Macau Business Daily, April 12, 2013 by Business Daily

www.macaubusinessdaily.com

Year II Number 260 MOP 6.00 Friday April 12, 2013 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: Vitor Quintã

Industry backs minimum fees for package tours Page 3

Suen gave LVS ‘valuable’ advice: Weidner

HSBC pulls out of city’s personal insurance market H

commissions to HSBC on product sales. “The overall strategy is to be in the fastest growing markets in the world,” Gareth Hewett, a spokesman for HSBC in Hong Kong, told Business Daily. In late 2012 HSBC also disposed of its general insurance business in Hong Kong, selling it to AXA SA, a French company. More on page 5

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Contractor to blame for July’s Hengqin tunnel Page 7 I SSN 2226-8294

Brought to you by

2013-04-12

2013-04-13

2013-04-14

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HANG SENG INDEX 22240

22192

Weaker yen of little help for car sales

22144

22096

22048

Local car dealers expect a five percent fall in the retail price of Japanese cars by the summer and possibly ten percent by October. It’s largely because of depreciation in the Japanese yen against other major currencies. The country’s leaders have introduced that policy after years of monetary rigour, precisely to encourage Japanese exports. But Macau Motor Traders Association questions whether it will drive sales here.

22000

April 11

HSI - MOVERS Name

Page 2

Public investment stalls in first quarter The 17.9 billion patacas (US$2.2 billion patacas) the government put aside for this year’s public investment plan was barely touched in the first quarter, official data show. Public spending still grew year-on-year thanks to the wages of civil servants, which will be raised next month. Revenue is increasing even faster, though, and the surplus is on pace to top 110 billion patacas this year.

Full smoking ban only solution for casino air quality: staff

HENGAN INTL

2.78

TINGYI HLDG CO

2.64

CHINA RES ENTERP

2.27

AIA GROUP LTD

1.68

ESPRIT HLDGS

1.66

BOC HONG KONG HO

-0.97

CHINA UNICOM HON

-1.09

CHINA LIFE INS-H

-1.67

COSCO PAC LTD

-2.58

LENOVO GROUP LTD

-5.84

Source: Bloomberg

Page 3

The poor air quality in the smoking areas of the city’s gaming venues has prompted gaming workers’ groups to plead again for a full indoor smoking ban in casinos. Secretary for Economy and Finance Francis Tam Pak Yuen said yesterday the government is “determined” to penalise casinos if they fail to meet the air quality requirements when April’s data are assessed. Page 4

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business daily April 12, 2013

macau

Yen weakness does little for car sales Dealers expect the price of Japanese makes to drop in the summer Stephanie Lai

sw.lai@macaubusinessdaily.com

Prospective car buyers are inquiring more about Japanese models now that the yen has weakened

ar dealers expect the weakness of the yen to be reflected in the prices of Japanese models only later in the year, and then only gradually. US$1 bought 99.88 yen on Wednesday, the most for nearly four years, as the Bank of Japan’s ultra-easy monetary policy weakened the yen’s international value. Reuters reported that a survey of 19 analysts indicated that the Japanese currency may weaken to 102 yen to the U.S. dollar this year, its weakest since October 2008. The yen has depreciated by about 24 percent since

November. The pataca is indirectly pegged to the U.S. dollar, so when the U.S. dollar buys more yen, so does the pataca, and Japanese imports become cheaper. The president of the Macau Motor Traders Association, Patrick Tse Ka Ming, told Business Daily that he expected a drop of 5 percent in the prices of Japanese cars in the summer. Car dealers say a buyer usually has to wait half a year for delivery of a car he has ordered. This implies that prices of Japanese cars will reflect the weakness of the yen

later in the year. “The fall in the selling price will not be taking place all in one take, but only in a slow, gradual process,” said Mr Tse. Mr Tse’s dealership, Xin Kang Heng Holdings Ltd, sells Nissans, Hondas and Isuzus. “Though the yen started to fall acutely in February, so far we have not been seeing a full price cut in imported Japanese cars,” he said.

Slow to adjust “Around Easter time, for instance, a slight price cut in some Japanese models did take place, but it was only under a special promotion.”

“It would not be a surprise if a price drop as big as 10 percent happened in the sales peak season of October, when the local auto show takes place,” said Mr Tse. “Because then would be a period for keen competition among local dealers.” The 2013 China (Macau) International Automobile Exposition will be held from October 25 to October 27. Toyota and Mazda dealers said it was hard to say how much the weakness of the yen would reduce the prices of their cars by. They said prospective buyers were inquiring more about Japanese models, but that this had not yet meant more sales. “The cost of keeping a car in the current conditions, like rising rents for parking spaces and the parking meter rate, affects buyers’ willingness to purchase a car,” said the general manager of Mazda Motors (Macau) Ltd, Daniel Cheang Wing Yu. The city’s dominant car park company, Macau Parking Co Ltd, is still awaiting government approval to increase the charges in its car parks in Pak Lane and Pak Lai, near the Gongbei border crossing. The company asked for an increase to 3.00 patacas an hour from 2.00 patacas. The Transport Bureau said on December 28 that it would consult the public in the first quarter of this year about ways to ease road traffic congestion, including heavier taxes on motor vehicles and increases in

parking charges. Car dealers said that the volume of sales of Japanese cars had changed little in the first quarter, when the price had dropped by only “a bit”, in the words of one. “Even when the yen was strengthening in years gone by, it was not directly reflected in the selling price, as the setting of the final price is more dependent on the sales strategies of importers and traders,” said Mr Cheang. “And, by the same token, even as the yen continues to weaken, later on the proportion of Japanese cars in the local market will not be exceptionally enhanced, either.” The market for cars here is split between European and Japanese makes.

It would not be a surprise if a price drop as big as 10 percent happened in the sales peak season of October Patrick Tse Ka Ming, Macau Motor Traders Association president

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April 12, 2013 business daily | 3

MACAU

Public investment slow off the mark Budget surplus on pace to eclipse government estimate, top 100 bln patacas Vítor Quintã

vitorquinta@macaubusinessdaily.com

he 17.9 billion patacas (US$2.2 billion patacas) that the government has put aside for this year’s ambitious public investment plan was barely touched in the first quarter, official data show. By the end of March, the administration had spent only 21.1 million patacas as part of its investment plan for 2013. That was up from just 700,000 patacas a month earlier. However that figure accounts for just 0.1 percent of the total, according to data released late on Wednesday by the Financial Services Bureau. The plan provides for work on building the artificial island where the Hong Kong-Zhuhai-Macau Bridge will land, the Light Rapid Transit elevated railway and the University of Macau’s campus on Hengqin Island. The government’s investment spending usually picks up in the second half of the year, especially in December, when bills for many big contracts are settled. But investment has been even slower off the mark than usual this year. In the same period of 2012 the administration had already spent 653 million patacas. Nonetheless government spending in the first quarter reached 6.37 billion patacas, 4 percent higher than a year earlier. But almost all of that (6.34 billion patacas) was running expenses,

The Legislative Assembly is discussing a pay increase of 6.06 percent for civil servants

which includes spending on the pay and benefits of civil servants. If public spending follows the trend of the first three months of the year, the government would close the books with total expenditure of 25.48 billion patacas, just a third of the 73.99-billion-pataca budget.

Soaring surplus Spending, however, is expected to grow, with a pay increase of 6.06 percent for civil servants currently being discussed at the Legislative Assembly.

