman at Taiwanese electronics parts firm Hon Hai. Hon Hai owns a number of production facilities in Mexico, assembling and manufacturing components for some of the world's biggest brand names such as HP and Dell. “If any government calls for factories to be closed to stop the spread of the infection, we will of course comply with that,” Ding said. Honda, Japan's No 2 automaker, has suspended all global business travel until at least May 6 due to the outbreak. Honda, which also has production facilities in Mexico, is considering sending Japanese families of expatriate workers home, although production was continuing as normal, a spokeswoman said. Meanwhile, Denso, the world's biggest listed auto parts maker, said it has recommended families of its expatriate staff in Mexico to return temporarily to Japan.
University of Hong Kong scientists are racing against time to develop a quick test to diagnose the new swine flu virus, a key tool to manage a possible outbreak. The microbiology department is helping the government and the Hospital Authority to develop a polymerase chain reaction (PCR) test that could confirm an infection in four to six hours. Conventional tests take one to two days. Department head Yuen Kwok-yung said his team was comparing the gene sequencing of the H1N1 swine flu virus with the H1N1 human flu virus found in Hong Kong. The swine flu gene sequences were made available by the United States Centres for Disease Control and Prevention to key laboratories. "In developing the quick tests, we have to compare the two gene sequences and find out the difference between them," Professor Yuen said. "It is what we call a primer. We can then use the primer to develop the PCR test. We hope we can develop the test within two weeks. The test sensitivity would be around 80 to 90 per cent." The department has also made a formal request to the WHO for a sample of the new swine flu. He said this was needed to test the accuracy of the locally developed quick test. Hospital Authority director of quality and safety Leung Pak-yin said having an efficient and reliable test was a key tool in managing an outbreak. "Having a quick test can help public hospitals to provide prompt treatment to confirmed patients and rule out suspected cases to reduce unnecessary hospitalisations, so the hospital beds can be used for the needy cases," Dr Leung said. He said the Centre for Health Protection's laboratory and five hospital laboratories could, at full capacity, conduct 1,000 flu tests a day. The laboratories are at Queen Mary, Princess Margaret, Queen Elizabeth, Prince of Wales and Tuen Mun hospitals. Malik Peiris, a flu expert at the University of Hong Kong, said the next few days would be vital to show how quickly the virus could spread. "We have to closely monitor the reproduction number of the virus, which means how many secondary cases that each confirmed case could cause. If the number is more than one, it means the infection is spreading fast and the epidemic is gaining momentum," Professor Peiris said. He said Hong Kong was vulnerable to a pandemic given that it was a traffic hub with the US, but said the city was "better prepared this time than in the 2003 Sars outbreak. We don't need to panic". Professor Yuen said experts were still uncertain how infectious the new virus was. "There is a big difference in the severity of cases in Mexico with those in the US. It is possible that the virus gets less virulent when it is transmitted from human to human. A clear answer will take some time." A scientific committee under the Centre for Health Protection will meet today to update the situation. Professor Yuen said the government could consider stockpiling more antibiotics because past experience showed that many flu patients died of secondary bacterial infections. Both Professor Yuen and Professor Peiris said the virus was sensitive to Tamiflu and there was no evidence of drug resistance. The president of the Hong Kong Medical Association, Tse Hung-hing, said the group would meet soon to discuss the development of the flu outbreak. Dr Tse said private doctors needed regular outbreak updates and government diagnostic support.
A new website – which would provide people with free public transport point-to-point route searches – was launched by the Transport Department on Tuesday. Assistant Commissioner for Transport Tsang King-man said the website aimed to encourage more people to use public transport. “Hong Kong public transport system carries more than 11 million passengers per day. “We hope that the system can provide more information to drivers so that some of them will give up using their private cars and uses public transport,” he said. Through the website, the public can search the possible routes from one location to another location based on number of interchanges, fare, estimated journey time and preferred transport mode. He said the system would cover more than 8,000 buses and minibus routes. MTR and ferries are also included.
Hong Kong Ballet has apologised for the way it sacked its former principal dancer, Faye Leung, and offered her the chance to perform with the company as a guest artist. A farewell performance has been scheduled for the summer but no other shows are planned at the moment for the 30-year-old dancer, who is at the peak of her career. In a statement yesterday, executive director Evonne Tsui apologised for the handling of the sacking of Leung, an award-winning homegrown ballerina who had been with the company for 13 years. "We apologise and regret that Faye's departure earlier in the year has caused concerns about the company's and the artist's reputation." She acknowledged Leung's achievements and said she would reappear as a guest artist. Hong Kong Ballet said the agreement with Leung was reached last week after three months of negotiations. But the statement did not explain the reasons for sacking her. Leung said the company had agreed to compensate her with her salary for the remaining period of her contract, which runs until the end of June, instead of the initial one-month compensation. She was fired on January 23 after being told that her direction and that of the company "were going different ways". She was summoned on that day by board member Linda Fung King to sign a termination agreement and was asked to leave the company immediately. Leung said she had no choice but to accept the settlement. "This is the best [deal] I can get. I have already rested for so long and I can't afford to look back," Leung said, saying she wanted to move on. "I didn't do anything wrong." Leung said and she hoped to continue to dance with the company even as a guest because she loved dancing. "If I stay in Hong Kong, there's nowhere else but Hong Kong Ballet." However, the ballerina said the experience had discouraged her from pursuing a full-time contract with other dance companies, adding: "I have lost my confidence." Leung has made other plans, including writing an autobiography to be published at the end of the year and opening a dance studio to teach children dancing from a stage performer's perspective. She said she would appear in Cinderella for her farewell performance in August, but nothing else had been scheduled. Civic Party legislator Tanya Chan said the government should give out better guidelines on the governance of arts groups as they were funded by taxpayers and should be accountable to the public. A Home Affairs Bureau spokesman said the bureau and the Funding Committee for the Performing Arts were pleased by the agreement.
Hong Kong plans to launch a sovereign bond program, mainly denominated in local currency, with a ceiling of HK$100 billion to further stimulate the financial hub’s debt market, a senior government official said on Tuesday. The plan will be submitted to the territory’s law-making body, the Legislative Council, for approval on May 20, Chan Ka-keung, Secretary for Financial Services and Treasury, told reporters. The government will issue bonds with maturities of two to 10 years initially and will consider long-term issues of 15 years or above in the long term, he said. The market can absorb HK$10 billion to HK$20 billion in one year and the government will decide the size of the first issue after assessing market conditions. “This plan will have a proposed ceiling of HK$100 billion and the proceeds will go into a fund to be separated from the government’s reserves and accounts,” Professor Chan said. Financial Secretary John Tsang Chun-wah unveiled a series of measures to promote the development of Hong Kong’s bond market, including the launch of a sovereign bond.
Hong Kong, aided by a recent spate of strategic investments by leading information technology services companies, is being transformed into a potentially lucrative cloud computing centre for Greater China. It is a welcome development brought to the recession-hit city by International Business Machines Corp, the world's biggest technology services provider, and NTT Com Asia, part of Japanese telecommunications giant Nippon Telegraph and Telephone Corp. Cloud computing puts the availability and management of various software, stored data and services used by organisations and consumers on to the internet - via remote, large-scale data centres run by providers who charge a monthly or annual fee. These Net-based facilities are usually represented as clouds in network diagrams, hence the name. Though still in its infancy, it is a computing model that is now offering a much cheaper and viable way for businesses to acquire and use information technology, especially in these tough economic times. "Cloud computing introduces new options and flexibilities for a corporate chief information officer and ought not to be written off simply as marketing hype," said Steve Hodgkinson, a research director at technology consultancy Ovum. Market research firm International Data Corp has estimated worldwide spending on cloud computing services will grow almost threefold to reach US$42 billion in 2012. Following its acquisition for an undisclosed amount of the messaging business assets of Outblaze, a privately held local technology company, IBM has set up its first cloud computing laboratory in Cyberport. "IBM is focused on helping businesses, large and small, work smarter to drive innovation up and costs down and this new cloud lab will reinforce that," said Bob Picciano, general manager at IBM's Lotus Software business unit. "We see this Hong Kong lab as a global hub for IBM's cloud collaboration services." The company will start with 70 employees, but expects to add more staff and put more substantial investments based on growing demand for cloud services in Greater China. Stephen Mak Hung-sung, the acting Hong Kong Government Chief Information Officer, said: "The new IBM laboratory marks a milestone in Hong Kong's information technology industry as it has the potential to help businesses jump-start their cloud computing projects and enhance their computing capabilities to compete in the global marketplace." Businesses of all sizes will be able to use IBM as the provider for their full range of e-mail needs, whether on-premise or hosted, from casual to intense usage. Business partners, such as telecommunications operators and internet service providers, will be able to package and sell collaborative services to their clients under their own brands. The business acquired from Outblaze offers hosted e-mail and collaboration services in 22 languages to more than 40 million users worldwide. NTT Communications Corp, which directly runs NTT Com Asia, acquired for HK$161 million at the end of last year a data centre in Tai Po from Skywork Corp and Singasat, which ran it under APT Satellite Telecommunications. That facility has since been upgraded into a strategic cloud computing hub for NTT Com Asia. "The new NTT Communications data centre is the embodiment of the company's resolution to explore business in Greater China," said Masaaki Moribayashi, the president and chief executive at NTT Com Asia. Brandon Lee, the executive vice-president of NTT Com Asia's new business division, said service providers see Hong Kong as a much more stable location to set up these kinds of facilities because of the city's advanced communications infrastructure, the rule of law, protection of intellectual property rights and close proximity to the mainland and other Asian markets. "We're looking at faster growth than expected in this market," Mr Lee said.
China: The global financial crisis had prompted some countries to scale back their plans for next year's World Expo in Shanghai, including Argentina and Brazil, the organising group's director admitted yesterday. "Certain countries or international organisations have changed from a self-built pavilion to a rented pavilion or a joint pavilion, or in other words they have shrunk the scale," Hong Hao , director general of the municipal government's Bureau of Shanghai World Expo Co-ordination, told a media conference yesterday. Friday marks the one-year countdown to the six-month fair - billed as the biggest, most expensive expo since the first in 1851 - but worries remain about the impact the worldwide recession will have. Mr Hong stressed that none of the 234 countries and organisations that had formally committed to the expo had pulled out entirely, adding that Chile and Morocco had actually increased the size of their buildings. However, he admitted that the US had still not put its oral commitment to take part into writing. "Both the [George W.] Bush and the [Barack] Obama administrations showed very positive attitudes about taking part in the Shanghai expo," Mr Hong said. "It is our sincerest wish that they can complete their fund-raising as soon as possible and confirm their participation so they can start construction work." It had been reported that April 15 was the last practical date for the US to sign up, but laws limiting the use of public funds for expo participation have proved a stumbling block. The question mark hanging over American participation dominated yesterday's press conference, but Mr Hong refused to issue an ultimatum, saying pavilions with "simpler designs" could be completed in a relatively short time. "I am sure the US organising team will be able to adjust or optimise their design to fit the schedule for the Shanghai expo," he said. Mr Hong said his bureau had set aside a prominent place for the United States pavilion on the weight of requests from the consul general in Shanghai to "save a good spot". "I'll be sorry if the US does not participate in the expo, but I believe the American people will feel even more that this would be a pity," he said. "But if any country fails to take part for whatever reason, then of course we do have emergency plans." The Shanghai expo is being built on a 5.28 sq km plot spanning the Huangpu River to the south of the city centre. Organisers estimate that more than 70 million people - 95 per cent of them from the mainland - will visit the show during its 184-day run. Construction of the site's infrastructure and buildings - most of which will be torn down afterwards - is expected to cost 18 billion yuan (HK$20.5 billion) of public funds. The organisers have an additional operational budget of 10.6 billion yuan, which is being funded through ticket sales and sponsorships. Those figures do not include the cost of massive improvement works on the city's transport network and other infrastructure to coincide with the show. The expansion of the Shanghai Metro alone will more than double the reach of its network.
US Trade Representative Ron Kirk greets China's Minister of Commerce Chen Deming, in Washington on Monday. US and Chinese companies signed 32 business deals on Monday worth US$10.6 billion, while top US and mainland officials said the two countries must co-operate on trade to help restore global growth. "History tells us that openness and co-operation is all the more important amidst a crisis," Chinese Commerce Minister Chen Deming said in a speech just before China Telecom (SEHK: 0728) signed contracts with Cisco, Microsoft, Dell and Emerson. “Trade protectionism will not restore growth. On the contrary, it will exacerbate recession,” Mr Chen said.
LG Electronics, the world’s No 3 mobile phone handset maker, on Tuesday said it had been picked to supply third-generation (3G) mobile handsets to all three carriers in mainland.
Baidu, which runs mainland’s leading internet search engine, said on Tuesday its first quarter profit rose 34.7 per cent from a year earlier on stronger online marketing revenue despite the country’s economic slowdown. Profit rose to 198.5 million yuan (HK$225.70 million) or 5.22 yuan per share for the three months ending March 31, the Beijing-based company announced. Revenue jumped 41.1 per cent to 810.7 million. “Our balanced approach to controlling costs allowed us to maintain healthy margins even as we continued to invest in important initiatives,” chief financial officer Jennifer Li said in a statement. Baidu forecast second-quarter revenue of 1 billion yuan to 1.1 billion yuan. Analysts are expecting 999 million yuan. The company’s American Depositary shares jumped US$8.33, or 3.7 per cent, to US$233.19 in after-hours trading. The stock had closed the regular session up US$7.32, or 3.4 per cent at US$224.86. While Baidu’s sales growth has slowed from its historical pace, Pali Research analyst Tian Hou said the company nonetheless outperformed the low bar it had set for itself. Earlier this year, Baidu said its growth would moderate in the first quarter because of the weak economy and a decision to remove paid listings of unlicensed medical companies from its site. According to Mr Hou, mainland’s economy has improved in March and April. “If you look at China’s market there’s a rebound. If you look at Baidu, there’s better performance than expectations. And also if you look at the pools of investable stock from the China internet space, you really don’t have a lot,” said Mr Hou. Baidu trails Google and Yahoo in internet search worldwide, but is the No 1 player in mainland according to research firm comScore.
China called for new initiatives to
boost the China-France comprehensive strategic partnership. The call was made
during a meeting between Chinese President Hu Jintao and former French President
April 28, 2009
Hong Kong: The global financial crisis was continuing to affect Hong Kong's economy with the value of total exports falling "markedly" - over 21 per cent in March year-on-year, a government spokesman said on Thursday. Latest Census and Statistics Department figures showed that in March, the value of exports (re-exports and domestic exports) decreased by 21.1 per cent over a year earlier to HK$175.5 billion. This was after an annual decrease of 23.0 per cent in February 2009. Within this total, the value of re-exports decreased by 20.5 per cent to HK$171.1 billion in March 2009, while the value of domestic exports decreased by 41.1 per cent to HK$4.4 billion. The spokesman said Hong Kong had registered another month of sharp declines in exports. This was because the global economic recession had caused a "significant contraction in world trade". "In fact, many other Asian economies saw even steeper declines in exports than Hong Kong in recent months," he said. Comparing March 2009 with March 2008, exports to Asia fell by 20.2 per cent, the figures showed. Sharp declines were also registered in the value of exports to other major destinations, such as the United Kingdom (down 27.5 per cent) and the United States of America (down 23.3 per cent). For the first quarter of 2009, year-on-year decreases were registered in the value of a number of goods. "Electrical machinery, apparatus and appliances, and electrical parts thereof", for example, fell by HK$30.5 billion (or 19.5 per cent) during this time, the figures showed. At the same time, the value of imports dropped 22.7 per cent in March to HK$193.7 billion from a year earlier. A visible trade deficit of HK$18.2 billion, equivalent to 9.4 per cent of the value of imports of goods, was recorded in March. The spokesman predicted the external trading environment would remain "challenging" in coming months.
Chief Executive Donald Tsang Yam-kuen at the airport upon returning from Expo Central China 2009 in Hefei, Anhui, on Monday morning. Mr Tsang discussed Hong Kong's preparations for dealing with swine influenza. Chief Executive Donald Tsang Yam-kuen on Monday urged the public to be vigilant in the wake of the swine flu outbreak - which has now killed at least 103 people in Mexico. Human cases of swine influenza have been confirmed in the United States – in San Diego, California and Texas – as well as in Canada and New Zealand, but with no fatalities yet. Hong Kong and mainland authorities are now taking steps to stop the flu spreading. China’s central government was studying inspection and quarantine measures to guard against the spread of the flu strain, officials said. In Hong Kong, health officials said checks at border crossings have been stepped up. Cable television reported on Monday that mainland health authorities have also banned pork imports from Mexico. Donald Tsang told reporters that Hong Kong had raised its influenza alert level to ‘serious’ on Sunday. The chief executive said the local health authorities were preparing to deal with a possible outbreak in Hong Kong.
Hong Kong, one of the region’s key hedge fund centres, was hardest hit with 27 closures last year as a wave of investor redemptions and sharp losses amid the financial crisis took a heavy toll on the region’s once high-flying industry, a new survey said on Monday. Almost 20 per cent of Asia’s hedge funds closed shop since the start of last year. At least 129 funds were shuttered last year and 17 more in the first quarter of this year, a study by London-based AsiaHedge magazine said. Japan suffered the fewest with nine. The global hedge fund industry has taken a beating since the financial crisis erupted last year, hit by their own poor performance and relentless withdrawals by investors. Hedge funds – loose pools of capital invested in everything from stocks to currencies and commodities – are expected to see more pain. Monday’s survey predicts the pace of closures in Asia will only quicken as smaller funds reel from higher operational costs.
The Consumer Council said on Thursday it would use the Consumer Legal Action Fund in the next two months to help investors in Lehman Brothers' financial products to take action against banks. Fund chairman Johannes Chan Man-mun said it would take legal action where it felt that investors' complaints were justified. Mr Chan said the council had now received 82 applications from Lehman Brothers investors applying for fund assistance with legal action. Over half of them have now reached a settlement with the banks - and 11 investors have dropped their applications. He said they had screened many cases; only some had been chosen for legal action. "Selection criteria is primarily based on complainants' vulnerability, the cogency of evidence, inadequacy of risk disclosure, misrepresentation and the responsibility of bank credits to see whether the litigations should be funded and assistance granted in the cases," he explained. For instance, they might assist an applicant who used HK$500,000 to buy Lehman Brothers-related products last January.
Hong Kong was now a leading regional and global sourcing centre for gifts and premium products, Chief Secretary Henry Tang Ying-yen said on Monday.
Chan Ching-chuen and a mock-up of an electric motorcycle. Introducing electric cars to Hong Kong will require more than just change in infrastructure - the new technology will also mean drivers must change how they think about getting around, an expert says. Chan Ching-chuen, an electrical engineer at the University of Hong Kong, said the mindset of drivers was as important to making the cars a success as ensuring there was a wide choice of vehicles available. "It is a chicken-and-egg question but both have to be answered at the same time," said Dr Chan, who is on the government's steering committee on electric vehicle development. The government on Friday signed a memorandum of understanding with Japanese car maker Nissan on introducing such vehicles in the city. It was the second such deal Hong Kong had entered into in two months. Earlier, Mitsubishi Motors promised to bring its newest electric car, iMiEv, for road tests. The car is expected to arrive next month. Dr Chan said the city could become one of the world's success stories in adapting to electric vehicles - the city's compact size gave it a big advantage. But using the cars was more than a matter of technology. It was also a social question, and the key to success lay in overcoming drivers' "psychological barriers", which policy would have to address. "When it comes to electric cars, Hong Kong is a different story from other cities as nearly half of the journeys people make in cars is less than 50km. If you look at this data, you will be very optimistic. But the psychology of drivers is another matter." Dr Chan said it was important that early adopters, expected to be the wealthy, found the cars convenient. Driving them had to be fun or the technology would not take off. The government could consider offering incentives such as cash subsidies or tax concessions and free parking to help develop the market. It was essential the government fostered alliances among carmakers, power companies and property developers, he said. In the early stages of the roll-out, the recharging network should cover public car parks and property developments, he said. Lawmakers could also require developers make rechargers a standard feature in new buildings. It would be worth considering offering drivers free recharging, he said. Quick-charging points or battery-swapping spots should be set up at convenient locations or near border crossings. Dr Chan predicted that electric vehicles would not become the dominant method of road transport in Hong Kong as they would remain costly for some time. He said it was more likely that hybrid cars - powered by electricity and petrol, would prevail at least until 2020.
The Sands Macao, the first foreign-owned casino in the world's largest gaming market, may soon go on the block for a bargain basement price of about US$1.3 billion. Heavily indebted owner Las Vegas Sands is exploring the sale of the casino after recent attempts to offload luxury shopping centres attached to its Venetian and Four Seasons resorts in Macau met with scant interest, sources said. Las Vegas Sands has spoken with potential buyers about splitting the Sands Macao up into separate property and operating businesses. The company is mulling a sale and leaseback in which it would sell the building, continue running the 229,000 square foot casino floor under its gaming licence and pay its new landlord rent based partly on how the casino performs. The Sands Macao discussions began last week after talks to sell the shopping centres stalled because buyers found the US$1 billion price too high. "It was kind of, 'OK then, if you don't want the malls, do you want the Sands?'" one source said, while confirming that the company's Macau gaming licence was not up for sale. Las Vegas Sands suspended work last year on a US$3.3 billion, 6,400-room resort project on Macau's Cotai strip to conserve cash amid the global recession and gambling slowdown. The company had US$10.8 billion of long-term debt at the end of last year. It warned that it was in danger of busting financial covenants but subsequently gained breathing space by selling US$2.1 billion in new shares. The company said recently that several parties were interested in investing in its various Macau businesses, but a spokesman declined over the weekend to comment on a potential sale of the Sands Macao. "We will continue to evaluate all alternatives that provide us further financial flexibility and we will provide any necessary updates at the appropriate time," said Las Vegas Sands vice-president of communications Ron Reese. Goldman Sachs, Las Vegas Sands' longtime financial adviser, held informal discussions about a sale and leaseback of the Sands Macao with property developers and private equity firms, a number of sources said. Goldman declined to comment. "The Sands property is available," a banker said. "But it may not sell. People will want the casino licence, which is a licence to print money." Because the process is at an early stage, Las Vegas Sands has not put a price on the property or sent out an information memorandum to interested parties. Floris Van Dijkum, the chief investment officer at Macau property investor Speymill Macau, calculated that a deal for the Sands Macao could be worth US$1.3 billion, based on the property's cash flow over the past 12 months and an interest coverage ratio of 2. Such a scenario would appear to represent a bargain basement price, reflecting a 7.5 per cent rental yield to potential buyers. This may look high, considering that investors in United States Treasury 10-year bonds are getting yields of only 2.9 per cent. However, analysts said the yield should be expected to price in the regulatory and competitive risks associated with owning a casino in Macau. CLSA gaming analyst Aaron Fischer was even more pessimistic, saying the 7.5 per cent yield was too low. If, for example, investors demanded a 10 per cent yield, the building's value would fall to US$1 billion. The Sands opened in 2004 as Macau's first western-style casino following the end of Stanley Ho Hung-sun's four-decade monopoly on gaming in the enclave. Las Vegas Sands famously made back its initial US$285 million investment in the property in less than 12 months, but the Sands has since been eclipsed by newer and glitzier properties, such as the Wynn Macau and Las Vegas Sands' own 3,000-room Venetian resort on Cotai. Last year, the Sands Macao recorded US$213 million of earnings before interest, tax, depreciation and amortisation. This amount was sharply below the US$372 million profit it made in 2007. All Macau casinos face a drain in profit if Beijing continues restricting mainland residents' visits to the gaming enclave. Mr Van Dijkum, who is not a buyer, because his fund does not invest in casinos, said the deal would be attractive to the right investor, because Sands Macao was still earning good money. "This could be a very interesting financial investment for someone with significant spare change." But a private equity investor with knowledge of the sale argued it was too risky. "I don't see any private equity funds putting money into Macau's gaming sector, particularly that much money, because they are all just being incredibly cautious," the investor said. Macau Fisherman's Wharf, a HK$2 billion theme park developed jointly by Mr Ho and Macau legislator David Chow Kam-fai, just completed a heavily discounted buyout of international hedge funds including Och Ziff and TPG-Axon, who invested US$400 million in its debt securities in 2006. Buyout houses Apollo Management and TPG Capital bought Harrah's Entertainment for US$27.8 billion in January last year. The US casino giant has struggled with its debt covenants ever since. Sources said Las Vegas Sands' Macau shopping centre auction generated lacklustre interest because would-be buyers were asked to shoulder low returns and bet big on bullish projections despite the global consumer slowdown and uncertainties in Macau.
Hong Kong's two largest developers pulled in more than HK$5 billion from property sales last weekend, a move analysts believe will help them build up their war chests in preparation for a land acquisition spree. Cheung Kong (Holdings) (SEHK: 0001) reaped HK$2 billion from the sale of all its 1,068 units at Central Park Towers II in Tin Shui Wai in two days. Rival Sun Hung Kai Properties (SEHK: 0016) kicked off the sale of the Latitude in San Po Kong last Saturday and fetched HK$3 billion in revenue after 400 flats were snapped up by buyers by the next day. Taking advantage of the improved market sentiment, analysts said, the two developers had sold more than 1,500 units in less than 72 hours, allowing them to lock up revenue for future expansion. Cheung Kong is considered as the most aggressive in marketing new projects for sale. It said it would release three more projects totalling more than 2,000 flats for pre-sale soon. They are Seasons Monarch in Yuen Long, Celestial Heights in Ho Man Tin and Le Prestige in Tseung Kwan O. "Developers may be preparing for land acquisitions when opportunities arise over the next six or nine months," said Paul Louie, the regional head of property research at Nomura International (Hong Kong). The government last month softened its stand in encouraging developers to trigger sites in the land application list for auction. Under the new rule, the government would lower the asking prices in order to raise developers' profit margin from 10 per cent to 20 per cent. "A higher margin could be achieved if property prices rebound by about 10 per cent or 20 per cent over the next several years," he said. David Ng, the head of regional property research at Royal Bank of Scotland, said developers would be more interested in expanding their presence on the mainland given land values there have dropped to an attractive level. "With the mainland government auctions, there appear more opportunities to pick up a bargain," Mr Ng said. According to mainland property website Soufun, 11 out of a total 97 sites sold at the floor price at government auctions in 60 major cities last month and 20 sites were withdrawn from sale in the absence of bids. In anticipation of a surge in transaction volumes nationwide, analysts expect major developers to start to look at acquiring land across the border before the market recovers.
China: Industrial and Commercial Bank of China, the world’s biggest bank by market value, on Monday posted a 6.1 per cent increase in first-quarter profit due to higher fees and commission income.
In the first of a three-part series looking at the first 100 days of Barack Obama's historic presidency, Chief Asia Correspondent Greg Torode looks at his approach to Asia - As the strategic assumptions that have governed the region for decades start to shift, a mere 100 days in the life of a US president arguably counts for little. But, for all that, US President Barack Obama has worked swiftly to put flesh on the bones of his campaign promises - seeking to further broaden the Sino-US relationship while quietly re-energising traditional alliances, particularly with Japan. The rest of the year looks set to amplify those moves, with Mr Obama's planners preparing for his first trip to East Asia. The Democrat walked away from a successful first bilateral meeting with President Hu Jintao in London with an invite to Beijing - a mission that may be combined with his scheduled appearance at the Asia-Pacific Economic Co-operation Forum in Singapore in November. Such a mission could also be linked with a much-anticipated trip to Indonesia, where he lived as a boy - all part of the multicultural background that created his unique appeal. Indonesia will be crucial to another plank of the Obama mission's inclusive foreign policy - his attempt to better engage the Muslim world after eight "with us or against us" years of predecessor George W. Bush. Obama advisers describe a steady-as-it-goes approach to East Asia - with North Korea being the one glaring exception. There is a determination to improve a host of relations - whether with China, Japan, South Korea, Thailand or Vietnam - while avoiding any new firestorms breaking out. Between the domestic priority of forging a more sustainable American capitalism and the vexing foreign policy problems of an Iran determined to join the nuclear club and an unstable Afghanistan, he does not need any further trouble. "If we are careful and responsive, East Asia could be an area that is an early success story," one insider said. "We have worked quickly to get to the personal relationships in train and let the big powers know we are listening and want to deal with them with respect. We know, too, they want us to fix our economy." He may also need more than that, they add. Both Beijing and Tokyo could play key roles in Iran, where both have commercial interests, and to a lesser extent in Afghanistan. More visibly, Mr Obama needs Beijing and the rest of the region onboard in the diplomatic battle to get North Korea back to the six-nation agreement on its nuclear disarmament. Pyongyang has proved predictably unpredictable in staging a rocket launch, then withdrawing from its commitments and restarting its nuclear programme in protest against the UN Security Council stiffening sanctions. In staging the launch, Pyongyang tested not only a rocket that could be used to deliver warheads, but also Mr Obama's relations with the other players, chiefly Beijing, Moscow and Tokyo. While the economic crisis dominated the first days of his presidency, it was no accident that Mr Obama's first foreign guest in the White House was embattled Japanese Prime Minister Taro Aso. Mr Obama is apparently keen to dispel the view in Tokyo that US Republicans, rather than Democrats, serve Japanese interests better. A robust approach to North Korea - in contrast to the last days of Mr Bush - has also helped win over a Japan ever paranoid of a North Korean attack. Secretary of State Hillary Rodham Clinton used her first visit in mid-February to hammer the point home, meeting the families of people kidnapped by the North Koreans in the 1970s. Yet the Japanese effort has not apparently been at the expense of an evolving relationship with Beijing. Yu Wanli of Peking University said Mr Obama was the first non-confrontational president when initially taking office since the Sino-US ties were established 30 years ago. "If I was to rate the performance of Mr Obama and his administration, I think 100 would not be an overstatement," he said. "Most US presidents were confrontational towards China when they first took office, but Mr Obama made it clear that he wanted co-operation with China." Despite closer co-operation, Mr Yu said it was unlikely that China would replace Japan as the major US partner in the region because there was still a lack of "common values". And there are difficulties. Prime Minister Wen Jiabao put the US on notice that China did not want its considerable US investments squandered by poor economic management, while Beijing's reluctance to slam Pyongyang for its rocket test irritated Washington. The standoff between the USNS Impeccable surveillance ship and mainland vessels off Hainan also highlighted the risk of tension. Across the region, however, diplomats are quietly confident that the next four years at least will be a period marked by meaningful engagement, rather than dispute.
China has banned hog and pork
product imports from Mexico and parts of the United States with immediate
effect, the government said in a statement posted on official websites on
China's Communist Party will launch a patriotic propaganda offensive celebrating 60 years of its rule, hoping the campaign will ward off economic pessimism and public discontent that could loosen its grip on power. The "mass patriotic education" campaign was announced on the front page of the People's Daily and other official newspapers on Monday. It underscores how even as China expands as a global economic power, its domestic political controls are bolstered by propaganda tools honed over decades of one-party rule. Now officials are applying those tools in an effort to counter social strains from the financial crisis. The surge of patriotic television spectacles, concerts, speeches and meetings would “bolster confidence in vanquishing hardship", said the paper, citing a directive from the Party's Department of Propaganda. "Guide people to profoundly grasp the incomparable superiority of socialism with Chinese characteristics," it said. "Correctly understand the new changes in the international economic environment and in our country's economic development."
Huawei Technologies, the mainland's largest telecommunications equipment manufacturer, is aiming for more than US$30 billion in global sales this year to strengthen its foothold in emerging markets amid the challenging global economy. The privately held company, which was ranked last year as the world's third-biggest supplier of mobile communications equipment, said steady growth will be achieved this year, despite uncertainties in the sector. It said demand will be "driven by 3G network deployments in emerging markets, particularly in China". Shenzhen-based Huawei yesterday released its audited financial results for last year, showing net income rose 20 per cent to US$1.15 billion from US$957 million in 2007. The company saw revenues climb 42.7 per cent to US$18.33 billion from US$12.84 billion. Operating profit margin also improved to 13 per cent from 10 per cent. "We are pleased with our progress [last year] and expect the momentum to continue this year, driven by our continued focus on customer-centric innovation and industry-leading telecommunications network solutions," said Huawei chief marketing officer William Xu. Global contract sales last year reached US$23.3 billion, up 46 per cent from US$16 billion the previous year. Huawei said 75 per cent of the sales come from outside the mainland, from 41 per cent in 2004. While a large part of Huawei's growth last year was in developed markets where a rapid migration to mobile broadband networks is under way, the company also acknowledged strong demand from emerging markets in Asia, eastern Europe, the Americas and Africa. Huawei, which is a supplier to 36 of the world's 50 largest telecommunications network operators, said the next billion mobile-telephone subscribers will predominantly come from those emerging markets. Jessica Figueras, the practice leader of service infrastructure research at global consulting firm Ovum, noted that Huawei "has shown a willingness to throw engineers at projects which one does not see from every vendor". Ovum forecast users of mobile broadband services will reach more than 2 billion by 2014 from 181 million last year. "We understand our customers' business challenges and have consistently demonstrated our ability to respond quickly to their requirements with solutions that combine innovation, quality and value," Mr Xu said. Huawei is the world's leader in international patent filings with 1,737 applications made last year. The company has 43 per cent of its 87,500 employees engaged in research and development in 14 research centres worldwide.
April 18 - 27, 2009
Hong Kong: Hong Kong and Australia on Thursday signed a memorandum of understanding – pledging to co-operate more on wine-related issues. It was signed by Commerce Secretary Rita Lau Ng Wai Lan and Tony Burke – Australia’s Minister for Agriculture. It is the third memorandum Hong Kong had signed with a wine-producing country after reaching agreements with France and Spain. Last year, Hong Kong signed its first memorandum of understanding on co-operation in wine-related business with France – the largest supplier of wine imports into the city. It signed the second with Spain. Mrs Lau said the memorandum would cover common areas of co-operation. Both sides keep requirements for wine certification simple to reduce trade barriers. “I believe that the memorandum will give a strong impetus to Hong Kong’s aspiration to be a regional wine hub, she said. “It also embraces new areas such as promoting commercial co-operation on wine auctions and storage, certification as well as sharing of experience for the possible setting up of a wine centre in Hong Kong,” added Mrs Lau.
Taichung mayor Jason Hu Zhi-qiang yesterday described Hong Kong's relaxation of visa requirements as a gift for himself and Taiwan's 23 million residents. Taiwanese visitors traveling to China through Hong Kong would previously have been unable to enter unless they had a separate entry or exit endorsement for the mainland. But the endorsement requirement will be scrapped on April 27 and visitors will be allowed to stay for up to seven days, an Immigration Department spokesman said. The visa relaxation is seen as the latest sign of thawing relations with the mainland. The spokesman said that from April 27, Taiwan residents holding a valid "Mainland Travel Permit for Taiwan Residents," commonly known as "Tai Bao Zheng," can remain for seven days, compared with the current policy which required a valid entry/exit endorsement for the mainland. Hu is in the middle of a four-day visit with a 100-strong delegation for a Hong Kong-Taichung Intercity Forum. Chief Executive Donald Tsang Yam- kuen received Hu at Government House yesterday. Tsang told the Taiwan mayor he hopes closer ties can be developed in a number of economic and trade areas, including tourism and education. "It's the first time Taiwan officials are invited by the SAR government. It's very meaningful, a breakthrough of relationship between Hong Kong and Taiwan." Hu described it as "a big breakthrough" and that he wanted to make it a firmer and bigger step with many steps to follow. "We hope from improving the relationship between Taichung and Hong Kong, it will be extended to the mainland as well." At a lunch hosted by Chief Secretary Henry Tang Ying-yen, Hu described the relationship between Hong Kong and Taiwan as "brothers from a family and not just friends." He said after attending a Hong Kong- Taichung forum that he had invited Tsang to visit Taichung. "I welcome his visit, no matter in what capacity." Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung said the chief executive had spent his honeymoon in Taiwan, adding Tsang someday could visit Taiwan again. Lam announced that top officials will visit Taiwan gradually for cooperation and better relationship with corresponding bureaus. The SAR government has also accepted Hu's invitation to visit Taichung next spring. Provided conditions and situations permit, the government will set up official or semi-official organizations in Taiwan, Lam said. Tourism Board chairman James Tien Pei-chun believed the flexibility will encourage more Taiwan visitors to stay overnight.
Macau chief executive Edmund Ho Hau-wah on Thursday announced a three-billion-pataca (around HK$3 billion) cash giveaway with 6,000 patacas for each permanent resident, among other relief measures – ahead of an expected annual protests on May 1. In addition, there will be a medical voucher worth 500 patacas for each permanent Macau resident. Mr Ho revealed the measures as he took questions from lawmakers at the legislature on Thursday afternoon. The cash-sharing scheme will take effect next month with every non-permanent resident pocketing 3,600 patacas. He said the government was also close to finalising a subsidy scheme to help homebuyers pay their mortgages. Last April, Mr Ho introduced a cash-sharing scheme with 5,000 patacas for each permanent resident ahead of a Labour Day protest. The Executive Council will discuss the cash-sharing scheme next week before passing it to the legislature. Mr Ho said he had asked the president of the legislature to use emergency procedures to ensure quick passage of the cash-sharing scheme. Macau’s economy is now struggling in the wake of the global economic crisis. In recent years, it had been enjoying strong growth largely fuelled by a gambling boom following the liberalisation of the industry in 2002. In 2006, the former Portuguese colony supplanted Las Vegas as the world’s gambling capital – with casinos generating more cash than their Las Vegas counterparts. But late last year, the financial crisis hit the enclave hard – forcing casino operators to lay-off thousands of workers and put future projects on hold. Fewer mainland gamblers are now visiting the city due to tighter visa requirements.
Bishop John Tong Hon, who will succeed Cardinal Joseph Zen Ze-kiun as the Bishop of the Catholic Diocese of Hong Kong, in Central on Thursday. The newly-appointed leader of Hong Kong Catholic Diocese Cardinal John Tong Hon said on Thursday he looks forward to improving ties between the Vatican and Beijing. On Thursday, Cardinal Tong, 70, officially succeeded Joseph Zen Ze-kiun, 76 – who was well-known for his criticism of Beijing's human rights record. This was after Pope Benedict XVI approved Joseph Zen’s retirement on Wednesday and named Cardinal Tong as his successor. Speaking to local media, Cardinal Tong said there were already non-official diplomatic ties between the Vatican and Beijing. He said he was willing to act as a bridge between the Vatican and the central government. Cardinal Tong also said he fully supported the introduction of universal suffrage into Hong Kong. “We are born free and human rights are given by God and should not be restricted by any government. “The earlier it is introduced the better,” he added. Cardinal Tong was asked by reporters whether he would join events marking the 20th anniversary of the June 1989 Tiananmen Square crackdown. He replied: “I will not join any demonstration to commemorate the June 4 incident as I have not joined these demonstrations in the past,” he said. He said that instead he would pray for those who died during the bloody crackdown. In the latest issue of Kung Kao Po, Cardinal Tong said he hoped the Catholic Diocese could continue to contribute to issues such as education and social services in Hong Kong. He also urged Catholics to keep fighting for justice.
A wider international currency system reflecting Asia’s growing economic power could boost global financial stability, but the yuan’s transition to an international currency should be gradual, Hong Kong’s chief central banker said on Thursday. Rather than maintaining the US dollar as the dominant reserve currency, Asia’s rising economic power makes a wider international currency system desirable in the long term to reflect the “tri-polar” economic order of the United States, Europe and Asia, Joseph Yam Chi-kwong, chief executive of the Hong Kong Monetary Authority (HKMA), said. “Such a system might help to increase global financial stability by diversifying risks in trade and investment,” Mr Yam wrote in a weekly column on the HKMA’s Website www.info.gov.hk/hkma/eng. Mainland’s central bank governor, Zhou Xiaochuan, last month called for the dollar eventually to be replaced as the world’s main reserve currency by the IMF’s Special Drawing Right, and for the SDR’s basket of currencies to include currencies of all major economies. At present, the SDR comprises the dollar, the Japanese yen, the euro and the British pound. Mr Yam said the yuan would be more widely accepted overseas over time given mainland’s growing economic strength and financial liberalisation. “But I am sure a wider use of renminbi in the region or even beyond will have to be a gradual process and carefully controlled to ensure that the possible risks involved are properly managed,” he said. Hong Kong is seen as a test ground for gradual liberalisation of yuan. In the past six years, banks in the territory have started offering yuan services to retail investors. Beijing has now authorised the start of yuan trade settlement between Hong Kong and five cities in mainland, which is due to start soon and eventually will be expanded to other jurisdictions outside the country.
The managing director of McDonald's Hong Kong was convicted yesterday of taking HK$2.5 million in kickbacks from a corn supplier in exchange for preferential treatment. Joseph Lau Si-sing, 48, was also found guilty of conspiring to pervert the course of justice for asking the supplier to lie to anti-graft agents. Lau, who joined McDonald's in 2004, had pleaded not guilty in the District Court to two counts of accepting advantages and one count of conspiracy to pervert the course of public justice. Lau had instructed Pornthep Srisa-An to tell investigators from the Independent Commission Against Corruption that he had given Lau the money to fund joint property investments on the mainland, the court heard. He was convicted on one of the bribery charges and conspiracy, but acquitted of the second bribery charge. The court was told that Lau had met Mr Pornthep in December 2003 when they worked together at a company called Global Kitchen. Mr Pornthep would later set up Siam Ready; his family ran Siam Food Products Public. The two had left Global Kitchen in 2004, and Lau joined McDonald's as managing director that May. The next year, Lau suggested McDonald's improve its menu by adding more vegetables and fruit. During a trip together to Macau in mid 2005, Lau suggested Mr Pornthep pay him 10 per cent of the value of orders that McDonald's placed with Siam Ready, Prosecutor Thomas Iu said. Mr Pornthep agreed, fearing Lau would stop ordering food from his company and believing this was how suppliers had to do business with McDonald's, the court heard. In June 2005, Lau approved Siam Ready to supply corn to McDonald's. Between December 2005 and April 2007, Lau had received HK$2.5 million - initially reported as HK$3 million - in remittances from the supplier as kickbacks, the court heard. The kickbacks were in return for HK$25 million worth of corn McDonald's bought from the supplier from July 2005 to June 2007. Furthermore, when Lau discovered in December 2005 that Siam Ready was also supplying McDonald's in Taiwan and Singapore, he suggested he be paid the same cut of the value of those orders, and Mr Pornthep agreed. Delivering the verdict, Deputy Judge Johnny Chan Jong-herng said he found the prosecution witnesses credible, and said the evidence showed Lau was paid the rebates in exchange for giving the supplier preferential treatment. He acquitted Lau of a bribery charge related to the Taiwan and Singapore orders, as Lau was an employee only of McDonald's Hong Kong. Furthermore, the judge said it was obvious the Macau trip in 2005 was to discuss the 10 per cent rebates. Sentencing was adjourned to May 6, pending a background report. McDonald's Hong Kong said Lau's employment has been terminated, and that the company respects the court verdict.
China: Beijing not manipulating undervalued currency: United States - US President Barack Obama’s administration overnight on Wednesday said that Beijing had not manipulated its currency to snare a competitive advantage but it remained undervalued, broaching a sensitive trade issue. In its first report to Congress on global currency policies since Mr Obama took office nearly three months ago, the Treasury Department said that no major US trade partner had manipulated its exchange rate to gain an unfair competitive leverage. The report appeared to be an abrupt about-face for Treasury Secretary Timothy Geithner, whose comment that mainland manipulated its currency during his January Senate confirmation hearing set off alarms in Beijing. The twice-yearly Treasury report concluded that mainland, which US lawmakers for years have accused of artificially weakening the value of the yuan to boost exports, had made progress in making its currency more flexible. “China has taken steps to enhance exchange rate flexibility,” Mr Geithner said in a statement. “Even so, Treasury remains of the view that the renminbi is undervalued.” Mr Geithner explained that the decision to not name mainland a currency manipulator came after “Chinese officials reaffirmed in January this year their commitment to greater flexibility and the need to allow the exchange rate to adapt to an equilibrium level”. He said the yuan had appreciated by 16.6 per cent in real effective terms between the end of June last year and the end of February this year. Officials also determined that mainland was not manipulating its currency in weighing official data suggesting the pace of mainland’s foreign-exchange reserve accumulation had slowed in the last year fourth quarter. Mainland’s massive US$580 billion fiscal stimulus package – “second in size to that of the United States” – unveiled in November to jump-start growth also was a factor, Mr Geithner said. Under the former Republican administration of George W. Bush, the Treasury stopped short of designating mainland as a currency manipulator despite furious complaints in Congress about the huge trade gap with mainland that dwarfs those with other partners. The politically sensitive trade deficit with mainland fell in February, amid the first global recession in six decades, to its lowest level in three years: US$14.2 billion, from US$20.6 billion in January. “I have long maintained that China’s exchange rate should better reflect market forces, for its own benefit and ours,” said Democratic Senator Max Baucus, chairman of the Senate Finance Committee, in response to the report. “I urge Secretary Geithner to work with Congress to chart a course for our economic ties with China months and years down the road, and set out clear milestones to measure our progress,” he said. But the National Association of Manufacturers slammed the decision not to brand mainland a currency manipulator. “While we recognize the delicacy of the global financial situation, today’s decision was a missed opportunity to provide the basis for moving ahead to address China’s currency within international institutions,” said NAM president John Engler. A treasury official, speaking on condition of anonymity, said the White House had been consulted as the report was being finalised. “We certainly have consulted with the White House,” the official said. Asked what the Democratic administration considers an acceptable margin of fluctuation between the yuan and the dollar, he said: “I don’t have any range.”
Despite the global slump, the Shanghai auto show which opens on April 20 will see every brand trying to impress with glitzy new cars and concepts while offering a glimpse into the next generation of green vehicles to showcase their technological advances.
China Eastern Airlines (0670), the nation's third-biggest carrier, slumped to a record 15.3 billion yuan (HK$17.3 billion) annual loss after making wrong- way bets on fuel prices and carrying fewer passengers.
China has signed up more than 120 overseas experts for a new project aimed at spurring innovation by offering thousands of academics one million yuan (US$146,000) to move to China, state media reported Thursday. The first batch of recruits for the program comprises 96 scientists and 26 entrepreneurs – 80 of whom hold foreign passports and all but four of whom are of Chinese origin, the China Daily reported. The new government incentives come as research programs overseas are being cut back and have had a massive impact on China’s ability to recruit, said Miao Hong, a recruitment official at Beijing’s Chinese Academy of Sciences. “People used to say no to us but now that is changing,” Mr Miao was quoted as saying. “The people we have targeted are those in the top five or top 10 in the world in their field,” Mr Miao said, adding that a major reason for most returning was a desire to give something back to China after reaching their career peak. The paper did not specify the expertise of the people recruited from overseas so far. The government program launched in December aims to recruit 2,000 experts over five to ten years by offering a one million yuan relocation package in addition to salaries and funding from the institutions where they will work, the report said. Ding Hong, 40, said his colleagues were shocked when he resigned as a physics professor at Boston College to return to China after 18 years in the US, the newspaper said. “People thought staying in the US was good for my career. But I wanted to contribute to the physics research going on in China,” he was quoted as saying. “There is a difference between China and the US in the mindset over scientific development. China is accelerating, the US is slowing down,” said Mr Ding, who has already started work at the Chinese Academy of Sciences. China has more than 38 million research scientists, but only 10,000 are top-level experts and the government wants that to change, the newspaper said. The program is part of China’s efforts to wean its economy off its dependency on manufacturing and move up the value chain by developing its capacity for design and innovation. Entrepreneurs who join the program are expected to supply their own technology and set up businesses in science research parks, the report said.
China regulators are concerned about the sharp rise in loans - 4.58 trillion yuan (HK$5.19 trillion) - in the first quarter and are checking whether any money has gone into unwanted areas. A mainland newspaper said officials are investigating five lenders - Industrial and Commercial Bank of China (1398), Bank of China (3988), Bank of Communications (3328), China Construction Bank (0939) and Agricultural Bank of China. According to the Shenzhen-based 21st Century Business Herald, the China Banking Regulatory Commission will focus on amounts loaned, sectors the money went to and whether the lending was legal. The probe covers from October to February, and bank branches in Beijing, Shanghai and Shanxi are already being investigated. The lenders have until today to submit records to the commission. The regulator will then take follow-up action if it is needed. Commission vice chairman Jiang Dingzhi, told the state-run Shanghai Securities Journal that there was concern about a surge in lending during recent months and was ready to issue warnings.
With fewer foreign buyers roaming the vast halls of the mainland’s top trade fair on Wednesday, China's stricken exporters said western orders remained scarce despite cheaper prices and recent positive signs. With the global financial crisis and slumping western demand for mainland-made goods having damaged China’s once roaring export engine, the 22,000 or so mainland manufacturers at the Canton Fair are competing fiercely to nail down scarce western orders amid initial signs of the export slump beginning to slow. “Now there is more opportunity for buyers,” said Fandi Riad, an Algerian buyer of construction materials who said his Chinese suppliers used to blankly refuse orders of less than five cargo containers, but were now willing to accept just one. “The sellers are now much more attentive.” The Canton Fair comes amid some recent signs of an improvement in China’s export figures, which have plunged for the past five straight months. In March exports fell 17.1 per cent, versus a much more pronounced 25.7 per cent drop in February. Many western buyers, however, seemed to be scouting prices and taking more of a wait-and-see approach. “I think everybody is moving forward cautiously, US retailers are trying to feel where the market is going to go.” said Charles White, a buyer for the US nationwide retailer Harbor Freight Tools which sells hand and power tools. “We are cautiously optimistic.” With manufacturers desperate to firm up orders for the rest of the year, many have been taking advantage of falling material and labour costs to entice buyers. Michael Gao, a salesperson with the Chaowei Industry factory in Shenzhen which makes electronics gadgets like talking alarm clocks said they’d shaved around 10 per cent off the costs of some products in recent months – a necessity given a plunge in orders of some 20-30 per cent amid the crisis. Its factory workforce was subsequently cut from 500 last year to the current 200. “We still have to maintain an optimistic attitude,” said Mr Gao. “We can definitely get back to our previous production levels but I think it will take till next year at least,” he said. Amin Ali Alherwi from Yemen, who sources white household goods, said prices of China-made washing machines and fridges had fallen around 10 per cent since the start of the year, but he was only planning to buy a third of what he did in October. “We’re not secure now because you never know what tomorrow the price will be... Instead of making a big order, you make small orders in case the price falls further, it’s risky.” Before the Canton Fair kicked off, local media reported lower occupancy rates at hotels which are normally packed out and many stall holders said there seemed to be less foreign buyers. With fair organisers reportedly saying this Canton Fair could be one of “the most difficult” ones in recent years, a series of exceptional measures have been taken. Top foreign buyers were reportedly flown in for free, while the fair opened its doors to mainland buyers for the first time, in a bid to give exporters the chance to tap the large domestic market to tide them through the lean times. Despite the tough climate, some firms see signs of a pickup. “Each time I visited our logistics department, it wasn’t very busy at all in the first quarter (this year),” said CiCi Chen, a sales manager for Chint Electrics, a Wenzhou-based manufacturer of products such as circuit breakers and solar panels. “But since the start of April, staff there have been working overtime,” she added.
Guangdong's top political adviser - a former head of its police and judiciary - and its former top corruption fighter have been detained by Communist Party anti-graft officers, sources said yesterday. Chen Shaoji, chairman of the Guangdong committee of the Chinese People's Political Consultative Conference, was flown to Beijing at the weekend on a chartered plane and placed under shuanggui, an internal party disciplinary procedure. At the same time Wang Huayuan was detained in Zhejiang province and also placed under shuanggui - a form of detention for party members for the purpose of investigation before they are turned over to prosecutors. They are the most senior current or former officials in Guangdong to have been implicated in corruption in recent years. "I believe this will be the most important case in Guangdong ever. Some provincial senior officials might be involved," said one of Mr Chen's former colleagues. Others implicated in Mr Chen's case were also on the plane, this source said. The source would not name these people. Government sources said Mr Chen, 63, was taken to the capital by officials from the party's Central Commission for Discipline Inspection who flew in from Beijing. Mr Wang, who used to head the commission's Guangdong operations and moved to Zhejiang three years ago to do the same job, was not on the plane but was being held elsewhere, sources said. The publicity department of the Zhejiang Discipline Inspection Commission said yesterday it knew nothing of Mr Wang's case. Police and government sources said Mr Chen did not have a good reputation among Guangdong officials. They said it was no big surprise that he had been placed under shuanggui. "We all know he is a corrupt official," a source said. Sources said Mr Chen's two children had taken advantage of his connections to run businesses and had amassed a big fortune. They said his daughter was the major supplier of medicine to all of Guangdong's drug rehabilitation centres, while her younger brother had a company selling firefighting equipment to the fire police. A source close to military circles in Beijing said he had heard about the central authorities' intention of "taking Mr Chen down" as early as 2003. The plan was aborted because of Mr Chen's powerful connections, some in Macau and Hong Kong, this source said. Mr Wang and Mr Chen were leading members of the Guangdong provincial Communist Party standing committee in the late 1990s and the early years of this decade. Mr Chen, a Guangdong native, worked in public security from the 1970s onwards and headed the provincial public security department for nearly 13 years. In 1998, he led the operation that led to the arrest of notorious gangster "Big Spender" Cheung Tze-keung in Jiangmen. At that time, one of his key subordinates was Zheng Shaodong, who played a big part in Cheung's arrest. Mr Zheng rose to the position of assistant minister of public security. Three months ago, he was reported to be under investigation by the commission for discipline inspection for his alleged links to Wong Kwong-yu, the billionaire founder of the Gome electrical appliances (SEHK: 0493) group. In November, police confirmed Mr Wong was under investigation for share-price manipulation.
April 17, 2009
Hong Kong: Hong Kong, Shenzhen and Shanghai retain their spots as the three most competitive cities, according to the latest annual report on urban competitiveness in the country. Qingdao, a coastal city in Shandong province, makes it to the top-10 list for the first time after it hosted the sailing events of the Beijing Olympic Games last summer. The seventh edition of the Blue Book on Urban Competitiveness was launched yesterday by the Chinese Academy of Social Sciences (CASS). "Urbanization will become the major force behind China's economic growth in the next 30 years," Yao Jingyuan, chief economist with the National Bureau of Statistics, said at the book launch on Tuesday. He added that the annual report provides useful information for policy makers on the country's urbanization drive. Led by Ni Pengfei, a researcher at the CASS Institute of Finance and Trade Economics, the team surveyed 294 cities on the Chinese mainland and Taiwan, as well as Hong Kong and Macao. They compared the cities' competitiveness mainly based on the per unit area of gross domestic product (GDP), a theory that has been adopted since 2005. "The huge gap between the coastal cities and the inland area is widening," Ni said. The top 10 cities are from the Pearl River Delta, the Yangtze River Delta, the Bohai Sea Rim area and Taiwan, the most robust city clusters, the report said. The report also notes that Zhejiang province - which last year had its capital Hangzhou on the list - failed to produce a top-10 city this year. But in the global context, the competitiveness of Chinese cities is lagging. Hong Kong, Shenzhen and Shanghai are listed only 26th, 64th and 41st on the Global Urban Competitiveness Report (2007-08) by the CASS. But since all the data were collected before the global financial crisis, that report may not reflect the impact of the worldwide economic slowdown on China's urban competitiveness, Ni said. The recent decision by the State Council to build Shanghai into one of the world's leading financial and shipping centers by 2020 has made competition between the largest business hub on the mainland and Hong Kong seem inevitable. "In terms of the overall economic output, Shanghai has already exceeded Hong Kong," Ni said. "But it has a long way to go to catch up with Hong Kong in becoming a global financial center." The cities should play complementary roles, with Shanghai focusing more on the mainland and Hong Kong on overseas financial market, he suggested.
A managing director of McDonalds was found guilty on Wednesday in the District Court of accepting "kickbacks" in return for approving a company to supply corn to the fast food chain. Joseph Lau Sze-shing, 47, had worked for McDonalds in Hong Kong since 1983. Lau was also found guilty of conspiring with a director of the corn supply company to pervert the course of justice. The offences took place between 2005 and 2007. Deputy-District Judge Johnny Chan Jong-herng adjourned the sentence until May 6. Lau is not allowed bail and must remain in custody. Lau had earlier pleaded not guilty to two counts of conspiring to accept advantages and one count of conspiring to pervert the course of justice. Lau was charged by the Independent Commission Against Corruption in 2007 for allegedly accepting an illegal commission of 10 per cent on sales of corn – which was over HK$3 million – from his former colleague Pornthep Srisa-an of Siam Reap Food Company between May 2005 and April 2007. The court also heard that Lau had asked Srisa-An to lie to police and say the money was used to set up a mainland joint-venture firm. Lau had been managing director of McDonald’s Restaurants (Hong Kong) since May 1, 2004. He was previously managing director for McDonald’s operations in the Philippines.
Europharm Laboratories in Tai Po, where the company manufactures a drug that has been linked to five hospital patient deaths. The Department of Health has approved Europharm - the drug maker at the centre of a tainted medicine scandal - allowing it to resume production, Health Director Dr Lam Ping-yan. Dr Lam said this was after the department’s pharmaceutical inspectors inspected Europharm’s production facilities and their quality controls of drugs were found to be “satisfactory” and up to international standards. “As crucial factors leading to the mishap have been addressed, Europharm is ready to resume production any time,” he said. Use of all Europharm products was suspended in public hospitals in March after the discovery that its anti-gout drug Purinol, a brand of allopurinol, contained illegal levels of a fungus. These were linked to the deaths of six patients from a rare infection. Europharm stopped manufacturing operations on March 6. This was to allow the Department of Health’s investigations into the contamination of some batches of allopurinol tablets manufactured by the company. Europharm supplied 41 other types of drugs to public hospitals. These have been replaced with similar drugs produced by other companies. On March 10, the government said all 41 had been found free of fungus. The authority spent HK$630,000 buying replacement drugs for Purinol and an anti-diabetic drug called metformin produced by Christo Pharmaceuticals. The health director said the professional management of Europharm was now headed by a pharmacist with 13 year’s experience. “The company’s standard operating procedures have also been revised, placing limits on intermediate products’ critical duration. “The company would also introduce microbiological analysis on raw materials, intermediate and finished non-sterile products as well as enhancing environmental monitoring,” Dr Lam said.He stressed the Department’s Pharmaceutical Services would closely monitor the future operations of Europharm.
The Immigration Department on Wednesday announced a new entry arrangement allowing Taiwan residents to visit Hong Kong would be implemented later this month. Under the arrangement, Taiwan residents holding a valid mainland travel permit for Taiwan residents, known as “Tai Bao Zheng”, can enter Hong Kong as a visitor. “They can stay for up to seven days if normal immigration requirements are met, without the need to also possess a valid entry/exit endorsement for the mainland as currently required,” an Immigration Department spokesman said. This follows two facilitation measures for Taiwan visitors implemented from January 1. These include the lifting the restriction that only two iPermits can be applied for within 30 days, and the extension of the period of stay in Hong Kong for holders of iPermits and multiple entry permits from 14 days to 30 days. “The new arrangement to be introduced on April 27 will provide visitors from Taiwan with greater convenience and flexibility in planning their journeys,” the spokesman said. Chief Executive Donald Tsang Yam-kuen said this week’s visit to Hong Kong by senior Taiwanese officials was an important development in relations between Hong Kong and Taiwan. A delegation led by the mayor of Taichung city, Jason Hu, is visiting Hong Kong at the invitation of the government. During a meeting with Mr Hu, Mr Tsang said he hoped closer ties could be fostered in trade, finance, tourism and education. The mayor said closer relations with Hong Kong might help improve Taiwan’s relationship with the mainland. Mr Hu said Taiwan and Hong Kong could work with Guangdong and Fujian provinces to develop “mega economic body”. Taiwan has had a bitter relationship with Beijing over its status since its separation from the mainland in 1949 when the communists took power. Beijing has always claimed that Taiwan is part of China. But in recent months, there have been signs of progress since Taiwanese President Ma Ying-jeou, of the Kuomintang party (KMT), who took office in May 20, 2008. Under Mr Ma’s leadership, he has advocated better ties with Beijing – under a policy of "mutual nondenial".
The newest casino hotel resort on Macau's Cotai Strip expects to rely, at least initially, on the mainland for about half its visitors, with another quarter coming from Hong Kong, "I think you'd expect a large proportion from the PRC and Hong Kong," City of Dreams president Greg Hawkins said. "The core visitation segments, realistically across all operators in Macau, are similar. Mainland China, particularly southern China, and Hong Kong are the primary inbound segments." The casino-hotel development is the only project opening on the Cotai Strip this year. With established long-haul markets the United States and the European Union hit hard by the global downturn, and with international travel in a slump, mainland and Hong Kong visitors are picking up much of the slack in Macau. In February just over half its 1.65 million visitors came from the mainland and nearly a third from Hong Kong, official figures show. "We're conscious that they are the general inbound markets. At the same time, secondary markets, like Southeast Asia, Korea, Japan and Taiwan, to some extent, are important as well. They are much smaller markets but they generally tend to be multi-stay markets," Mr Hawkins said. The heavy reliance on mainland and Hong Kong visitors will be reflected in the prices City of Dreams will charge. The first phase will open in June. It involves 620 rooms split between the Hard Rock Hotel and the more luxury-oriented Crown Towers, a casino, shops, restaurants and a dome-shaped theatre. The five-star Grand Hyatt hotel will open in September or October and add another 600 rooms. Mr Hawkins said: "Business plans and key strategies need to be adaptable to existing conditions. So we've very much looked at what's happening in the markets, making sure our strategies are appropriate for the current market." Diversifying Macau's sources of visitors and extending their length of stay are key to the Cotai Strip's aim of becoming a tourism destination. Currently, The Venetian - the mammoth casino-hotel developed by Las Vegas Sands - is anchoring the strip. Other projects are on hold because of the financial crisis. Mr Hawkins said the master plan for Cotai is at least four to five years from being fleshed out. "I think it's when, from a consumer point of view, it's clear you have no reason to leave Cotai [that the strip will have arrived]. To me, that's about how diverse the experiences are across all of the properties - in a gaming, hotel, food and beverage, retail and entertainment sense ... I would have thought it's when at least another two or three properties are completed." The company behind City of Dreams is Melco Crown Entertainment, a co-chairman of which is Lawrence Ho Yau-lung, the son of casino mogul Stanley Ho Hung-sun.
Secretary for Justice Wong Yan-lung on Wednesday began a two-day visit to Beijing – where he plans to discuss key legal issues including the provision of arbitration services in Hong Kong. Mr Wong said he would hold discussions with the China International Economic and Trade Arbitration Commission. “This is to enhance co-operation of the arbitration trade in the mainland and Hong Kong,” he explained. “This is conducive to strengthening Hong Kong’s role as a leading centre for regional and international dispute resolution,” Mr Wong added. CIETAC is one of the international arbitration bodies which deal with domestic and international arbitration cases. It handled 1,118 disputes in 2007 and some of its 1,000 arbitrators are Hong Kong residents. During his visit to Beijing, Mr Wong will also meet officials from the Legislative Affairs Commission of the Standing Committee of the National People’s Congress, the Ministry of Justice, the Supreme People’s Court and the Supreme People’s Procuratorate. He plans to discuss the development of arbitration services in the mainland and Hong Kong. Mr Wong will also look at legal services under the Closer Economic Partnership Arrangement. Mr Wong will return to Hong Kong on Friday morning.
SHKP will offer the Latitude flats at HK$6,000 to HK$8,000 per square foot. Hong Kong's two biggest developers have accelerated pre-sales of at least 2,227 new flats under construction - some at steep price discounts - raising concerns that they expect market conditions to get worse as the projects near completion next year. Cheung Kong (Holdings) (SEHK: 0001) said yesterday that it would begin pre-selling flats tomorrow at its Central Park Towers II in Tin Shui Wai. The developer stunned the market last Tuesday by announcing it planned to release the flats for as low as HK$2,066 per square foot, more than 10 per cent below secondary market deals in the area. It announced the pricing for the first batch of units on the same day, leading secondary market deals to plunge at the weekend as buyers turned their attention to the discounted new units. Sun Hung Kai Properties (SEHK: 0016) announced the next day that it would release its project, the Latitude in San Po Kong, Kowloon, for private negotiations. It said it would offer the units at an indicative range of HK$6,000 to HK$8,000 per square foot. Property agents said this represented a premium of about 20 per cent to secondary market deals in the area and that actual prices could be lower when pre-sales got under way. Both developments are due for completion in the fourth quarter of next year, which means buyers will have to wait at least 18 months before they can move in. "It is rare to see two big projects offered at such an early stage, as most uncompleted developments will only be pre-sold within 12 months of completion," said Matthew Kwok, the head of research at brokerage firm Tanrich Financial Holdings. Analysts and property agents said the accelerated pre-sales indicated developers wanted to capitalise on improved market conditions in view of concerns that buyer sentiment could deteriorate later in the year. Cheung Kong is the first developer to announce the launch of a new project at below secondary market transaction prices since the Sars health scare of 2003. The more than 10 per cent price cut contrasts with the 30 to 40 per cent discount at which new developments were released at the height of the property market recovery in 2007. While the low-price strategy was clearly aimed at attracting buyers to the remote border location, it would nevertheless have a negative impact on sentiment, said analysts. "To a certain degree, the strategy also reveals a negative view from the developer on the prospects of the market," said Michael Wu, a director in the Asia-Pacific corporate division of Fitch Ratings. "If a developer acknowledges the market is still under a cloud as global economic conditions are deteriorating, why not opt for a fire-sale strategy to raise cash?" He said there was no reason to do so to steal market share, particularly when buying interest was shrinking. "Developers focused on volume sales will appear to be the winners as they can generate sufficient cash to weather the downturn," he added. But in the present bearish market, demand could easily be exhausted by the release of just one large project. It would therefore come as no surprise if the market cooled down for at least six months after the two releases later this month, Mr Wu said. Early last year, sales ran out of steam in the primary residential market immediately after 2,000 units at the Capitol in Tseung Kwan O were sold by Cheung Kong. Agents said weekend secondary market transactions in Tin Shui Wai almost came to a standstill after the pre-sales were announced. "We have seen a nosedive in sales," said Perry Fong Kai-ming, a sales director for Tuen Mun and Tin Shui Wai districts at Centaline Property Agency. "Transactions at Kingswood Villa, a major residential project in Tin Shui Wai built by Cheung Kong, dropped as much as 60 per cent at the weekend compared with the previous weekend." Cheung Kong had announced it would price the cheapest of the first batch of 24 units at Central Park Towers II at HK$2,066 per square foot, compared with the average price of HK$2,470 per square foot for pre-owned flats in Phase I. The second phase has 1,068 units. The average price for the new batch was HK$2,205 per square foot, and the developer later said it would release 32 more units at that price. The move also undercut New World Development's Emerald Green project in Yuen Long, which offered units at HK$2,999 per square foot on the same day. A day later, Cheung Kong sweetened its offer by announcing that owners and tenants in Tin Shui Wai would receive a further 3per cent discount, which would price the cheapest unit at HK$2,004 per square foot. Paul Louie, the regional head of property research at Nomura International (Hong Kong), said a high pricing strategy would be inappropriate in the western part of the New Territories, as buyers were mostly price-sensitive end users. "It is true the first batch is lower than market expectations, but it only accounts for about 2 per cent of the total number of flats at Central Park Towers Phase II," Mr Louie said. "The low price is more of a strategy to generate buyer interest." Eric Wong Chun-yu, the co-head of Asia property research at UBS, said it was unlikely that projects in more centrally located districts such as Wan Chai and Mid-Levels would be offered at substantially discounted levels to generate sales volume. Separately, market sources said SHKP had received 50 purchase offers ranging from HK$7,000 to HK$8,000 per square foot for units at the Latitude up to yesterday afternoon. SHKP said it had arranged for Bank of East Asia (SEHK: 0023) to offer mortgages for 30 units at the Latitude at 3.35 percentage points below the prime rate, an effective mortgage rate of 1.9 per cent, for the first year.
Many shipping lines are struggling with losses and may face bankruptcy if freight rates do not go up. Shipping lines, which had cut rates on some routes to zero, are now raising rates in a desperate bid to survive, but the apparently co-ordinated move is causing some to accuse them of cartel behavior. "They are desperate," said Sunny Ho Lap-kee, executive director of the Hong Kong Shippers' Council. "Most shipping lines are forecasting substantial losses this year. If they didn't raise rates, they would have severe losses." Wilson Hung, the secretary of the Asia Australia Discussion Agreement (AADA), said raising rates is "a matter of survival. In the past six to nine months, rates have been down so much because of the economic situation. Hardly any operator can survive any longer unless they raise rates". If rates do not go up, many carriers cannot survive another six months, said Mr Hung. One reason for the rate increase was to help enough shipping firms survive so there would be enough capacity to meet increased demand when the shipping industry recovered, he added. The AADA is a voluntary discussion forum of 12 ocean carriers serving the trade from North and East Asia to Australia. Its members include major shipping lines such as Orient Overseas Container Line (controlled by the family of former Hong Kong chief executive Tung Chee-hwa) and Cosco Container Lines (a major state-owned container shipping firm). Starting today, AADA members will increase rates on all outward shipments from the mainland, Hong Kong, Taiwan and South Korea to Australia by US$250 per 20-foot equivalent unit (teu) for dry container cargo and by US$500 per teu for refrigerated container cargo, according to the group's announcement on March 13. "This is happening all over the world, including the intra-Asia trade and the transpacific trade," said Mr Hung. On April 9, a forum of major container shipping lines serving the transpacific trade, the Transpacific Stabilisation Agreement (TSA), recommended minimum freight rates from Asia to the United States. TSA's members include Cosco Container Lines and OOCL. Maersk Line would have raised its main port rate by US$250 per teu starting this month, reported Lloyd's List. Maersk Line's parent, AP Moller Maersk, a Danish conglomerate and the world's largest operator of container ships and supply vessels, will have an adjusted net loss of US$858 million for this fiscal year. The red ink was driven by a loss of US$1.9 billion in its container business, forecast Fearnley Fonds, a European securities firm. On some routes from China, container freight rates have been at zero for several months, said Mr Hung. However, some costs are imposed because shipping lines must add surcharges, including bunker adjustment fees. On the Asia-Europe route, shipping rates are now US$350 to US$550 per teu, down from US$1,200 a year earlier. On the transpacific route, shipping rates have fallen to US$1,300 from about US$2,000 a year earlier, said Mr Ho. "At this rate level, most shipping companies would be making losses." However, there is a limit to how much shipping lines can raise rates, given the low demand, said Charles de Trenck, an analyst with Transport Trackers, a Hong Kong transport consultancy. "It's wishful thinking till it takes hold," he said. "If it takes hold, it will raise rates to the level of one, two or three months ago. It's the little blips." Whether shipping lines can successfully raise rates depends on the market and whether competitors will unite over rates or engage in price wars, said Mr Ho. AADA's 12 member carriers had joined together to raise rates, which Mr Hung said was not cartel-like behaviour because the rates were not binding. But Mr Ho disagreed. "Any shipping conference is beyond doubt a cartel," he said. "AADA is a shipping conference. It is certainly anti-competitive even if the rates are voluntary, because shipping lines should not discuss price." However, said Mr Hung: "If, in the end, nothing can be done, the only conclusion is shipping companies go bankrupt. That may be the case. Many shipping companies may die." The cash flow of many shipping lines will be zero, but around the world, some large shippers will be rescued by their governments, including Cosco, predicted Mr de Trenck. "If nothing changes in the next six months, a lot of shipping lines will go down," he said. "There has to be a bailout of flag companies [shipping companies with large fleets]." Mr de Trenck noted that large shipping lines of national importance had been bailed out before, such as during the Asian financial crisis in the late 1990s. Nonetheless, Mr Ho did not rule out the possibility that some big shipping lines might disappear either through bankruptcy or mergers.
Hong Kong is now behind Shanghai in economic scale, infrastructure and community technology, although the city is still ranked No 1 in overall competitiveness among 294 Chinese cities. To stop the Shanghai gap from widening, Hong Kong needs to speed up its integration with the Pearl River Delta, a finance expert warns as an annual competitiveness study by the Chinese Academy of Social Science showed Shanghai has outrun Hong Kong in several categories. Following Hong Kong in overall competitiveness are Shenzhen, Shanghai, Beijing and Taipei. The SAR was third after Shanghai and Guangzhou in the external basic infrastructure category. What kept the city on top in competitiveness are its talent, capital, and openness. CASS said the development of Shanghai into an international financial center can generate mutual collaboration and compensation for both cities. But Hong Kong needs to adjust its positioning when faced with the rapid development of mainland cities. Chinese University finance associate professor Raymond So Wai-man said Shanghai's triumph in some of the categories is understandable because these are not Hong Kong's best qualities, but he said the economic scale competitiveness ranking deserves attention. "Of course Shanghai is performing better in building infrastructure because Hong Kong has more constraints such as environmental requirements. Shanghai's IT development is also driven by Suzhou which is an industrial city, whereas Hong Kong's biggest industry is finance." He said Shanghai's economic scale is supported by its integration with the Yangtze River Delta. "Shanghai successfully gained leadership through integration, but Hong Kong is still in the talking stage over integration with the Pearl River Delta," So said. Meanwhille, the government said it welcomed the results, with a spokesman saying Hong Kong is limited in scale and resources. The spokesman said Hong Kong's economic development mode and stage also differ from other cities and that it is not surprising the city's best qualities are different from others.
China: China drew US$21.8 billion in foreign direct investment (FDI) in the first quarter, 20.6 per cent less than in the same period last year, the Commerce Ministry said on Wednesday. The ministry released the figure at a news conference at which it also said the trade environment was still challenging and that the government would lend more support to exporters. FDI in March alone was US$8.4 billion, down 9.5 per cent from the same month last year. It was the sixth straight month in which FDI inflows fell from their year-earlier level, though the rate of decline was more gradual than in the first two months of this year. FDI inflows were down 15.8 per cent in February from a year earlier and 32.6 per cent in January. “Stable FDI growth is very important for China’s stable economic growth, especially for increasing employment and boosting foreign investors’ confidence,” said ministry spokesman Yao Jian. He noted that although foreign-invested companies comprise just 3 per cent of the overall number of businesses in the country, they account for 35 per cent of industrial output and 11 per cent of urban employment. Mainland attracted a record US$92.4 billion in non-financial FDI last year, an increase of 23.6 per cent from 2007. Inflows have surged since the country joined the World Trade Organisation in 2001, but have weakened in recent months as the global economic slowdown has hit investment flows. Mainland’s exports and imports have also suffered, falling in March from year-earlier levels for the fifth month in a row. Exports were down 17.1 per cent from March last year, better than February’s 25.7 per cent slump. “We need to continue cleaning up and changing our trade policy, strengthening support for exporters and importers and maintaining stable growth in trade,” Mr Yao said. To support exporters, mainland has raised value-added tax rebates on exports several times since the middle of last year, covering products from textiles to toys and metals. The central bank has also effectively halted the yuan’s rise against the dollar since July, giving exporters some breathing room.
China fired into orbit on Wednesday its second satellite in a program to build an alternative to the global positioning system based on US satellites. The geostationary satellite is one of a series being slung into space to form the Beidou, or “Compass,” navigation system, Xinhua news agency said, calling the system a “crucial part of the country’s space infrastructure.” The system is touted by Beijing as an alternative to the US satellite GPS network, the dominant positioning system, although it isn’t clear how far China has progressed in bringing the project to fruition. Although the US government says China has already launched at least five navigation satellites, Xinhua said Wednesday’s launch, which was fired off at 00.16am from the southwestern Xichang launching centre using a Long March 3C rocket, was only the second directly tied to the global navigation system. It said China’s current satellite navigation system only covers China and adjacent regions. The launch comes almost exactly two years after the first Beidou satellite was placed into orbit, Xinhua said. Xinhua said 30 more satellites would be needed before 2015 to complete the system, with 10 going up by the end of next year. China has been both a competitor and a partner in global positioning system efforts. While seeking to operate independently of the US system, it has invested in the European Union’s Galileo satellite navigation system and is talking about participating in Russia’s GLONASS system.
Coastal cities remain the most competitive in China but those inland are picking up, according to the latest Blue Book of Urban Competitiveness, released yesterday by the Chinese Academy of Social Sciences. Hong Kong, Shenzhen, Shanghai, Beijing, Taipei, Guangzhou, Qingdao, Tianjin, Suzhou and Kaohsiung are ranked the top 10 cities in terms of overall competitiveness, ranging from their economic scale and growth rate to economic efficiency and quality of life. These cities, not surprisingly, represent China's most dynamic regions - the Pearl River Delta area, Yangtze River Delta area, the Bohai Rim, Hong Kong and Taiwan. But some encouraging points also appeared in traditionally underdeveloped provinces in central and western areas, according to the Blue Book, which the academy has been compiling annually since 2003. Of the 10 fastest-growing cities worldwide last year, eight are in China. Two, Baotou and Hohhot, are in Inner Mongolia, and Wuhu is in Anhui province. Of the 10 fastest-growing Chinese cities last year, eight are in Inner Mongolia or Liaoning and Jilin - two industrial provinces in the northeast. The other two are Heyuan and Qingyuan, in Guangdong. Changsha, capital of Hunan, is the only city coming onto the top 20 list this year. But this is also the first time a city in central China has made it into the top 20. "All this indicates that the middle and western provinces in China are developing their economic strengths," said Ni Pengfei, an economist at the academy and leader of the Blue Book team. Beijing launched its ambitious plan to develop its expansive western regions in 2000; four years later, the central government vowed to rejuvenate the economies in the central region. In the 4 trillion yuan (HK$4.5 trillion) economic stimulus package announced in November, Beijing promised to invest a big chunk of that in infrastructure projects in central and western China, saying it wanted to make up for development debts accumulated over three decades. Mr Ni noted that compared with coastal cities, those in central China showed less disparity in the development within each province, a sign of their growth potential. Moreover, most central and western provinces now stand at the early or middle stages of their industrialisation, while those on the coast have mostly evolved into the late stages. "Our research shows that a city's competitiveness usually goes up as industrialisation matures, and this can partly explain the relatively high growth rates in some inland cities," Mr Ni said. But these bright points still appear sporadic and uneven. On the whole, the competitiveness indices for coastal regions stand at 0.78 or higher, while those for central and western regions are at 0.67 or lower.
Workers celebrate after the world's longest water diversion tunnel is completed in northeast China's Liaoning Province, on April 15, 2009. Construction teams digging the world's longest water diversion tunnel completed their work Wednesday in Liaoning Province, breaking a record held by Japan's Seikan (Aomori-Hakodate) tunnel, which is 53.86 km long. The 85.3 kilometer long tunnel starts in Hengren county in east Liaoning and ends in Xinbin county in the west part of the province, it will bring water from the Dahuofang Reservoir to more than 10 million people in seven industrial cities of the province.
April 16, 2009
Hong Kong: Hong Kong's central bank chief on Tuesday said he had warned investors about the risks of buying derivatives long before Lehman Brothers collapsed, but revealed that Lehman minibonds had been ranked “high risk” by only half of the 16 banks investigated. More than 40,000 Hong Kongers ploughed nearly HK$20 billion (US$2.5 billion) into failed structured products known as minibonds offered by US investment bank Lehman Brothers, which collapsed last September. Hong Kong Monetary Authority Chief Executive Joseph Yam, answering questions on the sale of Lehman minibonds in the Legislative Council, said he had issued several warnings in the media from the middle of 2006 about the risks of investing in derivatives products. By June last year, banks in the city were no longer offering the Lehman products, he said. “In terms of forewarning of risk, I think we have done enough,” Mr Yam said. Investors, however, claim they were misled over the sale of the products, which were called “minibonds” but were actually complex derviatives products, and have demanded full compensation. Mr Yam admitted that in late 2007 three banks distributing the bonds had ranked them as “low-risk” investment products and another five banks were selling them as “medium risk”. That was partly because the products were less risky before the credit crisis spread last year, Mr Yam said. “The risk for CDOs [collateralised debt obligations] suddenly shot up,” Mr Yam said. “We warned the market... It did not mean banks were wrong, it was just that banks did not respond in a timely manner.” Only two distributors, Sun Hung Kai Financial and KGI Asia Ltd, have agreed to compensate Lehman minibond investors so far. A spokeswoman for Bank of China (Hong Kong) declined to comment on media reports that the bank, the largest distributor of the Lehman products, was in advanced talks with the Securities and Futures Commission about compensating investors. The HKMA and the Securities and Futures Commission have separately made recommendations on how to better protect investors, including forcing banks to separate their deposit-taking and retail investment businesses from the end of September at the latest. Investors in Singapore and Indonesia have also lost money on the products.
The man who says late Hong Kong tycoon Nina Wang was his lover has been accused of basing his claim to her fortune on a will which was only to be used as part of a feng shui ritual, a court heard on Tuesday. Tony Chan Chun-chuen, a feng shui master, told Wang to draw up a will to be burnt later to give her long life as part of the ancient Chinese practice, according to an expert report submitted by Wang’s family to the city’s high court. Instead Mr Chan kept the document and used it to claim her estate, the court was told. “Mrs Wang merely executed the 2006 will, if she did, on instructions of [Chan], as part of feng shui procedures,” the report said. But Edward Chan, counsel for Tony Chan, said it was unfair to make an allegation of fraud against his client based on the report, written by another feng shui expert. Wang died of cancer in 2007, aged 69, leaving an estate estimated to be worth up to HK$100 billion which has been the subject of a bitter legal dispute. Mr Chan claimed to have had a longstanding relationship with the eccentric billionaire, and says she made a will in 2006 naming him as her sole beneficiary. But Wang’s family lays claim to an earlier 2002 will. They had argued earlier that Wang did not have the mental capacity to execute the alleged will because of her health problems. Last month, the family’s lawyers told the court they had evidence from a forensic handwriting expert that the signature on the alleged will was fake. Judge Johnson Lam Man-hon said he would not delve into the arguments over feng shui practices. “This is not a court of feng shui,” he said.
The toll for private cars to use the massive bridge linking Hong Kong, Macau and Zhuhai could be around HK$100, Transport Secretary Eva Cheng said on Tuesday. She made these comments at a press conference which announced that the Bank of China would lead a consortium of banks to finance loans for the 29 kilometre bridge. The project will cost 37-billion yuan (HK$42 billion) and 22-billion yuan (HK$25 billion) will come from bank loans. These would be repayable within 35 years. Hong Kong and Macau banks would be given an equal role in offering the loans. Ms Cheng, said the favourable financing arrangements could mean cheaper tolls for users. “Because of the very attractive terms offered by the Bank of China, we believe we will be able to charge the low end of what we have assumed so far. “For example, for private cars, we have been assuming in the feasibility report HK$100 to HK$200. So we might be able to charge HK$100 or even less. “For trucks, we were looking at HK$200 to HK$300... but we need to consider all factors before we decide on the final toll level,” Ms Cheng told reporters. The three governments of Hong Kong, Macau and Guangdong will each contribute to construction. The Hong Kong government will pay 6.75 billion yuan (HK$7.7 billion). Ms Cheng said other factors would also have to be taken into account. “The factors we need to consider are the expenses and the financing costs and daily expenses, including the maintenance costs.” “We also need to consider income – income comes from the daily traffic flow as well as the economic condition of the time,” she explained. The government is planning to table its proposals to the Legislative Council’s Transport Panel in the next two months. Ms Cheng said the three governments hoped to begin building the bridge by the end of 2009. The ambitious project is slated to be finished in 2016. The Hong Kong-Zhuhai-Macau Bridge would link the west side of Hong Kong with Macau and Zhuhai, which is on the west side of the Pearl River Delta.
Singapore’s central bank eased monetary policy by effectively devaluing its currency to counter a record economic slump while also keeping a lid on domestic interest rates. The currency is Singapore’s main policy instrument, and the central bank on Tuesday repeated what it had done in previous downturns in 2002 and 2003. It shifted the centre of the secret trade-weighted band for the Singapore dollar to the existing weak level of the exchange rate basket in an actual one-off devaluation. Based on their estimates of where the currency had been trading before the move, economists said the Singapore dollar might have been devalued by 1.5 to 2 per cent. The currency’s rally on Tuesday suggested market participants had expected a bigger move. “There had been some expectation that the re-centring would be as much as a 400 basis points depreciation,” said Claudio Piron, a strategist with JPMorgan Chase. Faced with slumping exports, the deepest recession on record and growing speculation of Singapore dollar depreciation, devaluing the currency had been the Monetary Authority of Singapore’s best option for the trade-dependent economy. Other options such as gradually steering the currency lower or widening the width of the trading band would have stoked speculative selling of the currency, thereby pushing yields higher. “A more radical policy action may have been viewed as counter-productive in terms of operational policy band management and foreign exchange reserves preservation,” Mr Piron said. Those moves could stir further market expectations for currency depreciation, which would have led to withdrawal of local currency supplies from the system, he said. Tuesday’s monetary easing came as Singapore’s economy contracted a record 11.5 per cent from a year earlier in the first quarter of this year, more than a market median forecast of an 8.8 per cent slump. The government expects the economy to shrink 6-9 per cent this year. “Given all these horrendous numbers, this policy change is not a big surprise. It is reflecting the free fall in external demand,” said Song Seng Wun, economist at Malaysian bank CIMB in Singapore. The Singapore dollar, which has been emerging Asia’s second-worst performing currency this year, strengthened to a two-month high of 1.497 against the US dollar, from 1.515 before the announcement, and was trading at 1.5036 by 11am HK time. “The market was expecting a more aggressive easing policy and it did not come about. The bet on the Singapore dollar will be less aggressive,” said Irene Cheung, currency strategist at Royal Bank of Scotland in Singapore. The country’s gross domestic product in the first three months of the year fell at a seasonally adjusted, annualised pace of 19.7 per cent, the ministry of trade said. The central bank said the economy is likely to remain below its potential growth rate until a decisive recovery in exports. “MAS will therefore re-centre the exchange rate policy band to the prevailing level of the dollar, while keeping the zero per cent appreciation path,” the central bank said in its twice-yearly monetary policy statement, referring to the currency’s nominal effective exchange rate. The Monetary Authority of Singapore sets policy by managing the Singapore dollar in a secret trade-weighted band against a basket of currencies, instead of setting interest rates. The bank has to tread a fine line between allowing its currency to weaken to help exporters while avoiding giving its neighbours the impression that it is seeking to make its currency more competitive in export markets. Vietnam has depreciated its dong, while central banks in Thailand and Taiwan seem to be tolerating weakness in their currencies. Central banks from Wellington to Bangkok have slashed interest rates sharply in recent months and some central bankers said they intend to wait and see how much good their rate-cutting had done to their battered economies before taking more action. Singapore eased policy at its last policy review in October for the first time since 2003 to support an economy that was the first in Asia to fall into recession last year. Economists said the economy could be nearing a bottom as its non-oil exports (NODX) fell 17 per cent year-on-year in March after a record 35 per cent plunge in January and a 24 per cent fall in February. Shipments to China jumped 14 per cent in March. “Although we are seeing some faint heartbeats in the Singapore economy with better-than-expected March NODX numbers, we have not seen the bottom yet. With inflation easing and external demand fragile, the shift in policy remains appropriate,” said CIMB’s Song, calling for the Singapore dollar to weaken to 1.60 by the end of the year.
Hong Kong's trade commissioner to the United States said overnight (HK time) that the city was coping well with the global financial crisis. Donald Tong, Hong Kong Commissioner for Economic and Trade Affairs to the US, was speaking at the Paul H Nitze School of Advanced International Studies (SAIS) at Johns Hopkins University. Mr Tong said Hong Kong had overcome several major challenges in the past decade or so. These included the Asian financial crisis and outbreaks of severe acute respiratory syndrome (Sars) and avian influenza. “We have confidence in Hong Kong’s ability to rebound due to its sound fundamentals, can-do spirit, quality workforce, the great support from the mainland, and the new opportunities arising from the Pearl River Delta development,” he said. Mr Tong noted that the financial crisis had ended the long period of economic growth Hong Kong had enjoyed since mid-2003. “It caused the economy to contract in the fourth quarter of 2008 and slow economic growth for last year as a whole to 2.5 per cent,” he said. “The growth rate was lower than the trend growth rate over the past 10 years and lower than gross domestic product growth of 6.4 per cent in 2007.” Mr Tong said the economy was forecast to contract by 2 to 3 per cent in 2009 due to falling external demand and weaker consumer sentiment. The unemployment rate has also climbed to a 32-month high – with the seasonally-adjusted jobless rate for the three months through February rising to 5 per cent. The territory’s exports have also experienced heavy falls this year, government statistics show. Despite this, Mr Tong was optimistic about Hong Kong’s ability to withstand the current crisis. “Since the Asian financial crisis of 1997-1998, Hong Kong has improved its risk management and created a more transparent regulatory environment while still encouraging financial innovation to maintain our competitiveness,” he said. Mr Tong also stressed that Hong Kong’s fundamentals remained good. “The city’s fundamentals include high capital adequacy ratios in the banking sector, prudent fiscal policies and healthy fiscal reserves.” Mr Tong said that since the crisis, the government had implemented some important measures. “A US$12.8 billion [HK$99.5 billion] loan guarantee programme was introduced to help unfreeze credit for the business community, in particular, for small and medium enterprises.” To boost public confidence and ease the liquidity for the business community, he said the government had guaranteed all bank deposits – with no ceiling. It had also established a mechanism to provide additional capital to banks, if requested, until at least 2010. “The government had fast-tracked public infrastructure projects and introduced other measures with a view to creating more than 120,000 jobs, training places and internships in the next three years – including more than 60,000 this year,” he added. Mr Tong noted that Hong Kong and the mainland had also agreed on a currency swap pact. “This is to provide short-term liquidity support to mainland operations of Hong Kong banks and the Hong Kong operations of mainland banks in case of need.” He said the mainland government had also lent support, pledging to expedite a pilot programme for Hong Kong whereby selected companies could settle mainland trade in yuan. “This will enhance Hong Kong’s role as an offshore centre for Renminbi business,” added Mr Tong.
Hong Kong government will continue to work closely with the electronic industry, the photovoltaic (PV) industry to promote research and development in solar energy, Commissioner for Innovation and Technology Eddy Chan said on Tuesday. Addressing a conference on "Promoting the Technology and Industry of Photovoltaics" at the Hong Kong Electronic Fair (Spring Edition) 2009, Chan said the government would also promote and facilitate the wider use of PV and cleaner and greener energy. Chan noted that building-integrated photovoltaics had become one of the fastest growing segments within the fast growing PV industry. He said, "the Hong Kong Science and Technology Parks Corporation has decided to establish a new cluster on Green Tech in the Science Park focusing on renewable energy and environmental technologies. Solar energy will be one of the key elements of the new cluster." He added that besides putting in place infrastructural facilities, the government also provides funding support to encourage applied research and development facilities. Furthermore, to strengthen its edge as a gateway to the Mainland market, Hong Kong had established various collaboration programs with Mainland authorities in the areas of innovation and technological development, Chan said.