Revenue is increasing even faster, though, reaching 34.52 billion patacas in the first quarter, up by 16.5 percent year-on-year. As usual the budget remains heavily reliant on revenue from direct taxes on gaming, which amounted to 29.5 billion patacas in the first three months of 2013, or 85.3 percent of all government revenue. The government pockets 35 percent of takings from gaming directly. It collects another 4 percent indirectly. Secretary for the Economy and Finance Francis Tam Pak Yuen said

in November that the reliance of the economy on gaming “would remain for some years to come”. With revenue growing faster than spending the government had a surplus of 28.2 billion patacas in the first quarter, an increase of 19.7 percent compared to the same period last year. The amount is already coming close to the 41.1 billion patacas surplus estimated in the 2013 government budget for the whole year. The surplus is on pace to reach 112.8 billion patacas in 2013. That would be a new record, easily eclipsing last year’s surplus of 72.8 billion patacas. The surplus will be added to the fiscal reserve, established a little over a year ago. The reserve contained 100.24 billion patacas in December, official data show.

MOP28.2 billion

Government surplus in the first quarter

Minimum charge for tours can help reduce disputes But this deterrent will not stop some agencies from exploring other means, the industry says Tony Lai

tony.lai@macaubusinessdaily.com

he tourism industry believes possible guidelines on package tour fees for travel agencies, following an example from mainland China, could help minimise travel disputes here. Official news agency Xinhua reported this weekend that 16 travel agencies in Ningxia Autonomous Region had come up with guidelines for arranging travel groups to Macau and Hong Kong. The rules said the lowest fee for seven-day tours including, roundtrip flights, should be 4,180 yuan per person (5,343 patacas) and 3,280 yuan for nine-day tours by train. Macau Government Tourist Office director Helena de Senna Fernandes said on Wednesday that they were “now studying the feasibility of the mainland example”. They would ask for the opinion of the industry and put out similar guidelines at “an appropriate time,” she told reporters on the sidelines of

a public event. The Macau Tourist Guide Association thinks such a move could help minimise travel disputes caused by ‘zero-fee tours’, which charge customers an extremely low price or no fee at all. These tours are routinely criticised for forcing customers to shop at specific stores in order to secure commissions for the tour guides. “It is always better to have some guidelines than none at all,” association president Angelina Wu Wai Fong told Business Daily. “But I doubt it would serve more than just a deterrent to the agencies here, rather than a practical measure to regulate their behaviour,” she added.

‘Zero-fee tours’ “The agencies can officially claim to charge visitors a certain price but then the visitors pay a different

amount in private, even though such guidelines exist.” Ms Wu admits that ‘zero-fee tours’ exist in Macau. “The price of a two-day tour to Macau during holidays, like the upcoming Labour Day Golden Week must exceed 1,000 patacas [US$125] per person, including half for accommodation costs and some more for renting shuttle buses,” she said. “But there are always some packages charging some 200 patacas or even lower, so one should know there must be some scheduled shopping activities.” Du Jiang, vice chairman of China National Tourism Administration, said in a Macau event on Wednesday there was “no worsening trend” for ‘zero-fee tours’ to Macau. He pledged to work closely with the Macau authorities to tackle any irregular practices. Travel disputes here usually

Some agencies sell package tours to Macau for as little as 200 patacas, industry insiders say (Photo: Manuel Cardoso)

happen because visitors could not fully understand their itinerary, Ms Wu noted. To strengthen communication between Macau and mainland agencies over package tours could help a lot, she said. Earlier this week, the Travel Industry Council of Hong Kong released guidelines for agencies there for receiving mainland package tours, to avoid a recurrence of disputes reported during the Lunar New Year holidays.

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business daily April 12, 2013

macau Brought to you by

HOSPITALITY Stubborn figure The proportion of mainland Chinese among visitors to Macau has been increasing consistently since the second half of 2009. The number of mainland visitors each quarter declined throughout 2008 and reached a trough of slightly below 2.5 million in the second quarter of 2009. Since then, despite a couple of drops, the number has risen. Since the third quarter of 2011 only once has it dropped below 4 million. In the fourth quarters of 2011 and last year the number of mainland visitors was close to 4.5 million, or an average of about 50,000 per day.

Full smoking ban only solution for casino air quality: staff Govt says gradual steps being taken to improve casinos’ smoking areas Tony Lai

tony.lai@macaubusinessdaily.com

he poor air quality in the smoking areas of the city’s gaming venues has prompted gaming workers’ groups to plead again for a full indoor smoking ban in casinos. “The government should not give any more time to those casinos that fail to meet the air quality standards. It should immediately reduce the smoking areas,” Choi Kam Fu, deputy secretary-general of the Macau Gaming Enterprises Staff’s Association, told Business Daily. Mr Choi, whose association claims to have over 4,000 members, slammed the government for not being “determined enough” in enforcing the partial smoking ban in casinos introduced on January 1. A first round of regular checks by the Health Bureau showed that twothirds of all gaming venues failed to match air quality standards. The bureau said in a Wednesday statement the failing gaming venues would have four weeks to improve.

It pointed out it had the power to recommend to Chief Executive Fernando Chui Sai a reduction in the size of permitted smoking areas in the city’s gaming venues. Ieong Man Teng, president of the Forefront of Macau Gaming association, said: “Those casinos should be penalised immediately as I do not think they can change much in four weeks.”

Early review “I also have doubts on the result of the checks as the Health Bureau does not explicitly state at what time of day they carried out the inspections,” said Mr Ieong. “The air quality may be better in the morning with fewer people,” he told Business Daily. Secretary for Economy and Finance Francis Tam Pak Yuen said yesterday the government is “determined” to penalise the casinos if they fail to meet the air quality requirements when April’s

Most mainland visitors are day-trippers, who typically stay just a few hours. Daytrippers tend to spend much less than overnight visitors, and jam the streets and border crossings. To increase revenue and reduce congestion, we would be better off if a higher proportion of mainland visitors were overnighters. But the number of daytrippers has been rising inexorably above the number of overnighters. Not even in the summer or at the turn the year, when more visitors stay longer, reverses this tendency. The proportion of mainland visitors that are day-trippers did decline slightly last year. A similar decline occurred in 2008 and 2009, but then the proportion began rising again. A similar rebound may be in progress. The figures for the first two months of this year show that a rise in the proportion that started in the fourth quarter of last year is continuing. Day-trippers appear more sensitive to the economic cycle than overnighters, but not, so far, so sensitive that they have ever made up fewer than half of all mainland visitors.

Gradual steps

J.I.D.

52.9 %

Proportion of mainland visitors in January and February that were day-trippers

data is assessed. “The results merely match our expectations,” said João Bosco Cheong Hong Lok, president of Macau Gaming Industry Employees Association, which claims to have 7,000 members. “Those old casinos in the [Macau] peninsula cannot meet the requirements unless they demolish the whole ventilation system and carry out a refurbishment – but is it possible?” he told Business Daily. More than half of the venues with air quality issues were run under the gaming licence of Sociedade de Jogos de Macau, SA (SJM), including older casinos like Casino Lisboa. MGM Macau casino was able to meet the requirements and Grant Bowie, chief executive of MGM China Holdings Ltd, said “most of the issues come down to the air-conditioning solutions. We have invested a considerable amount of money and we will continue to do so”. “It is probably worthy of note that these requirements are actually the strictest in the world and no other jurisdiction in the world has to meet these expectations,” he told media yesterday.