China: Local governments across the mainland have been ordered to buy more energy efficient products as part of the national drive to curb pollution and combat global warming, state press reported on Tuesday. China’s State Council, or cabinet, issued a statement Monday calling for all local governments to place a higher priority on eco-friendly products in their public purchases, the China Daily reported. Governments will be required to strictly follow a compulsory green procurement list, which was published in 2007 and includes nine types of items such as air conditioners and computers, it said. Previously agencies could shop around for other goods if they could justify buying them on cost and energy-saving grounds, the report added. China’s public authorities are influential consumers. In 2005, the government had an annual budget of 292.8 billion yuan (US$42.9 billion), or 1.6 per cent of the country’s overall economy that year, the newspaper said. Thanks to its strong spending power, the government has the capacity to expand the production of greener products into the mainstream market, it said. Green goods remain a niche category as general consumers are less interested in them due to higher initial costs. But government purchases can boost demand, which will stimulate greater and faster technological breakthroughs and help the products move into the mainstream markets by ultimately allowing lower unit costs and mass production. China has come under growing pressure to improve energy efficiency as its dependence on imported energy has risen, while its environment has continued to deteriorate. China also now ranks alongside the United States as the world’s biggest emitters of the greenhouse gases that are blamed for global warming.
A woman bikes past a Volkswagen vehicle in Shanghai. On Tuesday, the European automaker said it sold 112,466 vehicles in mainland and Hong Kong in March, a sales jump of 9pc year on year. Volkswagen said on Tuesday it sold 9 per cent more cars in mainland and Hong Kong in March, setting an all-time record for monthly sales as Beijing’s policy initiatives bolstered consumer confidence. The top European automaker sold 112,466 vehicles in mainland and Hong Kong, up from 103,204 units in March last year, it said in a statement. Sales in the first quarter came to 284,143 cars, up 5.94 per cent from a year earlier, it said. “The development of the total passenger car market in the first quarter has exceeded our expectations and we benefited successfully from this growth trend,” Winfried Vahland, president and chief executive of Volkswagen Group China, said. He added that Volkswagen had revised its sales forecast for the mainland market this year and increased its annual output plan by 50,000 units. Previous sales and output targets were not provided. Mainland’s overall auto market, the world’s largest, has received a strong boost since February from government policy support measures, including tax incentives for small cars and subsidies for vehicle buyers in rural areas. Passenger car sales in the country hit a monthly record of 772,400 units in March, up 10.26 per cent from a year earlier, official data showed. General Motors, Volkswagen’s archrival in mainland, saw its March China sales rise 24.6 per cent from a year earlier to 137,004 vehicles, setting a company record for monthly sales. Volkswagen, which operates car ventures with SAIC Motor and FAW Group, sold 235,772 cars under the Volkswagen brand in the first quarter in mainland and Hong Kong, up 6.5 per cent year-on-year, including imports, it said. Deliveries for Audi models fell 4.7 per cent to 29,010 units, including imports, it added. Volkswagen said in February it planned to double its vehicle sales in the Greater China area to 2 million units by 2018 and further increase its market share in the country, which currently stands at 19 per cent.
Deep price discounting has driven sales of new houses to a 10-month high in Hangzhou, the capital city of the southeastern coastal province of Zhejiang. Cash-strapped developers reduced prices by up to 30 per cent last month, reported agents, and buyers responded by pushing average daily sales in the city's primary residential market to about 300 units from a low of only 20 units during the downturn in the second half of last year. "Home sales in both the primary and secondary sectors have now returned to the level of the 2007 market boom," said Joe Xu Chihui, general manager at the Hangzhou branch of Midland China. "We have seen potential homebuyers lining up overnight outside sales offices wherever a project was being offered at a 20 or 30 per cent discount." As of March 29, 3,247 units were sold in the city, the highest for a single month since June last year, according to Soufun.com, the mainland property news website. In the secondary market there were 120 transactions per day, compared with 50 per day in the second half of last year when market sentiment turned negative as a result of the global financial crisis and slowing economic growth on the mainland. Mr Xu attributed the sharp rise in transactions to the deep price cuts introduced by developers. "It is the most effective way to attract buyers." Ocean Sky, a residential project in Xiasha district which is about an hour's drive from the city centre, attracted buyers for more than 200 units on the first day that the last remaining units were released. The final batch was marketed at an average price of 5,900 yuan (HK$6,692) per square metre, down 28 per cent from the 8,200 yuan per square metre price tag on its first launch. Other projects immediately followed suit with price discounting strategies including Xi Xi Shan Zhuang, Jin Se Qian Tang and Xian Lin, which were marketed at prices of about 5,000 yuan per square metre, about 30 per cent down from prices achieved in the same developments in the second half of last year. The result was that although property deals were on the rise, prices remained in retreat, particularly in rural areas where they had fallen to levels last seen in 2004, said agents. Mr Xu expected prices in the city centre would now stabilise around their present levels, although costs on the outskirts could fall another 10 per cent. Marco Cheung, general manager at Centaline China's Hangzhou branch, said prices in the city centre had now dropped as much as 20 per cent from the second half of last year to a current average of about 15,000 yuan per square metre, while rural prices were down some 30 per cent to between 5,000 and 6,000 yuan per square metre. "Genuine homebuyers came out in force when prices fell to an attractive level," he said. Buying interest was also boosted by stimulus measures taken by both the central and city governments since last October. Besides lowering mortgage rates and cutting transaction taxes, the Hangzhou city government had agreed to grant residency rights to buyers who invested more than one million yuan in property in the city centre. Mr Cheung said this rule would create additional buying demand as Hangzhou had been ranked as one of the most attractive cities in which to live and work. "The city has a well-established infrastructure and education system. The investment residency scheme will certainly lure homebuyers from other cities," he said. However, he said investors, who accounted for about 5 per cent of total transactions, had now withdrawn from the market. "The majority of buyers are now genuine end-users." A supply overhang in Hangzhou could continue to depress prices, however, and Centaline's monthly report said it would take at least a year to digest the unsold inventory of about 10,000 units in the city.
The destroyer DDG-167 Shenzhen (L) of the second group of Chinese navy escort ships and destroyer DDG-169 Wuhan of the first group sail in the Gulf of Aden on April 13, 2009. The second group of Chinese navy escort ships converged with the first group of Chinese navy escort ships in the Gulf of Aden on Monday.
Fast food chain McDonald's will recruit more than 10,000 people, hike salaries of existing staff and set up training and development programs for employees this year, its country head told China Daily yesterday. Kenneth Chan, the newly appointed chief executive officer of McDonald's China, said the chain will open more outlets this year to keep pace with rising business growth. The company will also incorporate more performance-oriented metrics and raise employee salaries nationwide by at least 6.3 percent, Chan said. This is Chan's first public announcement of the company's strategy for the year after his appointment last month following the exit of Jeffrey Schwartz, the former China chief who bid farewell to McDonald's after working with the chain for 40 years. Chan's appointment comes at a time when the financial crisis has spared very few countries, including China. And, sustaining the growth momentum of McDonald's under Schwartz will be a key challenge for Chan when Chinese consumers are actually tightening their belts. McDonald's to step up hiring in China this year "Actually, I am not concerned about China, as I am confident about the long-term potential of the market," Chan said. "This year will mark the beginning of the company's most rapid expansion in China." Last year, McDonald's said it planned to add 175 new outlets in 2009 to the current 1,000 it has in China, the biggest addition ever. In the interview, Chan refused to disclose new outlet numbers for the year. In 2008, the head count at McDonald's China outlets grew by 8.9 percent, double that of the United States and the European Union, making China its fastest growing market worldwide. Susanna Li, vice-president of human resources at McDonald's China, said besides recruiting more people, it will also invest in training and developing Chinese talent. "McDonald's is not only a company that sells hamburgers, but also a talent-oriented enterprise. McDonald's has been trying to create training opportunities for different levels of staff," she said. KFC is the largest fast food chain in China, with more than 2,300 stores in 450 cities. Company executives told China Daily last December that KFC would open more restaurants in 2009 than "the previous year's average of 400" new food joints. Sources said KFC's annual recruitment figure for the year will also exceed 10,000 people. McDonald's set up its Hamburger University in Hong Kong in 2000, also its seventh worldwide, to train its Chinese staff. The company plans to open another on the Chinese mainland next year. The company also launched the China Development Leadership Program this year, which aims to develop skills that will help employees find the best location for new outlets.
The Red River links the northern Vietnamese province of Lao Cai with Hekou county in China's Yunnan province. It is also the inspiration for the film, Red River, by Chinese director Zhang Jiarui. A tragic and beautiful love story, whose background is the aftermath of the Vietnam War, Red River tells the story of A Tao, a mentally-challenged Vietnamese girl played by Zhang Jingchu. Set in a tiny border town between China and Vietnam in 1977, the film begins with A Tao, who loses her mental balance after seeing her father killed by a mine planted during the war. Twenty-three years later, A Tao grows into a beautiful young woman with a childlike innocence that masks a simmering inner turmoil. She crosses into China and links with her domineering aunt working in her small frontier massage parlor - famous for its colorful clientele. Red River marks the third cinematic collaboration between director Zhang Jiarui and mainland actress Zhang Jingchu. In their first collaboration, Huangyao Bride in Shangrila in 2005, Zhang tossed aside her gentle and quiet image to play a rather rebellious woman Fengmei trying to join and revolutionize a men's dragon-dancing team. One year later in The Road, Zhang played a ticket seller whose love affair with a local doctor spans more than three decades. Zhang also starred in Jackie Chan's Rush Hour 3.
April 15, 2009
Hong Kong: The government was keeping an open mind last night on the possibility of sending charter flights to Bangkok to evacuate Hong Kong people, after hundreds of travellers flew to the riot-torn city despite repeated official advice and warnings not to do so. Secretary for Security Ambrose Lee Siu-kwong said the government "has not ruled out the possibility of sending charter flights" if people were stranded. About 800 Easter holidaymakers were still in Thailand, the government said. A government spokesman said it had arranged for Cathay Pacific Airways (SEHK: 0293) to use a bigger aircraft than usual for its flight CX702 from Bangkok tonight to provide additional seats for returning travellers. People who do not hold Cathay Pacific tickets can book seats at a special price of HK$1,100. The government was heavily criticised in November during a previous emergency in Bangkok. With the city's airports closed, it initially said charter flights were unnecessary to fly people home, but reversed that decision in the space of 24 hours. Mr Lee said: "The government has contacted airlines to ensure seats for travellers in Bangkok who would wish to return as soon as possible." The government said individual travellers who needed to return early but were having difficulty getting a seat could call the Immigration Department's 24-hour hotline for help. The government issued a travel warning at 5.55pm, urging Hong Kong people not to go to Bangkok and those there to stay away from large crowds and demonstrations. But hundreds of people had already flown out of Hong Kong earlier in the day, as travel operators had not cancelled their tours and said refunds would not be given for passengers who refused to go. Mr Lee insisted that the warning had not come too late. "Hong Kong was the first place in the world to issue travel warnings for Thailand." The warning would remain in force until the situation in Thailand had become clear and stable, he said. The Security Bureau has been issuing reminders since Thursday for people planning to visit Bangkok to consider changing their plans. Mr Lee called on tour operators and individuals to scrap their plans for Thailand because of the political unrest. He said several tour operators had already cancelled their package tours and he hoped more would follow their example. "We hope all the tour operators will put traveller safety first," Mr Lee said. Since Thursday, a unit of the Immigration Department that helps Hongkongers has received 515 inquiries about the situation in Thailand, but no requests for help. People outside the city who need help can call its 24-hour hotline (852) 1868.
A visitor takes in the Hong Kong Electronics Fair, the first event to take advantage of the expanded Convention and Exhibition Centre. Asia's biggest electronics trade show opened yesterday at the newly expanded Hong Kong Convention and Exhibition Centre, but exhibitors expect to see fewer buyers and overseas orders this year, given the global business environment. The Hong Kong Electronics Fair's organiser, the Trade Development Council, has sponsored 2,500 overseas buyers to attend the show. The move is part of an HK$80 million effort to subsidise about 10,000 overseas buyers to attend the council's shows this year amid the downturn. Still, exhibitors do not expect business at the event to improve much. Michael Hale, international sales manager with Zhuhai-based HiVi (China), which makes high-end audio systems, expects the number of buyers at the fair to be the lowest in five years. "Just look around. You can tell there are fewer buyers. It used to be very busy. I'm not very optimistic about orders." Mr Hale said most luxury products like his firm's sold less well in a downturn, when buyers were more price-sensitive. Raymond Yip Chak-yan, the council's assistant executive director, said the number of mainland buyers at the fair was up about 85 per cent year on year, but that the number from developed markets such as the United States and the European Union was down by 10 to 15 per cent on average. The Trade Development Council is trying to court first-time buyers from emerging markets such as India, Russia and the Middle East in an effort partially to offset the drop in buyers from developed countries. Brazilian buyer Fabiano Holzmann is attending the fair for the first time to source surveillance equipment such as closed-circuit television cameras. He said he was attracted by the lower prices this year. The fair is the first event to make use of part of the venue's expanded atrium, which will be completed next month. As a result, this year the fair has additional space totalling 7,200 square metres - enough for an additional 360 booths. The HK$1.4 billion atrium expansion covers 19,400 square metres and will accommodate 1,000 booths.
Hong Kong's Science and Technology Parks in Sha Tin will strive to attract companies that can develop overseas environmental technologies for applications on the mainland and in the rest of Asia, the parks' top executive says. The parks would also push to lure energy management companies to tap the region's growing market in power conservation and energy efficiency, corporation chief executive Anthony Tan said. It is all part of Hong Kong Science and Technology Parks Corporation's strategy to develop green technologies as its fifth cluster, after information technology, biotechnology, precision engineering and electronics and semi-conductors. Mr Tan said one of the key tasks now was to recruit green technology companies that would set up research and development bases. "We will attract people whom we call integrators who can licence, introduce or develop technologies from developed countries like Europe or the United States in water treatment or air purification technologies or processes to reduce pollutants," Mr Tan said. "We can become the integrator of technologies for applications in China or Asia, as some of these technologies might not be able to be applied unless you know how to use them locally. I know Hong Kong has the engineering capability to do this." Given rising global concern over climate change and government support for energy efficient buildings, companies focusing on energy management would also be welcomed, Mr Tan said. "High-rise buildings in Hong Kong account for about 90 per cent of electricity consumption," he said. "If we can manage the energy inside the building, like cutting it by 10 per cent, it will have a big impact." The park also planned to turn one of the buildings into a showcase for energy-efficient building technologies, and an education centre would be set up to demonstrate the benefits. Mr Tan said the science park would also continue to attract companies specialising in renewable energy with a focus on solar energy. Hong Kong's status as a a financial and trade hub with sound intellectual property protection and its close proximity to manufacturing bases in the Pearl River Delta would help it overcome rivals like Taipei or Singapore to lure technology companies. "It is a successful business model which is hard to compete against," Mr Tan said. More than 200 companies are now based at the Sha Tin park, employing 6,000 people. Park managers say the park will employ more than 12,000 people when its third phase is completed in 2013.
A retired top government official - heavily criticized over the Harbour Fest fiasco - will give his side of the story by publishing an alternative view of the issues surrounding the ill-fated concerts. Former InvestHK director general Mike Rowse says the "ineffectiveness" of the political accountability system played a part in the controversy that has dogged the whole issue. Rowse was censured and fined HK$156,000 for his role in the HK$100 million "feel good" Harbour Fest, which was organized following the devastation caused by the SARS outbreak. The event, which ran from October 17 to November 11, 2003, resulted in massive cost overruns. However, Rowse won a judicial review against the fine shortly before he retired in December. Rowse told The Standard that his book, No Minister, to be released later this year, will cover Harbour Fest in four parts, starting with the SARS outbreak, the economy, the concerts, and the investigation that followed. He said he has been reviewing relevant documents, including the report by the independent panel of inquiry, and hopes to show an alternative view of the incident and also the shortcomings of the political appointment system. "I accept most of the criticism in the report, but nobody has defined whether the government was a sponsor, or the co- organizer of the event, as each bears a different responsibility," said Rowse, adding the government - which paid out most of the cash - should have had more involvement. "The Leisure and Cultural Services Department is the only government department which has the experience in organizing entertainment events, and it should have taken part," Rowse said. He said he was disappointed his two former supervisors - the then secretary for commerce, industry and technology Henry Tang Ying-yen, and his successor John Tsang Chun-wah - as well as then secretary for home affairs Patrick Ho Chi-ping, who headed the LCSD, had failed to attend a press conference with him after the event. Rowse attributed the Harbour Fest fiasco to the unclear definition of the government's role. "We used a contract similar to the one we had with the Harbour Fest organizer, AmCham, with only minor changes when we held Forbes Global CEO Conference, FortuneGlobal Forum, and Business Week Forum," Rowse said. He added that when the government held such forums, it only served as a facilitator. "We usually liaise with various government departments such as the Drainage Department, the Environmental Protection Department, and the Office of the Telecommunications Authority, et cetera, to ensure the event will run smoothly," Rowse said. The government recently earmarked HK$100 million for a Mega Events Fund, to assist nonprofit organizers in hosting attractive events in arts, culture and sports over the next three years. It is believed a Woodstock-style concert will be held in the summer, using part of the fund.
Hong Kong is set to become the first place in the world to introduce an accreditation system for cellars as the city steps up its bid to become Asia's center of excellence for the wine trade. The new system, which is being studied by the Hong Kong Productivity Council, will set standards for how wine is kept, with a checklist consisting of such factors as temperature, humidity and vibration levels. According to Crown Wine Cellars general manager Gregory De'eb the system would work like the existing Quality Tourism Services Scheme which promotes excellence in the tourism sector. De'eb believes that under an accreditation system, wine cellars will have to attain standards set by the productivity council and pay for annual renewal of their accreditation. "If your wines are kept in quality wine cellars then their value will increase but if not then they will lose value," De'eb said. De'eb operates a wine cellar in a former underground ammunition and weapons storage depot in Shouson Hill which has controlled temperatures, humidity and zero vibration. Despite a long wine-making tradition, De'eb said there is no set standard for wine cellars in France or in London where most of the wines are kept at room temperature which can affect quality. "With the global warming, temperatures in London and Paris range from -10 to 46 degrees Celsius. But in Hong Kong it just ranges from 8 to 38 degrees celsius which is better," De'eb said. He says the ideal wine cellar should have a temperature of 13 to 14 degrees and 65 percent to 75 percent humidity. In addition to the storage condition, he added security is an issue. "In the past six years, wine cellars have gone bankrupt in London and the clients couldn't get their wines back, losing millions of dollars," De'eb said. "Every owner should go and check their wines. It's just like if you have bought HK$1 million worth of HSBC shares, you need to keep an eye on how they are doing." He said it is especially the case for Hong Kong wine collectors who together own 17 percent of the rare and collectable wines in the world. Most of them keep their wines in Britain. More local owners are bringing their wines back to Hong Kong since the government eliminated duties on liquor last year. Some people store them in warehouses. "There are many places for storing ordinary wines but not many wine cellars for quality wines whose ideal condition is underground without vibration and sunlight," De'eb said. He added that the Shouson Hill cellar is full with over 100,000 bottles.
China: China property market experienced strong growth last month, prompted by increasing sales of private housing and investment. Deeper discounting on mainland properties led to a further price decline of 1.3 per cent last month, but it also boosted the amount of private housing bought by 8.2 per cent and sales value by 23.1 per cent. Mainland property investment increased 4.1 per cent to 488 billion yuan (HK$553.34 billion) in the first quarter from a year earlier, according to research from the National Bureau of Statistics. Spending on private housing grew 3.2 per cent to 342.2 billion yuan. The research showed average prices in 70 key cities dropped 1.3 per cent last month, compared with a 1.2 per cent fall in February and a 0.9 per cent decline in January. Shenzhen recorded a 0.9 per cent increase in prices last month, the highest growth among cities. "The fall in property prices doesn't mean the market is getting worse," Chinese Academy of Social Sciences economist Yi Xianrong said. "Property prices have to come down, otherwise sales would not rebound as we saw in the past few months and we won't see the market recover." Overall property sales increased 8.2 per cent to 113.09 million square metres in the first quarter while the value of sales surged 23.1 per cent to 505.9 billion yuan. Wang Zhufeng, an analyst at Evolution Securities China, said the significant improvement in property purchases was because developers had begun to cut asking prices on their projects. "The price cut is not obvious in Shanghai, but we saw the market trend," he said. Mr Wang said he believed this month and next, the peak season in the property market, would be a critical time for the industry. About 50 to 60 per cent of annual property sales occur in the two-month period. And lower-priced housing will begin to be launched in the market in the middle of the year. "The market trend will be affected by the sales strategy of developers and the influx of budget housing," Mr Wang said. "The market outlook will be clearer after May." The decline in new construction and land acquisitions showed that developers remained cautious about the market outlook. According to the research, new construction by floor area decreased 16.2 per cent to 201 million sqmetres in the first quarter from last year. Developers had acquired development sites with a total gross floor area of 47.42 million sqmetres during the same period, 40 per cent less than a year earlier. New lending for property development from local banks rose 8 per cent to 254.5 billion yuan in the first quarter from a year earlier. "The growth is not significant," Mr Wang said. "Mainland banks remain cautious about approving property loans." Shenzhen-listed China Vanke's shares rose 1.31 per cent to close at 8.50 yuan yesterday, while Poly Real Estate Group advanced 0.4 per cent to 22.84 yuan. China Merchants Property Development climbed 0.49 per cent to close at 22.34 yuan.
With an eye on cutting costs in a tightening economy and keeping their data more secure, mainland businesses are taking the lead in Asia in adopting managed print services, according to industry experts. "In the past few months, we've seen a change in the attitude of mainland companies as they stress more the need to lower their printing costs while driving increased efficiency," said Ken Koo, the vice-president at Hewlett-Packard China's Imaging and Printing Group. Mr Koo said the mainland government had sent a strong message to domestic businesses to save energy and reduce their power costs, opening an opportunity for service providers to raise the awareness of managed print services. "Managed print service has become a growing trend, with rising adoption in the education, government sectors and medium-sized businesses," he said. In a managed print service, an outsourcing provider is contracted to manage all relevant devices, processes, people and technology used for print/copy/fax/scan activities within an enterprise. Outsourcing all or part of the print-management process helps reveal hidden costs, identify savings and significantly cut an organisation's spending on output. Managed print service experts use remote monitoring and management tools to make sure a company's document workflow is running smoothly and sensitive data is kept confidential. Technology market analyst Springboard Research said Australia and China were the leading markets for managed print services in the region. It estimated this market in Asia-Pacific, excluding Japan, will reach US$1 billion in 2012 from US$392 million two years ago. "While a few vertical industries like banking and finance and telecommunications have maturing printing demands, a few segments such as retail are still nascent in their use of managed print offerings," said Sanchit Vir Gogia, Springboard's senior research analyst for Services. HP and Fuji-Xerox, both having a tougher time selling their respective printing and imaging devices during this economic slowdown, continue to dominate managed print services in Asia, according to Springboard. Over the past year, Ricoh has also increased its efforts across the region to market managed print services. Wisdri Engineering and Research, a Wuhan-based engineering consultant to the mainland's metallurgical and steel industries, claimed it had reduced its printing expenses up to 20 per cent annually since embarking on a managed print services project in 2007. Huang Xiangwu, information centre director at Wisdri, said the company had a digital encryption set-up to protect its electronic documents, but relied on outsourcing to supply it with an information-security infrastructure to protect its trail of paper documents. Mr Koo said growing demand on the mainland has led HP to "work more with local solutions providers", extending the reach of its managed services offering to 250 cities.
China's residential property prices fell for the fourth consecutive month in March, despite the central government's efforts to bolster the real-estate sector. Home prices in the mainland's 70 main cities slipped 1.3 percent from a year ago, the most since records began in 2005, exceeding February's 1.2 percent, according to figures released by the National Bureau of Statistics. But urban prices in March showed a slight month-on-month pickup, inching up 0.2 percent from February. Real estate investment in the first three months totaled 488 billion yuan (HK$553.3 billion), up 4.1 percent from the same period a year ago. However, it recorded growth of 32.3 percent in the first quarter last year over 2007. "We believe that in Guangzhou and Shenzhen, we are at, or close to, the price points from which every additional price fall should attract a greater volume response," said Goldman Sachs analyst Yi Wang. Goldman expects residential prices to fall 5 percent this year from the levels at the end of 2008. Sales by floor area in the first quarter jumped 8.2 percent from last year to 113 million square meters, after falling 0.3 percent in the first two months, the statistics bureau said yesterday. Mainland developers such as China Overseas Land & Investment (0688) and Shimao Property Holdings (0813), have reported strong sales growth in the first quarter. "The government's supportive stance coupled with credit easing, and lower interest rates have helped release noticeable pent-up demand in the physical property market in China, making sales a less difficult task, compared to the situation in 2008," said Morgan Stanley analyst Derek Kwong in a recent report.
April 14, 2009
Hong Kong: Yanlord Land Group, which focuses on investments in mainland properties, says it had secured 2 billion yuan (HK$2.27 billion) in property sales in the first quarter, representing nearly 40 per cent of what it achieved for all of last year. The Singapore-listed company is the latest mainland player to report strong property sales in the first three months, further evidence of a growing recovery in the mainland real estate market. "A revival of home-buying interest was being recorded in different mainland cities in the first quarter as a result of several rounds of mortgage rate cuts and tax reductions," Michelle Sze, the head of investor relations at Yanlord, said. On Wednesday, China Overseas Land (SEHK: 0688) & Investment announced a 51.2 per cent increase in property sales in the first three months to HK$9.26 billion. Shimao Property Holdings (SEHK: 0813) said contracted sales soared 346 per cent from a year earlier to 4.55 billion yuan. Ms Sze said that unlike other developers that offered 20 per cent discounts to drum up sales, Yanlord's prices for the last batch of units at Shanghai Yanlord Riverside City had risen 6 per cent from October last year to 32,000 yuan per square meter. "In market doldrums, buyers will opt for good-quality developments in prime locations," she said. "That's why our developments are more resilient than others in secondary locations." Last month alone, the company generated 1 billion yuan from the sale of 220 units at Shanghai Yanlord Riverside City in Pudong's Lujiazui district, a new financial hub. The firm will release two new residential projects - Yanlord Riverside City in downtown Tianjin as early as this month and Yanlord Yangtze Riverside City in Nanjing in July. Prices for the Tianjin project, which comprises 1,000 units of 80 square metres and 330 square metres, had not yet been finalised but transaction prices in the city centre ranged from 10,000 yuan and 17,000 yuan per square metre, Ms Sze said. JP Morgan analyst Joy Wang said he expected the average selling prices for both projects to be 15,000 yuan per square metre, given recent encouraging sales in the respective markets, Tianjin in particular. The firm's cash reserve was bolstered in February by the sale of a 40 per cent stake to Singapore's Government Investment Corp (GIC) in each of two residential projects in Shanghai and Suzhou for a total of 1.25 billion yuan. Ms Sze said it sold its 40 per cent stake in Suzhou's Lakeview Bay project to GIC for 779 million yuan in cash. The price represented a 10 per cent discount to the land cost of 2.16 billion yuan in 2007. "We gave the discount for the Suzhou site as GIC is paying in cash for the deal," she said. BOC (SEHK: 3988) International property analyst Frank Lai wrote in a report that Yanlord would incur an estimated loss of 92 million yuan from the discounted sale of the Suzhou site.
Disneyland welcomes Shenzhen residents in a celebration yesterday to mark the launch of the Hong Kong multi-entry visa. A trip to Disneyland for less than the amount a family pays to eat at McDonald's is just one of the deals inbound travel agencies are offering Shenzhen visitors on package tours as a new visa scheme takes effect. More than 200 Shenzhen residents visited the theme park yesterday, paying 91 yuan (HK$103) - including 50 yuan for tips - in a one-off promotion aimed at boosting tourism, inbound travel agencies said. The price included the entrance fee and round-trip transport. It is about a third of what Hongkongers pay to get into the park. "Our corporation bore a lot of the cost" for this tour, said the deputy general manager of Shenzhen Sightseeing, Xiong Ligong. "But we will soon introduce more tour packages, including ones to Ngong Ping 360 and Ocean Park." The trip to Disneyland was so popular that the 200 places were sold within 30 minutes, company chairman Zhang Jun said. Shenzhen permanent residents were allowed multi-entry visas to Hong Kong beginning on April 1. In the past, most residents had to apply for single-entry visas each time they wanted to cross the border. Mr Xiong predicted the new visa scheme would boost business by nearly a third. A park spokeswoman said business had grown by double-digit rates from October compared with the same period the previous year. Mainland tourists made up a third of the park's overall attendance. Samson Woo, Disneyland's director of travel-trade sales, said the park would expand co-operation with travel agents on the mainland and target packages during holidays. Many mainlanders on the tour said the new visa scheme was convenient and time-saving. Dior Wen Rui, who used to visit Hong Kong up to 10 times a year, said she now would make weekly trips. "Now I will come when it's the weekend, or when I have holidays," Ms Wen said. "Whenever I feel like shopping, I will visit." She usually spent up to HK$2,000 on clothes and cosmetics when she visited, she said. "I will spend less on each trip, because it's more convenient to come over [more often]." Getting a visa under the old system took up to 10 days, she said. Tao Xingxing, a hotel receptionist on the mainland, said that in the past she only visited when there were specific items she wanted to buy, such as electronic goods or cosmetics. Now she would come every weekend. Ms Tao said she was likely to spend more because she would shop more on impulse. Mainlander Hong Shuo said the new visa would not prompt her to use the cheaper hotels in Shenzhen. "I'll probably still stay in Hong Kong [hotels], because of transportation costs and the time spent travelling."
Lam Kam-kwai at the development area of Ta Kwu Ling. A group of landowners in the northeastern New Territories have responded to the government's call for partnerships to develop their properties. But they have stressed that they want their land used to develop creative industries, rather than more apartments or container storage lots. Lam Kam-kwai has submitted a proposal to the Planning Department, which is now drafting an outline development plan for the combined areas of Ping Che and Ta Kwu Ling, one of the three designated new towns and where he lives. The other two areas are Kwu Tung North and Fanling North. The 23 hectares that Mr Lam and 17 other villagers own make up about 10 per cent of the 225-hectare new town site. Their lots were pooled under a company called North East Holding, which leases the former farmland to operators of war game venues, plant nurseries and container storage lots. "This is just a short-term measure, since we don't want to leave our land idle," said Mr Lam, who is also vice-chairman of the Ta Kwu Ling Rural Committee. "We want to work with the government to figure out a long-term plan to turn it into a place of job opportunities." Their land could be used to develop creative industries, or a business park, to do research and development on new products like electric cars, Mr Lam said. "There's no space in urban areas. We could charge a lower rent, say HK$10 per square foot," he said. Under his proposal, landlords would sell some of their land rights to the government, and some would go into a listed development company. The government's shares could be put on the market for public investors. The plan would need better transport links, he added, but the government had planned only one railway station for Kwu Tung North. "We hope to contribute to society in another way," he said. "We don't want to sell it to developers to build apartments." Mr Lam also warned that issues such as uncertain land rights and landfill pollution would first have to be resolved. The new towns were proposed in 1998 but shelved in 2003 as demand slowed. Ping Che and Ta Kwu Ling were then earmarked for cargo-container storage and industry, while flats were planned for the other two areas. Since most land in the area is privately owned, the government proposed models of public-private partnerships instead of the conventional land-acquisition approach. Landowners are encouraged to submit development proposals and participate in projects. A Planning Department spokeswoman said it was considering incorporating Mr Lam's ideas. It will further consult the public about a preliminary development plan in the third quarter of the year.
HSBC Holdings (SEHK: 0005, announcements, news) is seeking to sell three of its biggest office towers including the headquarters at Canary Wharf in London to raise up to £2.7 billion (HK$30.64 billion), according to Britain's Sunday Times. The newspaper yesterday cited a source as saying HSBC would sell three office blocks including the Docklands headquarters, the French base on Champs Elysees and the offices in New York. CB Richard Ellis has been appointed to head the sale process, with a supporting role from Jones Lang LaSalle, it said. An HSBC spokesman yesterday said it had no comment on the market rumours. The bank intended to lease back the offices for a 10-year term after the transaction, the report said. However, the deal could lapse if there were no interested buyers, it added. This will be HSBC's second sale of its London headquarters in two years. HSBC sold the 100,000 square metre tower for £1.1 billion in mid-2007 at the height of the property boom to troubled Spanish property firm Metrovacesa. The bank then leased back the property. Last year, it bought the building back for £800 million, making a £300 million profit. HSBC's American depositary receipts closed 9.1 per cent higher at US$35.02 last Thursday before the Easter holiday, after gaining 5.27 per cent in Hong Kong to HK$50.90. The bank completed a record-breaking US$17.7 billion rights issue last week, with shareholders taking up almost 97 per cent of the stocks on offer. The deal came after HSBC insisted that it had no plan to seek a rescue from the British government. However, credit rating agency Moody's Investors Service put a "negative" outlook on the bank and questioned its plans for the proceeds of a rights issue. "If this additional capital is allocated to substantial acquisitions rather than being employed to cover the existing risks in the portfolio, then this could increase the downward pressure on the Aa2 rating," said Moody's analyst Elisabeth Rudman. Meanwhile, write-offs at HSBC's United States credit card unit may double to US$10 billion this year because of US$50 billion in lending to people with poor credit histories, the Observer reported, without citing its sources. The bank might need to seek more funds from shareholders in addition to the rights offer, it said. HSBC had declined to confirm or deny the quantity of write-offs, the Observer said.
China: While people in the developed world tighten their belts and focus spending on daily necessities, the big luxury companies are looking to China's new rich to buy their jewelry, clothes and bags. "There is no doubt that luxury brands will come to China and grab a piece of the huge potential market," says Guo Zuli, director of the World Luxury Research Center, which operates luxury goods website www.luxee.com. The Chinese market shows remarkable resilience in the financial crisis because it has an increasing number of people able and willing to buy luxury goods, says Guo. "Unlike the mature traditional markets, demand in China is far from saturated either materially or psychologically." The high-end market, which was once believed to be immune from economic downturn, has seen weakening sales growth or even declines in the traditional markets of the United States, Europe and Japan, analysts say. A study by the Bain & Company consultants in October predicted global luxury goods sales growth would slow sharply to 3 percent to hit 175 billion euros ($220 billion) in 2008. The slower growth rate stood in sharp contrast with 6.5 percent in 2007 and 9 percent growth in 2006. The study also forecast the luxury sector would face its first recession in six years in 2009, with sales declining by up to 7 percent. A report from Deutsche Bank says the market will contract 5 to 10 percent in 2009. However, experts say the Chinese luxury goods market remains resilient. China's impressive economic growth and rising number of new rich have drawn many luxury companies, says Huang Siwei, director of the www.neeu.com website, a Beijing-based luxury and lifestyle portal. An estimated 415,000 Chinese had more than $1 million in disposable assets in 2007, more than any other country, according to the Merrill-Lynch Asia-Pacific Wealth Report released in September. "The spending power in China is spectacular", says Daisy Moon, assistant PR manager of Tiffany & Co China, which achieved its sales targets last year and seems little affected by the financial crisis. A Gucci spokesman said in an e-mail to Xinhua that China represented one of the most dynamic areas of retail growth for the firm, with 2008 sales growth in the mainland at 42 percent. The global profit for the company edged up 0.2 percent from a year ago. Gucci had 25 stores in 17 Chinese cities as of January, when it opened three new stores. It is looking to open its Shanghai flagship store in May. LVMH claims business profit was up 2.1 percent from a year earlier to 3.63 billion euros in 2008, but sales in the United States fell 4.03 percent and in Japan 5.16 percent last year. However, the group stressed in its annual report that performance in China was "solid" and strong. Cartier, the French jeweler and watchmaker, is planning more stores in first and second-tier Chinese cities after posting double-digit growth in 2008. Yan Jun, managing director of Beijing-based Ecole Fashion & Luxury Consulting Ltd., says the expanding middle class constitutes an important group of consumers who desire and can afford luxury goods. "Aged between 25 and 40 and living in developed regions, they are fashionable, mature, and passionate about lifestyle and quality," he says. Up to 170 million people, or 13 percent of the population, can afford luxury brands and the number will reach 250 million next year, according to the China Association of Branding Strategy. The government aims to build "a well-off society" by 2020, with per capita GDP of $3,000. Developed regions, such as Shanghai, Beijing, Guangzhou, Shenzhen, Suzhou and Wenzhou, with a total population of more than 300 million, will see per capita GDP exceed $15,000. Bain & Company predicted the Chinese luxury market would see growth of 20 to 35 percent in the next five years. The Ministry of Commerce says China will become the world's largest luxury market by 2014, accounting for 23 percent of global business. "It is almost certain that China has surpassed the United States to become the second largest luxury market after Japan. There is still a lot of room for development," says Yan Jun. He believes the huge potential will definitely attract more brands. "I am going to Italy to give a lecture about luxury management in China this June. I have been told a lot of executives of luxury companies will attend and they are eager to know more about the Chinese market and how to enter the market," says Yan. "The Chinese market is so desirable that international luxury companies are speeding up their quest for a share."
China Pacific Insurance Group, the country's third-biggest life insurer, has posted a 2.54 billion yuan (HK$2.88 billion) net loss for the fourth quarter of last year, as a slumping domestic stock market hurt its investment returns. That compared with a 1.14 billion yuan profit a year earlier and a 1.64 billion yuan loss in the third quarter. For the full year, earnings tumbled 80.6 per cent to 1.34 billion yuan from 6.89 billion yuan in 2007, in line with the company's estimate in January and a sharp contrast with its nearly sevenfold profit surge a year earlier. The fourth-quarter figures were calculated by subtracting nine-month results from full-year profit. Pacific Insurance and bigger rivals China Life (SEHK: 2628, announcements, news) Insurance and Ping An Insurance (Group) (SEHK: 2318) were hit last year by a severe slump in the domestic equity market, when the Shanghai Composite Index tumbled 65 per cent, the worst performance among the world's leading stock markets. Analysts expect Chinese insurers' earnings to improve this year as the stock market rebounds, fuelled in part by hopes that government stimulus spending will spur an early recovery in the economy. Pacific Insurance is also sharpening its focus on traditional insurance products, which have shown steady growth in the developing mainland market, while placing less emphasis on investment-linked products. The company's shares rose 3.89 per cent to 18.17 yuan on Friday before the earnings were released. The stock has jumped 59 per cent this year, outperforming a 32 per cent rise in the Shanghai benchmark index. The shares have been lifted in part by a Shanghai government plan this year to offer tax benefits for pension schemes and products, a move that should benefit the insurer's pension business. Pacific Insurance last year put off a plan to sell shares publicly in Hong Kong due to market sluggishness. China Life, the world's largest life insurer by market value, posted a 42 per cent drop in fourth-quarter profit, while Ping An, the world's second-biggest, reported a second consecutive quarterly loss from its failed investment in European financial group Fortis.
China is planning a US$10 billion investment fund and will offer US$15 billion worth of credit facilities to Southeast Asian neighbours in an effort to ease the damage triggered by the global financial crisis, according to the Foreign Ministry. Foreign Minister Yang Jiechi said that Premier Wen Jiabao, who was to have announced the plan at the Asean summit in Thailand, had promised that Beijing would not make any changes to the pledges although he did not say when the measures would be implemented. Economists said the plan, coming after the recent announcement of a US$40 billion contribution to the International Monetary Fund, was part of cash-rich China's strategy to win influence on a bigger stage as the world grappled with the economic downturn. The investment fund would finance infrastructure construction linking China with the 10 members of the Association of Southeast Asian Nations (Asean), the country's fourth-largest trading partner, Mr Yang said yesterday. The credit lines, including US$1.7 billion of preferential loans, would be provided over the next three to five years to Asean members, Mr Yang said on the way back to Beijing from the chaos-stricken Thai resort city of Pattaya, venue for the cancelled summit. In addition, the mainland would donate 300,000 tonnes of rice to a reserve for Asean, he said. The proposals were to be announced by Mr Wen at the Asean summit over the weekend. However, the summit was scrapped after anti-government protesters stormed the venue. "The financial crisis is still spreading and deepening, which hit Asian countries badly," Mr Yang said. "Asean leaders hope China could play an important role in pushing forward co-operation in East Asia with other countries to overcome the difficult times." Qu Hongbin, HSBC (SEHK: 0005, announcements, news) 's China economist, said the move, like the internationalisation of the yuan, was part of the country's strategy to boost its global clout and would be beneficial to China and the regional grouping. "It shows China's bigger say in the region's integration," Mr Qu said. "China will also benefit from the stabilisation of Asean's economy, because trade and investment is very active between the two parties." Trade between the mainland and Asean was worth US$231.1 billion last year, up 13.9 per cent year on year. Gao Hucheng, a vice-minister of commerce, predicted Asean would soon replace Japan as China's third-biggest trading partner after the United States and the European Union. China had also planned to sign an agreement to set up a free-trade area with Asean, which will be established next year. Asean comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
A rescuing helicopter flies over China's Antarctic exploration ship "Xuelong" near the estuary of the Yangtze River in east China April 12, 2009. A mechanic was missing and the three other crew members were rescued after the helicopter taking off from China's Antarctic exploration ship "Xuelong" crashed into the East China Sea off Shanghai Sunday. Four crew members, all men, were aboard the helicopter when it crashed near the estuary of the Yangtze River, said a spokesman for the China Marine Search and Rescue Center. Tragedy has struck China's Antarctic expedition team, with one person missing last night after a helicopter crashed and sank after taking off from the ice-breaker Xue Long yesterday morning, only days after its return to Shanghai. The three other people on board the helicopter were rescued. Xinhua cited a spokesman for the China Marine Search and Rescue Centre as saying that the Chinese-made Z-9 helicopter crashed near the estuary of the Yangtze River at about 11.20am, about 60 metres from the expedition vessel. It said the crash occurred one minute after the helicopter took off from the Xue Long, whose name means Snow Dragon. Pilot Yang Hua and mechanical engineers Li Baohui and Tang Lijun, were rescued but another mechanical engineer, Yang Yongchang, was missing. Three of those on board, including the missing man, had been among the 140 members of China's longest Antarctic expedition - lasting 173 days - which left Shanghai in October and returned on Friday. Zhang Guotong, president of the Shanghai Municipal No 7 People's Hospital, told Xinhua that one of the survivors was in serious condition and the other two men were stable. Sun Fumin, director of the Ministry of Transport's East China Sea Rescue Bureau, said: "The water is muddy and it is getting dark, increasing the difficulties for the search." The ship-based helicopter was rented by the Xue Long, which was moored at the time of the accident. The Z-9, hired from a Harbin helicopter service company, had been attempting to fly to an operations base, the report quoted the Polar Research Institute as saying. The cause of the crash had yet to be determined, but the Polar Research Institute's party chief, Wu Jingyou, said it had nothing to do with mechanical capabilities of the helicopter or its maintenance. Xinhua said takeoff had been delayed for more than three hours because of heavy fog, and a frontier defence spokesman said the fog was thick at the time of the crash. The rescue centre sealed off the neighbouring waters, suspended ferry traffic and dispatched nearly 10 rescue boats to the scene to search for the victims and the sunken helicopter. All the wreckage had been recovered by 9pm, Xinhua said. The helicopter took part in scientific and logistical support missions on the latest Antarctic expedition. During the expedition, team members erected a new research station at Dome Argus, the pole's highest icecap at 4,093 metres above sea level. Xue Long left China's Zhongshan Station for home on March 9.
The central government planned to launch about 10 satellites over the next two years and complete its Beidou-2 global satellite navigation system of about 30 satellites before 2015, state media reported yesterday. Zhao Xiaojin, director of the astronautics department at the China Aerospace Science and Technology Corp, was quoted by China Central Television as saying: "The launching of new navigation satellites is in the countdown period." Xinhua reported that a new Beidou navigation satellite would be launched on Wednesday. The country's first Beidou satellite was launched in 2000. The Beidou-1 system of four satellites is experimental and has limited coverage and application. Beidou is the Chinese word for the Big Dipper constellation. An analyst said the launch schedule showed Beijing's ambition to transform its small regional satellite navigation system into a full global program. The Beidou-2 system aims to perform in much the same way as the US Global Positioning System (GPS). It is scheduled to be operational ahead of the European Union's Galileo System, in which China is a partner. Andrei Chang, editor-in-chief of the Canada-based Kanwa Defence Review, said China's expansion into an independent satellite navigation system was anticipated. "Currently, Beijing has to rely on the US military owned GPS system. Its own version of the GPS system will provide China with more reliable and effective navigation and positioning of force deployment. The Chinese military, especially its precision-guided weapons, will benefit." Mr Zhao said the Beidou-2 would "free the country from dependence on foreign navigation satellite systems", boost the hi-tech sector and help the country's economic growth. The Beidou-1 system serves both commercial and military purposes. Many analysts say the Beidou-2 is driven by a combination of commercial, civil and national-security motives.
China's central bank said yesterday it will maintain a relaxed monetary policy to ensure sufficient liquidity to support economic growth, easing concerns it will tighten credit following strong money-supply growth last month. The People's Bank of China yesterday said measures taken to boost economic growth had shown early good signs and a "moderately loosened" monetary policy and keeping ample liquidity in the banking system would continue to be implemented. The comment was greeted with caution by analysts and economists who said last month's growth in credit was encouraging rather than alarming as it was driven by the government's stimulus package. The figures could also have been exaggerated by interest rate arbitrage activities by lenders, they said. However, some observers warned that banks that did not exercise care with their credit controls could face rising bad loans. Adding fuel to those concerns was the fact that after the latest jump, new loans made in the first quarter amounted to 4.58 trillion yuan (HK$5.19 trillion), close to the government's target of 5 trillion yuan for the whole year. In a statement, the PBOC said it would continue to "implement the macroeconomic controls set by the central party committee and the State Council, implement a moderately loosened monetary policy [and] maintain continuity and stability of monetary policy". The comment came after data released on Saturday showed that new loans soared to a fresh monthly high of 1.89 trillion yuan last month from the previous high of 1.62 trillion yuan in January and 1.07 trillion yuan in February. M2 growth accelerated 25.5 per cent year on year, higher than market expectations. Premier Wen Jiabao had earlier said in Pattaya, Thailand, that the mainland economy was on the mend, and the difficulties faced by some industries and enterprises had begun to show signs of easing. He was also quoted by Reuters as saying industrial output growth accelerated to 8.3 per cent last month, picking up from a record low of 3.8 per cent in the first two months of the year. Economists said the key issue confronting policymakers was to ensure that the credit was finding its way to labour-intensive small and medium-sized enterprises, which so far had yet to benefit from easier money, most of which was going to infrastructure projects. The PBOC aims to pump more financial support into these enterprises and the agricultural industry. However, that intention was not captured in the data that showed that the proportion of medium and long-term loans among new loans last month had risen to 47.9 per cent from 32.6 per cent in February. Analysts said this reflected increased credit supplied to large-scale projects backed by the 4 trillion yuan fiscal stimulus package the central government announced in November last year. In contrast, the proportion of discounted bills in the loan total fell significantly to about 20 per cent from 46 per cent in the previous month. Such bills are typically used for enterprise working capital and dilute bank loan margins. "While we do believe there are anomalies such as interest rate arbitrage activities using discount bills, which do not reflect fundamental demand from the real economy, the surge in credit growth has been mainly driven by the policy stimulus which requires a large amount of funding for investment projects," said a Goldman Sachs report. The latest financial reports from the nation's Big Four state-owned banks revealed that the lenders had cut the manufacturing sector's share of loans by shifting new loans grants in the fourth quarter of last year to electricity, gas and infrastructure construction sectors. Guo Tianyong, a professor with the Central Economic and Financial University in Beijing, said with the surge of lending, banks needed to be aware of the risk of bad loans. However, Jing Ulrich, the China equities chairman at JP Morgan, said tighter risk management practices might have led to a growing disparity in the amount of credit available to large corporations compared with smaller businesses. "Chinese banks have continued to be highly selective in lending to private companies in the manufacturing industry," Mrs Ulrich said. Mr Guo said the loan growth seen last month would slip this month.
Guangdong's external trade fell 18.2 per cent last month from a year earlier, but improved by 12.9 percentage points from the decline in January and 1 percentage point from February, Xinhua said, citing China Customs Guangdong sub-administration. On a monthly basis, the total value of imports and exports in the province jumped 31.7 per cent to US$44.79 billion last month from February's figure, Xinhua said. It did not provide year-on-year comparisons for imports and exports for last month, only saying the declines in that month and the first quarter were smaller than the nation's total. For the first quarter, total trade fell 23.1 per cent year on year to US$115.48 billion, recording a trade surplus of US$26.24 billion, Xinhua said. Guangdong accounted for 26.9 per cent of the country's external trade in the quarter, the biggest of all provinces, it added. The figures provide some positive signs for manufacturers in Guangdong, many of whom are from Hong Kong.
Premier: Chinese economy shows signs of positive changes - Chinese Premier Wen Jiabao, in an interview with Hong Kong and Macao reporters here Saturday, said that the Chinese economy showed signs of better than expected positive changes in the first quarter as a result of the economic stimulus package adopted by China.
Installed capacity in China's wind power sector will grow 64 percent this year to 20 million kilowatts, organizers of the 3rd China (Shanghai) International Wind Energy Exhibition and Symposium 2009 forecast Friday. Installed capacity grew 105 percent last year. Chinese industry experts believe that by about 2020, wind power will likely surpass nuclear power as China's third-largest source of electricity, after thermal and hydro power. Wind power comprised 1.5 percent of China's total installed capacity in 2008, when the country became the world's fourth-largest wind power market. The three-day event, which attracted 237 overseas companies, is due to conclude Friday in Shanghai.
April 13, 2009
Hong Kong: Hong Kong's role as an international financial centre was irreplaceable but the city would have to raise its game to maintain its hub status, Premier Wen Jiabao said yesterday. Responding to media questions about the central government's support for Shanghai becoming an international financial centre by 2020, Mr Wen said: "Hong Kong as a financial centre is facing competition. To quote a Chinese proverb: without progress, decline is inevitable. "An international financial centre cannot be designated; it can only emerge and grow through market competition ... The issue at hand now is not whether one city or the other is a financial centre, but about whether one is able to put their financial system back onto a stable, healthy and sustainable development track." Mr Wen was speaking in Pattaya, Thailand, where he and five other regional leaders were to have attended summits with leaders of the Association of Southeast Asian Nations. The premier cited Hong Kong's established advantages, including its sound legal system and history of financial-market operations. He said Hong Kong's position would be enhanced by a pilot programme to allow settlement of cross-border trade in yuan, rather than foreign currencies, but said the city should also work hard to find new economic growth engines. Following Mr Wen's remarks, a government spokesman said: "We need to review and build on our strengths, such as the tax system and the pending renminbi trade settlement, to ensure we are well ahead of others in the financial arena or we might fall behind." Julia Leung Fung-yee, undersecretary for financial services and the treasury, said cross-border renminbi trade settlement would enable Hong Kong banks to expand their renminbi services from individual clients to enterprises. Morgan Stanley chief economist Wang Qing said Hong Kong's role as a financial centre could not be replaced in the short term but it would face competition from Singapore and Shanghai. "The government should learn from Singapore to adopt proactive policies so as to create incentives [for] investors," he said. Raymond So Wai-man, associate professor of finance at Chinese University, said Hong Kong lacked long-term vision and "just waits for beneficial policies from the mainland". Mr Wen also commented on the top-level reshuffle at Citic Pacific (SEHK: 0267). He said mainland authorities would not interfere. Matters would be dealt with in accordance with Hong Kong laws, he said. Last week, Larry Yung Chi-kin stepped down as chairman of the state-owned, Hong Kong-listed company, days after city police raided the company's headquarters in connection with multibillion-dollar losses on foreign currency contracts. "After clarifying the facts and handling the matter, serious lessons should be learned with regard to the company's business philosophy, business direction, management standards and regulation," he said.
Protesters fall through the glass doors of the summit media centre onto troops guarding it. Observers were baffled by the ease with which they stormed the meeting's venue. Thailand's political crisis reached a new pitch yesterday as anti-government protesters stormed a regional summit, forcing its cancellation. Heads of government were evacuated from their hotels by helicopter. The annual summits of Asean leaders with Asia-Pacific leaders, including Premier Wen Jiabao, had already been rescheduled from December because of earlier political unrest in Thailand. Security chiefs had been planning arrangements for the meetings in the resort town of Pattaya for months. But protesters have been converging on the seaside town since Tuesday. Early yesterday, the protesters - who are seeking the resignation of Thai Prime Minister Abhisit Vejjajiva - clashed violently with hundreds of government supporters before heading towards the summit venues. As early as 9am, officials announced that a meeting between Mr Wen and his South Korean and Japanese counterparts to discuss North Korea had been cancelled. The meeting was later rearranged. Shortly before 11am, the "Asean plus three" summit between leaders of the 10 members of the Association of Southeast Asian Nations and China, Japan and South Korea, to discuss responses to the global economic downturn, was cancelled. By lunchtime, cordons of police and troops had given way, allowing more than 1,000 red-shirted protesters - supporters of exiled former prime minister Thaksin Shinawatra - to sweep through the summit venue. At about 2pm they smashed their way through the glass doors into the summit press centre and ran through it overturning tables, blowing horns, waving Thai flags and screaming: "Abhisit get out." Less than an hour later, Mr Abhisit, in a televised speech, declared a state of emergency in Pattaya, and today's East Asian Summit of "Asean plus three" leaders and counterparts from India, Australia and New Zealand was cancelled. Around two hours later, army helicopters began evacuating the heads of government from their hotels to a nearby military airfield. Mr Abhisit was the first to be flown to the U-Tapao military base, followed by the leaders of the Philippines, Myanmar and Vietnam. Others made it out by road. Some officials, including Thai Foreign Minister Kasit Piromya - and their wives - were carried on security guards' shoulders down a tourist beach to waiting speedboats to escape the protesters. A plane carrying Australian Prime Minister Kevin Rudd to Thailand turned around in mid-flight and headed for home. The state of emergency was lifted at 8pm.
A proposed law change in the middle of this year may help Hong Kong avoid being labelled a tax haven, but individuals and companies are worried about privacy. The amendment will mean the information they submit to local tax authorities can be passed on to officials elsewhere. Chief Executive Donald Tsang Yam-kuen this month said the government would submit a proposal to change the law to allow the Inland Revenue Department to share information with foreign authorities trying to crack down on tax evasion. The tax law came under the international spotlight when Hong Kong was on the verge of being declared a tax haven at the recent Group of 20 summit in London. "Many businesspeople come to Hong Kong as they like the low and simple tax regime here and the conducive environment for business. They come here not to evade taxes in their home countries," said Allan Zeman, the founding chairman of Lan Kwai Fong Holdings and a Canadian-born businessman who has been in the city for almost 40 years. Though Mr Zeman would like to see the details of the amendment before rushing to a conclusion, he believed the amendment would not affect Hong Kong's competitiveness. "Not only Hong Kong but many others will have to remove their secrecy laws in the banking sector. We are all in the same boat now," he said. Christopher Cheung Wah-fung, chairman of the Hong Kong Securities Professionals Association, said the new legislation would hurt the privacy of individual investors and companies, and discourage investments in the city. "I don't think we should change the law just because the OECD wants it. We can request the central government to impress upon the OECD that our system does not create a tax haven for evaders," Mr Cheung said. Citing recent OECD moves, he said the Organisation for Economic Co-operation and Development might accept the explanation. Last week, it removed the Philippines, Costa Rica, Malaysia and Uruguay from the tax haven "blacklist" after opposition from these governments, and their promise to make adjustments to their secrecy laws. The removal of those countries came less than a week after the blacklist was announced. They have now been put on a "grey list" of territories along with 38 others - such as Liechtenstein, Bermuda, the Cayman Islands, Singapore, Switzerland and Luxembourg - which are committed to accepting international tax standards but have yet to fully implement them. Sally Wong Chi-ming, chief executive of the Investment Funds Association, said the proposed tax law reform would be an area fund managers, like other financial services practitioners, would be monitoring. "We support global initiatives to enhance market transparency, including tax information exchange. However, we believe it is important to ensure that there are appropriate safeguards to protect the privacy rights of Hong Kong taxpayers," Ms Wong said. "It would be helpful if Hong Kong authorities can, in the negotiation process, ensure there are sufficient mechanisms to protect Hong Kong from issuing a blank cheque." She suggests the new tax law carefully defines what types of requests from overseas authorities will be entertained. Also, if overseas tax authorities request the information, Ms Wong said, the taxpayer in question should be informed. "To ensure this power is used sparingly, it would help to put the onus on the requesting authority to show it has tried other means and this is the last resort," she said. But Tim Lui Tim-leung, senior tax partner of PricewaterhouseCoopers, said Hong Kong needed to change the law as it was a worldwide trend. Tax havens have come under increasing scrutiny amid the global financial crisis as governments have spent billions of taxpayers' money to bail out banks. Transparency International France last year estimated that about US$10 trillion might be hidden in secret offshore accounts. "Privacy is a major concern and this is why the local tax law has not changed until now. But if we do not change the law, many countries will not agree to sign the double taxation agreement with Hong Kong and we'll eventually become one of the very few not to join international efforts to combat evasion," Mr Lui said. Hong Kong now has agreements only with the mainland, Thailand, Luxembourg and Belgium, and is about to sign one with Vietnam, whereas each country or territory has to sign at least 12 tax agreements with other countries or territories to show its commitment to co-operating with others over tax evasion. Mr Lui said many countries had stepped up sanctions on those that still had secrecy laws. If such sanctions are imposed on Hong Kong, it will mean an entity taxed here may face double taxation in other countries if the Inland Revenue Department fails to share information with those authorities. Democratic Party legislator Kam Nai-wai supports the change to the tax law but complains the government has been doing it too slowly. "We lag behind international tax practices. It shows the government is not acting fast enough to capture the international trend," Mr Kam said.
Movie star Jackie Chan has confirmed he will donate three of his antique houses from the Ming and Qing dynasties to Singapore - while the Hong Kong government is still studying the feasibility of setting up a collection of his historic houses. A statement released by Singapore's Ministry of Education said Simon Kwan, the superstar's property manager, told the ministry this month that Chan's three antique houses, a performance stage and a wooden hut would go to the Lion City. The superstar's donation will be showcased in a new university in Changi when it is completed in 2015. "We are delighted to receive confirmation of the generous donation," a spokeman for the Ministry of Education reportedly said. "The antique houses will bring a unique cultural flavour and architectural feature to the new university campus that can be enjoyed by the university community as well as the public." The spokesman said Chan had called Singapore's Minister for Foreign Affairs, George Yeo Yong Boon, to inform him of his decision to donate some of his private collection to the city state. This comes after the Hong Kong-born movie star expressed frustration over his decade-long efforts to convince the government to create a display of his private collection of antique sandalwood houses in Hong Kong. Chan criticised the government's slowness, which ultimately prompted him to donate the treasures to Singapore. His seven houses, stored in pieces in a warehouse in Hong Kong for years, date from the Ming dynasty (1368-1644) and Qing dynasty (1644-1911), and are thought be worth more than US$67 million. One house had been donated to the Shanghai government for the building of a Jackie Chan museum. A Commerce and Economic Development Bureau spokeswoman yesterday said "we are actively studying the feasibility of Mr Chan's proposal" to set up the houses in Hong Kong, adding that the government was considering the actor's views raised at a meeting with the Tourism Board two months ago. The board had earlier suggested two sites - at Diamond Hill and Sha Tin - that Chan rejected. He had suggested a site under the Tsing Ma Bridge.
Hongkongers are tweeting more and more as the Twitter social networking site grows in popularity. The amount of activity and number of users on the online microblogging site that allows users to send 140-character messages to "followers" is growing, Twitter enthusiasts say. There is, however, no official estimate of the number of users in Hong Kong. "Key bloggers are using it, and in the next phase, I think we'll have celebrities using it too, and then businesses," said Simon Taylor, managing consultant at Tech 100 Public Relations, a sponsor of Twestival, a gathering of Twitter users in Hong Kong in February. "I think 2009 will be when it goes mainstream." Pop star Joey Yung tweets, her representative said. Netizens have speculated that user "jy6", who regularly posts photos of Ms Yung's face and what appears to be her food and sock-clad feet, is in fact the star. Her rep could not confirm this. Jay Oatway, a technology correspondent for Power Magazine and promoter of the Hong Kong Twestival, agrees a trend has developed and says a parallel could be drawn between the growth of blogging, Facebook and Twitter, since the users were the same. The number of Mr Oatway's Twitter followers has increased from 1,600 in January to more than 40,000 today, making him the top Twitterer by followers, according to Twitterholic.com. The ability for Twitterers to tweet on mobile phones in the US has speeded up Twitter's growth there, but Hong Kong users cannot do the same, except on smart phones. Mr Oatway speculated that more smart phones here would "help carry Hongkongers into greater Twitterdom". Because Twitterers could control who they messaged or received messages from, they were in control, meaning they avoided being bombarded with unwanted information, he said.
Hutchison Whampoa (SEHK: 0013) and Kowloon-Canton Railway Corp are planning to raise at least US$1.5 billion from separate bond sales, a sign the corporate debt market is reawakening for top-quality issuers. Port-to-telecommunications conglomerate Hutchison Whampoa priced a planned US$1 billion 10-year bond at 487.5 basis points above US treasuries yesterday before the US market opened. It is the first bond issue the company has tapped since a £500 million (HK$5.75 billion) issue in 2006. KCRC, a railway operator in Hong Kong, is seeking to kick off the book-building for a planned US$500 million corporate bond today at the earliest, sources said. The bond sale is expected to launch out of KCRC's global medium-term note programme, with market participants saying investors would like to pay 290 to 300 basis points over the US treasuries for the new issuance. Hutchison is the first Hong Kong corporate to tap the international bond market since a US$1 billion sale of dollar bonds by Hong Kong and China Gas (SEHK: 0003) in August last year. The offering has attracted an overwhelming response from institutional investors, partly due to the strong credibility of the issuer, according to one source. The offering had been increased from an initial US$500 million and could be increased to US$1.5 billion depending on demand from the issuer, the source said. The strong response ensured a tight pricing, with the issuer sounding out the market with an indicative guideline of a spread of more than 500 basis points in the morning session, sources said. The issuance drew strong commitment from institutional investors with the order book amounting to more than US$2 billion. Hutchison declined to comment. "Hutchison Whampoa always has excellent timing when it taps the market. I understand they bought back a significant amount of debt at 70 cents on the dollar between October and November last year and now they are selling debt at full value," said a portfolio manager at a bond investment firm. "Investors are still shying away from high-yield issuance and are keen on investment-grade issuers with good fundamentals." Deutsche Bank and HSBC (SEHK: 0005, announcements, news) are jointly leading both transactions, while Citi has joined the syndication of KCRC's bond sale, and JP Morgan is helping the Hutchison's bond issue. According to Hutchison's latest annual report, the company repaid HK$83 billion worth of debt in 2008. "Many of the issues that have been priced have been oversubscribed and traded well, underlining investor confidence has returned to the Asia-Pacific debt markets for the likes of sovereigns, quasi sovereigns, financials and high grade corporates," said Rodrigo Zorrilla, co-head of markets for Citi in Asia-Pacific. Several South Korean companies have also tapped the international bond market in the past two weeks as investors remain hungry for bonds.
About 400 enterprises in the Chinese mainland had been selected to participate in the Renminbi cross-border trade settlement pilot program, Under Secretary for Financial Services and the Treasury of Hong Kong Julia Leung said here Saturday. Speaking on a radio talk show here Saturday, Leung said enterprises in Hong Kong would soon be able to settle trades in Renminbi through the banks with the selected companies in the Chinese mainland. Noting the program can reduce the risks and cost arising from fluctuations in exchange rates, she said Hong Kong banks could expand extensively their Renminbi services from individual clients to enterprises. When asked whether the scheme includes trade financing, Leung said authorities in the Chinese mainland would announce the details soon. "The Monetary Authority has made full preparation for the program including conducting tests on the Renminbi clearing system," Leung noted, adding that "the system can start operation once the Chinese mainland comes up with the operational details." When asked whether the Hong Kong Special Administrative Region (HKSAR) government would change Hong Kong's linked exchange rate with the U.S. dollar, the under secretary said the system had been working effectively and the HKSAR government had no plan to change it.
China: More than 150 households in a village in Liaoning province have secured a collective bank loan using their farmland as collateral, a groundbreaking deal that may open the floodgates for bank loans to flow into the mainland's cash-strapped rural areas. The deal is apparently illegal under the current law, but it was reported by CCTV and official news agency Xinhua, a sign that the government has given tacit approval to introduce an experiment allowing farmers to leverage their land for loans. A rural co-operative of 151 households in Changgangzi village, Faku county, secured a loan of 300,000 yuan (HK$340,600) from a local rural credit co-operative on Thursday by using their right to farm on 60 hectares of land as collateral, a Xinhua report said. The law stipulates that farmland belongs to the collective, a vague term usually referring to village committees, and forbids the sale of farmland or its use as collateral. The report quoted Li Lishan, a peasant who played a key role in the deal, as saying that local authorities had sanctioned the move as it went through a series of appraisals during the loan application process. Wu Guoli, deputy head of the business management department of the Shenyang branch of the People's Bank of China, told Xinhua that Faku county had been chosen to experiment with new rural financial services, and the landmark deal had been endorsed by the People's Bank of China, the central bank, and China Banking Regulatory Commission. Jiao Shi, the central bank's Faku branch chief, told Shenyang Evening News that the experiment would be expanded to cover 350,000 peasants in the next two years. The county would even allow individual farmers to do the same thing in the second half of the year, he said. Both the Rural Land Contracting Law passed by the National People's Congress in 2003 and the Property Law in 2007 forbid the use as collateral of operational rights to farmland. Chinese law stipulates that farmland is collectively owned and individuals enjoy only the operational rights to the land allocated to them. Li Ping, the Beijing representative for the US-based Rural Development Institute, hailed the deal as a major breakthrough for farmers' rights. "Please don't underestimate the change," he said. "Once there is a further breakthrough in this regard - especially once a relevant legal amendment comes afterwards - the influence will be profound and enormous." If 93.3 million hectares of farmland nationwide could be used as collateral for bank loans, rural families could enjoy up to a trillion yuan (HK$1.13 trillion) worth of loans - a massive boost to the rural economy, he said. Since farmers have few assets, borrowing from banks is extremely difficult for most rural families. Farmers who have lost land to corrupt officials or companies are a never-ending source of petitions to Beijing. The government is considering various ways to give rural families better access to finance as part of its drive to expand domestic consumption by stimulating the rural sector. Dr Li said a clause allowing farmers to use farmland as loan collateral was dropped from the property law that was passed in 2007 over concerns that many farmers might lose their land if they failed to repay loans.
South Korean President Lee Myung-bak (left) with Premier Wen Jiabao and Japanese Prime Minister Taro Aso in Pattaya yesterday. The country's latest economic figures seem to support Premier Wen Jiabao's reassuring remarks in Pattaya that the mainland economy has shown positive signs, but analysts say it will take longer to decide if the economy had indeed bottomed out. The People's Bank of China yesterday said M2 money supply, the broadest measure of money supply, grew 25.51 per cent to 53.06 trillion yuan (HK$60.25 trillion) by the end of last month from a year earlier. According to Bloomberg, that is the fastest growth since 1998 and more than the 21.5 per cent median estimate in a survey of 12 economists. New lending also surged 575 per cent from a year ago, to 1.89 trillion yuan last month. Mainland foreign exchange reserves also grew. At the end of March, they stood at US$1.95 trillion, up 16.14 per cent from a year earlier. They have risen US$7.7 billion in the first quarter. But that was the smallest rise since the second quarter of 2001 and compared with a US$40 billion jump in the fourth quarter of last year. Analysts believe this was due to a slump in exports and the slowing economy. Mr Wen, in Pattaya, Thailand, for a regional leaders' meeting, on Friday said: "The first-quarter economic figures could indicate the initial result of our efforts to stimulate the economy." Beijing is expected to release first-quarter gross domestic product figures on Thursday. Improvements in the economy were better than expected, Mr Wen said. "We saw investment increase and consumption grow steadily. The difficulties faced by some industries and enterprises have begun to be relieved," he said. Growth in the credit market remained strong as the overall banking industry stabilised. Currency liquidity was still sufficient, he said. However, Mr Wen said the mainland still faced many difficulties. "The global financial crisis is spreading and its impact is getting deeper and deeper," he said. "External demand keeps declining, which cuts imports and exports. Employment pressure is increasing and incomes are falling." The global financial meltdown had introduced unpredictable elements into the mainland's economic development, the premier said. Raymond So Wai-man, associate professor of finance at the Chinese University of Hong Kong, said it would take another six months to see whether or not the mainland economy had weathered the global financial storm despite the positive figures recorded last month. "We can't confirm that the mainland's economy is getting better at this stage," he said. "We have to wait for figures in the next two quarters." Exports contributed one-third of the mainland's gross domestic product, he said, and stimulating internal demand might not improve economic conditions in the short term if the global economy worsened. "Economic data showed positive signs, but it is uncertain whether it is sustainable. The economic outlook is cautiously optimistic." Morgan Stanley chief economist Wang Qing said the figures for money supply and new lending were positive but that it would take a few more months for the government's stimulus policies to show any effects. "From the perspective of real economic activity, the mainland's economy has stabilised and shown slight improvement. Export figures showed month-on-month increases in recent months," Mr Wang said. He said he expected other data such as industrial production and investment would also show month-on-month increases. "Money supply and lending figures show strong growth in March, which will trigger economic recovery. But it takes time. I believe the effect will appear in mid-2009 at the earliest." Chinese Academy of Social Sciences economist Yi Xianrong said: "The mainland's new lending is growing rapidly. The positive economic figures show stimulation measures have been effective."
China's foreign exchange reserves rose 16 percent year-on-year to 1.9537 trillion U.S. dollars by the end of March, said the People's Bank of China on Saturday. It represents an increase of 7.7 billion dollars for the first quarter, but the increase was 146.2 billion dollars lower than the same period of last year. Outstanding foreign currency loans stood at 235.2 billion U.S. dollars by the end of March, down 11.7 percent year on year. In the first quarter, foreign currency loans dropped by 8.5 billion U.S. dollars. The decline was 57.3 billion U.S. dollars heavier over the same period of last year. In March, foreign currency loans rose by 4.3 billion U.S. dollars. The increase was 6.4 billion U.S. dollars lower than the same period of last year. Meanwhile, outstanding foreign currency deposits rose 28.9 percent, or 7.5 billion U.S. dollars, to 200.3 billion U.S. dollars in the first quarter. The increase was 13 billion U.S. dollars higher over the same period of last year. In March alone, foreign currency deposits rose by 3.3 billion U.S. dollars. The increase was 1.8 billion U.S. dollars higher over the same month in 2008. Analysts said the smaller growth of foreign exchange reserves in the first quarter was related with changes in the value of non-U.S.-dollar assets and money flows under the capital account. In March alone, the foreign exchange reserves rose by 41.7 billion U.S. dollars. The increase was 6.7 billion U.S. dollars higher than the corresponding period of last year. The country's foreign exchange reserves reduced to 1.914 trillion U.S. dollars at the end of January and 1.912 trillion U.S. dollars at the end of February. "Changes of foreign exchange reserves in the first quarter were mainly driven by non-U.S.-dollar assets' volatile fluctuation," said Liu Yuhui, an economist with Chinese Academy of Social Sciences (CASS). During the first quarter, especially the first two months, non-dollar foreign currencies dropped heavily against the U.S. dollar, leaving about 40 percent of the country's non-dollar assets depreciated. Meanwhile, the country's trade surplus had reduced during the first quarter due to a weakening external demand. Exports fell 17.5 percent in January, 25.7 percent in February and 17.1 percent in March. In February, trade surplus plummeted by34.3 billion U.S. dollars to 4.8 billion. "The 7.7-billion-dollar increase in foreign exchange reserves for the first quarter showed the country's economy still depends heavily on external demand," said Mei Xinyu, an economist with the Ministry of Commerce (MOC). Yuan Gangming, a researcher with the CASS, said the smaller increase in foreign exchange reserves might also be caused by capital flight. Official statistics show during the first two months, the actually-utilized foreign direct investment dropped by 26.2 percent. A large proportion of the country's foreign exchange reserves are invested in U.S. treasuries and notes. Last month, the U.S. Federal Reserve announced a plan to buy up to 300 billion U.S. dollars in long-term treasuries. That added to worries in the value stability of the country's foreign exchange reserves. Mei said the slower growth in foreign exchange reserves could be conducive to the national economic security because less capital would be exposed to devaluation risks. "The top priority should be to keep the value of foreign exchange reserves stable," said Yuan. He suggested relevant authorities should keep a close eye on flows of foreign reserves and prevent a similar capital flight that happened after the Asian financial crisis.
April 11 - 12, 2009
Hong Kong: The government could increase its revenue by HK$480 million and help create more than 4,000 part-time and full-time jobs if it accedes to the Jockey Club's three-year-old plea for five more racing days and more simulcasts of top overseas races, the club said yesterday.
Costa Crociere cruise line's Costa Classica dwarfs a passer-by yesterday at Ocean Terminal in Tsim Sha Tsui. A second 53,000 tonne liner will arrive in May next year. A leading Europe-based cruise operator plans to base bigger, more modern liners in the city and may do so as soon as 2011 - though they will have to dock at container terminals until the first berth at the new Kai Tak cruise terminal is ready in 2013. Italy's Costa Crociere cruise line plans to base ships weighing between 90,000 gross tonnes and 115,000 gross tonnes in the city. Until now, the biggest cruise liner to have been based in the region is Royal Caribbean's 79,491 tonne Rhapsody of the Seas, though it was replaced by a slightly smaller ship that can more easily dock at existing terminals in the region, including Ocean Terminal in Tsim Sha Tsui. The European line's 28,400 tonne, 800-passenger Costa Allegra has operated from Hong Kong since 2006. Yesterday, the line's 53,000 tonne Costa Classica arrived to begin service. A second 53,000 tonne liner, the Costa Romantica, will replace the smaller Allegra in May next year. Although these ships can dock at Ocean Terminal, bigger liners such as the 105,000 tonne Costa Magica, have to berth at the container port in Kwai Chung or anchor in the middle of Victoria Harbour. The limited berths at Ocean Terminal also mean that not all ships can dock there when they want to. The arrival of the Costa Classica meant the Costa Allegra would have to berth at Kwai Chung today, Massimo Brancaleoni, Costa's vice-president of Asia-Pacific operations, said. He hopes Costa's bigger liners will be based in Hong Kong "very soon". "But for sure, it will not be in 2010," he added. "If we find the same kind of growth rate that we had in the past years, maybe we can consider starting in 2011. But this decision will only be taken in the coming six to eight months because I need to see how active the bookings are for Romantica in 2010." Costa has cut prices by single-digit percentage points because of the economic downturn, but Mr Brancaleoni said the outlook for the cruise industry was "pretty good". The government has decided to build a cruise terminal at the former Kai Tak airport after rejecting tenders from the private sector to build it. The first berth is expected to be ready by mid-2013, though terminal facilities may not be completed until 2015. Singapore expects to complete its International Cruise Terminal next year. It will have two berths capable of accommodating ships nearly twice as big as the largest liners Costa is planning to send to Hong Kong - the 220,000 tonne Genesis-class vessels operated by Royal Caribbean.
Chang Zhenming's dual roles as chairman and managing director may require explaining to Hong Kong Exchanges and Clearing. Lawyers and legislators believe the resignation of Citic Pacific (SEHK: 0267)'s top two executives will benefit the continuing investigation by the police and the Securities and Futures Commission into the company's finances. Legislator and lawyer Albert Ho Chun-yan said the remaining board members were more likely to co-operate with the police and the SFC after former chairman Larry Yung Chi-kin and former managing director Henry Fan Hung-ling stepped down. Their positions have been taken over by Citic Group vice-chairman Chang Zhenming. "The resignation of Mr Yung and Mr Fan may benefit the police investigation as other executives may feel more relaxed in giving information," Mr Ho said. "I believe Mr Yung and Mr Fan are both good citizens and will co-operate with the investigation." The resignations on Wednesday came after the Commercial Crime Bureau last Friday executed a search warrant and removed documents from the company's offices. The police asked Citic Pacific directors to assist investigations into allegations of false statements by directors and/or conspiracy to defraud. The SFC started its investigation in October last year after the company announced it had entered into a large number of high-risk, complex foreign currency deals on which it eventually lost HK$14.63 billion. Legislator Ronny Tong Ka-wah, who is a barrister, said Mr Yung and Mr Fan should have resigned in October when the losses were announced not only after the police action last week. "As top management, they should be responsible for the losses and should have stepped down immediately," Mr Tong said, adding their resignations should have no impact on the investigation by the SFC and the police. Mr Tong questioned Citic Pacific's board of directors' statement that the foreign exchange deals were executed without its authorisation. "If the board of directors did not know about these deals, there was a lack of internal control on staff. If they knew, the problem is bigger in terms of why they did not stop it," he said. Mr Tong also said the SFC investigation appeared to be progressing too slowly. An SFC spokesman yesterday declined to comment on the investigation process. Mr Tong said: "It is six months on and the SFC has still not yet completed its investigation. The commission should act faster and release its initial findings as soon as possible without waiting for the police investigation. All we want to know is why Citic Pacific lost such a huge sum of money. "The foreign exchange hedging was supposed to reduce risks faced by the company but instead led to the loss of half its assets. The public wants to know the truth." Stephen Cheung Yan-leung, a professor of finance at City University of Hong Kong, said Citic Pacific should immediately impose risk management measures. "The foreign exchange trading losses showed the company has a big problem in risk management measures. Chang Zhenming's top priority is to review the risk management system immediately," Mr Cheung said. Some critics have questioned why Mr Chang is taking on the dual roles of chairman and managing director. A spokesman at Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) said the code of best practice required listed companies to have separate people holding the positions. If the company did not follow best practice, as is common in many other listed companies, it was not breaching any rules but needed to give an explanation.
Although he might have "achieved little" during his 12 years as a bishop, Cardinal Joseph Zen Ze-kiun said people should judge him by his faith, rather than his success, when he retires as head of Hong Kong's Catholic church next week. "I might have achieved little," Cardinal Zen said last night at a farewell press conference. "But people should stand firm on their principles. I have many hopes, but now it's time to say goodbye." Matters close to his heart, he said, included religious freedom on the mainland, vindication for those killed in the 1989 crackdown in Tiananmen Square, and the welfare of underprivileged groups in Hong Kong. He said he hoped that Chief Executive Donald Tsang Yam-kuen, a devout Catholic, would have the "wisdom" to make Hong Kong a just society where there would "no longer be an ugly trend of toadying to the powerful while despising the weak". But the outspoken cleric, who many considered a fearless champion for social justice, said that after retirement he would concentrate on advising the Pope on mainland church affairs and would only speak selectively on local public issues. He said his successor, Coadjutor Bishop John Tong Hon, would continue the direction the church had taken so far. In an emotionally charged Easter liturgy last night, Cardinal Zen followed church tradition of serving others by washing the feet of children. Earlier, when he made his final address to the diocese's entire clergy after greeting and embracing each of them, he called on Catholics to devote their lives to helping the poor and the weak in a time of darkness. "Today, more than ever, the people need prophets and priests because there are so many poor people in the world, both material and spiritual," he told more than 170 priests as he presided over his final Chrism Mass - the traditional pre-Easter celebration of communion celebrated by Catholics. Father Stephen Chan Mun-hung, of the diocese's Justice and Peace Commission, said: "Cardinal Zen has awakened people's minds that Catholics are firmly committed to bringing about justice in society." Cardinal Zen will preside over Easter Baptism tomorrow, and on Sunday will say Latin Mass at a church school in Kowloon.
The volume of air cargo handled by the city's biggest operator remains well down from a year ago, but the drop last month was slightly smaller than those in January and February. Hong Kong Air Cargo Terminals (Hactl) said export volumes were down 26.9 per cent year on year in March, at 96,500 tonnes. Export volume in the first quarter was down 28.4 per cent; exports to the mainland fell the most, plunging 38.4 per cent. Exports to Europe and North America were down nearly 30 per cent in the same period. A decline in import volumes also continued last month, with a year-on-year drop of nearly 20 per cent. The volume of cargo transshipped via Hong Kong - normally the sector least affected by economic downturns - fell 6.7 per cent year on year. Hactl's general manager for marketing and customer service, Lilian Chan, said last month's volumes were an improvement on those the company had recorded in the previous few months. "The March figures came as a minor relief as compared with the sharp tonnage declines registered in the previous months." Still, she said: "The market outlook remains grim for the rest of 2009, as the global trade market will need more time to recover." Infrastructure projects such as the logistics park planned for northern Lantau Island have been put on hold amid the global fall in consumer demand for goods. Other major projects, including the construction of a third terminal and third runway at the airport and a 10th container terminal, are still being studied.
Urban planning guide published to allay transparency fears - Macau has publicised its urban-planning guidelines for 21 zones in response to public demands for transparency in planning and land use. The Cotai Strip is marked for "comprehensive development" rather than just gaming under the guidelines revealed yesterday. Lao Iong, head of the urban planning department of the Land, Public Works and Transport Bureau, said more information about urban planning would be gradually made public soon. "We are responding to public demands for greater transparency in urban planning and land use." Under the guidelines, Macau Peninsula is divided into eight zones with different functions, and Taipa and Coloane islands each into six. A large part of the guidelines were laid out by Macau's former Portuguese administration in 1980s, but access to these rules had been limited to government officials. The public have been increasingly vocal in demanding transparency over urban planning in the wake of the Ao Man-long graft scandal. During the Ao trials, courts heard that planning rules were often ignored or bent by officials to suit developers' needs. Ao, the former secretary for transport and public works, was sentenced in January last year to 27 years in jail for graft. The government is launching a consultation campaign to seek public feedback on planning rules. Mr Lao said the guidelines were outdated and needed adjustment, using residents' views. "Some of these rules have been there for nearly 20 years," he said. "Some heritage protection areas have expanded." The Cotai Strip, a stretch of reclaimed land between Coloane and Taipa known for glittering casinos, is marked for "comprehensive development" featuring tourism, gaming, exhibitions, logistics, education, science and sports. This echoes the central government's call for Macau to diversify. A controversial reclamation scheme to increase Macau's size by one-seventh has not figured in the urban-planning guidelines. Mr Lao said the reclamation scheme was still being reviewed by the central government. Ao unveiled the ambitious scheme in early 2006 without seeking Beijing's permission. Macau has no jurisdiction over the sea, and any landfill requires the central government's approval. Under the planning guidelines, an "ocean world" theme park will be built on the northwestern part of Taipa. It will be built in a zone marked for commercial and low-density residential development. However, Mr Lao said there was no timetable for the construction of the park. "We hope the theme park will be built as soon as possible," he said. The Guia hill area is named a key heritage protection zone under the guidelines. The Guia lighthouse, part of a UN heritage site, has been threatened by new residential towers around it. Also named as heritage protection zones are the Senado Square and A-Ma Temple areas. A height limit of 47 metres has been set for buildings around the fortress area, where the St Paul's ruins are. Taipa's old streets have been marked in the guidelines as a tourist zone where traditional appearance is to be maintained. Although the central government has given Macau approval to develop a plot of land on Zhuhai's Hengqin island, the guidelines do not feature any plan related to Hengqin. Mr Lao said any development on Hengqin had to be carried out through co-operation between Macau and Guangdong. "Hengqin belongs to Zhuhai: we can't make plans on our neighbour's territory," he said. Zone-specific consultation exercises were being planned to collect residents' views on their own neighbourhoods, Mr Lao said. A consultation on the revamp of Coloane's old streets is continuing, while two consultations regarding Taipa's old streets and Ilha Verde, or Green Island, are in the pipeline.
Tsang signals era nears for yuan trade settlements - Hong Kong is ready to become the first region outside the mainland to use the yuan for trade, Chief Executive Donald Tsang Yam-kuen said, as Beijing expands the reach of its tightly controlled currency. ''We, in Hong Kong, have completed the necessary technical preparations for becoming the first place outside the mainland to benefit from the scheme,'' Tsang said. Beijing is gradually expanding use abroad of the yuan amid official concern about reliance on the dominant US dollar. Beijing has signed currency swap deals with South Korea, Malaysia, Indonesia, Belarus and Argentina. The Cabinet announced approval yesterday for companies in Shanghai and four southern cities near Hong Kong to use yuan in foreign trade. Beijing announced last year that Hong Kong will be allowed to use the yuan to trade with the mainland. Tsang, pictured, said being allowed to use yuan will reduce the risks Hong Kong companies face from shifting exchange rates and increase potential business for the territory's banks. Tsang said the new yuan arrangement will not affect the Hong Kong dollar's peg to the greenback. ''This will have nothing to do with Hong Kong linked exchange rate with US dollar, which has been an anchor of Hong Kong's financial stability,'' he said.
Li Zongjin, a professor of HKUST Civil and Environmental Engineering Department, was recently appointed by China's Ministry of Science and Technology as the chief scientist for a 30-million-HK-dollar research project on concrete. The project is part of the National Basic Research Program, which is also known as the "973 Program." Li will work together with 54 scientists from both the Chinese mainland and Hong Kong to conduct relevant research. The research will help solve the drawbacks of contemporary concrete including premature cracking and short service life so as to make buildings capable of resisting environmental erosion and have increased durability. The National Basic Research Program was initiated in March 1997, so it is also called the "973 Program."
China: China's exports fell 17 per cent in March, a less sharp contraction than the month before, amid signs the plunge in overseas demand may be easing, the government reported on Friday. But while the decline in exports eased somewhat, a sharper weakening in imports pushed China's trade surplus to US$18.56 billion, up from US$4.84 billion the month before, the General Administration of Customs said. Exports totaled US$90.3 billion in March, the fifth straight month of year-on-year declines due to the global downturn. In February, exports sank 25.7 per cent from a year earlier in the worst drop in more than a decade. Imports in March fell 25 per cent to US$71.7 billion, the customs data showed. Mainland imports fell 24 per cent in February. "The pace of contraction in exports has moderated notably from January-February levels, as export activity showed signs of stabilisation," Jing Ulrich, chairman for China equities for J. P. Morgan, said in a report to clients. "Imports remained weak, but there are some initial signs of recovery in China's raw materials demand, driven by government stockpiling and record imports of iron ore," she said.
Shanghai has ordered high-ranking city officials to disclose their property assets to municipal Communist Party authorities in a bid to repair the party's image, tainted by a string of real-estate-related scandals in recent years in the nation's business capital. However, observers said they saw the move as another toothless regulation that would not stop corruption. The disclosure, expected to be completed by the end of the month, covers more than 2,000 officials and executives of state-owned enterprises, incumbent and retired, who had been department heads or above, Caijing magazine reported. Close family members, such as spouses and children, are also required to report properties that are in their names. The move came two months after Kang Huijun, a former deputy government chief in Shanghai's financial district, was sentenced to life in prison for graft. Apart from accepting cash bribes, Mr Kang accepted about 18 million yuan (HK$20.44 million) worth of flats - about two dozen - at below-market prices from real estate agents currying favour, and resold some for large profits. Two former city land regulator chiefs were found guilty of amassing millions of yuan in a similar fashion last year. Neither the Shanghai municipal government nor the city's party authorities were available for comment yesterday. But the municipal party publicity department issued a memo to the city's newspaper editors and television producers warning against "making a fuss of the topic". Caijing broke the news on its website yesterday morning. Observers lauded the new regulation strengthening top-down oversight as "pressing the right button" by authorities in Shanghai, the city with the most prosperous local property market on the mainland. But they said they could see no end to this kind of corruption until public scrutiny helped change any internal supervision process into an efficient official mechanism for the declaration of assets. "Many Shanghai officials have bought apartments at below-market prices ... the practice has been prevalent among bureaucrats for a long time," a retired city official said. "I doubt this [latest] kind of campaign-style check will yield any substantial results." The issue was first addressed in a document issued by the Chinese Communist Party Disciplinary Committee dated July 2007. The Supreme People's Court also clearly defined the property scam by government officials as a crime in a judicial interpretation last summer. Pu Xingzu, a politics professor at Fudan University, urged the government to give the regulation teeth instead of simply collecting information "for reference". "Of course, it takes time [to improve transparency], but without material punishment hanging over it and full access to the information by the public, you don't expect this kind of disclosure to help fight corruption," Professor Pu said. The issue of officials' assets disclosure inspired heated discussion at last month's annual National People's Congress plenary session and has continued as a hot topic in the mainland media. The central government has tried sporadic asset-disclosure experiments around the country since last year.
Only investors with deposits exceeding 200,000 yuan in brokerage accounts may be able to trade. The China Securities Regulatory Commission has completed a high-level personnel reshuffle with vice-chairman Fan Fuchun stepping down after reaching the mandatory retirement age. Liu Xinhua, an assistant to the chairman, would replace Mr Fan, the CSRC announced yesterday. Gui Minjie, also a vice-chairman, will take up Mr Fan's role as deputy party secretary of the regulator. The reshuffle will probably speed up the CSRC's efforts to launch a Nasdaq-style second board in Shenzhen and reform the initial public offering system, as the top officials have been assigned clear-cut areas to oversee. Mr Fan was in charge of the listing, supervision and research departments. He was expected to retire last year after turning 60, but the global financial crisis and Beijing Olympics delayed the reshuffle. Sources said Zhu Congjiu, 44, assistant to CSRC chairman Shang Fulin, would take charge of initial public offerings while Mr Gui, 56, would be responsible for market supervision. "The reshuffle has been within expectations and will pave a way for new policies, particularly on new listings and the second board," a source said. The CSRC published late last month listing rules on the long-delayed second board, while vice-chairman Yao Gang said the growth market would be officially started after August. The regulator is now working on details of the review process of listing candidates for the new board. It is also likely to set a threshold for investors interested in trading shares in the start-up companies seeking to be listed there. To avoid over-speculation, retail investors will not be allowed to buy shares on the growth market unless their brokerage accounts had more than 200,000 yuan (HK$226,780) in deposits, reports say. The regulator also announced early this year that it would give small investors a bigger say in pricing the new shares to enhance fairness and transparency. Beijing has not approved a single initial public offering since September last year amid worries of a liquidity drain. The Shanghai Composite Index has climbed 30.7 per cent this year but is still 61 per cent off the peak set in mid-October 2007. Last week, the review committee rejected an application by Ningbo QL Electronics to launch an initial offering, the first that came under its review in six months.