Gaming workers’ groups will deliver a petition today calling for an early review of the partial smoking ban in casinos

“The government should really start working on a full smoking ban now after seeing this result,” said Mr Cheong. “A full indoor smoking ban will not affect the operators’ business,” said Mr Cheong. “Gamblers are more addicted to gambling than smoking and they would not mind going outside to smoke.” “It is difficult to assess the effectiveness of the ban as it is only the first report,” Mr Tam told reporters. “You can say there are 26 [28] gaming venues not meeting the requirements but on the other hand there are about 20 which can do so.” He added the government and the operators would improve the smoking areas “step by step”. Lei Chin Ion, director of the Health Bureau, has previously said they would only review the partial ban by 2015 as stated in the law. Mr Choi’s and Mr Cheong’s associations will petition the cabinet of the city’s Chief Executive today for an early review of the rules. Mr Choi suggests the government should also place equipment in every gaming venue in order to assess constantly the air quality.

news where it matters

April 12, 2013 business daily | 5

MACAU

HSBC pulls out of city’s personal insurance market

Corporate

Michael Grimes

michael.grimes@macaubusinessdaily.com

Gregory Spierkel new Sands launches MGM Resorts director Cotai Pass The Venetian Macao and Sands Cotai Central’s Conrad and Holiday Inn hotels are joining together to offer their guests the new Cotai Pass for entertainment, shopping, dining and leisure. Exclusively for in-house guests, Cotai Pass is available for purchase in two formats – a Cotai Day Pass and a Cotai Entertainment Pass, the company said in a statement. Priced at HK$268 (US$34.5), the Cotai Day Pass offers 100 patacas redeemable in shopping, dining, spa, entertainment and exhibition tickets. It could include a lunch buffet, a gondola ride or an entry ticket to CSI: The Experience – Macau, 15 percent discount at the Manchester United Experience shop and 10 percent off in Cotai Water Jet tickets The Cotai Entertainment Pass, available for HK$698, also comes with a reserve show ticket to The House of Dancing Water at City of Dreams resort, run by rival operator Melco Crown Entertainment Ltd.

MGM Resorts International yesterday announced that Gregory Spierkel has accepted an invitation to join the company’s board of directors. He was elected to his new post by the board during its meeting on Tuesday. Mr Spierkel served for seven years as the chief executive of Ingram Micro Inc, a leading global technology distributor. He retired last year from the Fortune 100 company, which distributes and markets technology products from companies including Apple and Microsoft. “For 25 years, Greg has successfully managed complex, large-scale operations throughout the world,” said Jim Murren, MGM Resorts’ chairman of the board and chief executive officer. “He brings to the board a unique blend of leadership, expertise in technology and communications, and experience in Asia.” Mr Spierkel led the company’s US$500 million (4 billion patacas) acquisition of Tech Pacific and significantly strengthened its presence in Asia.

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HSBC – disposing of non-core assets

SBC Holdings plc said yesterday it is disposing of its general insurance business in Macau. It will be acquired by QBE Insurance (International) Ltd, a unit of Australian insurer QBE Insurance Group Ltd. The sum involved in the deal was not disclosed. But a filing to the Hong Kong Stock Exchange says that under the agreement, QBE will pay commissions to HSBC on product sales. The Macau operation, currently run by the bank’s unit HSBC Insurance (Asia) Ltd, is not discussed as a line item in the group’s annual report. But yesterday’s filing said the gross asset value of the Macau business was approximately HK$6.97 million (US$900,000) as of December 31, 2012. The Macau operation is focused mainly on personal rather than corporate insurance, HSBC spokesman Gareth Hewett told Business Daily. Nearly 75 percent of the US$13.6 billion insurance business written by HSBC globally last year was for life cover, according the parent’s annual report. Last year the group also earned US$117 million from disposal of general insurance portfolios. “We announced a new strategy for HSBC Group in May 2011…The overall strategy is to be in the fastest growing markets in the world,” said Mr Hewett. The bank said in its annual review it had “not yet reached” a target return on equity globally of

12 percent to 15 percent. But since 2011 it has been using a series of tests referred to as “filters” to establish what businesses it should keep and expand, and what it should sell. The tests include delivery of sustainable cost savings ahead of target, growth from investment in faster growing markets and “reducing legacy underperforming assets”. In late 2012 HSBC also disposed of its general insurance business in Hong Kong, selling it to AXA SA, a French company. On Wednesday HSBC announced it was selling its 26 percent stake in a life insurance joint venture with two Indian state-run banks. Canada’s Manulife Financial Corp. and the Indian affiliate of Standard Life plc were said to be among the suitors to place first-round bids for the HSBC share, valued at around US$200 million according to sources quoted by Reuters. In October last year, Business Daily reported ING Groep NV of the Netherlands sold ING Life Insurance Co. (Macau) Ltd and its Hong Kong insurance business as a job lot, after being told by European authorities to get rid of its insurance operations. The company sold its insurance assets in Macau, Hong Kong and Thailand to Richard Li Tzar Kai, a son of Asia’s richest man, for 1.64 billion euros (US$2.14 billion). ING’s Macau insurance unit made a loss of 37.2 million patacas (US$4.7 million) in 2011, adding to more than 100 million patacas in losses accumulated in previous years.

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business daily April 12, 2013

macau

Suen told LVS to stress conventions experience

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Still falling Textiles were not long ago the most visible merchandise exports of Macau. Early in the century they made up more than 80 percent of exports. By the middle of the first decade, as international trade became freer, the textiles industry began to wind down. That was reflected in a steep drop in exports that became shallower only in 2010. By then exports of clothing were only about 8 percent of what they were at their peak in 2004. In just six years the textiles industry was reduced to less than one-tenth of its size.

The contraction is still going on – more slowly than before, but still at a fast rate. The output of knitted garments shrunk by almost one half from 2010 to 2012. The output of other kinds of clothing was more resilient, shrinking by only about 15 percent. In 2011, last year and in the first two months of this year the value of exports of other kinds of clothing exceeded the value of exports of knitted garments, suggesting that the predominance of knitted garments is finished forever. Products of the textiles industry other than clothes never made up more than one-fifth of its output until 2010. That the proportion was higher in that year and last year was due to the output of clothing shrinking faster, rather than any reversal of the contraction of the textiles industry’s output of other products. The data for January and February indicate that these trends are continuing. Exports of clothing other than knitted garments are decreasing slowly, while exports of knitted garments and other products are still falling fast.

Former LVS boss Bill Weidner concedes HK businessman’s advice on Macau casino bid ‘valuable’ Michael Grimes

michael.grimes@macaubusinessdaily.com

illiam Weidner – a former right hand man to the boss of Las Vegas Sands Corp. – was described in court as an “adverse” and possibly “hostile” witness by a lawyer trying to win US$328 million (2.62 billion patacas) from the company for a client. This is the second time a Las Vegas court has heard a breachof-contract case brought by Hong Kong businessman Richard Suen against LVS. He claims he is owed the money for helping the firm get a Macau casino licence in 2002. A Nevada jury sided with Mr Suen in 2008 for a smaller amount of compensation, but the verdict was overturned on appeal. For a portion of his five hours of testimony on Wednesday U.S. time, Mr Weidner sounded anything but adverse or hostile. He described how he “lost confidence” in his former boss LVS chairman Sheldon Adelson following the financial crisis of 2008 that forced the firm to issue a warning of potential bankruptcy. He also said he had not been “treated well” when his former employer stated he had been “fired

for cause” even though he had already resigned. He testified he had been asked to sign a severance deal with strings attached. Under it, he couldn’t criticise Mr Adelson, but Mr Adelson would be able to say anything he liked about Mr Weidner. “No amount of money was acceptable for that,” Mr Weidner told the jury, before going on to describe how he had walked away from the package including a year’s salary of US$1 million and stock options that could have totalled between US$20 million and US$60 million. In the end he got nothing.

Relationship breakdown Asked why he didn’t sue, Mr Weidner replied: “I didn’t want to be Jacobs. I didn’t want to be Suen.” The first name was a reference to Steve Jacobs, a former president and chief executive of Sands China Ltd, who is suing LVS in a Nevada lawsuit for ‘wrongful termination’. It has so far sparked multiple regulatory inquiries about LVS’s operations in Macau because of allegations Mr Jacobs made in court filings.