Gong Haiyan, CEO of dating site Jiayuan.com, met her husband on the Net. Business has never been better for the woman at the helm of the mainland's biggest internet dating service - When Gong Haiyan's grandmother was the village matchmaker in their native Hunan province, grateful parents and couples thanked her with gifts of embroidery and a seat of honour at weddings. Times have changed. Now the mainland's most successful matchmaker, Gong is rewarded much more richly for bringing lonely hearts together: Jiayuan.com, the dating website that she founded, now earns 10 million yuan (HK$11.4 million) annually. As the CEO of the mainland's largest internet dating service, Gong counts the matches she makes in the millions. The 33-year-old claims she has helped 3 million people find spouses since the website launched in October 2003. Gong includes herself among that number - she met her husband through an advertisement she placed in February 2004 and they married two months later. Better known on the mainland by her online name of xiaolongnu, or little dragon lady, Gong is at the forefront of the mainland's booming internet dating business. Some 20,000 people sign up every day to Jiayuan.com, which now has 17 million members. According to research firm iResearch, that market was worth US$43.9 million last year and the number is expected to double by 2010. The global recession may have wiped out many mainland manufacturers, but it has brought a surge of people signing up with online dating companies such as Jiayuan.com, Baihe.com and Hongniang.com. "The economic slowdown has made a lot of people panic. They've realised careers and finances can be unreliable and so they've started to think about settling down and having a family," says Gong, who is now pregnant with her first child. She expects Jiayuan's membership to top 25 million by the end of the year, swelled by growing numbers of single, professional women in big cities who had put careers before personal lives. But she thinks the impact of the financial crisis - a poll by Sina.com earlier this month found that two-thirds of respondents were worried about losing their jobs - has focused their minds on marriage like never before. Jiayuan has seen a 40 per cent increase in women signing up since last September, while Baihe reports a 50 per cent jump and Hongniang 20 per cent. "More than 80 per cent of the women who are registered with us are graduates earning at least 36,000 yuan a year," says Mu Yan, a co-founder of Baihe.com, which has 13million members. "Most of them work in the media, IT and financial sectors. I think that with the economy slowing down, a lot of white-collar women have more time to concentrate on their love lives." Hangzhou-based advertising executive Qin Yu is one career woman whose thoughts have turned to marriage since the slowdown. After years of being single, the 35-year-old decided last October it was time to try online dating. "My investments in the stock market dropped a lot and work hasn't been so busy since the financial crisis," she says. "That made me depressed and I thought it was the right time to do something about my personal life." Qin previously relied on friends to introduce her to eligible men but found they had no idea what kind of guys would appeal. "They keep introducing men who I don't like at all or who are too old," she says. "But I can't say that to my friends because they are trying to help me. That's why I decided it would be better to sign up with a professional service that can introduce me to one or two men a month." Originally from Chongqing, Qin is among tens of millions of people who have moved far from their hometowns for work. That migration to cities, especially in the more affluent eastern provinces, has helped fuel the online dating boom. "Urbanisation has had a big effect," Gong says. "A lot of people from the country have moved to the cities where they don't know anyone. Their parents can't introduce them to people there, so they have turned to the internet." Traditional Chinese reticence when it comes to personal relationships has played a part too. "Very few people are lucky enough to find their life partner through classmates or friends, so they have to find a stranger," Gong says. "But a lot of Chinese aren't very outgoing, so it's a challenge for them to meet new people. The internet solves that. It's the best way for strangers to get to know each other." Many online personal advertisements and photos bear little resemblance to the person placing them, but Gong says the incidence of people exaggerating looks or income online is becoming less frequent. "As the internet has developed, it has become a lot more like real life. It's much harder to hide things now. It's not just on the internet that you get frauds - people cheat in real life too. You just have to make a judgment." For Zhou Wenyan, a 27-year-old financial controller from Beijing registered with Jiayuan.com, online communication is far less awkward than a face-to-face first date. "The internet is a safe platform to get to know each other. You can find out about a man's income, degree, his status and hobbies. When you meet someone in real life, you can be shy about asking about things like that. It's a good way to get to know someone at first," she says. Like most of the professional women who have turned to online matchmaking sites, Zhou denies she is too demanding in her choice of boyfriends or prospective spouses. However, many people insist that any future partner must not only make more money than they do, but also own a car and an apartment. Zhu Aijun, a 32-year-old office manager from Shanghai, is typical. "I can't say I don't care about that. It's OK in the short-term if he earns less than me but he has to be ambitious," Zhu says. Now the economic slowdown has forced some singletons to lower their expectations. That has given rise in recent months to the phenomenon of the economically fit man, or jingji shiyong nan. These are men who don't earn a fortune or have a glamorous lifestyle but can offer a greater sense of security. "Women have realised that men whose incomes might not be as high as theirs but whose jobs are stable and have a relatively high social status, like teachers and engineers, are a much safer option in these times," Gong says. Jingji shiyong nan are also perceived to be much more reliable and less likely to stray than their richer contemporaries. That's why Qin Yu is looking for one. "I want someone who is three to eight years older than me and has no children. But he has to have a stable job, like a schoolteacher. That's my first priority," she says. "Usually, these kind of men are well-educated and responsible and don't have bad habits like drinking and smoking." The excess of single, successful women has emerged in big cities despite the acute gender imbalance on the mainland - the traditional preference for male children means that in some rural areas 119 boys are born for every 100 girls. That surplus of men in the country provided Gong with her first matchmaking candidates. As a 16-year-old working in an electronics factory in Zhuhai, Guangdong, she started introducing men from her village to her women co-workers. But after two years in the factory, Gong returned to school and became the first girl from her county to win a place at Peking University in 40 years. It was while studying for her Masters at Fudan University in Shanghai, that she set up Jiayuan, which was originally called Love21. "I was 26 and my parents were pushing me to get married, so I signed up to two dating websites. I was very dissatisfied with them, so I decided to start my own," Gong recalls. "I felt I could do a better job." Her first clients were friends or fellow students. But by 2007, Gong's company was big enough to attract a 100 million yuan (HK$113 million) investment from a venture capital firm. Now she receives invitations to more weddings than she could ever attend and believes she is making a vital contribution to society. "I feel I'm doing very important work," Gong says. "It's not good for people to stay single and lonely."
Jia Qinglin (5th L, front), chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), poses for group photo with journalists from the Taiwan-based United Daily News (UDN) headed by Duncan Wang (4th R, front), chief executive officer (CEO) of UDN Group in Beijing, capital of China, April 9, 2009.
The undated photo shows the gate of headquaters of the Ministry of Finance in Beijing. Total executive pay for 2008 at financial institutions - which many are still computing - must not surpass 90 percent of the 2007 levels, the Ministry of Finance (MOF) announced yesterday. The Ministry of Finance has imposed a pay cap for top executives at state-owned financial institutions as the financial crisis eroded earnings of such companies in 2008, the ministry said Thursday in a circular on its website. The new rule, which came out amid rising public grumbles about huge pay packages for top executives at state-owned financial companies, outlined the basic line that pay for executives in 2008should be no more than 90 percent of the level in 2007. As of 9 p.m., two hours and half after the news was posted on the web Sina.com.cn, 584 netizens made comments. Nearly all of them were supportive of the move. Under the plan, pay refers to pre-tax income, including salary, bonus, and social insurance. The rule would enhance equal income distribution and push forward reform in pay mechanism, according to the ministry. The circular said it was in line with the current domestic and international situation for executives at some state-owned financial institutions to voluntarily cut their pay despite their companies posted rising profits. Companies which had a declining income last year should slash another 10 percent based on the basic line. Reductions should be deeper if companies suffered steep drop in profits, according to the circular. The ministry demanded to narrow pay gap among executives at companies in the financial sector, calling for bigger cuts for those who received much higher pay than the average in 2007. Caps were also urged to be imposed on pay for staff at financial companies to make a clear difference in posts and performance. It is the second time that MOF had set such pay limits. In an earlier circular in February this year, MOF ordered that the 2008 salary for top executives of state-owned financial institutions should be limited within 2.8 million yuan (about 410,000 U.S. dollars). The new move aimed at avoiding salary competition between some financial institutions when deciding the salaries for their executives in 2008, said Guo Tianyong, a professor at the China Central Finance University. It is necessary to put a cap on executive salaries to prevent unfair distribution of income and a larger gap between the rich and poor, he said. In March, the government ordered a crackdown on government "hospitality" budgets, including a 15-per-cent cut in car-buying and fuel funds as well as an across-the-board halt to the building of any new office compounds before the end of 2010. Chinese Premier Wen Jiabao said the government should take the leading role in promoting frugality and should ensure government spending goes where it is most needed amid the economic crisis.
April 9 -10, 2009
Hong Kong: China's plan to allow yuan trading settlement in Hong Kong would not affect the territory's currency peg with the US dollar, Chief Executive Donald Tsang Yam-kuen told reporters on Thursday. The scheme will start in Hong Kong, allowing importers and exporters in cross-border trade to exchange Hong Kong dollars for the Chinese yuan and vice-versa, even though the yuan is not fully convertible. The start of yuan trading settlement in Hong Kong soon will underpin the city’s status as an international financial centre, Mr Tsang said. “This will facilitate Hong Kong as a regional renminbi clearing centre and underpin our position as an international financial hub,”he said. “This will have nothing to do with Hong Kong's linked exchange rate with the US dollar, which has been an anchor of Hong Kong's financial stability.” The State Council on Wednesday approved plans to start trade settlement in yuan, also known as the renminbi, outside mainland and said Shanghai and four cities in southern Guangdong province would participate in the pilot program. The scheme is a further step in the gradual liberalisation of yuan and widens Hong Kong's role as a test ground for use of the yuan outside the mainland. Mr Tsang said the city was ready to become the first place to launch the settlement scheme as soon as Beijing unveiled operational details. The scheme, first announced in December, would reduce exchange rate risk for importers and exporters; enable banks in Hong Kong, which offer yuan retail services, to extend the services to companies; and create more jobs, Mr Tsang said. The scheme would cover cross-border trade including re-exports, Mr Tsang said. However, full details have yet to be announced and analysts expect Beijing to limit which companies can participate. The Chief Executive also said the move could strengthen the territory's banking system and help local businesses to reduce currency risks. “It will also give enormous security for trading entities in Hong Kong. Enterprises doing importing, exporting and trading will be able to make use of RMB resources. Therefore, it will provide greater security at a time of need. And it will definitely will create more jobs for Hong Kong,”he explained. The central State Council said in a statement on Wednesday that yuan settlement in cross-border trade would promote bilateral trade with neighbouring countries and regions, prevent exchange rate risks and promote stable trade growth. In the past five years Beijing has allowed Hong Kong residents to set up yuan-denominated bank accounts as well as authorising payment in yuan at some retail outlets in the territory and allowing mainland financial institutions to issue yuan-denominated bonds in the territory.
Canto-pop singer Jill Vidal, who was arrested in Tokyo in February over alleged possession of illegal drugs would face prosecution in Japan–and the case would go to trial later this month, her recording company Amusic confirmed on Thursday. The spokesman of Amusic told local radio their lawyers on Thursday morning informed them Vidal's trial would be on April 24. But he was not clear what kind of charge had been filed against the 26-year-old singer. He also said Vidal's father and her manager will go to Japan.
The Security Department on Thursday reminded Hong Kong people planning to visit Thailand to pay close attention to the situation there and to confirm their flight and transport arrangements before leaving. "During their stay in the country they should also exercise caution, take note of any changes in the [political] situation and avoid protests and large gatherings of crowds," a department spokesman said. He said if residents need assistance while outside the city, they could call the Immigration Department's hotline (852)1868 As many as 100,000 red-shirted supporters of ousted former premier Thaksin Shinawatra assembled on Wednesday in the area around Thai Prime Minister Abhisit Vejjajivas office, demanding he resign. On Thursday morning, their numbers were estimated by police to be around 20,000. The protests have been peaceful, but television footage showed a woman, wearing the yellow shirt of Mr Thaksin's opponents, driving a car into a group of demonstrators on Thursday. One man was reported to have been injured. The United Front for Democracy against Dictatorship (UDD) started a siege of Mr Abhisit's office at Government House on March 26, leading up to a mass rally this week.
Hong Kong Jockey Club chief Winfried Engelbrecht-Bresges believes the addition of five more race days each season would help stem Hongkongers' betting spree in Macau casinos - estimated to be worth HK$20 billion to HK$25 billion last year. Quantifying the competitive threat from Macau for the first time, Mr Engelbrecht-Bresges argued that extending the 78-meeting season by five meetings and adding 20 more simulcasts of overseas races would reap significant benefits for Hong Kong and the government. Additional tax revenue from the extra race days would reach HK$480 million, while the simulcasts would generate HK$36 million for government coffers, according to club calculations. The proposed additions would also help the club sustain or increase its charitable contributions, which are expected to rise to about HK$1.3 billion or HK$1.4 billion in 2008-09, up from about HK$1 billion a year ago, he said. About 4,100 part-time, and up to 100 full-time, workers would be needed as a result. More simulcasts would not significantly boost betting turnover or tax revenue, but they were needed to allow punters and fans to bet on overseas races featuring Hong Kong horses, trainers or jockeys without turning to illegal bookmakers, he argued. "Money is not the main concern" for wanting to add race days and simulcasts, Mr Engelbrecht-Bresges said. "But I am extremely worried about the competition getting into our customer base because then it becomes a matter of money." A survey conducted for the club by an independent consultant estimated that Hong Kong punters lost about HK$20 billion at Macau's casinos last year, up from about HK$9.1 billion in 2005. By comparison, punters lost about HK$11 billion on horse races at the club. The findings were based on interviews with visitors to Macau and gaming analysts. The club's proposal has already been submitted to the government. A Home Affairs Bureau spokesman said the Betting and Lotteries Commission had set up a working group to study the club's proposal. The commission was updated on the group's progress last week and will seek the public's views on the matter this month. The government would carefully consider the views of the commission and the Legislative Council before making a decision, the spokesman said. Secretary for Home Affairs Tsang Tak-sing said: "We are waiting to hear from the Betting and Lotteries Commission and we will keep an open mind. We will strive to strike a balance." The commission advises the secretary for home affairs on the regulation of horse-race betting. Under the plan, the extra race days would be added in July before the summer break. The earliest the meetings could be added was July next year, Mr Engelbrecht-Bresges said, as it would take about a year to prepare for the extended season, including hiring more staff and acquiring between 60 and 80 more horses.
End of Yung dynasty - The curtain came down on the powerful Yung dynasty at CITIC Pacific (0267) yesterday as chairman and director Larry Yung Chi-kin, together with right-hand man, managing director Henry Fan Hung-ling, stepped down.
A special Easter crackdown on teenage trafficking and abuse will see the deployment of teams of "super-sniffer" dogs capable of telling if someone has had even minimal contact with narcotics. Customs chiefs say if any of the 45 dogs identify someone who is not carrying - but has been "in contact" with - drugs, they will be stopped and offered advice on abuse from nongovernmental organizations. As concerns mount over Hong Kong's problem with cross-boundary teenage drug abuse, extra dogs have been recruited by customs, taking their canine complement from 34 to 45. Fifteen new officers have also joined to spearhead the push, said Lam Sze-hau, Divisional Commander (Detector Dog) at the Customs and Excise Department. The new dogs and their handlers have undergone overseas training and are at various control points to monitor passengers, luggage and cargo. In the first three months of this year, dogs have detected four drug cases leading to the arrest of three people. Last year, they detected 21 cases, seizing HK$12.59 million worth of drugs and arresting 15 people. Lam said the dogs are effective because traces of drugs, however small, cannot escape their senses. "The dogs can sniff and find out whether a person has even just had contact with drugs in the mainland," he said. Officers do not have the power to arrest someone who is not in possession of drugs. But if they are sniffed out as having been "in contact", travelers will be taken aside and given information and advice from NGOs. John Lee Cheung-wing, head of the department's Drug Investigation Bureau, said officers will stay vigilant to foil attempts by drug traffickers who try to take advantage of the busy travel times. In the first quarter of this year, officers at the land boundary control points detected 51 drug cases and arrested 43 people, compared with 73 cases detected and 66 arrests in the same period last year. Eleven people aged under 21 were arrested in the first quarter in 11 cases on their arrival in Hong Kong at the control points. The number was down from 19 in 2008. Lee appealed to young people not to traffick drugs, because the likelihood of being caught is greater now and the punishments are harsh. Even a seemingly small amount of drugs may be devastating to a young person's future, Lee warned. He cited the case of a 28-year-old woman who was recently jailed for two years for trafficking 11 grams of ketamine.
Building owners are to be encouraged to make their properties more energy efficient via a new HK$450 million government fund launched yesterday. Environmental and Conservation Fund chairman David Lung Ping-yee said more than 1,600 projects will be subsidized, creating business and job opportunities in electrical, mechanical, building services and environmental engineering. Lung, who is also a professor of architecture at Hong Kong University, said the city's commercial and residential buildings consume 90 percent of total electricity generated and improving their energy efficiency will significantly reduce greenhouse gas emissions. The funding scheme provides incentives to owners to conduct energy-cum-carbon audits and energy efficiency projects. Funding will be capped at HK$150,000 for audits and HK$500,000 for energy efficiency projects in individual buildings. Applications for a cluster of buildings will have their subsidies set at half of the total approved cost but this will not be subject to a ceiling. Friends of the Earth director Edwin Lau Che-feng said electricity use could be cut by 10 percent to 15 percent, saving 3.56 billion kilowatt-hours annually along with 2.67 million tonnes of carbon dioxide, or nearly 10 percent of total emissions, if all buildings complied with the current voluntary energy-saving measures. Lau said mandatory building energy codes should be brought in this year, adding that retrofits will allow building managers to recoup 20 percent of energy costs over a building's life span. Electrical and Mechanical Services Department chief engineer for energy efficiency Li Kwok- keung said the response from the private sector to the voluntary scheme was not satisfactory as nearly three-quarters of the 867 buildings registered last year were from the public sector. The mandatory scheme being mulled will apply to all new commercial buildings as well as common areas in residential and industrial buildings. Participating buildings will be issued with a certificate which will have to be be renewed every 10 years. The scheme will not apply to 40,000 existing buildings until they are retrofitted, while commercial buildings of more than 499 square meters of floor space will have be audited.
COSCO Pacific (1199), the world's fifth- largest container port operator, reported net profit declined 36 percent last year after missing the one-off gains it booked from investment selling in 2007.
China: Beijing plans to spend nearly 100 billion yuan (HK$113 billion) in the next decade to cope with the enormous social and environmental impact of the Three Gorges Dam, with landslide repairs, pollution cleanups and efforts to lift a stagnant economy listed as top priorities. Although the plan is still being drafted, it is expected from next year to meet many "unexpected" challenges stemming from the rising waters behind the 185-metre-high concrete dam, according to Wang Xiaofeng, a top official in charge of the project. Mr Wang, director of the State Council's Three Gorges Project Construction Committee's executive office, said the world's largest hydropower project was originally scheduled to be completed by the end of this year. "There is still a lot of work to finish, and it is unlikely we will have an official ceremony marking the completion of the project this year," he said in a recent interview with the South China Morning Post (SEHK: 0583). Apart from the Three Gorges reservoir region, Mr Wang said, the new plan would also cover the middle reaches of the Yangtze River - including lakes Dongting and Poyang, which have been adversely affected by the project - for the next 10 to 20 years. With water levels reaching the reservoir's maximum of 175 metres above sea level last year, the dam area recorded a sharp rise in often deadly landsides, minor earthquakes, pollution disasters and other hazards. At least 98.9 billion yuan would be needed by 2020 for the Three Gorges project, said a Caijing website report, citing the Yangtze River Water Resources Commission, which is drafting the plan. Of the total investment, 38.2 billion yuan has been earmarked to tackle environmental problems, such as waste and sewage treatment. But it did not specify how much would be spent to tackle geological hazards and complete the controversial resettlement scheme of millions of people. Over the past decade, most of the 1.4 million people displaced by the project from 20 cities and counties in Chongqing and Hubei have been sent to either higher ground nearby or different locations across the country. But the task of helping people to adjust to their new lives remains a headache for authorities. Despite Beijing's announcement that the dam, officially billed at 200 billion yuan and widely seen as the country's top prestige project of the past three decades, was "basically completed" in 2007, mainland officials have publicly expressed concerns that the mammoth project could turn into a catastrophe. Environmentalists opposed the plan, saying the government had yet to explain why the project had become an abyss of public funding. Dai Qing, a writer and fierce critic of the project, said the money would never be enough to solve the problems created by the reservoir.
Chinese Foreign Ministry spokeswoman Jiang Yu speaks at a press briefing in Beijing on Thursday. China wants Iran and other powers to pursue contacts aimed at eventually defusing a long-running dispute over Tehran's nuclear activities, a Foreign Ministry spokeswoman said on Thursday. The United States, Russia, China, France, Germany and Britain said on Wednesday they would ask EU foreign policy chief Javier Solana to invite Tehran to talks to find "a diplomatic solution" to Iran's nuclear program. China, host of six-party talks aimed at ending North Korea's nuclear programme, is a close energy and trade partner with Iran, and Foreign Ministry spokeswoman Jiang Yu said her government welcomed the signs of renewed engagement. It has a long-standing policy of favouring negotiated solutions to nuclear disputes with both Iran and North Korea. And the warm words on Thursday suggest it sees renewed hopes of progress. "We are glad to see an improvement in relations between the United States and Iran," Ms Jiang told a news conference. "We also support any suggestions to appropriately solve the Iran nuclear issue though negotiations and dialogue. We encourage Iran and other parties to have active contacts to seek an all-round, appropriate and long-term solution to the Iran nuclear issue." As a big oil customer of Iran and veto-wielding permanent member of the UN Security Council, China has been a focus of efforts to overcome the standoff with Iran. China has backed past limited sanctions on Iran, but resisted steps that would threaten their energy and economic ties. Iran is China's third biggest supplier of imported crude oil, behind Saudi Arabia and Angola. Breaking with past US policy of shunning direct talks with Iran, President Barack Obama's administration said the United States would join in nuclear discussions with Iran from now on. The big powers' statement was markedly more conciliatory than in the past when western officials often threatened to ratchet up sanctions against Iran or did not rule out military action. Last month, Mr Obama offered a "new beginning" of diplomatic engagement with Iran. Until now, US policy has made any negotiations with Iran about its nuclear programme conditional on Tehran giving up uranium enrichment work the West believes is aimed at building an atomic bomb-making capability. Iran, the world’s fourth-largest oil exporter, says its nuclear programme is only aimed at generating electricity. Iran celebrates its National Nuclear Day on Thursday when analysts expect President Mahmoud Ahmadinejad to announce Iran has mastered the final stage of nuclear fuel production. China is bound by UN Security Council sanctions resolutions forbidding support for or contact with individuals or companies linked to Iran's missile and nuclear programs. This week, the US government slapped sanctions on a Chinese metals company and six Iranian companies suspected of collaborating on a scheme to transfer missile and nuclear technology from China to Iran. Ms Jiang said China had very strict export controls to prevent nuclear proliferation.
Shares of Ping An Insurance (SEHK: 2318), the world’s second-largest insurer by market value, rose as much as 8.5 per cent on Thursday as investors shrugged off its weak fourth quarter and instead focused on its more upbeat this year outlook. Ping An posted a 1.34 billion yuan (HK$1.52 billion) loss for October-December, taking a hit on its investment in failed European financial group Fortis. Earnings for the full year, excluding the Fortis investment, came in more-or-less in line with market expectations. But analysts saw a brighter outlook for the insurer, which is expected to benefit from a stabilising stock market and rapidly growing premium incomes.
China Life Insurance, the country’s biggest insurer, said on Thursday that its last year profit plunged 45 per cent on weaker investment returns and warned the coming year could be more difficult.
China is to build a clinic in each of its 700,000 villages within three years, as part of a sweeping 850 billion yuan (HK$963 billion) investment in health-care reform. The clinic program is part of a plan to provide basic medical coverage and insurance to all. Vice Health Minister.
April 8, 2009
Hong Kong: A graphic designer told a court yesterday how computer technician Sze Ho-chun had burned her a compact disc containing the infamous Edison Chen Koon-hei sex pictures and marked it with an X. Janet Leung Ting-yan said Sze, 24, did this after showing the pictures to her and a female colleague at their office via an online server. But Ms Leung rejected a suggestion that she and her colleague had accessed and downloaded the pictures themselves, without Sze's help. She was giving evidence on the second day of the trial of Sze, accused of purloining hundreds of photos that had been on Chen's computer and which triggered a scandal last year when they appeared on the Net. Sze has pleaded not guilty in Kowloon City Court to three counts of obtaining access to a computer with a view to making a dishonest gain between January 1 and June 8, 2006. Ms Leung, a designer with a home appliance company, told the court Sze had helped them repair an Apple MacG5 computer at their office one day in 2006. Sze mentioned in a conversation that Chen had recently taken his laptop to Elite Multimedia in Central, where the technician worked, Ms Leung said. Sze further revealed that a colleague who repaired Chen's computer had discovered some "locked" files containing pictures of Chen and Gillian Chung Yan-tung of the Twins singing duo, to which they had been able to gain access. After hearing this, another designer, Fanny Choi Yuk-fun, asked Sze to show them the pictures. Sze then used their office computer to click onto an online server and had entered a password, before pictures featuring Gillian Chung appeared on the screen, Ms Leung added. After some time, Ms Choi stopped them from looking at the pictures, saying it was "not good to view these in the office". Sze then burned Ms Leung a compact disc and marked it with an "X" . Some time later, Ms Leung said, she had mentioned the pictures to another colleague, Mak Man-kei, and lent her the compact disc, which Ms Mak returned after one or two days. Cross-examined by barrister Kevin Tang, for Sze, Ms Leung said she had seen only a few pictures on the compact discs at home or in the office, adding that she had "no feelings" after looking at them. She rejected suggestions by Mr Tang that she and her colleagues had logged on to the server themselves and downloaded the files and that Sze had not shown them the pictures. Earlier in the witness stand, Ms Choi admitted she was the one who asked Sze to show her the pictures. She recalled she had hastily taken a look at more than 100 nude pictures depicting Chen and other celebrities. Chen's driver, Wong Hing-cheung, testified that he had helped Chen to take his computers for repair at Elite Multimedia on many occasions. On one occasion he had left a computer at the shop but was immediately told to return to the store. The hearing continues today before Chief Magistrate Tong Man.
A French multinational is taking over the running of Hong Kong's famed tramways after buying a 50 per cent stake in the business from conglomerate Wharf (Holdings) (SEHK: 0004). Announcing the deal yesterday, the two companies said they aimed to "bring new impetus to keep the system on track well [into its] second century of operation". They said existing services would continue. The French company, Veolia Transport, did not say how much it paid for its stake but that it was "far less than 100 million euros (HK$1.04 billion)". It has an option to buy the other 50 per cent of the company. The company - formerly Connex - is a subsidiary of Veolia Environnement and operates transport systems, including tramways, around the world. It runs bus joint ventures in Anhui province and Nanjing. Veolia sees buying a half-share in Hongkong Tramways as helping provide know-how as it builds an urban rail business in China. "Operating the light rail system in Hong Kong will give us the knowledge and expertise in mainland China. That's strategically why we chose to start in Hong Kong," Bruno Charrade, head of operations for Veolia Transport China, said. "Hong Kong will be a very good base for us to develop in China, where environment-friendly traffic solutions are in great demand." Under the new ownership arrangement - which is certain to face scrutiny from environmentalists and heritage activists - Mr Charrade will replace Wharf Transport Investment director Frankie Yick Chi-ming as managing director of Hongkong Tramways. Mr Charrade said the company understood the trams were part of Hong Kong's cultural heritage. "We are committed to protecting and preserving it," he said. Mr Yick said: "Our goal [in co-operating with Veolia] is to bring the tram services to a new level." Mr Charrade said Veolia would seek to improve the company's management and technical services and the safety, efficiency and quality of its services. "We will study our passengers first before analysing the sustainability of the existing system," he said. But he committed to "continuity of existing services" and said there were no plans to raise fares, cut staff or restructure the company. For 11 years, the adult fare has been HK$2. The tram company made a profit of around HK$2 million a year between 1996 and 2006, but earnings surged to more than HK$10 million in 2007 and more than HK$30 million in 2008 thanks to a revamp of advertisement services. Andrew Cheng Kar-foo, deputy chairman of the Legislative Council's transport panel, hoped fares would not rise if services were added. "We hope the trams will remain Hongkongers' trams," he said. A spokesman for the Transport and Housing Bureau said the government had stressed to Wharf and Veolia the importance of preserving the tradition of the service, including the trams' design. "Veolia has assured us that it is fully committed to preserving the trams in Hong Kong," he said. The deal has been in the offing for more than two years. "A number of buyers approached us during the past two years. We think Veolia is the best partner considering its knowledge and expertise in this area," Mr Yick said.
A multibillion-dollar expressway that will cut journey times between the airport and the northeastern New Territories may come into service this year, the transport minister said following the much-delayed completion yesterday of a key bridge. The final span of the Stonecutters Bridge across the Rambler Channel separating Tsing Yi from western Kowloon was lifted into place a year later than planned. The bridge has cost HK$3.7 billion rather than the HK$2.7 billion budgeted. Despite the delay and cost overrun, Secretary for Transport and Housing Eva Cheng said she was happy with progress on the project. "This is the world's second longest cable-stayed bridge. It will become a landmark for Hong Kong," she said. Chow Ying-shun, a Highways Department project manager for major works, said a mistake in surveying work and underestimation of the impact of weather on the project were the main reasons for the HK$1 billion overrun. Inflation in the prices of construction materials was another reason. "We misjudged the nature of the rock that we built our bridge on. Ten of the piers had to go as deep as 100 metres, rather than 60 metres, and that costs a lot more," he said. He denied there had been negligence, but said the government would see whether there were grounds for passing on some of the extra costs to contractors. "We will pay for the jobs they did, such as the time and money involved in that additional 40 metres," he said. "We poked more than 70 holes in the ground to test the rock, which is more than enough for a project of such scale, but after all, our findings are still only an estimation [of the actual ground conditions]." Drivers will not pay a toll to use the bridge. Route 8 links Sha Tin to Chek Lap Kok via Cheung Sha Wan and container terminals in Kwai Chung. The section between Sha Tin and Cheung Sha Wan opened in March last year, cutting the journey time between Sha Tin and West Kowloon to five minutes and the journey time from the New Territories new town to the Kwai Chung terminals to 15 minutes. When the bridge enters service, the journey time between Sha Tin and the airport will be halved, to 35 minutes. The bridge is one of the world's highest. Its deck is 73.5 metres above the Rambler Channel - more than enough to allow for passage of the world's biggest cargo vessels and able to accommodate the even larger vessels that may be built in the future.
Citic Group is expected to remove Larry Yung Chi-kin as chairman of Citic Pacific (SEHK: 0267) in the next few days and has sent a team to further investigate the company's huge foreign exchange losses and other possible irregularities, sources said. The Beijing-backed conglomerate is expected to replace Mr Yung with the group's deputy chairman, Chang Zhenming, and appoint several group senior managers to run various Citic Pacific businesses. Zhang Jijing, a director and assistant president of Citic Group, will assume a lead decision-making role in the daily operations of the Hong Kong-listed company. He was appointed a non-executive director of Citic Pacific on March 25. "Citic Pacific is expected to announce Mr Yung's resignation within days and the appointment of the managers from Beijing will be announced at the same time," a source said. Citic Group has no immediate plans to restructure Citic Pacific's business because Beijing wants to see if there are other irregularities beyond the wrong-way currency bets. "Citic Group needed to send a team of people to Hong Kong because it wanted to examine all of Citic's businesses in Hong Kong," another source said. "The exercise is not only to punish Larry Yung, and it is not just about money - many of Citic's investments have strategic implications [for the nation]." Spokesmen for Citic Pacific and Citic Group declined to comment. Trading of Citic Pacific shares remained suspended yesterday. Last Friday, Citic Pacific said the Commercial Crime Bureau had executed a search warrant related to an investigation of alleged offences, including false statements by directors and/or conspiracy to defraud. On October 20 last year, the company disclosed it could lose up to HK$15.5 billion from "unauthorised" trading in high-risk, complex futures contracts on the Australian dollar, euro and yuan. The value of the Australian dollar in particular had fallen against the greenback amid the global financial crisis. The revelation came six weeks after the board said it first learned about the currency bets, a delay that drew fire from critics who condemned the company's poor corporate governance. The Securities and Futures Commission launched a probe into the currency bets, which sources said was focused on whether Citic Pacific had intentionally delayed disclosure. Citic Pacific said it had intended to use the contracts to hedge its huge capital outlays on its iron-ore mining project in Australia. The company said deputy managing director Leslie Chang Li-hsien and executive director Chau Chi-yin had resigned to take responsibility for failing to obtain approval before the bets. At the time, the company said no other directors were involved, but an internal document later showed that executive director Vernon Moore had signed some of the contracts. A spokesman said Mr Moore merely confirmed the contracts and had no decision-making power over them. The board demoted Mr Yung's daughter, Frances Yung Ming-fong, and reduced her salary for her involvement and her failure to inform the board, a punishment some observers said was insufficient and showed favouritism. Although the board said it learned about the currency bets on September 7, it stated five days later it was unaware of "any material adverse change" in its financial or trading position since the end of 2007. An analyst at an American brokerage believed Beijing was unlikely to uproot too many Citic Pacific managers at a time, even if it forced Mr Yung out.
China: Hong Kong companies will receive conditional access to massive carbon-reduction markets across the border after mainland authorities eased the eligibility rules. The change came about after the National Development and Reform Commission "reinterpreted" the rules recently, Secretary for the Environment Edward Yau Tang-wah said. Beijing had previously insisted that only companies with at least half their equity supplied by Chinese capital in a strict sense would be eligible to develop projects on the mainland under the Clean Development Mechanism (CDM). Now, it says Hong Kong-registered companies based in the city and run by Chinese nationals or Hong Kong permanent residents who constitute half of the company's board membership will also be acceptable. Other criteria include a minimum threshold of 50 per cent of non-circulating shares for a listed company. Under the UN-supervised CDM - the world's second-biggest greenhouse-gas market after the European Union's emissions-trading system - developing countries can sell certified emission reductions generated from qualified projects, such as renewable energy, to developed nations to meet their Kyoto Protocol commitments to cut carbon emissions. The changes will put Hong Kong back into the growing CDM market on the mainland, which is the biggest supplier of CDM projects in the world, accounting for a third of the 1,500 projects already registered with the UN. The mainland is estimated to deliver more than 100 million credits a year from the projects, with each credit equalling a tonne of carbon reductions. Mr Yau, who said he had been informed of the change in Beijing last week, hailed it as a "turning point". He said Hong Kong companies were set to benefit from new business opportunities in the huge CDM market all over the mainland. But it would be difficult to assess what kinds and sizes of companies would benefit from the relaxed rules as they would still have to satisfy the national requirements for qualifying CDM projects, he said. "The most important thing in the change is that it has lowered the bar for entering the market," Mr Yau said. "Without that, no matter how big or small a company is, it just can't participate." Industry sources said local utilities such as CLP Power (SEHK: 0002), which had a growing investment in renewable energy such as wind or hydro power, would be major beneficiaries. The Hong Kong General Chamber of Commerce, which had advocated the change for some time, said it would allow genuine Hong Kong companies to take part in the green-technology market on the mainland. Last year, Beijing also relaxed rules for CDM projects in Hong Kong, allowing companies registered in the city to develop projects without paying the administrative fee imposed on the mainland. William Yu Yuen-ping, head of WWF Hong Kong's climate programme, said the change might draw more companies to Hong Kong - including those that specialise in verifying and certifying CDM projects.
CLP will acquire the 49 per cent stake held by Roaring 40s in 10 wind farms largely in Jilin and Shandong to boost its green energy capacity. Electricity supplier CLP Holdings (SEHK: 0002) has agreed to buy mainland wind-power projects from its Australia-based partner for HK$730 million, making its first move to restructure its renewable energy investments overseas. The deal involves the acquisition of a 49 per cent stake in 10 wind farms largely in Jilin and Shandong provinces from Roaring 40s Renewable Energy, a 50-50 joint venture between CLP and Hydro Tasmania of Australia. The acquisition will add 122 equity megawatts to CLP's renewable energy capacity, increasing it to more than 1,200MW, or 9 per cent of its total generation capacity. To lift the renewable energy capacity ratio to 20 per cent of its total generation capacity by 2020, CLP yesterday said it would acquire Roaring 40s' green energy portfolio in India "in the near future". A CLP spokesman said the India acquisition involved one wind farm. The price is still being negotiated. Group chief executive Andrew Brandler said the restructuring of ownership of Roaring 40s' mainland portfolio would instantly boost CLP's exposure to the country's fledgling green energy market while bringing its target non-carbon-emitting generating capacity closer to reality. The company would keep its interest in Roaring 40s, which would in turn focus on renewable investments such as geothermal and solar energy in Australia after the asset restructuring, he said. Two of the 10 wind farms are in Jilin and one in Shandong. The rest were under construction, a CLP spokesman said. Some analysts said investment on renewable energy development was commercially viable on the mainland because of incentives such as lower tax, higher on-grid tariffs and government subsidies. CLP, which has been accused by green groups of being Hong Kong's biggest polluter, has aggressively expanded its clean-energy investments in hydro, wind, biomass, solar and geothermal power on the mainland, in Australia, India, Thailand and Laos as part of its non-carbon-emitting vision for 2050.
A top officer from the United States Navy would attend a naval parade in Shandong this month to witness celebrations for the 60th anniversary of the PLA Navy, a US military newspaper said yesterday. The visit follows a confrontation between a US surveillance ship and five Chinese vessels in the South China Sea last month. Military analysts said that the officer's presence would not directly help the two countries to reach agreement to prevent similar clashes in the short term, but reflected that the People's Liberation Army was trying to increase military transparency. US military newspaper Stars and Stripes reported that Admiral Gary Roughead would be accompanied by Vice-Admiral John Bird, the Seventh Fleet's commander, at the international fleet review in Qingdao on April 23, the date on which the PLA Navy was founded in 1949. It said that the guided-missile destroyer USS Fitzgerald would also take part in the naval parade. The Fitzgerald took part in a Sino-US joint search-and-rescue drill in the South China Sea in 2006. On Wednesday last week, when Admiral Roughead's visit was first announced, President Hu Jintao and American President Barack Obama met on the eve of the G20 summit in London and declared a goal of improving relations. The report stressed that China's invitation to Admiral Roughead was not unusual as both countries had exchanged visits by military leaders and naval ships for years. He has visited China before and known his PLA counterpart, Admiral Wu Shengli, for two years. But it also highlighted the negative impact of last month's standoff between the surveillance ship Impeccable and five Chinese vessels off the coast of Hainan. Ni Lexiong, a military expert from the Shanghai University of Political Science and Law, said Admiral Roughead's visit would help both sides provide the foundation for future military dialogue. "The Hainan clash is a normal, military dispute between China and the US, as it has also happened in other, diplomatic sectors," Professor Ni said. "Admiral Roughead's visit tells us that both countries are keen on solving those military disputes, but it needs more negotiations from higher-level leaders if both of them want to reach agreements." With China also inviting other top naval officers from around the world to take part in the international fleet review, Professor Ni said this showed that the PLA was starting to become more transparent. Andrew Yang Nien-dzu, a Taipei-based military expert, said Admiral Roughead's decision to attend the PLA Navy parade would help Beijing and the US to enhance mutual military confidence. "But I think Beijing and Washington have to pay more attention to enhancing military exchanges, as so far we haven't seen any significant results between the PLA Navy and the US Navy since they signed the Military Maritime Consultative Agreement in 1998."
Google's free music download service on the mainland hopes to build traffic and win advertisers in the world's biggest internet market. Can global music companies make money by giving away songs in China, where piracy is rampant? They certainly hope so. On March 30, the world's biggest record labels - including EMI, Warner Music Group and Vivendi's Universal Music - said they would seek to profit on the mainland by working with Google and offering free downloads of music to anyone inside the country. Google, which has no plans to offer the service elsewhere, hopes to build traffic and win new advertisers by allowing the Chinese to search for free music on its site. Instead of earning money from each download, record labels will share advertising revenue with Google's partner in the deal, a mainland company called Top100.cn. Analysts said the partnership could help determine the future of how valuable content is distributed in the world's biggest internet market. Until now, China has been a hotbed of online piracy and free downloads of music, film and even television shows. According to the International Federation of Phonographic Industries, which represents the global record makers, 99 per cent of the music downloaded on the mainland violates copyrights. Lawsuits by big music labels and promises by the mainland government to crack down on internet piracy have failed to deter the practices. But now, the music industry said that, at least in China, it can live with giving away music. "The level of online advertising in China is quite mature, so we're willing to try this out," said Sandy Monteiro, a senior vice-president at Universal Music Group. The deal creates a powerful tandem - the world's biggest online search and advertising engine, paired with powerhouses from the music industry - aiming to take on the country's top search engine, Baidu, whose Web traffic has grown partly because of its links to free, unlicensed music. Global record labels have sued Baidu, trying to force the company to stop linking to unlicensed sites. But Baidu, which has a search market share approaching 65 per cent, has said it does not engage in piracy. Google executives said they acted because a music search function was one of the few elements they did not have in the country. According to government figures, about 84 per cent of the mainland's almost 300 million internet users download music over the Web, and most of it is used for mobile telephone ring tones. Google hopes that by offering free, high-quality music - giving consumers fewer worries about viruses or damaged tracks - it can cut into Baidu's lead. For the music industry, which believes it has lost hundreds of millions of dollars to online piracy, the deal promises to deliver a steady stream of revenue and could also put pressure on Baidu and other Chinese internet companies to distribute legitimate tracks or risk being locked out of future deals. Not everyone believes it will work. "Google's move is just burning money to compete with Baidu's dominance," said Guo Chunlong, the founder of yobo.com, a music and entertainment website. "Sharing ad revenues with music companies - this business model is not sustainable. How many page views could generate the money both Google and the music companies expect?"
China said yesterday that news outlets and publishers would be forced to stand on their own feet financially under a reform plan designed to create a more competitive media sector with a global reach.
April 7, 2009
Hong Kong: A Hong Kong court said it would allow controlling shareholders of PCCW (SEHK: 0008) to proceed with a US$2.2 billion privatisation of the telecom firm after finding against the city’s securities watchdog in a case over alleged vote buying. The Securities and Futures Commission (SFC) quickly said it will file an appeal against the decision allowing a company associated with PCCW Chairman Richard Li Tzar-kai, and China Netcom, to proceed with their buyout offer. “I have concluded that the statutory majority who voted for the scheme were acting in bona fide [good faith] and were not coercing the minority in order to promote an interest adverse to those of the class whom they represented,” the verdict issued by High Court Judge Susan Kwan Shuk-hing said. “On the evidence before me, I am satisfied that the scheme is one as to which an intelligent and honest man … and acting in respect of his interests might reasonably approve,” Madam Justice Kwan said, in a written judgement. “I therefore exercise my discretion to sanction the scheme.” The court rejected the SFC’s request to suspend the ruling or to hold up the privatisation process any further and also approved a proposed reduction in the company’s capitalisation. Controlling shareholder Mr Li, through his company Pacific Century Regional Developments (PCRD), and China Netcom, which is now part of China Unicom (SEHK: 0762) , offered to buy out minority shareholders for HK$4.20 a share last November. They sweetened the offer to HK$4.50 a share in December. But the SFC began probing alleged improper share transfers at PCCW under the privatisation deal proposed by PCRD and Netcom in February. The investigation began after shareholder activist David Webb said in January he had received an anonymous e-mail alleging PCCW shares were offered to insurance agents in exchange for supporting the buyout offer. SFC lawyers said of the 1,404 shareholder votes cast in early February in favour of the privatisation deal, 849 looked suspicious as they might have included those given out as bonus shares to the insurance agents, who were formerly PCRD employees. Both PCRD and Mr Li have denied any involvement in any improper activities and said that the process had complied with legal requirements. PCCW shares have been suspended since pre-opening last Wednesday, pending the court decision. The stock last traded at HK$3.98, an 11.6 per cent discount to the offer price.
HSBC shares rose over 4 per cent on Monday after its massive US$18.9 billion rights issue received a robust response from investors.
Edison Chen speaks at a press conference for his new film "The Sniper" in Singapore on Sunday. A computer technician accused of stealing the racy images at the centre of a celebrity sex photo scandal has pleaded not guilty. Sze Ho-chun entered his plea in Hong Kong court on Monday as his criminal trial got under way. The 24-year-old technician allegedly stole photos from the laptop computer of movie star Edison Chen showing him performing sex acts with famous actresses and singers. The photos shocked the Chinese-speaking world after their release on the internet last year. Chen, who fled to Canada, has publicly apologised. He and others in the scandal have only recently started to reappear in public. Sze is charged with obtaining access to a computer with dishonest intent. He faces a maximum penalty of five years in prison if convicted.
Hong Kong could adopt a further economic stimulus package later this year to counter the impact of the global financial downturn, chief executive Donald Tsang told Monday's Financial Times. He said the territory was facing its most serious economic test since the second world war but was in a position to weather the storm. A key transit hub for goods made in southern China’s factory belt, Hong Kong’s exports through fell almost a quarter year-on-year in February on the back of a slump in demand from the United States and Europe. Mr Tsang said the city had HK$400 billion (US$51.6 billion) in the bank “so I’m in a good position to spend more if I want to... If necessary we will do something in the middle of the year.” While Hong Kong has generally capped government spending at 18 per cent of gross domestic product, Mr Tsang said it was difficult to make a major impact on the wider economy. “Fortunately I’ve still got a lot of ammunition in my pocket,” he told the business daily. Mr Tsang’s comments echo those of his namesake, Hong Kong financial secretary John Tsang, who cautioned last month that the global slowdown would get worse before it got better. John Tsang, who had refused to make huge spending promises in his February budget, said he would wait until the middle of the year to gain a better grasp of how the economy is going to play out. Hong Kong slipped into recession in the third quarter of last year, a sharp contrast to the China-inspired boom over the past four years. The government expects the economy to shrink between two and three per cent this year, as the city’s key sectors – exports, finance and property – continue to struggle through the downturn.
The Hong Kong Institute of Education (HKIEd) will expand its academic and research collaborations with two tertiary institutes in the Mainland, according to a press release Xinhua received on Monday. In a visit to Beijing concluded on April 3, HKIEd has reached separate agreements on student exchange with Beijing Normal University (BNU) and Capital Normal University (CNU). A new Memorandum of Understanding (MOU) on educational leadership has also been sealed between the Asia Pacific Center for Leadership and Change at HKIEd and BNU's Faculty of Education, which outlined the future cooperation in research, professional development and academic programs. According to HKIEd, their collaboration with BNU will initially focus on development of a joint research project on rural school leadership in Mainland. HKIEd currently has collaboration agreements with some 30 institutions in the Mainland and 60 universities overseas.
Bank of East Asia (SEHK: 0023) is in talks with Industrial and Commercial Bank of China (SEHK: 1398) (ICBC) to take over its majority stake in their jointly held securities unit, ICEA Securities, a source said. The proposed deal was under due diligence procedures and the two sides were negotiating a price, the source said. Banking analysts said any bid to take control of ICEA, which is 75 per cent held by ICBC, could be part of a broader strategy by BEA to support the expansion of its wealth management business. Talk of the deal followed comments that BEA also planned to acquire a Taiwan unit of American International Group to expand its wealth management business. BEA chairman David Li Kwok-po confirmed to the South China Morning Post (SEHK: 0583, announcements, news) that the bank was planning to expand its wealth management business but he refused to comment on talk of taking full control of ICEA Securities. "I could not comment on this transaction. What I can say is that Bank of East Asia is very keen on expanding our wealth management business." ICEA is 25 per cent owned by BEA. Its securities arm, ICEA Securities, has about 250 brokers and a strong retail investor base. Louis Tse Ming-kwong, director of VC Brokerage, said were BEA to acquire full control of ICEA it would be in a position to expand its securities trading business which was at present only a small operation. "ICEA Securities has a large number of brokers and has established a good client base. If the purchase price is reasonable it would be easier and cheaper for BEA than building up such a service from scratch," he said. "What is important, however, is whether BEA can retain the good brokers and large client base of ICEA Securities after the takeover." The source said ICBC was a willing seller since it wanted to avoid a situation in which it operated three securities arms in competition with each other. The lender last year set up a wholly owned investment banking arm, ICBC International Capital, in Hong Kong, with a focus on mega fund-raising deals of its large mainland corporate clients to issue H shares in Hong Kong. The new unit also operates securities trading services. In addition, ICBC's local banking unit, ICBC Asia, has a securities arm in Hong Kong. Selling its stake in ICEA Securities would help consolidate its securities business, leaving ICBC International Capital to focus on institutional clients while ICBC Asia could focus on retail business, the source added. The Securities and Futures Commission in June last year fined ICEA Securities and ICEA Capital a combined HK$38 million and required an independent audit firm to conduct reviews of their internal controls and compliance systems. The action came after the commission found that from 2002 to 2004, some senior staff members who had since left the firms, had created an impression that the two firms were providing improper support to some listed stocks. In 2005, ICEA paid HK$30 million to the SFC as settlement in exchange for not admitting any wrongdoing for its sponsorship of Euro-Asia Agricultural (Holdings) in 2001. The Shenyang-based orchid grower collapsed in 2002 after it was alleged that it had inflated its revenue by 20 times in the four years leading up to its listing.
HSBC (SEHK: 0005) has drawn 96.6 per cent subscription orders from its 210,000 shareholders across the world on its US$17.7 billion rights issue in the largest single fund-raising exercise in Hong Kong and Britain. "I would like to thank shareholders for their support in this successful rights issue ... we remain confident that HSBC is well placed in today's environment and that our strength leads to opportunity," HSBC chairman Stephen Green said. The bank expects the remaining 3.4 per cent of the new ordinary shares to be sold today. Company sources said 98.2 per cent of Hong Kong shareholders had taken up the rights. Market watchers said this showed Hongkongers were the bank's most loyal shareholders in the world. "There has been an extraordinary take-up by shareholders, especially in Hong Kong," said Sandy Flockhart, the chief executive of HSBC Asia Pacific. "I am struck by the support they have given us through thick and thin. We recognise our responsibility to use the money wisely in the interests of Hong Kong and our shareholders at large." HSBC said: "As a result of the rights issue, HSBC is well positioned for the uncertain economic environment and for growth opportunities." The bank will use the money to increase capital and finance acquisitions that fit the company's strategy of expansion in emerging markets. Fund managers said the overwhelming response could see the bank's shares resume a rising track. There are more than 67,000 HSBC shareholders in Hong Kong, accounting for a third of the bank's shareholder base. The 96.6 per cent subscription rate was marginally below another rights issue proposed by HSBC's rival, Standard Chartered, in December last year, which attracted 96.95 per cent subscription on a HK$21 billion rights issue. This is the second time in 22 years that HSBC asked shareholders for new funds. "The result is in line with my expectations. It showed again that Hong Kong shareholders are diehard fans of HSBC," said Patrick Yiu Ho-yin, a managing director at CASH Asset Management. "I doubt they will sell the shares in the short term as HSBC's Hong Kong shareholders are accumulators rather than sellers. I expect the shares to reach HK$55 this week." HSBC shareholders have paid US$17.1 billion for the rights issue while the three arrangers of the issue - Goldman Sachs, JP Morgan Cazenove and HSBC - will tap the open market today for the sale of the remaining 3.4 per cent of the issue that was not taken up. "The response reflects that both retail and institutional investors are still keen on HSBC for its strong fundamentals and proven track record," said Paul Pong, a managing director of Pegasus Fund Managers. Shareholders who took part in the rights issue will receive the formal allocation on Wednesday while the new shares are set to begin trading on Thursday. HSBC said the proceeds would help strengthen its tier 1 capital ratio to 9.8 per cent from the current 8.5 per cent. HSBC closed at HK$49.45 in Hong Kong on Friday. Its London shares closed at £4.345 (HK$49.65) while its American depositary receipts closed at US$32.61 or the equivalent of HK$50.87 a share. HSBC unveiled the rights issue on March 2, the day the banking giant announced a 70 per cent drop in net earnings for last year, and formally began the offering on March 20. The stock had fallen 34.9 per cent to as low as HK$31.53 on March 9 after the announcement of the issue but has recovered 56 per cent to cross HK$50 last week.
Hong Kong's home affairs minister has hinted the city and Taiwan could explore the possibility of organising regional art exhibitions together following the warming of ties. Secretary for Home Affairs Tsang Tak-sing, who returned from a historic visit to Taipei last week, said there was still plenty of room for more extensive and higher-level cultural exchanges between Hong Kong and Taiwan. Mr Tsang was the first principal official from Hong Kong to visit Taiwan since the handover in 1997. During his visit to Taipei, he attended a Buddhism forum as the head of the delegation from Hong Kong and Macau. On his bureau's website yesterday, Mr Tsang said Hong Kong could take advantage of the development of a cultural district in West Kowloon to work with Taiwan. "Especially when we are to borrow important art items from overseas to be on display in the region, would it be more beneficial if we join hands to do it together?" he asked. Hong Kong and Taiwan have begun a new era of closer relations, with improvements in cross-strait ties. Last week, Chief Executive Donald Tsang Yam-kuen told visiting Kuomintang vice-chairman and magistrate of Taoyuan county Eric Chu Li-luan that he hoped to visit Taiwan before his term ended in 2012. Later this month, an intercity forum between Hong Kong and Taichung will be held in Hong Kong. At yesterday's RTHK City Forum, China observer Johnny Lau Yui-siu said Hong Kong should invite Taiwanese officials to a regional city mayors' conference, while Chiang Su-hui, who chairs the CS Culture Foundation, a private think-tank, said Hong Kong should first allow Taiwanese visitors visa-free entry. Official contact between Hong Kong's leader and a senior Taiwanese official came to a halt for seven years until July last year when Donald Tsang received Chiang Pin-kung, who heads the island's quasi-official Straits Exchange Foundation, at Government House. In 2001, the then chief executive Tung Chee-hwa met Taipei mayor Ma Ying-jeou, who is now Taiwan's president.
KGI Asia Limited will refund HK$1.6 million to clients who bought Lehman Brothers minibonds, the Securities and Futures Commission said yesterday. The firm is the second securities company - after Sun Hung Kai Financial in January - to buy back all outstanding minibonds from clients at the principal amounts they invested since local financial regulators began an investigation in September. The SFC reprimanded KGI over its internal systems and controls relating to the sale of the troubled product. "This outcome resolves our concerns about KGI's past sales practices in respect of Lehman Brothers minibonds, covers present losses incurred to its clients and provides assurance that these problems will not arise again in the future," said Mark Steward, SFC executive director of enforcement. "KGI and its management should be commended for taking up this initiative." KGI sold minibonds to five clients - none of them professional investors - between November 2007 and May 2008. KGI agreed to pay money back to minibond customers within 30 days of the date of acceptance. KGI chief operating officer Ben Kwong Man-bun said the firm will engage an independent audit company to review its internal controls, systems and procedures. The SFC said it will monitor KGI over the next 18 months, and if the same situation occurs again its license will be partially suspended for three years. The company would then not be allowed to sell or distribute any unlisted or structured products or provide advice to clients regarding such investment products. KGI was a distributor of series 34, 35 and 36 of Lehman minibonds. Clients who accept the offer will be required to transfer their minibonds to the broker, and drop all claims they may have against KGI. In January, Sun Hung Kai Financial announced a repurchase plan of HK$85 million from minibond customers. The Democratic Party said yesterday it will help minibond investors who plan to take their case to the District Court to apply for the Consumer Council's legal fund. The party hopes the government will provide unlimited support for the fund as promised. Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong will attend the Legislative Council's hearing on the minibond controversy for the first time on Tuesday next week.
Pop star Edison Chen Koon-hei, the central figure in last year's celebrity sex-photos scandal, braved a death threat to appear in public in Singapore yesterday to promote the film The Sniper, in which he stars. Chen admitted he was "a little bit afraid" but said he had to do "what needs to be done". He also said he wanted one day to end his self-imposed exile from Hong Kong. His appearance came less than a month after two Hong Kong media outlets each received an anonymous letter containing a cartridge and warning Chen to stay away from public events if he valued his life. "If I say I'm not fearful, I would be lying," the 28-year-old told a packed, heavily guarded media conference at Singapore's Grand Hyatt. At least four private guards armed with handguns were seen, reports said. "I'm a little afraid but I have to do what needs to be done so I hope everyone will welcome me and watch my movie," Chen said, referring to the crime thriller directed by Hongkonger Dante Lam Chiu-yin. Chen was wearing a dark shirt with the top button undone. There was no sign he was wearing a bullet-proof vest, an AFP report said. Chen also said he hoped to resume his career in Hong Kong. "I hope to be able to continue [working] in the Hong Kong movie industry but I'm taking things slowly for now," he said. "I will be brave to face whatever mistakes I've made." Chen had been one of the most promising stars in Asia until sex pictures he took with a string of actresses appeared on the Net last year. After the scandal broke he said he would quit the city's entertainment scene. He has been living in Canada since. He also apologised to the women involved. One, Cecilia Cheung Pak-chi, hit out at Chen in a Cable TV interview last month, saying he lacked sincerity.
Author Anneliese O'Young and Aedas chairman Keith Griffiths launch Travels with Aedas at Exchange Square for the Sichuan quake fund. Architectural giant Aedas is contributing to the reconstruction of quake-ravaged Sichuan with the launch of a book that showcases more than 50 of its award-winning buildings around the globe. For every copy of the book sold, more than HK$70 will go to Homes for Hope, a South China Morning Post (SEHK: 0583, announcements, news) initiative to help rebuild Sichuan. An estimated HK$500,000 of the total sales proceeds would go towards the fund, the firm's chairman, Keith Griffiths, said. The book is available at the Swindon, Kelly & Walsh bookstore and the Hong Kong Book Centre. Travels with Aedas will feature some of firm's best-known designs, including a spaceship-like centre in Singapore and a September 11 memorial and museum in New York. In the book, Aedas designers explain the ideas behind the structures, including a commercial building with a twisted spine in Dubai and the Venetian Macao, where more than 600 moulds of arches, windows and frames were used to evoke the Italian city of Venice inside the casino. The book shows how architects interact with the community they work in. Starting in Beijing and finishing in Sao Paulo, it takes readers on a journey through 23 cities. The book is likely to appeal both to architecture buffs and travel lovers; it offers more than 60 tips on recreational activities for visitors to the cities, and shares the thoughts of more than 40 architects. "The architects' role is not just to design buildings, but is also to integrate and help the community," Mr Griffiths said. A good design was one that added to the well-being of users, he said. Footbridges in Central, for example, were a wonderful network that allowed people to walk from one building to another. A sense of social responsibility prompts Aedas' support for the reconstruction of Sichuan. Right after the earthquake last May 12, the company launched a two-for-one programme. "For every dollar its staff donated to a selected charity, the senior management donated another HK$2 on the company's behalf, and we ended up with a donation of HK$1.2 million," Aedas managing director Kyran Sze said. The firm also set up a provisional training centre in its office in Chengdu, the capital of Sichuan province, to teach technical knowledge about building houses, in the hope more people could help in the reconstruction, Mr Sze said. Aedas also plans to roll out a design competition for the best housing models applicable to Sichuan villages. Anneliese O'Young, the author of the book, was proud of her involvement in the nine-month project. "I met a lot of forward-looking and passionate architects," O'Young said. "What I enjoy the most are ones with design solutions unique to the community." The Homes for Hope project by the Post aims to raise more than HK$18 million to help rebuild in excess of 1,000 homes for more than 2,400 people as well as provide essential services for two of the hardest-hit villages in Sichuan - Qingquan, north of Chengdu, and the Shengnan new village in the scenic nature reserve of Jiuzhaigou.
A potential management reshuffle may drag down the share price of CITIC Pacific (0267), which resumes trading today, but market watchers say the impact is expected to be less than when the firm warned of a huge foreign exchange loss last year. Following a police investigation that began on Friday into the foreign exchange contracts of the troubled conglomerate, there is speculation that CITIC Pacific chairman Larry Yung Chi-kin will be replaced by Chang Zhenming, vice chairman and president of the parent group in Beijing. "The stock price will be under pressure as the alleged offenses are serious but the impact on management staff is still unknown as there is yet no official announcement of any change of directors," said Sun Hung Kai Financial strategist Castor Pang Wai-sun. Shares of CITIC Pacific were suspended from trading on Friday morning when the price was HK$9.47. "It is possible for the shares to fall to around HK$8 but they are unlikely to test the previous low which was due to the company's financial loss," Pang said. "Investors' confidence in the company was eroded by worries about its corporate governance, which will be removed if a reshuffle takes place soon," said First Shanghai Securities strategist Linus Yip Sheung-chi. Yip said a management reshuffle would not surprise the market which has been speculating on such a possibility since the company announced a paper loss of up to HK$15.5 billion on Australian dollar derivatives last October. "A reshuffle would increase volatility of the stock in the short term as there will be a transition if directors are replaced," Yip said. He does not expect the company's long-term operation to be affected by any change in directors. The police searched CITIC Pacific's office on Friday as part of an investigation to see if company directors made false statements or conspired to defraud. "There have not been any charges or arrests made by the police," the company said. CITIC Pacific's share price plunged 55 percent to HK$6.52 on October 21, the day after the profit warning and senior staff - finance director Leslie Chang Li-hsien and financial controller Chau Chi- yin - resigned as directors.
Citibank's Hong Kong unit will not
lay off staff or cut salaries this year despite the economic environment
remaining difficult. Weber Lo Wai-pak, chief executive and country business
manager of Citibank Hong Kong, said the local unit was not as badly hit as
overseas branches, though both revenue and profit dropped by single digits in
the financial year ended March. "We saw continuous growth in deposit and net
money inflow during the past months, showing consumer confidence," he said. Lo
said salaries will be frozen at last year's level and there will be no job cuts.
"We also need talents for business development. We cut jobs last year but there
is no layoff plan so far this year."
China: HSBC (SEHK: 0005) said on Monday it had signed a US$250 million financial service agreement with Shanghai Electric Group (SEHK: 2727) to support the power equipment maker’s global expansion. Under the agreement, HSBC will provide Shanghai Electric and its units with a global facility limit of US$250 million to meet their financial needs, HSBC said. The funds could be used for spot and forward foreign exchange deals, working capital, and import and export services, it said. “The ongoing financial crisis poses challenges for corporates but also brings about opportunities. We are confident that we will sustain our growth amid the crisis,” Xu Jianguo, chairman of Shanghai Electric Group said. The agreement will “help enhance our risk management in our overseas expansion”, he said in the statement. Shanghai Electric, mainland’s biggest power-equipment maker by capacity, has recently secured market share in India, Pakistan, Indonesia and Kazakhstan. It “is also actively exploring other overseas markets including South American countries”, according to the statement. The company said in January it expected its last year net profit to fall short of its target of 2.9 billion yuan (HK$3.29 billion) by 10 to 13 per cent after customers requested a delay in product deliveries because of a weaker economy.
Anhui Conch Cement sold 15 per cent more cement in volume terms in the first quarter when price remained soft, and profit for the preiod is expected to remain steady, the company's executive director Guo Jingbin, seen here in a file picture, said in Hong ong on Monday. Top cement maker in the country, Anhui Conch Cement (SEHK: 0914) said on Monday it aims to sell 20 per cent more cement this year and will focus on markets in central and western parts as Beijing increases infrastructure investment. The cement maker is focusing on projects in western part of the country, such as in Sichuan and Chongqing, in a bid to meet cement demand from redevelopment after an earthquake which killed thousands in May last year, executive director Guo Jingbin told reporters. It will also continue to expand rural markets in central areas and its capital expenditure for this year would increase by more than half to 8 billion yuan (HK$9 billion) from 5.1 billion yuan a year ago. “About 50 per cent of our capital expenditure [this year] will go to central and western China,” Mr Guo said, adding the company aims to expand the production capability in the areas. He said demand for cement is expected to expand 6 per cent as fixed asset investment grows 15-20 per cent. Mainland’s cement industry has been clouded by concerns over rising capacity and slower economic growth that could depress demand. “Cement prices have bottomed out in the first quarter,” Mr Guo said. “We expect the price will continue to go up and will post quarter-on-quarter increase over the rest of year or into next year.” Mr Guo said the company sold 15 per cent more cement in volume terms in the first quarter when price remained soft, and profit for the first quarter is expected to remain steady. But the company may be able to save some 1.6 billion yuan of costs this year, thanks largely to lower coal prices. Anhui Conch, which competes with local players such as China National Building Materials and foreign operators such as Lafarge’s venture with Shui On Construction (SEHK: 0983, announcements, news) , posted a 5 per cent rise last year profit to 2.6 billion yuan last week. It also planned to issue up to 9.5 billion yuan worth of corporate bonds in mainland, raising capital to repay loans and improve its financial structure. Shares in Anhui Conch fell 1.3 per cent on Monday, compared with 2.7 per cent rise on the index for key mainland companies listed in Hong Kong.
Li Changchun (R), a member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, shakes hands with President of the Republic of Korea (ROK) Lee Myung Bak during their meeting in Seoul, ROK, April 6, 2009. Li, a member of the Standing Committee of the Political Bureau of the CPC Central Committee, made the remarks when meeting ROK President Lee Myung Bak. Li first congratulated the successful meeting between Lee and Chinese President Hu Jintao amidst the G20 financial summit in London. Lee, in return, highly spoke of the contribution made by China to the results scored in the summit. Hu-Lee summit is the latest demonstration of high-level exchanges between China and ROK. The two countries, key economic partners to the other, also carry out cooperation in cultural, educational and scientific areas. "We also strengthen communication and coordination on major global and regional issues, including China-Japan-ROK cooperation, climate change and international financial cooperation, thus ushering the China-ROK strategic and cooperative partnership in a new phase," Li said. "The development of relations with ROK takes an important position in China's foreign policy for neighboring countries," he added. To further develop such ties, Li suggested both nations maintain high-level exchanges for increasing mutual trust in political area. "Besides governmental contacts, the exchanges between parliaments and political parties should also be strengthened. And the exchanges among political parties should form a mechanism," he said. Li also proposed to make joint efforts for combating the spreading financial crisis and strengthening mutually beneficial cooperation. "We should adopt effective measures to ensure the steady growth of economic cooperation, increase cooperation in such key areas as energy, telecommunication, finance, logistic and environmental protection, and initiated negotiations of free-trade agreement at an early date," he said. He also pledged to expand people-to-people contacts, in particular the communication among young people, so as to lay a solid foundation for bilateral ties. "Exchanges of academic and media circles could also be enhanced," he said. On multi-lateral cooperation, Li suggested both keep close communication and coordination in preventing trade protectionism, reforming international financial system and strengthening global and regional cooperation on financial affairs. Li expressed appreciation for ROK's adherence to one-China policy.
Beijing will extend its post-Olympic vehicle restrictions for another year in an effort to ease traffic congestion and reduce air pollution, officials said yesterday. The extension was widely expected and the government claimed it was supported by most residents. Some car owners, however, complained it was unfair, while some questioned the benefits. The restrictions take 20 per cent of the city's 3.61 million vehicles off the roads each weekday. "It will be carried out from April 11 to April 10, 2010," said Wang Zhaorong, of the Beijing Municipal Committee of Communications. For private cars, the ban will be in effect from 7am to 8pm, compared to 6am to 9pm now. The restrictions remain in effect round the clock for government and corporate vehicles. Owners will have the same "off day" for 13 weeks in a row.
China National Petroleum Corp, the largest oil company on the mainland, has approached two Canadian oil firms in the process of merging regarding the purchase of their offshore assets in Libya and Syria valued at about US$5 billion, sources said. Beijing-based China National Petroleum, the parent of Hong Kong-listed PetroChina (SEHK: 0857, announcements, news) , could not be reached for comment. Suncor Energy Corp, Canada's second-largest oil sands company, announced on March 23 that rival Petro-Canada had agreed to be acquired for C$19.3 billion (HK$120.69 billion) in an all-stock deal. Petro-Canada's international unit owns assets in Syria, Libya, Trinidad and Tobago, and the North Sea. The offshore unit will generate about one-third of its total 2009 profit based on an oil price of US$45 a barrel, according to estimates from New York-based brokerage the Benchmark Company. A Suncor spokesman said any discussions regarding the future plans of the combined company would have to wait until the merger transaction was completed. Petro-Canada declined to comment. "I'm more in the camp that a disposal of the Libyan and Syrian assets is likely to occur because it would be one element in achieving the US$1 billion capital synergies the companies talked about at the time of the merger announcement," said Mark Gilman, energy analyst at the Benchmark Company. "By divesting they'd forgo development costs required in Libya and Syria and to date Suncor has been focused on North America and almost exclusively on Canadian oil sands, and these assets just don't fit," he added. Oil sands projects require separating the usable oil from the sand, making such projects more capital intensive than traditional oil drilling. Petro-Canada's Libyan assets produced 48,000 barrels of oil a day last year, according to the company's website. The Syrian assets are in development and have not started production. Resource-rich Africa and the Middle East are high on the list of regions targeted by mainland companies. Sinopec (SEHK: 0386), the largest oil refiner on the mainland, paid US$1.8 billion for Tanganyika Oil, which owns assets in Syria; and 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, or CNPC (SEHK: 0135), was last month blocked from the US$393 million acquisition of Verenex Energy, which owns assets in Libya, after the state-owned oil company National Oil exercised a right of first refusal. "Verenex is a very good asset. They'll have a better chance [with Petro-Canada] because the worse the assets the better the odds of success; but it may be that they end up getting Syria and not Libya," said independent energy analyst Larry Grace. CNPC is building an about US$1 billion refinery in Syria. The venture will produce 5 million tonnes of refined products a year.
Barbara Shiu says a sharp drop in candidates sitting the institute's entry examination is in line with the weaker equities market. Barbara Shiu is one of a rare breed who has managed to straddle working for both mainland and Hong Kong corporate watchdogs. The experience of working in radically different regulatory environments will stand her in good stead in her latest role as the first chairman of the Hong Kong Securities Institute (HKSI), an organisation facing unprecedented challenges amid the global financial crisis. The number of candidates sitting the institute's test for entry to the industry is half that of last year as jobs dry up in the battered financial sector. The HKSI offers industry entry examinations and training programmes for brokers, fund managers and financial advisers. In her full-time job as chief risk officer of BOC (SEHK: 3988) International Holdings, where she oversees risk management and legal compliance, the financial crisis means she has to monitor so-called in-house "stress tests" to make sure her company can cope with the crisis. "We have done so many stress tests that I almost worry the computer will crash," she said. A stress test basically helps determine whether the capital and other financial and operational requirements of the brokerage can be met should the market suddenly rise or drop by a very high percentage. Before taking up her position at BOCI, Ms Shiu spent two years at the China Securities Regulatory Commission from 2002 to 2004 as part of the regulator's strategy and development committee. Prior to that she had spent eight years at the Securities and Futures Commission in Hong Kong, where she worked in various departments including corporate finance and overseeing listing policies and takeover codes. Ms Shiu said the geographic differences between Hong Kong and China meant huge differences in the way policies were policed. "In Hong Kong, if you want to check on a broker, the SFC can send a staff member to the next building in Central to check its books and records. But in China, the regulator from Beijing may not so easily access a brokerage branch in Xinjiang or Guangxi." Before becoming a securities regulator, Ms Shiu had spent many years in the commercial and investment banking field in Hong Kong and North America, after gaining her MBA from the Rotman Business School at the University of Toronto. She is active in public duties, including being a member of the cash market consultative panel at the Hong Kong Stock Exchange. Although she is no longer a regulator, her fate seems tied to the sector. Her husband, Mark Dickens, is the newly appointed head of listings at the stock exchange. The couple worked together at the SFC as colleagues before wedding bells rang at the end of 2004. "Working with my husband in the financial market together is a good thing as we have a lot of common friends and topics to share."
China will strengthen oversight of listed securities companies by promoting information transparency. On Saturday, China Securities Regulatory Commission (CSRC) introduced a regulation which said securities companies should remind investors about potential risks when shareholders decide to launch a new business or introduce an innovative business. The annual report and half-year report by listed securities companies should include risk assessment conditions, as well as reasons for risk and probable effects. In addition to the annual operation report, companies were asked to deliver a supervision and monitoring annual report which includes audit and accounting information. If a company or high-rank official is involved with serious illegal activity, and that results in worsening financial condition, the company should inform all shareholders. The CSRC said the regulation, which was made on the basis of the Securities Law, took effect April 3.
April 6, 2009
Hong Kong: An outsider with a creative mind, rather than a rigid-thinking government official, will head Create Hong Kong, the commerce minister says. Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan said there would be an open recruitment process to choose the chief of a new office to co-ordinate the development of the creative industries. The office will be set up in a couple of months. "We are planning for an open recruitment," Mrs Lau said in a radio interview yesterday. "We hope that we can find such a talent who can lead the development of creative industries." The creative community welcomed the news. Alan Wan Siu-lun, secretary of the Hong Kong Comics and Animation Federation, hoped a person with an open mind who could think "out of the box" could be found to head the office. "Hong Kong lacks someone who is bold enough to try out new things and new ideas, but we need people like that to help develop our creative economy," Mr Wan said. Mrs Lau said the office would act as a one-stop service to create a much friendlier environment for people in the creative industries. The office would be established after the Legislative Council's Finance Committee approved the project. Mrs Lau said a HK$300 million fund had been earmarked to help develop creative industries apart from film and design, which the government already funds. Create Hong Kong would manage this fund and it would be open to receiving applications, she said. "My idea is to set up an advisory board to take care of the applications," Mrs Lau said, adding that it would be necessary to seek the opinions of professionals when considering the applications' merits. The new creative industries office would take the initiative in doing outreach work, so that the community could be part of the development of the creative economy, she said. She hoped that scholarships, subsidies and overseas training opportunities could be awarded to young students who showed potential in the creative fields so that their talents could be fully developed.
Fancy throwing a party? You could fork out HK$20,000 to rent the roof garden of The Pawn, the heritage building turned trendy gastropub in Wan Chai. Or you could go there and not pay a cent - because the area is actually classified as open space that can be used by anyone, not just bar patrons. The British-style pub and restaurant in Johnston Road, hailed as a landmark revitalisation of an old building, is another of those venues that inhabit a confusing zone between private and public space. The Pawn was built in 1888 as four separate shophouses, one of which was called the Wo Cheong Pawn Shop. They were restored by the Urban Renewal Authority in 2005 at a cost of HK$15 million. Although the building is now rented by a private company, part of the building is required to be open to the public, even though it is not legally bound to do so. The rooftop of the building, which is decorated as a garden, is public open space under a consensus between the government and the URA. However, its status as a public open space is not stated clearly either on the lease or the master layout plan of the development. The only hint that the area is an open space is a sign posted next to the lift inside the building, which says the roof garden is open to the public daily from 11am to 11pm. There was uproar last year after it emerged that the operators of Times Square in Causeway Bay had restricted access to a public piazza and rented out parts of it. And nightclub Dragon-i in Central was caught out by the Sunday Morning Post (SEHK: 0583) roping off and charging entry to a public area. William Wan Shiu-wah, the URA's director of property and land, said: "While we are drafting the master layout plan of the project, we believe the rooftop should be open to the public as it is a preserved building." The URA said the roof garden was opened to the public as a goodwill gesture after the premises were leased for commercial use. The Pawn said bookings for this month were nearly full. The minimum charge is HK$18,000, plus 10 per cent charge, for five hours. The contradictory nature of the space has created trouble. Janis Tong, who visited the roof garden with friends in November, was questioned by Pawn staff. "When we had been there about 20 minutes, a staff member came and asked if we wanted anything. When we replied no and said it is an open space, he gave us a long face." Ada Wong Ying-kay, ex-chairwoman of Wan Chai District Council, said a local tour was barred from entering the garden. "They were told there was a private function and they were not welcome." Pawn manager Sam Lam Shing-wai said: "All our staff understand the roof garden is open for visits." Mr Wan said the authority was going to hire two security guards to ensure public access to the roof.
Lau Kin-wai at the protest at Tsim Sha Tsui Star Ferry pier. Calligraphy by the legendary "King of Kowloon" may yet find its way into a permanent exhibition. The government has expressed a willingness to discuss offers by any artists or collectors to donate their works of art to the public. The government's interest follows Lau Kin-wai, a long-time friend of the late street calligrapher Tsang Tsou-choi, revealing he would like to donate all of the 40 Tsang pieces he owns, on the condition that they are properly exhibited. The works are currently stored in a small warehouse he rents. A spokesman for the Leisure and Cultural Services Department said: "We are happy to discuss donation proposals with any artists or collectors." He said the department was also aware that Mr Lau, inspired by Tsang, had created a number of artworks of his own. "Mr Lau has not mentioned to us his intention to donate his artworks to our museums," he said. Mr Lau said he might contact the department's officials this week to raise the matter. "I will give it a try, but I am not sure whether they will really do this." He and several other artists yesterday staged a protest at the Star Ferry pier in Tsim Sha Tsui. They put up banners and collected signatures demanding the government preserve Tsang's work. On Wednesday, acting Secretary for Home Affairs Florence Hui Hiu-fai told the Legislative Council the government had been taking photographs of Tsang's graffiti instead of physically preserving them, as their poor condition made them difficult to protect. This angered some lawmakers and the arts community. A Tsang work is expected to fetch between HK$20,000 and HK$30,000 when it goes under the hammer at a Sotheby's auction tomorrow at the Convention and Exhibition Centre.
Wild swings in earnings reported by developers recently have been exaggerated by accounting standards that require firms to mark investment properties to their market value every six months and book changes in the profit and loss accounts rather than on balance sheets. But savvy investors in property companies have understood that big write-downs taken today could turn into write-backs once the economic situation changes. And so they look instead to core operating earnings for guidance, rather than the bottom line, analysts say. "There is no doubt that the accounting rule has injected huge volatility into property companies' profitability," said Raphael Ding, a partner at accountancy firm Grant Thornton. "But earnings will zoom up again when property prices rebound later and portfolios are revalued upwards. Investors have now become accustomed to this roller-coaster ride in net profit as the mark-to-market accounting rule has been in force for four years." The results of the rule, which became effective in 2005 and requires listed companies to book fair value changes in investment properties to income statements rather than valuation reserves on balance sheets, has been graphically shown in several recent profit statements. Singapore-listed Hongkong Land Holdings, the biggest landlord in Central, reported a net loss of US$109 million for last year, compared with a US$2.84 billion profit in 2007. The loss was largely the result of a US$698.9 million revaluation loss, while underlying profit actually rose 8.8 per cent to US$375 million. Chinese Estates Holdings (SEHK: 0127) reported an annual net loss of HK$1.49 billion for last year largely arising from a HK$7.47 billion revaluation loss, compared with a HK$6.42 billion gain in the previous year. Excluding non-cash items, underlying profit rose 63 per cent to HK$4.45 billion. And last week, New World Development declared an interim loss of HK$992.2 million mainly because of a HK$2.35 billion revaluation deficit on investment properties. But stripping out the write-down, underlying profit nonetheless dropped 41.3 per cent to HK$1.02 billion for the six months to December. Under HKAS40, the Hong Kong version of International Accounting Standard rule 40 which took effect in 2005, listed companies are required to book fair value changes in their investment properties in income statements, instead of in a separate valuation reserve. But while the accounting rule injected volatility into property companies' profitability, Mr Ding said it also increased transparency as companies were required to announce changes in valuations on a six-monthly basis. "As a result, investors can track the book value more easily." Mr Ding said in many cases the reported losses were "paper losses", as developers such as Hongkong Land were unlikely to sell valuable retail-office buildings, such as the Landmark, in Central, at their current depressed prices. But according to the existing accounting rules, the company has to book the revaluation gain or loss of the investment portfolio in the profit and loss account even if it had not sold any of the buildings. To arrive at a fair value in cases where there were no major en bloc transactions of comparable properties concluded, valuers would refer to transaction prices achieved in nearby areas and the prospects of the leasing market to come up with the latest valuation for the portfolio, Mr Ding said. But analysts said investors now focused on core underlying profit rather than on net earnings to gauge the performance of management, as operating income was a more reliable indicator than volatile bottom-line outcomes. "It is unfair to judge a firm's performance by just looking at its net profit," said Adrian Ngan Wai-hung, the executive director of research at CCB (SEHK: 0939, announcements, news) International Securities. Mr Ngan's caution came after blue-chip developer Sun Hung Kai Properties (SEHK: 0016) reported on March 11 its worst interim result in 20 years - a 94.92 per cent plunge in net earnings to HK$692 million. The sharp fall stemmed from a revaluation deficit of HK$4.34 billion on investment properties, compared with a revaluation gain of HK$5.84 billion a year earlier. SHKP executive director Michael Wong Yick-kam said the deficit arose from a revaluation of the market value of the International Finance Centre in Central. The developer, which has an investment portfolio with a value of about HK$159 billion, recorded a HK$5.84 billion revaluation gain in 2007, when office rents and prices reached record highs. But a year later, the market slump dented the carrying value of its investments.
Actress Maggie Cheung on stage of martial arts movie Ashes of Time. Fifteen years ago, when as his career was just starting to take off, Hong Kong director Wong Kar-Wai made a martial arts movie, his only one so far. An adaptation of Louis Cha's famous martial arts novel The Eagle-Shooting Heroes, Ashes of Time it was, as his films would later be, a vague and strikingly beautiful piece of work. With the original negatives lost and multiple versions now floating around the world, Wong had long wanted to return to Ashes of Time for a restored, remastered and definitive cut. The result is Ashes of Time Redux. Set in ancient China, Ouyang Feng (Leslie Cheung) is a fallen swordsman driven by greed toward both friend and foe. He is a perpetual loner and afraid of love after having his heart broken but the bounty hunters who work for him, like "Blind Swordsman" (Tony Leung Chiu Wai) and Hung Chi (Jacky Cheung), discover the intangible secret of true love and teach him precious lessons. Wong's film had stunning photography, from a palette that included searing acid yellows and scorched ambers and reliant on reflected light and layered images. Shot in China's remote Gobi Desert, it featured possibly the most impressive cast ever assembled in Hong Kong cinema. Even the production crew, which includes action choreographer Sammo Hung, production designer William Chang Suk-ping and cinematographer Christopher Doyle, are now all legends in their own fields. The film is no traditional Wu Xia movie, though - it remains the most abstract of Wong's works and a poetic dream on unreturned love and memory. The film is set in five parts, representing four seasons in the Chinese almanac, Lichun, Jingzhe Xiazhi and Bailu. Wong clarifies the central narrative while intensifying the film's most inspiring moments, including a vital scene in which Maggie Cheung delivers her sorrowful soliloquy. The biggest change is the soundtrack: gone are the synthesizer tracks, replaced by lush orchestral movements with cello by Yo-Yo Ma. In Ashes of Time Redux, Wong has streamlined the narrative without losing the essence of the original work. It is an aural and visual feast that will doubtless prove as timeless as its star, the late Leslie Cheung. The long-anticipated movie opens this weekend.
China: China will send more commercial missions overseas to make purchases and investments this year, Commerce Minister Chen Deming said, according to a statement on Beijing's website. "China won't turn to protectionism just because of some temporary difficulties in its economic development," Mr Chen said at a London briefing after Group of 20 policymakers agreed on steps to combat a global recession. "As the crisis worsens, people increasingly realise the necessity and urgency of rejecting protectionism." The ministry will send a business group on a buying trip to the US late this month, the 21st Century Business Herald reported. The country imported US$1.13 trillion of goods last year.
Former students of what used to be a Beichuan school yesterday remember classmates who died when the school was destroyed by last year's May 12 earthquake. Sichuan residents yesterday mourned tens of thousands of quake victims on the first Ching Ming festival since the massive earthquake, amid a delicate calmness carefully managed by the authorities. The government organised a 10,000-strong mass memorial ceremony at the epicentre, Yingxiu county, while a similar but smaller event was held in Chengdu city. Beichuan county, now in ruins following the magnitude-8 earthquake on May 12 last year, was also opened to residents for four days from last Wednesday. The authorities appeared to adopt a two-pronged strategy: allow the public to express their grief in government-organised activities but keep a tight grip over the parents of students killed while at school. The poor quality of some school buildings that collapsed in the earthquake has become a flashpoint between earthquake victims and the government, which has moved to contain negative publicity. Dujiangyan city, where the large number of collapsed schools enraged parents and mainland netizens, was under tight security yesterday as parents were barred from getting close to the ruins, parents and mainland media said. A father whose child was buried under rubble at Xinjian Primary School said he was forced to join a government-arranged memorial ceremony in the morning and then a "spring outing tour" in the afternoon. "I was forced to join a `spring outing tour' organised by local grass-roots cadres today," Xiang Fangqiang said, adding he tried to reject the arrangement but failed. "The cadres first sent me and many other parents to attend a public memorial ceremony. Then they took all of us to the countryside for a spring outing." Mr Xiang, who petitioned the Sichuan government for a more thorough investigation about the quality of the collapsed school building, said local cadres warned him that he would be accused of "disturbing public order" if he visited the school's ruins for tomb-sweeping activities related to the Ching Ming festival. Chen Dingfu, who lost his 17-year-old son in the collapse of Beichuan Middle School, said officials warned him not to go to the ruins by himself. He and other parents had to choose other locations, where they could see the ruins from a distance, to pay tribute to their children. Many of these parents were given compensation of up to 90,000 yuan (HK$102,000) as the government tried to assuage their anger, but Luo Houjun, whose son was killed in Beichuan Middle School, said many parents remained angry. "As a construction worker, I can't accept the fact that a school building that is only a few years old could collapse so easily while the older buildings nearby remained intact," he said. The Ministry of Civil Affairs estimated 120 million people visited their ancestors' tombs yesterday, while tens of thousands visited the Chairman Mao Memorial Hall near Tiananmen Square.
Analysts say the change in policy allows farmers to buy more expensive LCD televisions, which will provide a boost for television makers. The central government has raised the price cap for televisions sold as part of its campaign "Home appliances down to villages" to 3,500 yuan (HK$3,968) from 2,000 yuan, which will in effect increase subsidies for farmers. But television stocks did not respond strongly to the news yesterday, as analysts said the real benefit of the change remained to be seen. Shares in Hong Kong-listed TCL Multimedia Technology Holdings (SEHK: 1070) Shanghai-listed Sichuan Changhong Electric, another major television maker, climbed 0.89 per cent to 4.54 yuan. Analysts said the policy change would allow farmers to buy more expensive televisions such as LCD models, which would be a boost for television makers. "Since the campaign launch in February 1, major television makers have not seen a surge in sales volume," said CASH Management analyst Li Leiyu. "So time is needed to see if the campaign really benefits the producers." The campaign is aimed at spurring domestic consumption and entitles each of 180 million rural households a 13 per cent government rebate on purchase of one home appliance. The products include television sets, refrigerators, washing machines, mobile telephones, air-conditioners, water heaters, computers and motorcycles. The previous cap of 2,000 yuan was criticised as limiting farmers' choice of televisions to outdated cathode ray tube (CRT) models which also damped manufacturers' appetite to get involved in the campaign. A TCL spokesman said yesterday the average selling price of its LCD sets was 4,070 yuan in the first two months of the year. "As the average selling price is closer to the cap, the company will actively take part in the campaign," said the spokesman, who expects more LCD televisions will be sold to farmers. TCL successfully bid to supply 45 television models through the campaign, but most of them are CRT televisions.
Chinese President Hu Jintao (2nd R) talks with British Prime Minister Gorden Brown (R) as they prepare to pose for a family photo during the Group of 20 summit in London, Britain, April 2, 2009. Chinese President Hu Jintao made concrete proposals on tackling the global financial crisis at the G20 London summit, playing an important and constructive role for the summit to gain pragmatic results, the Chinese foreign minister said on Friday. "The summit produced measures of high value in fighting the financial crisis and built up confidence for the world to tide over the crisis and renew economic growth," Yang Jiechi said, adding that Hu's proposals contributed to the result. The international community held high expectations, especially on influential emerging economies such as China, and President Hu's attendance caught much attention, Yang said. At the summit, Hu called for international cooperation, actively participated in various discussions, comprehensively introduced China's effective measures in dealing with the financial crisis, Yang said. Firstly, Hu expounded China's opinions on the global financial crisis and called for coordination and support between each other to "join hands and tide over the difficulties together." Hu reiterated the Chinese government's willingness to strengthen macroeconomic policy coordination with the international community, push the reform of the international financial system forward, actively safeguard the stability of the multilateral trade mechanism and contribute to the restoration of the world's economic development. Secondly, Hu put forward proposals on reforming the international financial system, saying efforts should be made to strengthen cooperation in financial regulations, formulate as soon as possible widely accepted standards and norms of the regulations, Yang said. International financial institutions should offer more aid to developing countries and the Financial Stability Forum should playa bigger role, the Chinese president said. The International Monetary Fund (IMF) should strengthen and improve its supervision over the macroeconomic policies of various economies, major reserve currency issuing economies in particular, with a special focus on their currency issuing policies. Measures should be taken to improve the governance structures of the IMF and the World Bank and give more say to developing countries. Thirdly, Hu introduced to world leaders China's anti-crisis measures and preliminary achievements gained in tackling the economic downturn. Fourthly, China voiced strong opposition to protectionism and concerns over development issues, Yang said. Hu pointed out that protectionism had produced grave consequences, lessons of history must be learnt, and no country should resort to protectionism under the excuse of stimulating the economy. Yang said the crisis has taken its toll particularly on the developing nations and the UN Millennium Goals have also suffered as a result. China, as the world's biggest developing nation, has spared no efforts in defending the interests of developing nations, the minister said. Fifthly, Hu's visit promotes bilateral relations with some countries, Yang said.
Despite a continuous drop in China's overall foreign direct investment (FDI) in the past four months, multinational retail giants aren't showing any signs of slowing their expansion in the country. Wal-Mart, the US retail giant that entered China in 1996, is set to open a further 23 stores by the end of the first quarter of this year, taking its total up to 140. It opened 19 stores in 2008 on top of the 30 it opened in 2007. Carrefour said it would "keep the same speed" of opening new stores this year. The French hypermarket chain that first came to China in 1995 opened 23 stores last year and now has a total of 135 outlets. 7-Eleven, the world's largest convenience store chain, will open three to four stores concurrently in Shanghai at the end of March or the beginning of April. It is the first time that 7-Eleven is entering the Shanghai market and it reportedly plans to open 100 outlets there within the next three years. While the deepening global economic downturn will take its toll on the consumption of high-end and luxury products, the impact on the sales of daily necessities will be much smaller, said Cao Lisheng, chief economist of the National Commercial Information Center of China. "Compared with department stores, supermarkets will be less affected by the financial crisis," Cao was recently quoted as saying by Xinhua. The dropping house rents in major Chinese cities also presents a good opportunity for retailers to expand their network, said Pei Liang, secretary-general of China Chain Store and Franchise Association. The country's second and third tied cities are also attracting foreign retailers' attention. "The second- and third-tier cities are promising markets as the infrastructure development would lead to a greater concentration of people moving there. Better communications and transport also means we will be able to reach our products to these locations more easily," said Barry Friedman, vice-president for corporate affairs, Wal-Mart China. Friedman said Wal-Mart is closely watching the Chinese government's policies to increase domestic consumption, such as subsidizing farmers' purchase of home appliances. But he said expansion in the more outlying areas of China would not be at the expense of the major urban centers. "I am not against the first tier cities. They are great markets and there is still potential for growth," he said. "With markets in first-tier cities getting relatively saturated, China's second- and third-tier cities are opening up new vistas for profit growth," Pei said. Compared with coastal cities, Pei said, China's central and western regions are less affected by the financial crisis and are more suitable for new expansion. While expanding their networks, foreign retailers are likely to see more competition on the price front this year, analysts said. Carrefour plans to expand its program of directly purchasing agricultural products from farmers this year, said Chen Bo, spokesman of Carrefour China. The French company will increase the percentage of such products in its total purchase from 15 percent to 50 percent this year, Chen said. "By skipping the dealers, we can save a lot of costs and provide a 10 to 15 percent discount to our customers," Chen said.