Valuable assistance

J.I.D. The content of this column is the work of Business Daily’s journalists.

MOP145.5 mln

Textiles exports in January and February

The court heard on Wednesday that Mr Weidner resigned from his post as president and chief operating officer of LVS in March 2009 after being informed that his relationship with Mr Adelson “wasn’t working”. In live testimony on Tuesday, Mr Adelson had said he “wouldn’t have approved” any document agreeing the payment of US$5 million and two percent of the net profits from the Macau gaming operation to Mr Suen, and appeared to put responsibility for the alleged deal on Mr Weidner. In the 2008 trial Mr Adelson called Mr Weidner a liar and said he had exaggerated the positive outcome of a meeting Mr Suen arranged with Chinese officials. A legal deposition on the issue of payment to Mr Suen, video recorded in September 2005 – when Mr Weidner was still working for LVS – was played to the court on Wednesday. The moment was captured by cameras from Courtroom View Network – the television service authorised to record the trial despite pre-trial opposition from Mr Adelson’s lawyers. In the 2005 video Mr Weidner says: “We never had a memorialised written contract [with Mr Suen].”

William Weidner – ‘Adelson supported idea of compensating Suen’

Mr Weidner conceded in his live testimony that Mr Suen’s insistence LVS stress its experience in the conventions business when talking to officials in Macau and the mainland about a Macau gaming licence was “valuable”. James Pisanelli, a lawyer for Mr Suen, asked: “The meeting with the [Chinese] vice premier was valuable. It would not have happened without Richard’s [Mr Suen’s] advice and contacts?” “Yes,” replied Mr Weidner. But Mr Weidner added on the deposition tape: “He [Mr Suen] sincerely tried to do it…He couldn’t deliver [a Macau licence] from our perspective. But we tried to figure out some way to reimburse him for his time and for his efforts.” He added to the jury in response to a question from Mr Suen’s counsel: “I do know Sheldon supported the idea of giving Richard [Suen] value for what he’d delivered.” Mr Weidner is expected to testify further on Thursday U.S. time.

April 12, 2013 business daily | 7

MACAU

Contractor to take rap for tunnel site cave-in But govt says nothing about any penalty for the month-long delay in construction Tony Lai

tony.lai@macaubusinessdaily.com

he government has said it holds the state-owned contractor responsible for the delay caused by the cave-in in July at the construction site of the tunnel to the University of Macau’s new campus on Hengqin Island. Guangdong’s Nam Yue Group Corp Ltd has the contract to construct the campus and the tunnel that connects it to Macau. The cave-in meant work on the tunnel was suspended for a month. The director of the Infrastructure Development Office, Chan Hon Kit, said in a written reply last week to an inquiry by Legislative Assembly member Chan Meng Kam: “The contractor has to take responsibility, in accordance with the contract, for all the losses and construction delays caused by the cave-in incident.” The Infrastructure Development Office, which is meant to supervise the construction of the campus, did not say how much the delay in the work had cost.

It made no mention of any penalty incurred by the contractor. Business Daily asked for more information, but had received no reply by the time we went to press. According to a preliminary official report released last year, the cavein was due to the weakness of the ground at the site, heavy rain and some minor faults in construction procedures. The Infrastructure Development Office said it had “urged the contractor to put all resources into catching up with the construction schedule”. But it did not say when the campus would be turned over to the government. Mr Chan Hon Kit said the tunnel was now “basically completed”. He said it would be ready for use once some mechanical equipment had been installed. In his inquiry, Chan Meng Kam accused officials of failing to keep their promises. The government originally said

A cave-in July hindered construction of the tunnel to the University of Macau’s new campus

it could take possession of the new campus last year, but later said it could take possession last month. The state-run newspaper Legal Daily reported this week that the campus could be turned over to the Macau government by April 20. Asked by Business Daily if

this report was accurate, the Infrastructure Development Office made no comment. The office said only: “All construction was basically completed in March.” It added that it would begin inspecting the campus this month.

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business daily April 12, 2013

GREATER CHINA

Lending tops forecasts, adds to financial risks March credit surge supports economic recovery

hina’s new yuan loans and money supply exceeded analyst estimates last month, aiding the nation’s recovery from the slowest growth in 13 years while adding to financial risks that may presage tighter credit. New local-currency lending in March was 1.06 trillion yuan (US$171 billion), the People’s Bank of China said yesterday in Beijing. That compares with the 900 billion yuan median estimate in a Bloomberg News survey of 34 economists and 620 billion yuan in February. M2, China’s broadest measure of money supply, rose 15.7 percent, compared with the median forecast for 14.6 percent. New Premier Li Keqiang is trying to keep credit flowing to sustain an economic rebound without creating asset bubbles or excessive risks in the banking system. While inflation eased more than forecast last month, Fitch Ratings Ltd cut the nation’s long-term local-currency debt rating this week, citing dangers to financial stability. “China’s monetary policy makers are in a tough position to balance short-term growth stability, market worries and long- term economic health,” said Lu Ting, Hong Kong-based chief economist

for Greater China at Bank of America Corp. While growth momentum is “not strong” and “external conditions are still volatile,” the data “could once again trigger fears on CPI inflation, property bubbles, government debt, shadow banking and then monetary tightening,” Mr Lu said in a note yesterday, referring to the consumer price index.

the first pickup in two years. Aggregate financing, a broader measure of credit that includes non-bank lending such as trust loans, bond and stock sales, was 2.54 trillion yuan in March, close to a record, compared with the median analyst estimate of 1.8 trillion yuan. The increase in China’s reserves, the world’s largest, “will put more upward pressure on the yuan,” said Dariusz Kowalczyk, Record reserves senior strategist with Credit E c o n o m i c g r o w t h Agricole CIB in Hong Kong. probably accelerated in the T h e c u r r e n c y t o u c h e d first quarter to 8 percent 6.1923 per dollar yesterday, from a year earlier, according the strongest level since the government unified official and market exchange rates at the end of 1993. China’s foreign exchange reserves rose to a record US$3.44 trillion at the end of March from US$3.31 trillion in December. For the first quarter, aggregate financing surged New local-currency about 58 percent from a year earlier lending in March to 6.16 trillion yuan, according to the median estimate in a to central bank data. New Bloomberg News survey of local-currency loans in the 38 economists before data first three months were due Monday. Gross domestic 2.76 trillion yuan, the most product rose 7.9 percent in for a first quarter since the the last three months of 2012, global financial crisis, and 12

RMB1.06 trillion

Chinese banks made loans well above market expectations

percent higher than the same period last year. Moneysupply growth exceeded the government’s 2013 target of 13 percent. “Concerns have been growing about China’s credit situation, primarily linked to the shadow-banking system, with Fitch’s recent downgrade of China’s credit rating tying into these fears,” Hu Yifan, chief economist at Haitong Securities Co. in Hong Kong, said in a note yesterday. These concerns “are an impediment to a more proactive monetary policy,” she said.