Despite the world economic crisis, no Chinese air carrier has cancelled orders with Airbus, Laurence Barron President of Airbus China, confirmed on March 30 in Beijing. But Barron acknowledged that some Chinese air carriers have asked France-based Airbus to postpone delivering aircraft, Reuters reported. Barron made these comments at a ceremony held by Airbus on March 30 for the delivery of one A320 Family aircraft to a Chinese private air carrier, Spring Airlines. Airbus said that if the number of aircraft ordered is not large, Airbus can hold discussions with some Chinese air carriers to help them weather the economic crisis. At present, Airbus is not encountering serious difficulties in aircraft delivery. According to Groupe Radio France Internationale, China's three largest air carriers are experiencing operational difficulties due to noticeable declines in the number of passengers during the economic crisis. The three carriers all posted a loss in 2008. Foreign media previously said that the Chinese government has encouraged Chinese air carriers to put off aircraft delivery or even cancel orders, while some Chinese air carriers were criticized for having purchased too many aircraft, resulting in economic liabilities. Barron said that it is very hard to forecast when the Chinese aviation market will recover and stabilize. From a long-term point of view, however, Airbus is optimistic about the China market. Barron estimates that once the aviation market becomes stable, China will place aircraft orders in bulk, as China needs to purchase at least 3,000 aircraft to meet its air transport needs for the next two decades.
April 4 - 5, 2009
Hong Kong: Police raided the headquarters of Citic Pacific (SEHK: 0267) in Hong Kong on Friday afternoon, local radio reported. Commercial Crime Bureau staff confiscated documents after spending a short time in the building which is based in Wan Chai. The company has not commented on the raid, RTHK reported. Trading in Citic Pacific shares was suspended on Friday. The Securities and Futures Commission has been probing the company over a delay in announcing massive losses incurred on currency bets. When contacted by SCMP reporters, a police spokesman said they would not comment on individual cases.
Hong Kong should not be regarded as a “tax haven” just because the region has a lower tax rate, top officials in Hong Kong said on Friday in response to calls at the G20 summit for a tougher stance against places considered to be tax havens. “Hong Kong enjoys low tax rates and simple tax system – our tax system is also one of high transparency. But that doesn’t mean Hong Kong has become a tax haven,” Chief Executive Donald Tsang Yam-kuen said. “Hong Kong’s tax system also meets international standards,” Mr Tsang told local media. Secretary for Financial Services and the Treasury Chan Ka-keung said he also opposed suggestions to list Hong Kong as a tax haven. “Hong Kong has a very simple and clear tax system, the city does not has secretive banking ordinance. Moreover, we will continue to join the international efforts to combat money laundering. He noted that Financial Secretary John Tsang Chun-wah had pledged in his Budget in late February that Hong Kong would signed agreements with other countries to avoid double taxation. “However, we have to adapt our tax ordinance so that we can do better in exchange information with other countries,” he said. During this week’s G20 summit, some countries proposed a blacklist of tax haven areas to take measures against places long considered to be unco-operative by the Organisation for Economic Co-operation and Development (OECD). Switzerland, Singapore, Monaco, Hong Kong and Macau were among the places initially listed by the organisation. At the G20 talks in London, President Hu Jintao objected to a move led by French President Nicolas Sarkozy to get the summit to “endorse” the list of tax havens. After some tense negotiations brokered by the US President Barack Obama, the leaders agreed the summit participants would “take note” of the list of non-compliant tax havens later listed by the OECD. After the G20 summit, the OECD published a revised blacklist of the tax havens it viewed as “non-co-operative” but Hong Kong and Macau were not on that list. On Thursday, the Foreign Ministry spokesman Qin Gang had staunchly opposed the move to list Hong Kong and Macau as tax havens. Mr Qin said Beijing actively supports the international community’s efforts to tighten financial regulations and to crack down on tax evasion. But he said it was “groundless” to label Hong Kong and Macau in such a way. On Friday, treasury chief Professor Chan was upbeat about the G20 move to pledge more than US$1 trillion in loans to help boost the global economy and assist poorer countries. “I think the agreement could improve the market atmosphere, which would also benefit Hong Kong. The most important thing is the countries have introduced their own stimulus package to boost the economy. This could help to boost investors’ confidence in the market,” he said.
The fraud case against the former chairwoman of the Hong Kong General Chamber of Commerce Lily Chiang Lai-lei on Friday has been adjourned in the District Court until next month. Ms Chiang had earlier lodged an appeal after the High Court rejected her bid to have the case tried before a jury, rather than by a judge in the District Court. But her appeal has been rejected by the Court of First Instance. Ms Chiang and an executive of her company, Shah Hussain, both face three counts of conspiracy to defraud, and of making false statements in connection with the granting of share options to staff. She and Pau Kwok-ping, 54, former chief executive of Eco-Tek Holdings, also face two counts of fraud stemming from alleged dealings during the company’s initial public offering. Mr Pau is also applying for a judicial review for a jury trial in the case and proceedings could only start after a decision was made, the court was told. Her defence lawyers on March 16 had applied for a four-month adjournment of the criminal proceedings to wait for Mr Pau’s results to apply for the judicial review for a jury trial. But their application has been rejected by the prosecution because the case had already been adjourned a few times. Lily Chiang Lai-lei was the first woman to chair Hong Kong’s most powerful chamber of commerce. She was forced to step down as the chairwoman of the chamber in January last year after facing fraud charges.
The government would "spare no effort" when considering this year whether to introduce additional measures to help people during the financial crisis, the chief executive said yesterday. But on the eve of the fourth meeting of the Taskforce on Economic Challenges, which he chairs, Donald Tsang Yam-kuen warned that Hong Kong should adopt new thinking to realise the development of several industries with promising potential. "I do not believe that we have seen the worst yet in the current financial crisis," Mr Tsang said in an interview with electronic media. "No one can say that they could rescue the whole world in a short space of time." Mr Tsang, who has kept a low profile in recent weeks, said the key to the economic recovery would hinge on whether the US and Europe would resort to protectionist policies - if this was the case, the downturn "would drag on" for some time. Predicting that the Hong Kong economy would worsen and that there would be an unavoidable rise in the jobless rate, Mr Tsang said he hoped the unemployment situation would not reach the level during the outbreak of severe acute respiratory syndrome in 2003. During that period, unemployment reached 7.9 per cent. Last month, Vice-President Xi Jinping expressed concern about the employment situation in Hong Kong, estimating that it could rise from the 4.6 per cent recorded in January to 6.5 per cent. Amid strong dissent from major political parties that have threatened to veto the budget on the grounds that the relief measures are inadequate, Mr Tsang promised to take strong action when necessary. "If we realise in the middle of the year that we have to put more effort into the economy, we will spare no effort and will definitely continue to introduce necessary measures to address people's anxiety," he said. He said the government already had a series of relief measures with a total cost of HK$57 billion, which he said worked out to an average of HK$25,000 for each family. "I used the slogan of 'getting the job done' when I ran for election in 2007. We now see that the financial tsunami is a war. We hope to fight and win this war together with the people as a common goal," he said. On recent concerns that Hong Kong's leading position as an international financial centre would be lost to Shanghai given the central government's plan to develop it as a financial hub, Mr Tsang said he welcomed competition. "We should not be afraid of competition. Hong Kong has always made a living out of competition," he said, adding that all leading international financial centres had to face competition from rivals. He said improvements to the taxation system and the development of renminbi business would help Hong Kong remain at the forefront. Mr Tsang stressed that the banking system had been stabilised, and there was no need to "rescue" any local banks. To improve the city's competitiveness, the Taskforce on Economic Challenges will discuss mid-to- longer-term strategies on how to strengthen industries - including Chinese medicine, education and health care - which have potential to thrive. He said there should be "new thinking" when searching for new opportunities. "How come these quality and creative industries did not flourish in the past? Was it because of inadequacies in our systems? Have they been hindered by our system, our policies, our laws, the level of resources or talent? I hope to examine these questions in detail." The decision by Mr Tsang to air his views about the economy surprised observers, who believed he wanted to salvage public support for the budget. But a government source said the interview, which took place on the day lawmakers debated the financial blueprint, was just a coincidence.
The Hong Kong Productivity Council is teaming up with Avnet Electronics Marketing, part of global electronics distributor Avnet, to design, develop and market a new generation of low-cost, energy-efficient LED lighting products. The productivity council, a government-backed organisation formed by statute in 1967 to help local manufacturers adopt efficient technologies and practices, has forged a memorandum of understanding with United States-based Avnet to use light-emitting diodes (LEDs) in various areas, including indoor and street lighting, display advertising, heat-dissipation design, as backlights for flat-panel televisions and in car applications. LED illumination products reduce energy consumption by emitting light from a chip rather than an incandescent filament in a light bulb or charged gases in a fluorescent light tube. LEDs use about 10 per cent of the energy of an incandescent bulb and can last a decade or longer. They also produce almost no heat, which cuts down the potential of causing fire. As the LED lighting market grows in the residential, commercial and outdoor applications, its revenues are forecast to exceed US$5 billion worldwide by 2012, according to US-based research firm Strategies Unlimited. Frank Leung Wai-ming, the general manager for the automotive and electronics industries at the council, said: "The council has been actively promoting the application of LED lighting technology and supporting local companies to overcome the technical barriers to its deployment." Last year, the council set up the LED Lighting Application Consortium to provide a platform for engineering and application support for this nascent market. "Both the council and Avnet can play a more active role in partnering with the city's LED lighting product companies on the design and development of LED products," Mr Leung said. Avnet, which has six Asian design centres, including locations on the mainland and in Taiwan, has developed product reference solutions for general illumination, architectural and advertising lighting. "LED lighting can play a major role in achieving compliance with Hong Kong's new building energy codes and enabling more applications to become energy-efficient," said Frederick Fu kam-cheung, a regional president at Avnet Electronics Marketing China. The Hong Kong government has estimated the mandatory implementation of energy codes for new buildings could result in savings of 2.8 billion kilowatt-hours in the first decade, contributing to a reduction in carbon dioxide emission of 1.96 million tonnes a year. Mr Fu also said that "the interest in durable, low-cost, energy-efficient LED lighting extends well beyond Hong Kong, with many potential manufacturing customers as well as large-scale end-users all looking for solutions". According to market intelligence provider LEDinside, Japan and Taiwan have the world's two largest LED industries.
The Securities and Futures Commission yesterday placed Francis Yuen Tin-fan squarely at the center of the alleged plot to rig the PCCW (0008) privatization vote, saying Yuen phoned a Fortis Insurance director three times in the hours before that director bought a huge amount of PCCW stock. At the end of the two-day hearing, Justice Susan Kwan Shuk-hing adjourned the case, saying she will render her decision at 2.30pm on Monday. Today was originally set to be the last trading day before the stock's de-listing, but PCCW said last night this will now be postponed. A revised timetable will be announced after Kwan's judgment. Yuen called Lam Hau-wah - the Fortis Insurance (Asia) regional director who claims he handed out PCCW shares as lai see - three times on his mobile the morning of January 5, SFC counsel Winston Poon SC told the High Court yesterday. "Mr Lam had quite a busy morning," Poon said. That was just hours before Lam bought 500,000 shares of PCCW, which he later distributed to agents at Fortis Asia. Yuen used to be chairman of the insurer, formerly called Pacific Century Insurance when it was owned by tycoon Richard Li Tzar-kai. Poon said Lam told the SFC in interviews it was that morning when he came up with the idea of giving PCCW shares to his underlings as bonuses. Lam contended the phone calls were unconnected, and that he and Yuen were not accustomed to chatting on business matters. Yuen and Lam talked a fourth time that day, with Lam calling Yuen in the afternoon, around the same time he bought the PCCW shares, Poon said. "Lam, at the request of Francis Yuen, devised the scheme," Poon said, adding the plot to split a large shareholding and push through the privatization vote seemed to have Yuen's mark on it. "Not many people could have arranged this whole scheme," Poon said. Yuen has contended in SFC interviews that his relationship with Lam was "friendly, but not close." However, Poon charged that Lam was in fact Yuen's "sidekick," having worked closely with Yuen during his days at Pacific Century Insurance. And in recent days, the two have met for dinner and golfed together in Shenzhen. Poon said it is not necessary for the SFC to prove that Lam specifically requested the recipients of his largesse vote in favor of the PCCW privatization proposal. "When you throw a piece of meat to a dog, what do you think the dog will do?" Poon said. "You don't have to tell the dog to eat." Yuen has long been one of PCCW chairman Li's top lieutenants, currently serving as deputy chairman of the billionaire's Singapore-listed holding company, Pacific Century Regional Developments, the vehicle used to make the privatization offer for PCCW. Splitting one block of shares into smaller chunks creates "artificial transactions" that are "designed to frustrate the policy of the legislation" on privatization votes, with the intention of amplifying one person's vote over others, Poon said. "It's a manipulative device so that you amplify the number of persons voting," he added. "If you have share-splitting, it's an abuse." It does not matter whether half a million shares, or one board lot, were distributed, or how many ways the shares were split, Poon said. To allow share- splitting would "promote uncertainty and chaos" in the Hong Kong market and "may have the effect of destroying the financial market," he said. Allowing such practices would render "meaningless" sections of the Companies Ordinance designed to protect minority shareholders, according to Poon. Every privatization offer would then lead to a campaign by parties for and against to split their shareholdings as much as possible, he said. Poon said giving shares to your employees in exchange for getting them to vote "yes" on a privatization bid is akin to buying votes in a Legislative Council election. Michael Todd QC, counsel for PCCW, hit back at the SFC, saying it was attacking "innocent people" such as PCCW's minority shareholders who voted in favor of the deal. The SFC's "attacks" are "an abuse of their position as a public regulator," Todd said. The arguments of the securities regulator consist of "surmise, suspicions, and conspiracy theories" made up of "bits and pieces chucked from the different witnesses," he charged. PCCW minority shareholder Danny Chan Chung-cheung said that privatization offers are nothing unusual, but this particular bid is "immoral on the principles of righteousness and principles of kindness." PCCW group managing director Alex Arena said after the hearing he is very confident in the judge, who he said was efficiently dealing with the complicated points of law involved in the case. Quite appropriately, the judge needs a few days to weigh the evidence in front of her," Arena said. "She's very alert to the fact it's a public company, and there's trading in its shares."
Relief appears to be near for Lehman minibond holders. There are sufficient grounds for disciplinary action against some bank staff accused of misselling the minibonds, according to the Hong Kong Monetary Authority. And market sources say the Securities and Futures Commission is pushing big banks to follow in the footsteps of Sun Hung Kai Investment and settle with disgruntled customers. HKMA executive director Raymond Li said yesterday that "a few cases are already at a very advanced stage of investigation," he said adding, "Should any case be concluded we would definitely tell the public." According to procedures, anyone accused of misselling will have at least 30 days to make a representation and another 21 days to appeal if their explanations are rejected - before their case goes public. As of yesterday, the HKMA had got 20,642 complaints, and 20,443 had cleared initial assessment. So far, files have been opened for just 5,772 cases, of which 4,178 have gone through a preliminary investigation. Only 418 complaints relating to 16 banks were referred to the SFC. Li blamed the slow progress on the reluctance of complainants to provide useful information in most of the cases. But he reiterated that the authority will complete investigating at least 70 percent of complaints by March 2010. "We are recruiting more staff - both part-time and those on secondment - to accelerate the process," he said. About 200 staff will be involved. Li said a client's interest was the HKMA's priority, and if a settlement without punishment was the best solution it would get the authority's support.
China: Online video games maker Changyou.com closed up 25 per cent in its trading debut on Thursday, making it the most successful stock launch in nearly a year. It was only the third initial public offering in the United States since August last year, and the largest mainland IPO on a US exchange since December 2007, according to Thomson Reuters data. “If this IPO had come in November, when the markets were low, it would have flopped,” said Francis Gaskins, president of research firm IPO Desktop. “It was obviously lifted by the rising markets.” The Nasdaq index ended 3.3 per cent higher. The initial public offering of Changyou, spun off from mainland internet portal Sohu.com, rose as much as 50 per cent during its first day of trading before easing to end at US$20.02, up US$4.02, or 25 per cent on Nasdaq. The American Depositary Receipts started trading on Nasdaq at $22.02, a 38 per cent premium over its pricing of US$16 on Wednesday evening. Changyou sold 7.5 million ADRs, raising US$120 million after pricing at the top of its estimate range. Changyou chairman Charles Zhang said the strong debut was due to the deal’s pricing as well as the track record of Sohu, which has been listed on Nasdaq for nine years. “The pricing was based on the environment, and our price-earnings multiple was low compared to others,” Mr Zhang said. The valuation multiple of the Changyou IPO offer price of US$16 was about seven, compared with a range of 11 to 13 for rivals such as Giant Interactive Group, Shanda Interactive Entertainment and NetEase.com. Also, the IPO’s float of 7.5 million ADRs was small. “It did well because Sohu’s shareholder base is familiar with Changyou as a division of Sohu,” Mr Zhang added. The only other stock market debut this year was also a spinoff, an US$828 million IPO by paediatrics nutrition maker Mead Johnson Nutrition, a carve-out of drugmaker Bristol Myers Squibb. Its shares jumped 12 per cent on their first day of trading. “Mead Johnson had tremendous financials and brand awareness, as do Changyou and [upcoming IPO] Rosetta Stone, meaning that a company meeting those criteria should feel safe attempting an IPO,” said Scott Sweet, senior managing director with research firm IPO Boutique. Set to price their IPOs in two weeks are Rosetta Stone, a language learning company and Bridgepoint Education, an education services provider, as that market starts to show signs of thawing, Sweet said. After the IPO, Soho has a stake of about 70 per cent in Changyou, a level Mr Zhang said it plans to maintain, making a follow-on offering not likely soon. Mr Zhang is also chairman of Sohu. The IPO attracted orders for 15 times the number of shares on offer, a source said on Wednesday. Changyou is best known for its online, role-playing martial-arts game, “Tian Long Ba Bu”, which accounts for about 94 per cent of total revenues, and was launched in May 2007. Analysts said the dependence on one blockbuster is a red flag, but Mr Zhang said the company has three new games in the pipeline, with at least one title expected by the end of the year. Mr Zhang estimated about 300 million internet users in China, and expects that to grow to 600 million in five years, bringing millions more online gamers. “If you talk about video games in China, it’s online games,” Mr Zhang said. “On a global basis, I think the online game will be the future.” Mr Zhang said Changyou was in the early stages of marketing its games outside China. One video games analyst cautioned against thinking the mainland market is limitless. “It’s the classic situation. Everybody believes China is going to grow in perpetuity,” said Wedbush Morgan analyst Michael Pachter. “My question is what are the barriers to entry? It’s a very healthy market, but there is a lot of competition.” The last IPO to jump as quickly as Changyou was Intrepid Potash in April last year. It ended its first day up 58 per cent, and is now down 37 per cent from its offer price.
China's first class of female fighter pilots were given their wings yesterday and will take part in this year's National Day military parade, state media reported. The 16 People's Liberation Army Air Force fighter jet pilots, aged 21 to 24, completed 44 months of training at air force bases after being selected from a nationwide field in 2005. They logged an average 135 hours in military aircraft and graduated as lieutenants. They were taught parachuting, bush survival skills and how to perform fighter manoeuvres, including dives and rolls. An air force spokesman said the women would soon head off to join squadrons training for the October 1 military parade to mark the People's Republic's 60th anniversary and demonstrate advances in the country's defences and military build-up over the past three decades. The spokesman said the pilots, all Communist Party members, were carefully assessed on politics, military theory, aviation technology, leadership and physical fitness, Xinhua reported. "[We] started to train female fighter jet pilots because the latest aviation technology allows for this and the demand from military missions. The air force is expected to have more female fighter jet pilots in the future, and female pilots will cover all aviation positions in the military." At least 328 female pilots have graduated from the PLA air force since it began recruiting trainees, and 52 of them are now flying missions on the mainland.
Centre: US President Barack Obama, Italy's Prime Minister Silvio Berlusconi and Russia's President Dmitry Medvedev enjoy a lighthearted moment during a photo shoot to mark the G20 summit. Also shown (clockwise from front centre) are President Hu Jintao, Saudi Foreign Minister Prince Saud al Faisal, Turkish Prime Minister Recep Tayyip Erdogan, Thai Prime Minister Abhisit Vejjajiva, Ethiopian Prime Minister Meles Zenawi, South African President Kgalema Motlanthe and British Prime Minister Gordon Brown. World leaders at the G20 summit in London yesterday pledged more than US$1 trillion in loans and guarantees for impoverished countries, and agreed to crack down on tax havens and hedge funds. But they failed to commit to further stimulus spending to directly attack the global economic decline, despite lobbying from the United States and summit host Britain. "Today, the largest countries of the world have agreed on a global plan for economic recovery and reform," British Prime Minister Gordon Brown said. He added: "A new world order is emerging, and with it we are entering into a new era of international co-operation." In a communique capping a dramatic one-day gathering, the leaders of the Group of 20 nations announced the creation of a supervisory body to flag problems in the global financial system, going some way towards bridging the gap between the US and some European nations over how far to regulate the market and curb the excesses that sparked the economic crisis. French President Nicolas Sarkozy, who had threatened earlier to walk out if unsatisfied with the outcome, praised US President Barack Obama for helping to create consensus on the issue of tax havens. China initially objected to any reference to a list of tax havens in the communique, while the French wanted an actual list endorsed by the summit participants. "There were moments of tension," Mr Sarkozy said afterwards. "Never would we have thought to get as big an agreement." In a compromise that satisfied both parties, the agreement said summit participants would take note of a list of non-compliant tax havens to be published by the Organisation of Economic Co-operation and Development. Mr Brown said the US$1.1 trillion deal to boost funds for the International Monetary Fund and other global institutions was unprecedented. He said China would give US$40 billion towards the bolstered war chest, while the European Union and Japan would chip in US$100 billion each. "For the first time we have a common approach to cleaning up banks around the world, to restructuring the world financial system. We have maintained our commitment to help the world's poorest," Mr Brown said. "This is a collective action of people around the world working at their best." The G20 leaders also said that developing nations - hard-hit and long complaining of marginalisation - deserved a greater say in world economic affairs. They said they would renounce protectionism, and pledged US$250 billion in trade finance over the next two years - a key measure to help struggling developing countries. The leaders also agreed to new rules on linking executive pay to performance, Mr Brown said, adding that bonuses should genuinely reflect performance. News from the summit cheered the markets, with the FTSE 100 in London closing up 4.28 per cent at 4,124.97, while in early afternoon trading in New York, the Dow Jones Industrial Average was up 3. 22 per cent at 8,011.69. In Hong Kong, the Hang Seng Index earlier saw its best gain in nearly four months. The index opened 443.80 points higher in a prelude to a steady day-long advance that sent it soaring 1,002.43 points, or 7.41 per cent, to 14,521.97. Trading turnover was HK$75.22 billion.
China takes star turn at meeting - A simple positioning arrangement for a photo-taking session of world leaders at the G20 summit is worth a thousand words. The picture is more than subtle - a power shift is in the works. President Hu Jintao was placed right beside host and UK Prime Minister Gordon Brown in the front row while other leaders composed themselves for the camera. US President Barack Obama was relegated to the second row behind Hu and Brown. And then there was the meeting between French President Nicolas Sarkozy and Hu. As the two leaders smiled and shook hands prior to their talks, neither showed signs of previous tensions between the countries over a meeting Sarkozy had with exiled Tibetan leader the Dalai Lama. International relations expert Terence Yeung Tat, supervisor of Hong Kong Baptist University's European Documentation Centre, took all of the above as signs that China is quickly rising in status. "All of these gestures by world leaders to Hu Jintao show China's importance," Yeung said. "France and America have shown respect for China with their leaders eagerly waiting to talk to Hu." Political commentator James Sung Lap-kung said: "China is becoming a new star. The United States, Europe, and even the BRIC countries [Brazil, Russia, India, China] all stand to benefit from China." He added: "Obama chose Hu Jintao as one of the first leaders to meet. The United States really needs China. It is the government's largest creditor and Obama wouldn't want anything to go wrong [in terms of relations] between the two."
Sun Wen Xiu, of the central government liaison office (left); Joshua Law, permanent secretary for constitutional and mainland affairs; Chen Xianjin, of the Shanghai World Expo Co-ordination Bureau; Zhou Laiwei, director of China Travel Service; and Brett Free, of the Information Services Department. The Shanghai World Expo next year will attract a more enthusiastic response than the Beijing Olympics, China Travel Service says. Tickets officially went on sale in Hong Kong yesterday and China Travel Service (Hong Kong) Limited has been appointed as the city's sole official ticketing agent. Chairman Jeremy Xu was confident that the company would surpass the sales record for the Beijing Olympics of last year, with more than 178,000 tickets sold. Chen Xianjin, deputy director general of the Shanghai World Expo Co-ordination Bureau, said 233 countries and international organisations had confirmed their participation, the highest rate in the 160 years of world expo history, and 196 had already signed the agreement. "But in any previous world expo, there were bound to be some 6 to 8 per cent of participants who would eventually withdraw for one reason or another. But up till now, we have not received any notice of withdrawal or scaling down of investment due to the global financial downturn," Mr Chen said. Taiwan is being asked to take part in the Shanghai expo. Permanent Secretary for Constitutional and Mainland Affairs Joshua Law Chi-kong said Hong Kong would build a separate pavilion within the China pavilion area. The city's use of its home-grown, smart-card technology in improving efficiency and quality of life would be showcased in the "urban best practices areas" exhibition. Mr Law said a "virtual" Hong Kong pavilion would be created to give online visitors a cyber experience of the expo. Hong Kong is the first place outside the mainland where world expo tickets will be sold. Tickets go on sale in Macau today. Prices will be from HK$154 to HK$201 and tickets will be released in three phases: sales to companies, groups and students. Individual tickets will be available from July. Children less than 1.2 metres tall can enjoy free admission. But there will be no complimentary tickets for less privileged people.
Shanghai has pledged more land for the development of its financial sector to bolster its ambition to become an international finance hub. According to a draft rule published by the city's legislature yesterday, land authorities and district-level governments will be required to give priority to the financial sector when they draw up annual land-use plans. The city government will also conduct building-swap deals and resort to other administrative measures to meet the rising demand for office space in the city's financial zones. The rule, aimed at developing the city into a global financial centre by 2020, is viewed by economists as a precursor to further drastic market liberalizations on the mainland. The rule also included some generalities on financial innovation and co-operation with Hong Kong. "The city will deepen co-operation with the Hong Kong Special Administrative Region in terms of financial-product innovation, control of financial risks and the nurturing of financial talent," it said. The Shanghai People's Congress said it would solicit public opinion on the rule until April 20. The draft rule followed high-profile guidelines released by the State Council last week, under which the central government vowed to help Shanghai evolve into a global financial and shipping hub by 2020. HSBC (SEHK: 0005, announcements, news) China chief executive Richard Yorke said: "We believe that this process will help deepen financial reforms and facilitate the building of a more prudent financial system, benefiting the country and all financial institutions for the long term." Pan Yingli, a professor of finance at Shanghai Jiao Tong University, said land and taxes were the two key parts of the effort to build up a financial centre, adding that foreign institutions would not gravitate to Shanghai unless the city established zones where big-name companies could cluster. The city government had also promised to set up a fund to attract more talent and encourage market liberalization, the rule said. Shanghai now has two major financial zones - Lujiazui and the Bund - home to big-name financial institutions' China headquarters and local branches. In the rule, the city also said the Zhangjiang hi-tech zone and Yangshan port would reinforce the future growth of Shanghai's financial sector. It did not elaborate. Analysts said the ambitious plan for Shanghai would not live up to its promise unless Beijing made the yuan fully convertible. It is widely believed that the central government has set 2020 as the deadline for full convertibility. Shanghai has also lobbied the central government to slash personal income tax for professionals in the financial sector.
China's envoy in Australia called for calm over Beijing's push into its resources sector, saying in an article published yesterday that it was not trying to control Australia's mineral base. As officials in Canberra consider applications by state-owned mainland firms to invest tens of billions of dollars in the mining sector, Ambassador Zhang Junsai said he was not surprised Australians were debating the issue. But he urged a sober approach amid signs that the debate had taken on an increasingly anti-Chinese tone in recent weeks. "Rather than using emotive language, we should approach this matter in a rational and comprehensive manner," Mr Zhang said in an article in The Australian newspaper. He said perceptions that state-owned Chinese firms were directly controlled by Beijing were incorrect, insisting they were becoming "stock-market players" that pursued profit like other enterprises. Chinese companies in Australia, state-owned or private, did not seek to control Australia's energy or mineral resources, he said. "Like companies from other countries, they seek a long-term sound and reliable supply of energy and resources." Until recently, Australia's economy was riding a resources boom driven by China's need for raw materials to fuel its rapid industrial expansion. But the global downturn has left many resources firms weighed down by debt, and mainland firms have moved into the sector. Australia is considering Chinalco's bid for a US$19.5 billion stake in mining giant Rio Tinto, in what would be China's largest ever foreign investment. It rejected a takeover bid by China's Minmetals for OZ Minerals on national-security grounds last week - although a revised offer has been tabled - but on Tuesday it approved Hunan Valin Iron and Steel's US$700 million investment in Fortescue Metals. Beijing's interest in Australian resources has provoked unease among some politicians and analysts, and the conservative opposition has accused Prime Minister Kevin Rudd, who speaks Putonghua, of acting like a "roving ambassador" for Beijing.
Guangzhou Metro Corp, the operator of the city's railway system, is using an International Business Machines Corp system to manage its information technology network and other key infrastructure to bolster its expansion program. The two companies recently agreed to set up an integrated asset management system as part of Guangzhou Metro's 12 billion yuan (HK$13.6 billion) modernisation this year. IBM said the railway operator's asset management system was a first for the mainland. Financial terms of the project were not given. Assets covered by the system include four commuter lines, 60 stations and more than 116 kilometres of track. Guangzhou Metro has assets worth more than 20 billion yuan. The government-run railway operator is extending its network this year to nine commuter lines, which will increase its daily passenger capacity to 4 million from 2 million. "By having control over each asset across the entire rail system, Guangzhou Metro will improve safety and on-time arrivals for passengers and commuters," said Marc Chapman, the general manager for the global business services unit at IBM Greater China. IBM Global Business Services will build a uniform classification and coding system for all Guangzhou Metro assets. It will also integrate the railway company's operational and financial management processes in investment, construction, operation and asset maintenance. The system will be powered by IBM's Maximo software, a solution that helps address stringent regulatory requirements. It is designed to extend asset life, optimise parts management, reduce road calls and increase planned maintenance. The system is scheduled to be operational in November. Guangzhou Metro's enhanced maintenance procedures are anticipated to lower operational costs, while improving productivity. "With traffic congestion on the rise in cities across China, it has become critical to build smarter rail systems, and governments are investing heavily in these projects," Mr Chapman said. Smart urban rail transport systems, such as Guangzhou Metro, are also being designed to be more environmentally friendly through reduced travel delays, emissions and fuel consumption. Hangzhou Metro Group awarded a contract last month to GE Transportation, a unit of General Electric, to provide integrated supervision and control systems on Line 1 of its Hangzhou Metro network. GE's RailEdge platform will be applied to a 54km mass transit line that includes 34 stations, one operational control centre, one yard and one depot. The new line is expected to open at the end of 2011. Evren Eryurek, the general manager at GE Transportation's global rail operations, said: "We anticipate this being the beginning of a long-term relationship as a provider of progressive technology to China's mass transit market." The railway expansion programmes in Guangzhou and Hangzhou are the latest in a recent burst of activity in the mainland's urban mass transit market. The country is recognised as the world's largest mass transit railway market, with new infrastructure works backed by the central government's 4 trillion yuan, two-year stimulus package. The 11th five-year plan targets completion of more than 1,500km subway and light tracks next year across cities such as Beijing, Shanghai and Guangzhou.
Dell's sales in China grew 28 per cent in unit terms in the year to January, accounting for about 5 per cent of the company's global business, chief executive Michael Dell said yesterday.
China internet giant Alibaba Group plans to give away its new business-management software to an estimated 42 million small and medium-sized enterprises (SMEs) across the country to push these firms into the e-commerce market. The initiative, launched on Tuesday by its subsidiary Alisoft, includes a further investment of 1 billion yuan (HK$1.13 billion) to develop subscription-based software programs for mainland SMEs over the next three years. Web services company Alisoft will start providing a multi-year licence of its new “Shopkeeper” business-management program, which has basic accounting and finance functions. Inventory management and customer relations management functions will be available in May. Shopkeeper will be free to use for at least three years, according to Alisoft, which will also provide free upgrades, training and customer support. “We are confident that this offering will bring a revolutionary change to how small businesses manage their operations in the coming years,” said Oliver Wang, president at Alisoft. The potential market for Alisoft, which had previously introduced an online supermarket for software on a pay-as-you-go basis, could be huge if its strategy successfully attracts and keeps more SME users. Research and advisory firm Celent projected the number of SMEs on the mainland would grow up to 8 per cent annually over the next few years and reach about 50 million by 2012. According to a report from the Chinese Academy of Sciences, less than 5 per cent of small domestic firms are using business-management applications, such as enterprise resource planning software. Subscribers of Shopkeeper will also be encouraged to apply for a loan-assistance program, called “Ali-Loan”, which is backed by e-commerce giant Alibaba.com (SEHK: 1688, announcements, news) and eight major mainland banks.
April 3, 2009
Hong Kong: HK has 'friendliest' tax regime: Forbes - Hong Kong offers the friendliest, Forbes Asia business magazine said in its this year survey released on Thursday. Forbes said China’s tax “misery score” rose seven points to 159 from last year after Beijing imposed higher employer and employee social security taxes as its economy took a hit from the global economic downturn. China levies a 25 per cent tax on corporate income, 45 per cent on personal income, 49 per cent for employers’ social security, 23 per cent for employees social security and a 17 per cent tax on goods and services, the survey showed. By contrast, Hong Kong’s tax misery score of 41.5 ranked the best in the Asia-Pacific region. Hong Kong’s corporate tax stands at 16.5 per cent, personal income tax at 15 per cent and employer and employee social security levy at 5.0 per cent each, it said. “This year, most Asian jurisdictions continue to have [a] more tax-friendly environment compared with other parts of the world,” Forbes said in a press statement. “The survey shows that outside of China and Japan, the rest of Asia continues to enjoy stable, low tax advantage.” Japan’s misery score of 122.6 ranked it as having Asia’s second-least friendly tax environment after China, while Taiwan followed Hong Kong as the region’s second-most friendly with a score of 75, the survey said. Forbes calculates the misery score by taking the sum of the corporate, personal, social security and sales tax rates. It is used to assess whether a jurisdiction’s tax policy attracts or repels talent and capital. Eight of the 10 least tax-friendly countries on the list are European, it added. Worldwide, France topped the list by having the least friendly tax regime with a misery score of 167.9 among all the 50 jurisdictions surveyed. France charges a corporate tax of 34.4 per cent, personal income tax of 52.1 per cent, a 45 per cent social security levy on the employer, a 14 per cent social security tax on the employee and a 19.6 per cent sales tax. Qatar, which taxes only corporate income, has the friendliest tax regime worldwide, followed by the United Arab Emirates, which only collects social security contributions. India saw its misery score rise by 24 points to 113.4 after it raised social security charges for employers and employees, while New Zealand made the biggest improvement in the Asia-Pacific region after it eased individual and social security taxes.
Singer Kelvin Kwan Chor-yiu arrives at Hong Kong airport from Japan on Saturday after suspected prohibited drugs was found in his luggage. Canto-pop singer Kelvin Kwan Chor-yiu on Thursday apologised for being detained in Japan for cannabis possession – saying he would take a break from the Hong Kong entertainment industry “for a long time”. Kwan and singer Jill Vidal, 26, who are believed to be linked romantically, were arrested in the Dogenzaka shopping area in Tokyo’s Shibuya district on February 24. Kwan had reportedly told Japanese police he brought the drugs from Hong Kong. But Vidal has denied any criminal behaviour, saying she had no idea any their possessions contained cannabis. Speaking at a press conference on Thursday, Kwan, dressed in a black suit and a white shirt, repeatedly apologised to his family and the public for the incident. “Thank you for all the care and concern. I would like to apologise. I have also decided to leave my beloved Hong Kong entertainment industry for a long period,” Kwan said in a calm voice. Kwan said that after being detained for nearly a month, he understood the importance of personal freedom. “I hope through this incident, adolescents can understand the importance of personal conduct and being good citizens. Most importantly, I hope they can treasure their lives, their health and stay away from drugs,” he said. Kwan stressed that after the investigation, police in Japan had still not filed any charges against him. He also said he did not have a criminal record. Kwan said he was very concerned about Jill Vidal – who was still being detained in Japan. “I hope she can return to Hong Kong soon,” he said, before leaving the press conference. Kwan returned from Tokyo to Hong Kong last Saturday, after being held for nearly a month. Jill Vidal may be detained for another two weeks, according to her record company Amusic.
Winston Poon, the barrister for the Securities and Futures Commission in the case on PCCW buyout, urged the court on Thursday not to accept the votes cast by agents at Fortis Insurance. A lawyer for Hong Kong’s securities watchdog on Thursday urged a court to block the controversial privatisation of telecoms giant PCCW (SEHK: 0008), saying it could destroy the city’s financial market. Winston Poon Chung-fai, the barrister for the Securities and Futures Commission, said PCCW had only won shareholder approval for the buyout after insurance agents were given shares on condition that they backed the privatisation. “To allow share-splitting, which creates uncertainties or chaos, may have the effect of destroying the financial market in Hong Kong,” he told the court. The claims came on the final day of a High Court hearing to decide whether the deal to take the city’s largest fixed-line operator into private hands should go ahead. Mr Poon said two businessmen had plotted to rig a shareholder vote which approved the US$2.1 billion buyout bid, which has been a long-held dream of PCCW chairman Richard Li Tzar-kai. Mr Li is the son of one of Asia’s richest businessmen, Li Ka-shing, and the drawn-out battle has gripped the tycoon-obsessed financial hub. Mr Poon said the plot to split shares was hatched by Francis Yuen, the former deputy chairman of PCCW and chief executive of the local stock exchange, and Lam Hau-wah, a senior manager at Fortis Insurance Company (Asia). Fortis Insurance Company (Asia) was previously a unit of Pacific Century Regional Developments, which is controlled by Mr Li. After several phone conversations between Mr Lam and Mr Yuen in January, Mr Lam bought 500,000 shares in PCCW and then handed them out to his employees under the guise of a bonus. The gift came with the agreement that the employees sign proxy shareholder voting forms, which would then be used to support the buyout, Poon said. “As soon as they were handed the shares they signed the transfer forms and the proxy forms – even before they got their name on to the share registry,” he told the court. Mr Poon argues that such share-splitting “abused” a law meant to protect minority shareholders. Vote-rigging is not an offence in Hong Kong, but if it is found that some voters had a relationship with the major shareholders, they are not counted as independent and are ineligible to vote in such shareholder meetings. Hong Kong law requires that more than 50 per cent of individual shareholders support any privatisation move. Mr Li and PCCW have repeatedly said they had no knowledge of any vote-rigging. Lawyers for PCCW and PCRD on Tuesday lambasted the SFC’s investigation, calling it biased, inaccurate and incomplete. Mr Li has made three efforts to take the telecoms firm private in recent years, with the first reportedly blocked by Beijing and the second by minority shareholders. A large group of current shareholders are furious at the latest proposal and have submitted their objections to the court. Shares in PCCW have plummeted from more than HK$130 in 2000 at the height of the tech-stock boom to less than HK$4 this year. Mr Li, and his partner China Netcom, are offering existing shareholders HK$4.50 for each share in the buyout move. The SFC started its investigation after local investor David Webb said he had been tipped off that hundreds of Fortis insurance sales agents were offered the shares in return for voting yes to the deal.
Shares of HSBC got off to a firm start on Thursday, vaulting over 15 per cent on a rally in Wall Street banks, spurred by encouraging US homes sales data and an expected loosening in accounting rules.
In a further sign of the impact of the global economic crisis, the value of Hong Kong retail sales fell in February by 12.6 per cent, year-on-year, to HK$19.9 billion, latest statistics released on Thursday showed. The Census and Statistics Department figures also showed the volume of total retail sales decreased by 13.8 per cent in February compared with a year earlier. Analysed by type of retail outlet, and comparing the total for January and February with a year earlier, the volume of sales of motor vehicles and parts decreased the most — by 35.6 per cent. This was followed by falls in sales of furniture and fixtures (down 9.1 per cent in volume); wearing apparel (down 6.8 per cent); commodities in department stores (down 6.6 per cent); miscellaneous consumer durable goods (down 4.8 per cent). The volume of sales of footwear, jewellery, watches and clocks and products sold in supermarkets also fell during this time. A government spokesman explained that the sharp year-on-year decline in February was distorted to a large extent by the timing of the Lunar New Year. This fell in January this year, but February in 2008. “Combining the figures for January and February to remove such a distortion, there was a much more moderate decline in retail sales over the same period last year.” The spokesman said the near-term prospect for retailing would continue to be clouded by the economic downturn. “Yet, the government’s efforts to preserve employment and to promote inbound tourism should render some support to consumer confidence as well as the retail business,” he said. Meanwhile, the number of property transactions in March was 59.9 per cent higher than in February. But it was down 26.7 per cent compared with the same month last year, new figures released by the Land Registry showed. The total number of sale and purchase agreements for building units received for registration in the Land Registry in March was 8,062. “Among the sale and purchase agreements, 7,102 were sale and purchase agreements for residential units. This was 58.3 per cent higher than that in February but 25.6 per cent lower than that in March last year,” a spokesman for the registry said.
Hong Kong’s new Centre of Anti-Corruption Studies would play an important future role in helping the ICAC fight graft, Secretary for Justice Wong Yan-lung said on Thursday. Mr Wong, opening the Independent Commission Against Corruption Centre of Anti-Corruption Studies, said it would provide important benefits. “Having a resource centre and research facility will encourage the study of corruption and will also lead to us all having a better understanding of the causes of corruption,” he said. “Both in Hong Kong and elsewhere, this will enable us to better tailor our resources to defeating this common enemy.” Mr Wong said the ICAC recognised the centre needed to establish an international profile. This was to attract leading academics and anti-corruption practitioners. “In this modern world, where crime has become a global phenomenon and where corruption now crosses national borders, forming partnerships with the international community has become essential for every law enforcement agency,’’ Mr Wong said. “This is something which the ICAC has been doing for some time and doing very well indeed,’’ he said. Mr Wong noted that from modest beginnings in 1974 to today, the ICAC has come far. “As an anti-corruption agency the ICAC has become a model for many other such organisations and its reputation has spread far beyond Hong Kong.” He said fighting corruption in the 21st century was more complex. “The modern criminal is forever adapting their methods of criminal activity, and the corrupt are no exception,’’ he said. The justice secretary said the ICAC recognised that as “its enemy changes — so must it also evolve”.
Chief Executive Donald Tsang meets Taoyuan chief Eric Chu at Government House yesterday. Chief Executive Donald Tsang Yam-kuen was invited to visit Taiwan during a brief meeting yesterday with Kuomintang vice-chairman Eric Chu Li-luan. The invitation came as Secretary for Home Affairs Tsang Tak-sing toured Taipei. He is the highest-ranking Hong Kong official to visit the island since the handover. Dr Chu, who is county chief in Taoyuan and was leading a trade mission to Hong Kong to promote business opportunities in Taoyuan's aviation-related development plan, paid a 20-minute courtesy call on the chief executive. "During the meeting, the chief executive said he hoped to visit Taiwan at an appropriate time during his tenure," a spokeswoman for the Chief Executive's Office said after the meeting. Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung joined the meeting at Government House. Mr Tsang told Dr Chu that he had visited the island in 1977, and hoped Hong Kong and Taiwan could strengthen official exchanges, including some on tackling the financial crisis. The two had exchanged views on the latest developments in Hong Kong and Taiwan, the spokeswoman added. Lawmakers welcomed news of the invitation, saying it was a sign of the improving relationship between Hong Kong and Taiwan. "I believe the possibility of Mr Tsang visiting Taiwan is very high, given the growth of cross-strait ties. Things can change very fast," said Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong and a member of the Chinese People's Political Consultative Conference. Democratic Party chairman Albert Ho Chun-yan said that if Mr Tsang did visit Taiwan, it would promote communication between the two places, but he cautioned that it would not be a simple task. "He will have to work according to constraints set by the central government." Timothy Wong Ka-ying, associate director of the Hong Kong Institute of Asia-Pacific Studies at Chinese University, said many issues had to be dealt with before the chief executive could go to Taiwan. "In what capacity should he visit? How should the Taiwan government receive him? Whom should he meet?" Professor Wong said. "If unnecessary controversy was sparked, it might bring negative effects." Meanwhile, Mr Tsang Tak-sing called on the two sides to improve their relations pragmatically as he concluded his trip to attend the Second World Buddhist Forum. He said both sides should avoid isolating themselves by adhering to "binding rules", as a lot could be done without raising such limitations. Mr Tsang Tak-sing met Lee Yung-ping, director of Taipei's Cultural Affairs Bureau, on Tuesday evening and Fung Ming-chu, deputy director of the National Palace Museum, yesterday morning to discuss co-operation in the arts. Ms Lee said she and Mr Tsang Tak-sing had already discussed some co-operation ideas, including sharing costs to jointly hold large-scale touring exhibitions of masterpieces from top museum collections from around the world. She said she had invited Mr Tsang Tak-sing to send artists and exhibits to take part in the Taipei International Gardening and Horticulture Exposition next year, which he had accepted. Ms Fung said that aside from seeking to collaborate with the National Palace Museum on joint exhibitions of global museum collections, Mr Tsang also explored the possibility of having treasures from the palace museums in Taipei and Beijing put on display in Hong Kong.