Total credit Fitch on Tuesday lowered its assessment of China’s long-term yuan debt by one step to A+, the fifth-

highest grade, saying there are increasing financialstability risks given the lack of transparency in the increased borrowing by local governments. It estimated total credit in the economy, including forms of so-called shadow banking, may have reached 198 percent of GDP at the end of 2012, up from 125 percent four years earlier. There is a “dichotomy between strong credit data and weak demand in the real economy,” said Tao Dong, head of Asia economics excluding Japan at Credit Suisse Group AG in Hong Kong. While credit data accelerated, “economic activities in the real economy were flattish, in some cases moderating,” he said. Inflows of so-called hot

Yuan to be dominant Asian currency, Stevens says There could be a profound adjustment for many countries in the region from membership of what is, at present, a de facto U.S. dollar zone, to membership of an RMB zone Glenn Stevens, Governor, Reserve Bank of Australia

eserve Bank of Australia Governor Glenn Stevens said China’s yuan is likely to become Asia’s dominant currency. “There could be a profound adjustment for many countries in the region from membership of what is, at present, a de facto U.S. dollar zone, to membership of an RMB zone,” Mr Stevens told a symposium on Asia-Pacific financial market development in Sydney, according to remarks posted on the RBA’s website. “To some extent this has begun with the use of RMB for trade settlement, which is growing quickly.” China surpassed the U.S. to become the world’s biggest trading nation last year, ending the U.S. dominance in global commerce dating from the end of World War II, according to the U.S. Commerce Department. Mr Stevens said that “unless something serious goes wrong in China,” the world’s most populous nation will probably have the dominant currency in Asia.

Mr Stevens said events in Europe meant that the fashion a decade ago in Asia to look to that region as a model for a currency union had abated. “This may one day be built in Asia, but it takes a long time: Europe’s prodigious efforts over 50 years or more did not, as it turns out, produce fully the conditions for currency union,” he said. The governor said the total size of the bond market in Asia, excluding the very large Japanese market, now amounts to about US$7 trillion, having increased “substantially” over the past five years. He said “the risks associated with prolonged low interest rates globally are very much on the minds of policy makers right around the region, and will be for a while, I would think.” Asia will seek to use its own financial sector to do more of the intermediation of its saving, Mr Stevens said. Bloomberg News

April 12, 2013 business daily | 9

GREATER CHINA

Bird ‘flu fears hit Yum profits analysis

um! Brands Inc., owner of KFC and Pizza Hut dining chains, said sales at stores open at least a year fell 13 percent in China in March as its ads failed to regain customers concerned about the quality of its chicken. Analysts projected a drop of 10 percent, the average of four estimates compiled by Consensus Metrix. Sales dropped 16 percent at KFC while gaining 4 percent at Pizza Hut, the Louisville, Kentucky-based company said in a filing with the U.S. Securities and Exchange Commission yesterday. Yum is trying to revive sales and win back consumers with new ads in China after former chicken money may have persisted in February, as the central bank and financial institutions bought a net 295.4 billion yuan of foreign currency after purchasing 683.7 billion yuan in January, PBOC data showed yesterday. Bank of America’s Mr Lu estimated there could be about US$100 billion of “unexplained” foreignexchange inflows in the first quarter, reversing a capital outflow of US$60 billion in the previous period. “March may mark the peak of easy credit conditions,” said Yao Wei, a China economist at Societe Generale SA in Hong Kong. Various tightening measures on housing and shadow banking will “bite from here onwards,” she said. Bloomberg News

Taobao bans live poultry trading

libaba Group Holding Ltd and other Chinese e-commerce sites are taking steps to protect against the spread of bird ‘flu as concerns rise the H7N9 variant that’s killed nine people could spur an epidemic. Alibaba’s e-commerce platform Taobao Marketplace said it would shut down online trading of live poultry “under necessary circumstances” this week. Shanghai-based Tony’s Farm and Beijingbased www.tootoo.cn have halted the sales. Web retailer 360buy Jingdong Inc. will cut down on face-face meetings

Manulife buys HK tower

anulife Financial Corp. has agreed to pay the secondhighest price on record for a whole Hong Kong office tower as companies seeking cheaper rents push up demand for space outside the city’s Central business district. Canada’s biggest insurer will pay HK$4.5 billion (US$580 million) to the developer, a unit of Wheelock & Co., for the 512,000-square-foot Kowloon East building, the companies said in a joint statement yesterday. The building is scheduled for completion by the end of 2015 and will be used by Manulife as its Hong Kong headquarters, they said.

supplier Liuhe Group was found to have supplied meat with too much antibiotics. In February, Yum said it would start a marketing campaign after the Lunar New Year ended. It also pledged to improve food safety and tighten standards for its suppliers in the Asian nation, where the fast-food company has more than 5,200 stores. An outbreak of bird ‘flu may also curb demand for KFC this month in China, where Yum last year got about half of its revenue. “Within the past week, publicity associated with Avian ‘flu in China has had a significant, negative impact on KFC sales,” Yum said in the filing.

Demand for office space outside Central, which has the world’s second-highest office occupancy cost behind London’s West End, is rising as banks and brokerages seek cheaper locations to keep costs low amid slowing corporate finance activities. Monthly rents in Kowloon East rose 4.5 percent in the first three months of 2013 from the previous quarter to HK$31.71 a square foot, as those in Central gained 0.3 percent to HK$98.77 a square foot, according to broker Cushman & Wakefield Inc. The price paid by Manulife, equivalent to about HK$8,790 a square foot, is the second-highest in

with suppliers, and stop offering pork and poultry at its employee cafeteria, Richard Liu, chief executive of Jingdong, said in a letter to employees last week. The H7N9 cases may become an opportunity for e-commerce companies as fears of infection prompt more people to stay home and shop online. A 2003 outbreak of Severe Acute Respiratory Syndrome helped make e-commerce popular just as it was getting started, said Cao Lei, a director at Hangzhou-based China eBusiness Research Center.

Hong Kong for whole office building sale, according to Sigrid Zialcita, managing director for Asia research at Cushman & Wakefield. Agricultural Bank of China Ltd. last year paid HK$4.9 billion for 50 Connaught Road, near Central. JPMorgan Chase & Co. and Bank of America Corp. are among banks that have leased additional office space in areas outside of Central in the first quarter, according to Cushman & Wakefield. Manulife isn’t the first financial services company to acquire its own building in Kowloon East, where rents are rising. China Construction Bank Corp. in March last year paid HK$2.5 billion, or about HK$7,200 a square foot, for an office building in the area. The insurer is buying one of the two towers of the One Bay East commercial complex. Wheelock bought the site for HK$3.53 billion, or HK$3,856 per buildable square foot, in a tender in 2011. The developer, Wheelock Properties Ltd, may sell the second tower in full or by floors when it’s nearing completion, managing director Ricky Wong said in the statement Reuters

Commodity imports just enough to support growth view Clyde Russell Reuters market analyst

hina’s imports of key commodities such as crude oil, copper and iron ore recovered just enough in March from February’s holiday-affected slump to support the view of a modest economic re-acceleration. A recovery in imports after the week-long Lunar New Year holiday last month was always on the cards, with the extent of the increase likely to be interpreted as a sign of just how fast the Chinese economy is growing. The best answer appears to be that growth seems steady, with the level of commodity imports supporting the gentle increase in the March Purchasing Managers’ Indexes, which pointed to gross domestic product expanding about 8 percent in 2013. Crude oil imports totalled 23.05 million tonnes in March, up 10.9 percent from February’s 20.78 million. However, in barrels per day (bpd) terms, March’s 5.43 million was virtually unchanged from February’s 5.42 million. Crude imports stood at 5.59 million bpd in the first quarter, down from 5.66 million in the same period last year. At first blush this seems likely a fairly bearish outcome for crude demand in China, but it should be remembered that the first half of 2012 saw large oil purchases for strategic and commercial stockpiling. It’s likely that as much as 400,000 bpd was diverted to storage in the first half of last year, and subtracting that figure from overall imports leaves about 5.26 million bpd being used for actual consumption in the first quarter of 2012. Assuming that no current crude is being stockpiled, this would imply that the first quarter of this year saw crude consumption rise by about 330,000 bpd over the corresponding period in 2012. Of course, it’s not that simple and one factor to account for is the large slump of 33.6 percent in net fuel imports, as Chinese refiners use more of their crude throughput to export refined fuels. While imports of refined products have dropped 3.4 percent in the first quarter of 2013 from the same period last year, exports have surged 20.2 percent.

Regional impact The impact of higher Chinese fuel exports is being felt by Asian refiners, with the profit margin of a Singapore-based plant dropping to US$5.38 a barrel on Tuesday from US$10.49 a barrel in February. While Chinese refiners still have excess capacity, it is unlikely they will import more crude and export more fuels in the short term. Rather, domestic demand growth

will drive increases in crude imports, and this means that in the absence of renewed strategic stockpiling, imports are likely to remain below or close to the levels of last year, at least for the first half of the year. After that, there should be strong gains in imports when compared to the same month in 2012 as China stopped stockpiling in the second half and actually ran down commercial inventories as economic growth slowed at that time. Turning to iron ore, and the jump of 14.4 percent in March imports to 64.55 million tonnes from February’s 56.42 million tells more about how weak February was than about any strength last month. For the first quarter, imports of the steel-making ingredient are flat with the same period a year earlier, in what is probably a reflection of higher prices. Benchmark Asian spot iron ore prices reached a 15-month high of US$158.90 a tonne on February 20, and had been rising for several weeks prior, when many cargoes for March delivery would have been booked. Prices have since fallen as low as US$132.90 a tonne on March 14, a drop of 16 percent from the peak this year, and they closed on Tuesday at US$139.10. The moderation in prices should help stimulate demand, but only if steel consumption, which is largely driven by property and infrastructure, holds up. Copper imports also rebounded, with unwrought copper jumping 7.2 percent to 319,603 tonnes in March. But as with iron ore, in year-todate terms the numbers look less impressive, with imports slumping 28.9 percent in the first quarter from a year earlier. This has less to do with price, given London copper slumped 8 percent from the year-high of US$8,305 a tonne to US$7,630 on Tuesday, and more to do with the overhang of inventories built up last year for financing deals. Imports were boosted by an attractive arbitrage between London and Shanghai prices, and this could also boost imports again in April. But it will take lower prices to suck in more imports, as the weak environment in Europe creates uncertainty over China’s exports, which rose 10 percent in March, just below forecasts. However, overall imports rose 14.1 percent, mainly on the back of higher commodity volumes, exceeding the 5.2 percent consensus and leaving China with an unexpected trade deficit. So the impetus for further commodity import growth now depends on domestic demand and the external sector. Reuters

10 |

business daily April 12, 2013

ASIA Malaysia factory output down Malaysia’s industrial production in February fell 4.5 percent from a year earlier, suffering its steepest fall since May 2011 and coming in below expectations, official data showed yesterday. A Reuters poll of 17 economists had forecast factory output to have slipped 2.5 percent after five months of expansion as export-focused firms cut back production because of the Lunar New Year holidays in the region. January’s factory output was revised upwards to 5.2 percent year-on-year from 4.6 percent previously.

Kuroda: BOJ made all possible moves Newly appointed Haruhiko Kuroda said the unprecedented stimulus announced by the Bank of Japan at his first meeting as governor last week is enough to achieve a 2 percent inflation goal. The central bank has taken all “necessary” and “possible” measures, Mr Kuroda told reporters in Tokyo. While officials will change policy as needed, he doesn’t expect adjustments each month, he said. The BOJ chief reiterated a pledge to do what’s needed to meet the target in two years. He said yesterday that the BOJ’s campaign to fuel prices and growth isn’t targeting the yen and monetary policy won’t be altered because of currency moves.

Hyundai Heavy wins order from Chevron Hyundai Heavy Industries Co. Ltd, the world’s largest shipbuilder, said yesterday it has clinched a US$1.9 billion order to build offshore facilities for U.S. multinational energy group Chevron Corp. The shipyard said the floating oil production and storage facilities capable of producing 100,000 barrels of oil a day would be set up by 2017 in the North Sea Rosebank oil field in Britain. The order came two weeks after Hyundai Heavy won a US$2.0 billion deal to build two offshore platforms for French energy giant Total.

Australia jobless rate rises to 3yr high Australia’s jobless rate rose unexpectedly to hit its highest in over three years in March as employment fell and more people went looking for work, a disappointing report that led markets to narrow the odds on another cut in interest rates. Yesterday’s data from the Australian Bureau of Statistics showed the unemployment rate rose to 5.6 percent in March, from 5.4 percent the month before. That was above expectations for a steady outcome and the highest reading since November 2009. Employment fell by a larger-than-expected 36,100, but that followed a huge forecast-busting 74,000 increase in February. Averaging the two months, employment growth was still reasonably solid.

BOK cuts 2013 growth outlook to 2.6 pct South Korea’s central bank resists pressure, signals no easing soon Se Young Lee and Choonsik Yoo

outh Korea’s central bank surprised markets by holding interest rates steady yesterday, resisting pressure from the new government for a cut and signalling it was not ready to reduce rates any time soon. Government bond yields jumped and the won currency gained as the surprise decision to keep the policy rate unchanged for a sixth consecutive month prompted traders to adjust positions that had priced in a rate cut. The Bank of Korea kept its base rate steady at 2.75 percent. Only four out of the 22 analysts surveyed by Reuters predicted no change in the rate, while the remaining 18 saw a cut by 25 basis points. “There is no major change in the domestic economic recovery path from January,” Governor Kim Choong-soo told reporters while explaining its downgrade of the 2013 economic growth forecast to 2.6 percent from 2.8 percent set in January. In response to questions about political pressure for a rate cut, Mr Kim said views of those outside the central bank could not be a

driving factor for its policy decision because it applies a longer-term view on the economy, a possible reference to pressure to align the BOK with President Park Geun-hye’s impending stimulus drive. “I think the Bank of Korea is convinced that interest rates are low enough. The central bank believes that rates are fully accommodative and as long as Governor Kim Choong-soo is in place there will be no more cuts,” said Yum Sang-hoon, economist at SK Securities.

SMEs support The Bank of Korea separately announced creation of a 3.0 trillion won (US$2.64 billion) special lending facility to support smaller companies, which Mr Kim said reflected the Bank of Korea’s effort to use more tailored policy tools for weak areas. The central bank’s new growth forecast for this year represents a much more optimistic view than the government of new President Park has on Asia’s fourth-largest economy, which the administration sees growing only 2.3 percent.

KEY POINTS Base rate kept at 2.75 pct C.bank makes small cut to 2013 GDP Officials from new govT have called for rate cut Launches special lending facility to support firms

Ms Park’s government is set to unveil an extra budget bill next week, estimated by finance ministry officials to be up to 20 trillion won (US$17.6 billion), to lower budget revenue projections as well as adding spending plans. Officials including Finance

Japan carmakers to recall 3.4 mln cars Top four companies recalling vehicles globally over airbag flaws

p to 3.39 million vehicles made by major Japanese manufacturers will be recalled worldwide because of possible problems with airbags, the companies said yesterday. Toyota Motor Corp, Honda Motor Co., Nissan Motor Co. and Mazda Motor Corp separately said they would recall a combined 3.39 million vehicles globally in accordance with local regulations, all citing the same malfunction of passenger-side airbags. Japan’s transport ministry, which received recall reports from the manufacturers, said the number of vehicles affected would reach 2.92 million. There was no explanation for the discrepancy in the total. A Toyota spokesman said his company alone was recalling a total of 1.73 million vehicles, manufactured between November 2000 and March 2004 in Japan or abroad, due to a defect in passenger-side airbags. The carmaker said while five incidents of malfunctions have been reported though there were no accidents or injuries. Toyota USA said in a statement it

was recalling 170,000 vehicles in the United States, out of the company’s total recall. “The involved vehicles are equipped with front passenger airbag inflators which could have been assembled with improperly manufactured propellant wafers,” the statement said. “ I m p r o p er l y m a n u f a c t u r e d propellant wafers could cause the inflator to rupture and the front passenger airbag to deploy abnormally in the event of a crash.” The company’s spokesman in Japan said this abnormal inflation “could also burn part of the vehicle’s inside and cause fire”. However, he said, there were no recorded instances of this happening. Nissan and Honda released statements giving similar explanations. A Nissan spokeswoman said the company was recalling a total of 480,000 vehicles globally, all of which were manufactured in Japan between August 2000 and January 2004. Toyota and Nissan said the airbags were made by Tokyo-based