Las Vegas Sands said on Thursday it aims to resume construction of its stalled Macau projects by year-end with talks now ongoing with potential new investors to restart the half-finished Cotai strip projects. Las Vegas Sands said on Thursday it aims to resume construction of its stalled Macau projects by year-end with talks now ongoing with potential new investors to restart the half-finished Cotai strip projects. “We are certainly looking to resume in this calendar year, keeping in mind that when we suspended these works, we were only about nine months off from opening the first phase,” Stephen Weaver, the firm’s Asia President said. Mr Weaver, however, wouldn’t give specifics on who the investors might be though said it was not the Macau government. The debt-straddled Sands said late last year it was halting any further casino expansion in Macau and laid off most of the 11,000 or so construction workers working on phase one of two plots of land on the Cotai strip. Sands has said since last November it was in talks with a syndicate of banks to secure funding of around US$1.5 billion to US$2 billion to finance its stalled projects, which are a stone’s throw from its gargantuan Venetian Macau casino resort, the world’s largest casino, also on the stretch of reclaimed land in Macau called the Cotai Strip fashioned after Las Vegas’ famed neon alley. Sands also said they were on track to open the first phase of its US$5.4 billion Marina Bay Sands in Singapore by the end of this year, and there was no risk with regard to funds drying up. “The company has funds available at the parent level which if needed, could be used to complete the project. I think you should rest assured that this would be financed,” said Mr Weaver.
China: Shenzhen residents flocked in their thousands yesterday to apply for new 12-month, multi-entry Hong Kong visas introduced to streamline access to and boost tourism in the Special Administrative Region. Hundreds of people lined up outside the new two-storey, exit-entry office building in Futian district, which customs authorities built to handle the expected rush of residents for the new visa. Hong Kong and Guangdong leaders agreed in Beijing last month to give Shenzhen permanent residents access to multi-entry visas to Hong Kong from April 1. In the past, most residents had to apply for single-entry visas each time they wanted to cross the border. Leading officials from both cities say the new programme will benefit integration between the two places, and bolster the tourism, entertainment and retail sectors in Hong Kong. Businessman Li Tie was at the head of the long queue of people waiting outside the office building hours before the new service opened at 10am. Mr Li, in his mid-40s, said he arrived before 6am and wanted to be the first to get one of the new permits. He said he had regularly applied for single or double-entry visas in the past and the new permits would be much more convenient. Psychologist Liu Yingjiang was also keen to apply for the visa, saying she had missed many seminars in Hong Kong because it took a long time to apply under the previous scheme. Mr Li and Ms Liu were among the lucky ones to receive their visas yesterday. Only 600 visitor permits will be issued each day, and yesterday's quota was filled within an hour. Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan welcomed the new policy, which will allow more than 2 million Shenzhen citizens to obtain multiple-entry visas. James Tang Cheung-sing, vice-chairman of the Hong Kong Department Stores and Commercial Staff General Union, believed the scheme would help boost the retail industry amid the financial crisis, and hoped more jobs would be created.
President Barack Obama meets with President Hu Jintao at Winfield House in London on Wednesday. President Hu Jintao's meeting with US leader Barack Obama has set a vital foundation for greater co-operation between their two nations, China's state-run media said on Thursday. The two leaders met for the first time in London on Wednesday ahead of the G20 financial crisis summit, pledging to expand ties and elevate a regular economic dialogue to cover all strategic bilateral issues. “One can hardly find an area where China-US co-operation is considered dispensable. The new commitment holds out promising prospects,” Xinhua news agency said in a commentary. “At a time when the international financial crisis continues to spread, it is in the primary common interests of China and the United States that the two countries support each other and work together to ride out the storm.” The People’s Daily, the ruling Communist Party’s main mouthpiece, quoted Mr Hu as telling Mr Obama that relations between the two sides were at a critical juncture, with the world economic crisis underlining their common interests. “US-China relations are now at a jumping off point and faced with an important development opportunity. The two sides can and should work jointly to build comprehensive, positive and co-operative ties for the 21st century,” Mr Hu reportedly said. During their meeting, Mr Obama said they agreed to “strengthen ties at all levels.” Key to this would be expanding an economic dialogue, started during the administration of former US president George W. Bush, to encompass far more than just business matters. “The establishment of the China-US Strategic and Economic Dialogue mechanism is an important step to further advance bilateral relations,” Xinhua said, using the dialogue’s new name. China’s rising clout in the world has given rise to the widespread view that any global efforts on the economy and other matters depend on Sino-US co-operation. The China Daily echoed that idea. “By working together despite their differences, China and the US can set an example for the rest of the world, it said in an editorial.” “Let’s hope this partnership flourishes.”
Taiwan and the mainland will co-operate on research in Antarctica for the first time, scientists said on Thursday, in a further sign of closer ties between the two rivals.
State-run Bank of China said on Thursday it had dropped a planned 2.3 billion yuan (HK$2.61 billion) investment for a 20 per cent stake in French bank La Compagnie Financiere Edmond de Rothschild after a regulatory deadline passed without a deal. Bank of China spokesman Wang Zhaowen said the bank would not extend the deadline and the plan for an investment had lapsed. “We failed to obtain approval from relevant Chinese authorities for the deal,” Mr Wang said by telephone. “However, we will continue to seek other forms of business co-operation with Rothschild.” Mainland China has stepped up scrutiny on overseas investments by domestic financial institutions after companies such as Ping An Insurance (SEHK: 2318) and China Investment Corp suffered high-profile losses investing abroad. In a notice issued in February, the China Banking Regulatory Commission, the industry watchdog, told the country’s five biggest lenders, including Bank of China and Industrial & Commercial Bank of China that it would step up regulation of their overseas acquisitions and investment. “The government is getting cautious toward banks’ overseas acquisitions, fearing that overseas assets involve unseen risks,” said Jin Lin, analyst at Everbright Securities. “It’s a frustration for Bank of China, who has been seeking to strengthen its high-end private banking business through foreign partnerships.” Bank of China last year invested in Geneva-based asset manager Heritage Fund Management (HFM) and started operating a private bank and an asset management firm in Switzerland. The bank also had business co-operation with the Royal Bank of Scotland before the British bank ended its strategic partnership with the mainland lender earlier this year.
Changyou.com said on Thursday it priced its initial public offering at US$16 per American Depository Share, at the top end of an estimated range of US$14 and US$16. Changou, an online gaming company spun off from mainland internet portal company Sohu.com sold 7.5 million American Depositary Receipts, representing 15 million shares, raising a total of US$120 million. The IPO’s lead bookrunners were Credit Suisse and Merrill Lynch, now part of Bank of America. The underwriters have the option to purchase an additional 1.125 million ADSs, representing 2.25 million shares. Changyou’s hit video game, Tian Long Ba Bu, accounted for 94 per cent of its last year revenues of US$194.6 million, according to a regulatory filing. Changyou is the first IPO by a mainland company on a US exchange since China Mass Media International Advertising’s US$49 million offering in August last year. The company plans to begin trading on Thursday in Nasdaq under the symbol CYOU.
China-based Citic Resources (SEHK: 1205) has raised its stake in Australian miner Macarthur Coal to just under 24 per cent, the latest expansion of mainland investment in Australian mining. The US$17 million purchase, disclosed in a notice to the Australian Securities Exchange on Thursday, was made under rules that allow big shareholders to buy 3 per cent every six months without a requirement to make a full takeover offer. The move comes as the Australian government is reviewing two investments from state-owned companies from mainland in Australian mining assets – Chinalco’s US$19.5 billion tie-up with global miner Rio Tinto and a US$1.2 billion offer by Minmetals for most of OZ Minerals’s mines. Mainland’s investment in mining assets has sparked protests from some politicians in Australia concerned about possible foreign government control over Australian resources, the country’s key export revenue earner. “The concerns that may be raised with regards to Chinese investment in iron ore or other metal investments are different with regards to coal, because China is not a major customer,” said Shane Stephan, Macarthur’s chief development officer. Earlier this week Australia gave the green light for mainland’s state-owned Hunan Valin Iron and Steel Group to buy up to 17.55 per cent of Australia’s no 3 iron ore miner Fortescue Metals. Citic became Macarthur’s biggest shareholder last July. Stephan said Citic had not approached it about any bigger move on the company. “It’s fair to say it’s not a surprise that at current prices that they have decided to increase their shareholding,” he said. “It’s just a sign that Citic are a long term supporter of Macarthur Coal.”
April 2, 2009
Hong Kong: In a rare move to revive investor confidence, Bank of China, which controls 65.77 per cent of BOC Hong Kong (Holdings) (SEHK: 2388) or BOCHK, said it would "continually increase its shareholding" in the banking subsidiary on the secondary market. The nation's third-largest lender said this would be done in the coming 12 months and would depend on future share price movements. "The bank has full confidence in the future development of BOCHK," said the lender in a statement to the stock exchange last night. "The bank does not have any plans to privatise BOCHK in the foreseeable future, and will hold the shares of BOCHK on a long-term basis." The state-owned lender added that any future increase of the shareholding in BOCHK would not affect the listing status of BOCHK and would fulfil the minimum public float requirements at all times. Exchange rules require a listed company to maintain a minimum public float of 25 per cent. "It is a gesture to show its support for the bank," said Louis Tse Ming-kwong, a director at VC Brokerage. "BOCHK has been affected by negative news before and after the results announcement. These are things that could make investors walk away from the stock." Last week, BOCHK reported a net profit drop of 78.36 per cent to HK$3.34 billion last year due to a massive write-down in United States mortgage-backed securities. It also set aside HK$769 million for settlement with Lehman Brothers minibond investors. Shares of BOCHK have lost 57.68 per cent in the past 12 months, trailing Hang Seng Bank (SEHK: 0011, announcements, news) 's 44.61 per cent decline. BOCHK's fall is slightly less than Bank of East Asia (SEHK: 0023)'s 57.75 per cent slump. Lee Yuk-kei, a senior analyst at Core Pacific-Yamaichi International, said it was an unusual move for a mainland bank to buy shares of its Hong Kong subsidiary on the market to fortify its share price. "The bank probably got the idea from Central Huijin buying shares of state-owned lenders amid the stock market slump last year," Mr Lee said. "It's a verbal support for BOCHK aimed at restoring its stock value." But Mr Tse said the stake purchase would further blur the roles between the two lenders, and BOCHK would eventually be privatised by its parent. "The future prospects of the parent company have a definite advantage," he said. "While most of BOCHK's business is concentrated in Hong Kong, the two banks will compete with each other in expanding their international business." BOCHK received a US$2.5 billion loan from its parent firm in December last year, when it issued a profit warning. It was the first time a mainland bank in Hong Kong had to seek financial assistance from its parent to boost its capital.
A Hong Kong writer has been banned from the Philippines for "arrogance and disrespect" in a column about Filipino maids, the country's immigration chief said yesterday. Columnist Chip Tsao wrote what he calls a satirical article, poking fun at Hongkongers' poor treatment of their maids, in last Friday's edition of HK Magazine. Tsao wrote that he was so angered by the Philippines' claim on the Spratly Islands, which are also claimed by China, that he summoned his Filipino maid to give her a lecture. Calling the Philippines "a nation of servants" that should not challenge China, he wrote that he would be forced to fire her in the event of a war between the Philippines and China.
Consumer Council vice-chairman Ambrose Ho (left), chairman Anthony Cheung Bing-leung and chief executive Connie Lau celebrate the watchdog's 35th anniversary. Consumers are apparently less happy with how they are spending their money, with customer satisfaction dropping for the first time last year after increases over five years. Respondents to a poll gauging consumer sentiment said they were unhappy about high rents for private housing. The consumer satisfaction index fell to a rating of 69.1 out of a base score of 100, a 1.6-point drop on last year, according to the annual survey conducted by City University's department of management sciences. The decline was the first since 2003. The department based its findings on 13,000 telephone interviews conducted from June to August. "Consumers are less willing to spend money when the economy is bad," associate professor Geoffrey Tso Kwok-fai said. "They are also more aware of the quality and price differences of commodities." Four out of six product and service categories marked a drop in satisfaction. The housing category saw the biggest decrease, with the subcategory of private housing rentals sliding 5.4 points. Satisfaction with the information and entertainment category, and transport, followed, dropping 1.3 points and 1 point respectively. "Consumer satisfaction with private housing rentals witnessed the biggest drop, and was probably due to the fact that rents did not decrease very much despite the property market slump," Dr Tso said. Rent for private housing constituted a big part of people's expenses, he said, and tenants were unhappy because they still had to pay the same amount despite having had pay cuts. Meanwhile, the Consumer Council warned people to be aware of employment traps even though they were desperate for jobs. It received seven complaints about misconduct by fashion modelling agencies in January, compared to four in the same period last year. It also advised consumers to pay attention before being talked into prepayment deals, to take advantage of small discounts in making purchases. "The most important of all is they consume according to their own capabilities," chief executive Connie Lau Yin-hing said. The council's chiefs cut a cake yesterday to celebrate the body's 35th anniversary. It received 42,050 complaints last year, compared to 4,872 in 1974, when it was set up.
Secretary for Justice Wong Yan-lung (left), Chief Justice Andrew Li Kwok-nang and Bar Association chairman Rimsky Yuen Kwok-keung at the ceremonial opening of the 2009 legal year. For the vast majority of those who have contemplated seeking justice through the civil courts, the conclusion has almost inevitably been the same: it just isn't worth it. Civil justice systems around the world are plagued with the same problems of runaway costs and the incalculable stress of having to overcome an opponent determined to be as difficult as possible for as long as possible, dragging the case through the court system and wasting resources. The nature of litigation means there are two parties or more at loggerheads, and a confrontational mindset pervades every aspect of the process. The effect has been a gradual perception in the community that only the rich can afford justice. On Thursday, a decade of work by the judiciary and the legal community to dispel those perceptions will come to fruition as reforms of the civil justice system come into effect. It is hoped that the current adversarial, frustrate-your-opponent-at-all-costs culture of litigation will be a thing of the past. Key to the process is the granting of greater powers to judges in the timetabling of cases in an attempt to remove opportunities for delay and obstructionist tactics. Another major change will see the judiciary encouraging parties to seek alternatives such as mediation. Litigants may be penalised by costs if the judge thinks they have unreasonably rejected options. All this comes as the number of court writs is expected to rise with the economic downturn. The reforms are therefore timely. But the sudden rise in cases might also create difficulties should there be any teething problems. Major British Commonwealth jurisdictions such as Australia and Canada have already implemented reforms; Hong Kong's are mostly inspired by the 1999 changes in England and Wales. In his final report in 1996 on the system in England and Wales, Lord Woolf - now a non-permanent judge in Hong Kong's Court of Final Appeal - concluded: "The defects I identified in our present system were that it is too expensive, in that the costs often exceed the value of the claim; too slow in bringing cases to a conclusion; and too unequal - there is a lack of equality between the powerful, wealthy litigant and the under-resourced litigant." He further noted that the procedures themselves were not conducive to openness and almost encouraged a psychology of warfare. The long journey to reform in Hong Kong began in February 2000, with the formation of a Working Party on Civil Justice Reform, comprising judges and lawyers. The party's interim report, in 2001, quoted Henry Litton, another non-permanent judge at the Court of Final Appeal, who wrote in a foreword to a law book: "Civil litigation is in crisis. It has been for some time." The report went on to say many of the ills that had plagued England and Wales applied in Hong Kong. It found that litigants whose cases involved smaller claims suffered most from the imbalance between the legal fees paid and the money recovered from winning the case. In some cases, it found that the plaintiff would have had to pay out more in costs, including lawyers' fees, than was actually recovered. Lawyer Sylvia Siu Wing-yee, as one of the founders of the Hong Kong Mediation Centre, has advocated mediation as an alternative dispute-resolution method for 10 years. "In litigation, the winners are always the lawyers," she said, citing the eight-year probate battle between Nina Wang Kung Yu-sum and her father-in-law; she died barely two years after coming out on top. "Is she a winner? I always think she is the greatest loser," said Ms Siu, adding that Wang could have spent those years trying to improve her health rather than battling her father-in-law. Another common frustration for litigants is the use of delaying tactics by lawyers, who often apply for decisions on procedural matters. "Similar to the problems faced by England prior to the Woolf Reforms in 1999, the current civil justice system in Hong Kong suffers from delays, procedural complexity and excessive costs," said Angus Ross, a partner at international law firm Allen & Overy. "In addition, there is a degree to which the existing system is open to misuse when litigants use tactical ploys to create procedural obstacles for their opponents." To address long, expensive litigation, the courts themselves will now handle the timetabling of a case, setting "milestone dates" and discouraging interlocutory applications by requiring costs for such hearings to be paid immediately after individual hearings, rather than at the end of the whole case. Mr Ross, who holds seminars on how the changes affect clients, said: "First, the court will have greater power to award costs orders against parties where they have behaved unreasonably in the conduct of the proceedings. The court will be looking more closely at the conduct of the parties and will impose cost sanctions as it considers appropriate. Second, the court's new case-management powers will mean that parties will have less control over the conduct of their cases. The court will be able to step in at any time to amend directions, to strike out proceedings and make orders it considers appropriate.
China: Australia's center-left government accused the opposition of pandering to anti- China sentiment yesterday, dismissing concerns about Beijing's influence over senior ministers as absurd. Amid intense debate over moves by Chinese state-owned entities to buy into the country's vast resource base, the conservative opposition has put the spotlight on several ministers' links to China. Opposition leader Malcolm Turnbull has accused Prime Minister Kevin Rudd - a Putonghua-speaking former diplomat and avowed Sinophile - of acting like a "roving ambassador" for Beijing. Turnbull also attacked Defense Minister Joel Fitzgibbon's failure to declare two trips to China paid for by a Beijing- born businesswoman. Finance Minister Lindsay Tanner said Turnbull was running a populist line he believed would resonate with sections of the Australian public. "It's both absurd and it's a blatant attempt by Malcolm Turnbull to play to latent antagonism toward China in the Australian populace," Tanner told Sky News. He also raised the issue of race, saying: "I think Malcolm Turnbull's trying to stir up some more yellow peril sentiments, frankly." "Yellow peril" was a racist term commonly used in the early 1900s, when many Australians feared Asia's large population coveted their country's wide open spaces and was intent on invading. Acting Prime Minister Julia Gillard, who is in charge while Rudd is overseas, said the opposition was playing cheap politics. "This is all getting a little bit absurd," Gillard told ABC television. "We now have the opposition carrying on as if there is some huge conspiracy here. That if you've ever met a Chinese person, if you've ever discussed an issue with relation to China, and if you've ever spoken a word of Mandarin - apparently this is all some huge conspiracy against Australia's national interest." Turnbull last week linked Fitzgibbon's trips to China, taken in 2002 and 2005 when he was an opposition member of parliament, to China's recent interest in Australian resources. "China has a vested interest in acquiring our natural resources at low prices," Turnbull said. "The question is how much has Fitzgibbon not told us." Opposition treasury spokesman Joe Hockey broadened the attack to include more ministers and Rudd. "I'm concerned about the pattern of behavior at the moment," Hockey said. "Kevin Rudd received free trips when he was in opposition from Chinese interests. Wayne Swan, the treasurer, received these trips, Tony Burke the agriculture minister. Now we hear about the defense minister receiving free trips from China ... what's going on?"
President Hu Jintao urged world governments to take appropriate steps to boost their economies as leaders of the G20 rich and emerging powers gather in London for a summit to tackle the global economic crisis. Mr Hu also said China’s prompt moves to support its economy had born some initial fruit and the country would continue to take economy-friendly steps as part of the global effort to battle the worst financial crisis in generations. His remarks were published in all major Chinese newspapers on Wednesday. Mr Hu was expected to arrive in London later in the day. The run-up to the April 2 summit has been marred by divisions between the United States and Britain on one side and European governments on the other over the right scale of fiscal stimulus needed to revive economic growth and how deeply regulatory systems need to be changed to prevent another global crisis. Beijing has flexed its growing economic and political muscle ahead of the meeting, most notably in a call by its central bank governor last week for a new super-sovereign reserve currency to replace the US dollar. As the global crisis drags on, Mr Hu urged governments around the world to coordinate their economic policies while implementing stimulus measures. “World countries should adopt economic stimulus steps suited to their conditions, reinforce co-ordination of their macroeconomic policies and achieve mutual development, employment and [better] livelihoods,” Mr Hu was quoted as saying in an interview with Xinhua. “The gathering of G20 leaders in London this time after last November’s Washington summit has great significance in helping boost individual and corporate confidence, stabilising global financial markets and promoting the recovery of global economic growth,” he said. The world needs to curb trade and investment protectionism, and conduct a “necessary” overhaul of the global monetary system to prevent similar crises from emerging again in the future, Mr Hu added. He did not mention the recent proposal floated by central bank governor Zhou Xiaochuan and other Chinese officials to establish a new reserve currency to replace the dollar as the world’s main reserve currency. Mr Hu also said China would continue to open its economy despite the negative impact of the global crisis, which had caused its exports and imports to dive, industrial production to slow and unemployment to rise. China’s active fiscal policy and appropriate loose monetary policy adopted after the crisis “have born initial fruit, with [the economy showing] positive signs,” Mr Hu said. Beijing announced a crucial two-year, US$586 billion economic stimulus plan last November, among other boosting steps.
The mainland securities regulator yesterday took advantage of rising investor confidence to announce rules for the long-awaited Nasdaq-style second board as well as the resumption of initial public offerings. The China Securities Regulatory Commission published on its website listing rules for the planned technology-heavy market in Shenzhen. It issued a separate statement announcing the listing review committee would vet an application by Ningbo QL Electronics on Friday, the first new listing hearing since September last year. Buoyed by a 30.34 per cent gain in the Shanghai Composite Index this year, regulators are now confident the measures can be introduced without endangering market confidence. The benchmark's gain is its largest first-quarter rally since 2000, when it climbed 31.7 per cent. The regulator did not say when the second board would be officially created, but sources said more than 12 small firms would be among the first batch of companies on the growth market. The CSRC said the rules would take effect on May 1, a clear sign the second board has obtained the central leadership's final approval. The benchmark edged up 15.173 points or 0.64 per cent yesterday to 2,373.213 as investors were unfazed by the news of fresh equity influx, driving the index up in afternoon trade before it tumbled 2.5 per cent. "The market is a mixture of worries and confidence," said Shenyin Wanguo Securities analyst Li Xiaoxuan. But "it looks like the market can maintain the upward momentum with policy stimulus". Sources said listing approvals would be slowed down if the market sentiment turned sour. Analysts and investment banks earlier predicted the CSRC would resume new offerings when the Shanghai index hit the 2,400-point level. Last year, the index slumped 65.39 per cent amid a crisis of confidence sparked by the global financial turmoil. Beijing has since come under heavy pressure to maintain employment after exports, one of the key drivers of the world's third-largest economy, dwindled sharply. The second board may provide a source of capital for smaller firms unable to obtain financing from banks, many of whom baulk at the high risks of lending to less established companies. The mainland has been eyeing a Nasdaq-style technology board for the past decade but took a go-slow approach to giving it the approval as it feared a flood of new listings would exacerbate weak market sentiment. The State Council was expected to endorse the draft listing rules in March, according to sources. "The recent outperformance and rising average trading volumes in the Chinese share market suggest that investor confidence is returning," Jing Ulrich, the chairman of JP Morgan's China equities, wrote in a research note. "While equity raising overall has slowed sharply, regulators may gradually increase approvals, first for existing listed companies and then for IPOs, provided market conditions continue to improve." The regulator might need an additional three months before it officially launches the second board in Shenzhen, investment banking sources said. While analysts say recovering market sentiment is a good sign, they warn the rally could be precarious as key economic data for March and the first quarter has yet to be released. If the market turns bearish again in the coming months, Beijing may be unwilling to kick off the board for small enterprises. It is expected that 100 small-cap firms would raise a total of 30 billion yuan (HK$34.02 billion) on the growth market this year.
The Shanghai Stock Exchange may have lost two-thirds of its value last year but not everyone was a loser, according to a new report on high-net-worth mainland investors. By the end of this year there will be more than 320,000 investors on the mainland with more than 10 million yuan (HK$11.35 million) of capital to speculate with, a report produced by the China Merchant Bank and global business consulting firm Bain & Company predicts. The estimate represents an increase of 6 per cent from the end of last year, with the group expected to have more than 9 trillion yuan between them - 7 per cent more than at the end of last year. The figures are a stark contrast to events at the other end of the social ladder, with dramatic rises in unemployment and wage cuts reported among the lowest paid as the full impact of the global slowdown begins to be felt by the mainland economy. They also underline the widening wealth gap, highlighted in a recent UN report on development. The China Institute for Reform and Development warned that the growing disparity threatened to undermine progress made in improving welfare and living standards. "Development gaps have emerged and widened sharply between urban and rural areas, between the prosperous coastal regions in the east and the poorer interior regions of central and western China, between men and women and between registered urban residents and urban migrants," said Khalid Malik, the UN Development Programme's resident representative in China, as he delivered the report in November. Per capita annual earnings in rural areas were just 4,761 yuan last year. The bank's prediction follows a roller-coaster year for the economy. The government admits at least 20 million migrant workers have lost their jobs, out of a floating workforce of 130 million across the mainland. An estimated 1.2 million university graduates from last year have still to find jobs, and competition will increase when 6.1 million more complete their degrees this summer. Figures from February show mainland exports were down 25.7 per cent on the same period last year, with imports down by 24.1 per cent. The Shanghai Composite Index ended last year as the worst performing market in the region and second worst worldwide, having fallen from 5,272 points in January to close on just 1,820 points on December 31. By yesterday, the market had clawed its way back up to 2,373 points. However, the bank's analysis says there were still more than 300,000 high-end investors - categorised by people whose main source of income is from their investments - with portfolios valued at more than 10 million yuan at the end of last year. Beijing, Shanghai, Guangzhou, Zhejiang and Jiangsu accounted for the lion's share of the rich, the report said, with each region boasting more than 20,000 of those investors. The highest number was in Guangzhou with 46,000 - almost 15 per cent of the national total. The report also identified a high number of super-rich investors, with a national total of nearly 10,000 having more than 100 million yuan to play with. The elite group's investments totalled 1.4 trillion yuan.
Mar 31 - April 1, 2009
Hong Kong: Winning parties in civil lawsuits may be blocked from reclaiming the full costs of litigation if they fail to make a reasonable attempt to settle out of court, under sweeping judicial reforms which take effect this week. After nine years of discussion and consultation, the Civil Justice Reforms will on Thursday bring significant changes to civil proceedings in the High Court and District Court. Chief Justice Andrew Li Kwok-nang says the changes will benefit the public and reduce the workload of the Judiciary. In an interview with The Standard the city's top judge described the reforms as the most comprehensive in 50 years. "It is like we have been using an old car for a long time and we are only now switching to an advanced model, but we're not making a drastic change to an aeroplane," Li said. The reforms have six objectives, he said, including an increase in the cost- effectiveness of civil proceedings, ensuring fairness, facilitating the settlement of disputes and distributing court resources fairly. At present, the pace of proceedings is largely party-driven which leads to too many interlocutory applications, he said, and proceedings also lack focus until a very late stage, causing delays as well as expense. Li said the courts will take a more proactive approach in case management to grasp the core of a case earlier. "Under the new arrangements, both parties can make a monetary offer to settle a dispute. If the plaintiff makes a claim of HK$1 million and the defendant offers a HK$700,000 settlement but it is rejected, the plaintiff may still be compensated less than HK$700,000 even if he wins the lawsuit at the end," Li said. Under the reforms, the courts will take into consideration a party failing to make a reasonable attempt to settle a dispute out of court. Li said the reforms also encourage mediation. "Mediation has proved successful in other jurisdictions and the public can benefit in terms of time and monetary costs. It can also help reduce the workload of the courts," he said. While in some jurisdictions it is compulsory to use mediation before going to courts, Li said this will not be the case in Hong Kong. But the court will take it into account when deciding costs at the conclusion of the proceedings. He said mediation has been used in the Family Court for some time, and has been successful. "For example, if there are five disputes in a case it will be better if at least one can be settled." Li said that what is and is not an unreasonably refused offer of mediation will depend on the circumstances of a case. He said that in cases related to outstanding credit card debt it will be reasonable to pursue litigation. Under the new rules, lawyers will be duty-bound to explain the different costs and time implications of mediation and litigation to clients. Li said their benefit to the public is of greater concern than their impact on the legal sector. "If I am not a tycoon and cannot get legal aid, I would think that litigation is worth trying and mediation is an alternative," Li said. He added that the legal sector is well- prepared for reforms that have been discussed for nine years. A steering committee may be set up to review the reforms next year.
Home Affairs Secretary Tsang Tak-sing predicted a new era of ties with Taiwan, during a rare visit to the island on Monday, in what analysts say is a Beijing-sanctioned attempt to normalise diplomatic relations after a decade. Mr Tsang flew to Taipei on Monday in the first visit to the island by a senior Hong Kong official since the former British colony reverted to mainland rule in 1997. “Now that I’ve come to Taiwan, I expect in future, Taiwan and Hong Kong relations will rise to a new development level,” said Mr Tsang upon his arrival in Taiwan as the head of a delegation to the World Buddhist Forum in Taipei. Hong Kong and Taiwan have long held close cultural, trade and economic ties – with Taiwan flights and cargo often routed via Hong Kong en-route to the mainland. But the two sides have had awkward diplomatic relations over the past decade, given the influence of Beijing which tried to limit high-level contact under Taiwan’s previous anti-China president Chen Shui-bian. Political analysts said Mr Tsang’s visit while a small step, was a Beijing-sanctioned move aimed at normalising political relations between the two sides under the new Beijing-friendly Kuomintang administration of Taiwan President Ma Ying-jeou. Since Mr Ma took office in May, he has eased tension with Beijing through trade and transit deals although military distrust lingers. “Relations across the Taiwan Straits have much improved and while we are only making very small steps ... apparently this has been cleared by Beijing,” said Joseph Cheng, a political scientist at Hong Kong’s City University. “[Hong Kong] had [previously] adopted a very conservative attitude and they simply toed the Beijing line, and of course during the Chen Shui-bian administration era, being politically correct meant having nothing to do with Taiwan,” said Mr Cheng. Mr Tsang said he didn’t rule out the possibility of meeting officials on the sidelines of the Buddhist forum. In previous years, top Taiwan officials have made key visits to mainland cities like Beijing and Macau, but apparently avoided Hong Kong, though analysts said the situation could now change.
Pop singer Kelvin Kwan Chor-yiu, who was arrested in Tokyo for alleged possession of cannabis, burst into tears on his weekend release after spending more than a month in detention. Hong Kong Performing Artistes Guild president Alan Tam Wing-lun, who is Kwan's godfather, said Kwan, 25, called him immediately after his release from police custody. "He couldn't stop crying over the phone. So I told him crying would not help and that what he did was something serious that deserves harsh punishment." Tam said the young singer called him again the next morning but did not say much. "It is no use apologizing to me. It is time for him to show his sincerity to the whole community and his fans," Tam said. After being detained for more than a month, Kwan returned at about 8.30pm on Saturday. Besieged by more than 100 journalists at the arrival hall, Kwan immediately made an apology and admitted he had "committed a big mistake." His rumored girlfriend Wei Si, who is also known as Jill Vidal, remains in police custody in Tokyo. The pair was arrested in Tokyo's trendy Shibuya district on February 24. Kwan and Vidal are alleged to have been arguing with a shopkeeper in a 24-hour store when police were called.
Shares in fashion retailer Esprit recovered some of their earlier sharp losses on Monday after the company said its CEO had not tendered his resignation, quashing talk of more management changes. The world’s No 6 fashion retailer announced the surprise departure of a senior executive late last week, sending its shares down more than 9 per cent on Friday and almost 11 per cent on Monday. In an attempt to soothe investor nerves, Esprit issued a statement saying it had not received a resignation letter from CEO Heinz Krogner.
The Hong Kong University of Science and Technology (HKUST) on Monday announced the appointment of Professor Tony Chan Fan-Cheong as its next president. Mr Chan, 57, a prominent maths and physics scholar, would become president of HKUST in September 1. He succeeds Paul Chu Jingwu – who retires in August. Mr Chan received his bachelor and masters degrees in engineering from the California Institute of Technology (Caltech). He also obtained a PhD in computer science from Stanford University. He pursued post-doctoral research at Caltech, and taught computer science at Yale University before joining UCLA as professor of mathematics in 1986. He is currently assistant director of the US National Science Foundation (NSF). There, he manages research funding of almost HK$10 billion a year for astronomy, physics, chemistry, mathematics and material science. Speaking at a press conference, Mr Chan said he had lived in the US for 40 years, but was born and brought up in Hong Kong.
Hong Kong has nothing to fear from Shanghai's development into an international shipping centre, as the former has a unique advantage in professional services for the industry, Hong Kong's transport minister says. Eva Cheng said the ports of Hong Kong and Shanghai served different hinterlands and there was synergy between the two cities' maritime industries. The secretary for transport and housing said Hong Kong's professional services to the maritime industry could help upgrade Shanghai's shipping industry to meet international standards. The State Council announced on Wednesday that Shanghai should strive to become an international financial centre and international shipping centre, in line with the country's economic power and the growing importance of its currency, by 2020. "An international maritime centre is more than a port handling cargo-carrying containers. Hong Kong has a well-developed cluster of professional services for maritime industry, such as legal services, insurance, financing and registration of vessels," Ms Cheng said. Hong Kong's port handled 24.4 million 20-foot equivalent units last year, compared with container throughput of 28 million TEUs in Shanghai. She said there were more than 900 firms in Hong Kong that specialised in providing professional services for the maritime industry. "Shanghai is still in the initial stage of developing professional services for maritime industry and would like to draw on the expertise of providers of such services in Hong Kong," the minister said. Ms Cheng, who led a mission to Shanghai on Thursday to promote Hong Kong as an international maritime centre, said Hong Kong was also known for its low taxes as well as a free flow of capital and information. She said the Hong Kong Maritime Industry Council had been promoting the city as an international maritime centre in such cities as Shanghai, Ningbo and Dalian. She admitted Hong Kong's maritime industry faced the problem of high operating costs, although the city excelled in efficient and value-added service. Ms Cheng said the feasibility study for the planned development of Container Terminal 10 in Tsing Yi was expected to be completed in two years, and building the terminal would take another six or seven years.
Private equity and hedge funds that backed Fisherman's Wharf (SEHK: 0004), the colorful Macau waterfront theme park with a casino established by Stanley Ho Hung-sun and Macau legislator David Chow Kam-fai, are about to bail out of the HK$2 billion project and swallow massive losses. In a fiasco more eye-popping than the park's enormous fake volcano and gold, Egyptian-themed casino, funds including United States-based Texas Pacific Group and Och Ziff are likely to write-off half the value of loans worth about US$340 million in return for being allowed to walk away, according to sources. The saga dates to 2006, when Fisherman's Wharf privately issued a US$400 million convertible bond to raise new funds. Mr Chow, who also owns the Macau Landmark hotel and attached Pharaoh's casino, was at the time mulling a Hong Kong share sale and talking of plans for a major expansion that would more than double the size of the park and add four new hotels. Foreign investors who bought the bonds, sold by Merrill Lynch, did so anticipating that they could convert them into shares at a profit of 25-30 per cent after Fisherman's Wharf was floated on the Hong Kong exchange. But three years on, the listing and the expansion plans have not materialised. Visitor numbers have fallen far short of expectations as it has struggled to compete against the pulling power of glitzy new casino resorts such as Las Vegas Sands Corp's Venetian Macao. Bondholders battered by the financial crisis appear to have given up hope of a profitable exit from their investment in Fisherman's Wharf, and have decided to cut their losses while taking a hefty haircut. Mr Chow, who used proceeds from the original convertible bond sale to buy out the 45 per cent stake previously held by Mr Ho's SJM Holdings, is now negotiating to take out foreign bondholders at a price sources close to him said would be "just over 50 cents in the dollar". At the same time the bond buy-back will allow Mr Chow to effectively halve interest payments on the Wharf's debt, which also includes a HK$534 million syndicated loan facility co-guaranteed by SJM that had HK$369.6 million drawn down at the end of 2007. One source close to Mr Chow said the debt buy-back was almost done. "It is not signed but they are getting there. The ink will be dry on the paperwork within two months." A Merrill Lynch spokesman declined to comment. TPG and Och Ziff, which several sources confirmed were involved in selling their loans back to Mr Chow, did not return calls. Mr Chow declined to comment. Sources said the funds have spent most of this year wrangling to cash out of their US$340 million in Fisherman's Wharf bonds, and a sale to Mr Chow would bring a close to their investment. Merrill Lynch, which invested about US$60 million of its own cash in the bonds, will stay in the deal, according to two sources. The bank hopes to win a role advising on the Wharf's initial public offering, if and when a listing occurs. TPG is one of the world's biggest private equity firms, with more than US$50 billion of capital under management. Och Ziff is a hedge fund founded by former Goldman Sachs star Daniel Och. It said in February its funds under management had fallen by US$11.1 billion to US$22.1 billion during 2008, partly due to bad performance and partly because investors pulled money out. Fisherman's Wharf has faced some challenges since breaking ground in 2001 and soft opening in January 2006.
China: Taiwan plans to remove underwater naval barricades from a former military outpost to let people take part in a swim from the mainland in another sign of detente with Beijing, an official said on Monday. Officials on the outlying islets of Quemoy, also known as Kinmen, want to remove anti-ship landing barricades before August 1, when local authorities will sponsor the swim from Cthe mainland, six kilometres away, information official Fu Yang-tu said. Since Taiwan President Ma Ying-jeou took office in May, the Beijing-friendly leader has eased tension with Beijing through trade and transit deals, although military distrust lingers. “Ties between the two sides are growing warmer, and Chinese people can visit Kinmen,” Mr Fu said. The swim, he said, “will at least bring a spirit of peace and perhaps also tourism”. In 1958, mainland forces bombed Quemoy for weeks when it tried to seize the islets, which have strategic and military value. The main island of Taiwan is about 160 kilometres from China. The barricades to be removed are spikes mounted at an angle on cement bases and designed to spear warships headed toward shore. The county has not decided how many to take down.
Zhang Qingli, secretary of the Tibet Autonomous Regional Committee of the Communist Party of China, addresses a ceremony marking 50 years of Chinese control over Tibet in Lhasa on Saturday. Authorities will reopen Tibet to foreign tourists on April 5, a travel official said on Monday, in a sign that authorities may ease a crackdown imposed for the anniversary of a failed Tibetan uprising. State news agency Xinhua quoted Tibet’s head of tourism, Mr Bachug, as saying that tourist arrivals had been suspended in March “for the sake of travellers’ safety” but would resume April 5. “Tibet is harmonious and safe now,” he said, adding that “travel agencies, tourist resorts and hotels are well prepared for tourists.”
Barack Obama this week meets for the first time with President Hu Jintao, which is putting the new US leader on notice it sees itself as a power to be reckoned with.
Australia's Sinophile Prime Minister Kevin Rudd is fighting perceptions he has become a "running dog" for Beijing as anti-China sentiment mounts at home, threatening billions of dollars worth of Chinese investment. With Mr Rudd urging a greater IMF role for China at a meeting this week of major economies in London, Australia’s conservative opposition leader Malcolm Turnbull accused Rudd of having become a “roving ambassador for the People’s Republic of China”. Even a shock decision last Friday to refuse a bid by Chinese state-owned Minmetals to buy Australian miner OZ Minerals on national security grounds appears to have backfired, with media accusing the government of belated chest-beating. “The government has thrown up a series of arbitrary investment barriers apparently to look like it is ‘standing up to China’”, the Sydney Morning Herald newspaper said on Monday. “It has sent a message to the Australian public that Chinese money is inherently dangerous. The result is red peril hysteria.” The Mandarin-speaking Mr Rudd, elected in late 2007, was expected to take Australia’s relations with China to a new high with his expert understanding of the country, learned in Beijing as a junior diplomat. But Chinese investment bids now before Australia’s foreign investment watchdog, including a US$19.5 billion tie-up between Chinese state-owned metals firm Chinalco and Anglo-Australian mining giant Rio Tinto, have sparked public unease. Conservative opposition politicians and an influential upper house swing vote independent senator plan television advertisements with more than a whiff of nationalism, demanding the centre-left government not sell the farm to Beijing. At the same time, Mr Rudd’s Labor has given inadvertent credence to populist attacks, although a poll on Monday showed its popularity remains strong with voters. Defence minister Joel Fitzgibbon is fighting for his job after failing to declare two free trips given to him by a Chinese-born friend, while Mr Rudd has endured a media storm over undeclared meetings with China’s security and intelligence chief Zhou Yongkang, as well as propaganda tzar Li Changchun. Opponents had all but tarred Mr Rudd as “Beijing’s running dog”, newspapers said, with perceptions rising of the popular prime minister as a “Chinese lickspittle” or “Manchurian Candidate.
Rarely does China deviate from its low-profile stance on international affairs. But in the week ahead of the critical Group of 20 meeting in London, top officials adopted a new position as they pursue a design and architecture for the global financial system that is in China's best interest. From challenging the dominance of the US dollar in the international currency system to rebuking the existing financial supervisory network, China's leading economic and financial officials issued very public comments calling for a new financial order. There were the written thoughts of central bank governor Zhou Xiaochuan, comments by foreign exchange chief Hu Xiaolian at a Ministry of Foreign Affairs media briefing, Finance Minister Xie Xuren speaking out in an interview with Xinhua, and a commentary in the London-based Times newspaper by Vice-Premier Wang Qishan. "This is the first time in living memory that we see Chinese policymakers laying down the markers in such a proactive manner before a significant international gathering," said Yuan Gangming, an economist with the Chinese Academy of Social Sciences. "The reason is simple: China has got to the closest point it has ever reached in really making a difference to the international order." In Mr Wang's opinion piece, the Vice-Premier clearly stated for the first time what China wanted from the G20 summit - a timetable and a roadmap for the reform of the international financial system to give developing nations greater influence. The unprecedentedly strong assertion has profound implications beyond the ideas Beijing has about a new global financial order, economists say. Underscoring the Chinese initiative is a rising nation seeking a bigger say in the international community during the G20 summit and bidding for a better position in possible future global disputes. "China's intention is very clear. It wants to increase its soft power in line with its position as the world's third-largest economy, second-largest trading country, an important outbound investor and a major foreign capital attractor, by grasping the opportunity brought by the financial crisis," said Qu Hongbin, an economist with HSBC (SEHK: 0005). "The official comments in the past few days indicate that China has well prepared to express at the summit what it wants and what it does not want. It does not matter if the macro and strategic ideas are feasible on a short-term or long-term view. It is a remarkable change that China is positively seeking a bigger say." Peng Wensheng, an economist with Barclays Capital Research, said the central leadership must know that some of the stated goals were not achievable for a long time, such as replacing the US dollar's dominance in the international currency system by a "super-sovereign reserve currency" as proposed by Mr Zhou. "It is hard to change the position of the US dollar. However, reduced dependence on a single currency and a more balanced world economy are to the benefit of China. Voicing it and making it heard is the first step as China sets out to approach the goal," said Mr Peng. Economists say Beijing has also been trying to avoid barbs at the summit and afterwards by defending its high saving rates, reassuring the world that the mainland economy is under control and pressuring counterparts before they raise any economic dispute in the future. "China does not have the strength to challenge the position of US in the international economic and financial system at the moment. However, the financial crisis gave reasons for China to blame the flawed system," said Mr Yuan. "The pressure is on the US now. It could give China an advantage in possible future talks on foreign exchange rates if the US lets its currency depreciate." On Monday, Mr Zhou wrote in an article on the website of People's Bank of China that an overhaul of the global monetary system was needed and that the world's main reserve currency could be replaced by the International Monetary Fund's special drawing rights as a "super-sovereign reserve currency". Mr Zhou diplomatically did not refer explicitly to the US dollar. However, the next day US President Barack Obama said that there was no need for a global currency, following Federal Reserve chairman Ben Bernanke and Treasury Secretary Timothy Geithner's comments at a congressional hearing that they would not allow the US dollar to be stripped of its premier reserve status. On Tuesday, the central bank's website published another article by Mr Zhou, in which he defended the country's savings glut for the second time in six weeks. Some critics in the US have partly blamed the high savings rates in some emerging nations, particularly China, and major oil exporters for the financial crisis. They claimed the excessive liquidity flow had kept US interest rates low and helped create the asset bubble at the root of the crisis. Mr Zhou said the mainland's high savings deposit rate did not play as big a role in triggering the crisis as the "excessive gearing in consumption and investment" in the US. Two days ago, Mr Zhou wrote a third article, saying the mainland's rapid economic slide had been basically brought under control through a combination of government spending and stimulus packages. Also on Thursday, the central bank's research arm released a report saying the world's financial supervisors needed to work together to overhaul the financial system by starting with "self-criticism". It also sought indices that would serve as an early warning of market chaos. Foreign exchange and finance ministry chiefs also called for the scrapping of the single-currency system, reform of the international financial agencies and improvement of co-operative supervision.
China and Argentina have agreed a 70 billion yuan (HK$79.54 billion) currency swap so the Latin American country can pay for mainland imports in yuan, the official Xinhua news agency said on Monday. The swap was signed in Medellin, Colombia, on the sidelines of the annual meeting of the Inter-American Development Bank, which is being attended by Zhou Xiaochuan, governor of the People’s Bank of China. Thanks to the swap, Argentina will not have to pay for imports from mainland in dollars, the currency in which most international trade is settled, Xinhua said. “The deal will help stabilise the regional monetary system, guard against financial risks and limit the spread of the crisis at this key moment when it is broadening day by day,” the agency said, paraphrasing the official reasoning behind the agreement. The swap is the sixth that the PBOC has signed with central banks since December in a drive to free up trade-finance channels that have been clogged by the global credit crunch. The World Bank reckons the shortfall in global trade finance could be as high as US$300 billion.
*News information are obtained via various sources deemed reliable, but not guaranteed