Toyota is the worst affected by the latest recall

Takata Corp., while the ministry said the airbag parts were supplied by a single company but declined to disclose the name. Takata Corp. fell as much as 11 percent before closing at 1,819 yen (US$18.3) in Tokyo trading, down 9 percent. “This is a global recall that affects all regions where we do our business,” said a spokeswoman with Honda, which is recalling 1.135 million vehicles. Mazda said its recall target would reach 45,463 units worldwide, including 4,384 at home. “We will recall the cars at home while taking the same action in accordance with local regulations of each country,” a company spokeswoman said. AFP

April 12, 2013 business daily | 11

ASIA

Indonesia holds rate as subsidies raise inflation risk Central bank slightly cut growth forecast for 2013

Mr Kim says economic recovery intact

Minister Hyun Oh-seok have said recently that policy authorities, including the government and the central bank, need to introduce more supportive measures as quickly as possible. Policymakers and analysts remain worried that the yen depreciation stemming from Bank of Japan’s aggressive monetary easing will undercut local exporters and stunt the current recovery. Heightened tensions over North

Korea’s threats of a nuclear war on the peninsula is an additional drag on South Korea’s economy, with the most immediate impact seen felt in spending by consumers and companies within the country. They are also keeping a close eye on the impact from increased tensions with North Korea as weeks of bellicose rhetoric from Pyongyang have rattled investor confidence in South Korean financial markets. Reuters

ndonesia held its benchmark interest rate for a 14th consecutive meeting as plans to cut fuel subsidies boost inflation risks, reducing scope for monetary easing even as falling exports crimp growth. Bank Indonesia Governor Darmin Nasution and his board held the reference rate at a record-low 5.75 percent, the central bank said in Jakarta yesterday. President Susilo Bambang Yudhoyono is due to review proposals for a new fuel policy as officials seek to limit energy subsidies that have spurred oil imports, depleted foreign-exchange reserves and weakened the rupiah. Higher gasoline and diesel prices or restrictions on the use of partially government-funded fuel would add to inflation, which accelerated to a 22-month high in March. “There’s no room for BI to cut the rate as inflation risks are high,” Juniman, chief economist at PT Bank Internasional Indonesia, said before the decision. “The markets are waiting for the government policy on fuel subsidies.” Indonesia spent 211.9 trillion rupiah (US$22 billion) on fuel subsidies last year, spurring demand for energy products that contributed to a record trade deficit in October. Containing the subsidy bill will be a key challenge for the successor to Finance Minister Agus Martowardojo, who is set to replace Mr Nasution at

the central bank. Mr Nasution, whose term ends in May, said last week the central bank “cannot avoid” raising borrowing costs if needed. Inflation, which accelerated to a faster-than-estimated 5.9 percent in March, may be 5.3 percent by the end of 2013 compared with an earlier forecast of about 4.9 percent, Perry Warjiyo, executive director for monetary policy and economic research at Bank Indonesia, said this week. The central bank said it now projects Indonesia to have economic growth of between 6.2 and 6.6 percent this year, versus a previous forecast for 6.3 to 6.8 percent. Bank Indonesia (BI) said the prospects for global economic recovery aren’t as optimistic as before. Reuters/Bloomberg News

There’s no room for BI to cut the rate as inflation risks are high Juniman, PT Bank Internasional Indonesia

Kingfisher submits second revival plan Plans to resume services with seven aircraft as parent company offers help

Kingfisher’s permit is suspended since October

ingfisher Airlines Ltd, grounded since October following five years of losses, submitted a revival plan to Indian authorities for a second time after the previous proposal was rejected as inadequate. Parent UB Group will give 6.5 billion rupees (US$119 million) to help the carrier restart flights, Kingfisher chief executive Sanjay Aggarwal said after meeting India’s aviation regulator in New Delhi

yesterday. The airline plans to resume services with seven aircraft, he said. Kingfisher’s present plan is more “practical” as private airport operators and aircraft lessors support it, a government official said. Liquor tycoon Vijay Mallya’s latest attempt to revive the Bangalore-based airline comes as Indian carriers struggle with high operating costs and competition is set to intensify with the entry of AirAsia Bhd. later this year. “It’s a good thing if the regulator

is seeing substance in the plan,” said Harsh Vardhan, chairman of Starair Consulting, a New Delhibased company that advises airlines. “Nobody, whether it’s creditors or lessors, would like to come in the way of a restart. They know it’s a tradeoff between write-off and possibility of recovery.” Indian authorities had rejected Kingfisher’s previous revival plan, saying the funding pledged by the parent wasn’t adequate to ensure

reliable services and the carrier didn’t disclose how it will pay money owed to airports. The aviation regulator had suspended the airline’s permit in October following flight disruptions caused by strikes triggered by unpaid wages. The carrier’s flying permit lapsed on December 31. Kingfisher, the only Indian carrier to order Airbus SAS A380 superjumbos, has defaulted on payments to creditors, fuel suppliers and airports. The carrier, which was No. 2 in India by market share in 2011, has a debt of 86 billion rupees. Mr Mallya, who founded Kingfisher in 2005, is under pressure to repay the carrier’s debts. State Bank of India, the biggest lender to Kingfisher, said earlier this month it will seize the collateral pledged for the airline’s loans. An Indian court has declined to stop banks from selling pledged shares of United Spirits Ltd. Mr Mallya, who is selling a stake in United Spirits to Diageo Plc, will use proceeds from the sale to pare Kingfisher’s debt, Prakash Mirpuri, a UB Group spokesman, said in February. Mr Mallya’s UB Holdings lost some of its stake in United Spirits and Kingfisher after banks sold a part of their pledged shares on April 1, according to stock exchange filings. Bloomberg News

12 |

business daily April 12, 2013

MARKETS Hang SENG INDEX NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

33.2

1.684533

36207089

ALUMINUM CORP-H

3.07

2.675585

30020080

BANK OF CHINA-H

3.52

241966818

BANK OF COMMUN-H

5.85

1.211073

33319926

NAME CHINA UNICOM HON

PRICE

DAY %

9.95

VOLUME

-1.093439

28762230

NAME

PRICE

DAY %

POWER ASSETS HOL

73.85

-0.1352265

VOLUME 2143673

39.65

0.5069708

8099438

9.7

5718562

SANDS CHINA LTD

67.8

-0.2941176

1606004

SINO LAND CO

12.58

-0.6319115

8767866

CNOOC LTD

14.26

37486718

SUN HUNG KAI PRO

106.7

0.2819549

4305524

COSCO PAC LTD

CITIC PACIFIC CLP HLDGS LTD

BANK EAST ASIA

30.05

1.349073

2160797

10.56

-2.583026

20109610

SWIRE PACIFIC-A

93.95 -0.05319149

2152123

BELLE INTERNATIO

13.32

1.369863

22544032

ESPRIT HLDGS

9.82

1.656315

6347243

TENCENT HOLDINGS

250.4

0.4009623

4718239

BOC HONG KONG HO

25.6

-0.967118

19857551

HANG LUNG PROPER

29.3

0.6872852

6633953

TINGYI HLDG CO

21.4

2.63789

8889100

CATHAY PAC AIR

12.8

0.6289308

6084274

HANG SENG BK

124.5

1.219512

1796093

WANT WANT CHINA

11.32

-0.3521127

9400890

HENDERSON LAND D

54.35

1.210428

5707325

WHARF HLDG

67.55

-0.5886681

3522962

77.6

2.781457

2975702

CHEUNG KONG CHINA COAL ENE-H CHINA CONST BA-H

114.5

0.4385965

3497021

6.55

-0.4559271

17666250

6.2

0.1615509

227202686

CHINA LIFE INS-H

20.6

-1.670644

49846604

CHINA MERCHANT

24.75

0.2024291

2926991

CHINA MOBILE

82.95

0.06031363

13762084

CHINA OVERSEAS

21.6

0.2320186

17799645

CHINA PETROLEU-H

8.89

0.6795017

63676015

24.75

2.272727

3786866

CHINA RES LAND

CHINA RES ENTERP

21.8

1.395349

5721030

CHINA RES POWER

23.9

0.2096436

6521193

CHINA SHENHUA-H

27.55

1.100917

22572098

HENGAN INTL HONG KG CHINA GS

22.7

4848379

130.1

1.087801

4067999

82.1

0.2442002

8701873

82.15

0.1829268

7403136

5.26

0.5736138

228561969

LI & FUNG LTD

10.52

1.348748

14673490

MTR CORP

30.95

1.143791

1958924

NEW WORLD DEV

12.74

1.111111

10386286

PETROCHINA CO-H

9.98

-0.3992016

36258353

HONG KONG EXCHNG HSBC HLDGS PLC HUTCHISON WHAMPO IND & COMM BK-H

PING AN INSURA-H

59.75

0.2516779

11263362

MOVERS

4 22240

INDEX 22101.27 HIGH

22232.74

LOW

21800.24

52W (H) 23944.74 21790

(L) 18056.4 9-April

11-April

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

CHINA PACIFIC-H

27.3

-0.907441

13965863

YANZHOU COAL-H

9.63

-1.533742

15286472

13988416

CHINA PETROLEU-H

8.89

0.6795017

63676015

ZIJIN MINING-H

2.54

-1.550388

35552035

2.675585

30020080

CHINA RAIL CN-H

0.4304161

12103300

ZOOMLION HEAVY-H

8.23

0.6112469

13913572

27.55

-0.1811594

8991896

CHINA RAIL GR-H

3.79

0.2645503

11474600

ZTE CORP-H

12.06

-0.8223684

2616525

BANK OF CHINA-H

3.52

241966818

CHINA SHENHUA-H

27.55

1.100917

22572098

BANK OF COMMUN-H

5.85

1.211073

33319926

CHINA TELECOM-H

3.76

-1.312336

95954800

BYD CO LTD-H

22.6

-1.525054

1268414

DONGFENG MOTOR-H

11.34

1.795332

18152095

CHINA CITIC BK-H

4.22

0.2375297

19033631

GUANGZHOU AUTO-H

5.91

2.426343

9758824

CHINA COAL ENE-H

6.55

-0.4559271

17666250

HUANENG POWER-H

8.37

13372153

CHINA COM CONS-H

7.38

0.2717391

20440162

IND & COMM BK-H

5.26

0.5736138

228561969

CHINA CONST BA-H

6.2

0.1615509

227202686

JIANGXI COPPER-H

16.66

-0.9512485

8433513

CHINA COSCO HO-H

3.54

-1.666667

7325694

PETROCHINA CO-H

9.98

-0.3992016

36258353

CHINA LIFE INS-H

20.6

-1.670644

49846604

PICC PROPERTY &

9.7

0.2066116

30183244

CHINA LONGYUAN-H

7.25

-2.159244

17753001

PING AN INSURA-H

59.75

0.2516779

11263362

CHINA MERCH BK-H

15.68

0.5128205

12575579

SHANDONG WEIG-H

6.97

-1.692525

90860000

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.53

0.8571429

200265697

AIR CHINA LTD-H

6.4

2.4

3.07

ANHUI CONCH-H

ALUMINUM CORP-H

NAME

CHINA MINSHENG-H

9.33

0.7559395

43653446

SINOPHARM-H

24.6

-0.8064516

2368590

CHINA NATL BDG-H

9.64

0.5213764

38270210

TSINGTAO BREW-H

49.5

-0.4024145

843624

16.26

0.7434944

4733971

WEICHAI POWER-H

27.05

2.462121

4482300

PRICE

DAY %

VOLUME

6.41

0.7861635

6258247

CHINA OILFIELD-H

NAME

MOVERS

2 10830

INDEX 10708.25 HIGH

10828.16

LOW

10496.58

52W (H) 12354.22 10490

(L) 8987.76 9-April

11-April

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.7

-0.3690037

62444115

AIR CHINA LTD-A

5.17

0.1937984

8110262

CITIC SECURITI-A

11.95

-0.4995837

ALUMINUM CORP-A

4.22

-2.764977

21281770

CSR CORP LTD -A

4.13

18.85

2.557127

40586128

DAQIN RAILWAY -A

BANK OF BEIJIN-A

8.6

12487401

DATANG INTL PO-A

BANK OF CHINA-A

2.91

15664767

EVERBRIG SEC -A

13.08

BANK OF COMMUN-A

4.66

-0.2141328

39789625

GD MIDEA HOLDI-A

13.48

BANK OF NINGBO-A

10.56

-0.4712535

8400993

GD POWER DEVEL-A

2.96

BAOSHAN IRON & S

4.89

0.204918

33524038

GEMDALE CORP-A

3268588

GF SECURITIES-A GREE ELECTRIC

ANHUI CONCH-A

BYD CO LTD -A

21.43

1.467803

CHONGQING WATE-A

NAME

PRICE

DAY %

VOLUME

SAIC MOTOR-A

15.58

-0.1282051

26209664

59889272

SANY HEAVY INDUS

10.17

0.0984252

25855105

-0.9592326

39888100

SHANDONG DONG-A

45.7

0.08760403

8962498

7.08

-1.529903

35129934

SHANDONG GOLD-MI

32.13

4503942

4.45

0.9070295

14675415

SHANG PHARM -A

12.5

-1.574803

12729784

-1.431801

8965369

SHANG PUDONG-A

10.02

0.2

43303750

0.3723008

35926948

SHANGHAI ELECT-A

3.87

-1.27551

2611099

0.6802721

35953371

SHANXI LU'AN -A

17.3

-1.199315

13884869

6.69

0.1497006

23727334

SHANXI XISHAN-A

11.32

-1.393728

9420277

13.13

-0.530303

13242615

SHENZEN OVERSE-A

5.74

-0.173913

19015018

60.58

1.42307

855469

6.14

-1.286174

24156910

CHINA AVIC AVI-A

22.92

-0.6932409

2151434

26.72

-1.474926

26573750

SICHUAN KELUN-A

CHINA CITIC BK-A

4.32

0.6993007

37247680

GUANGHUI ENERG-A

19.6

1.60705

18572477

SUNING COMMERC-A

CHINA CNR CORP-A

4.15

-0.4796163

62138127

HAITONG SECURI-A

10.11

0.0990099

67232582

TASLY PHARMAC-A

64.85

-1.593323

2019743

7008987

HANGZHOU HIKVI-A

37.31

-0.5066667

2509598

TSINGTAO BREW-A

37.3

-0.1071237

2344110

CHINA COAL ENE-A

6.93

-1.282051

CHINA CONST BA-A

4.68

0.4291845

21467783

HENAN SHUAN-A

76.41

2.853682

2368871

WEICHAI POWER-A

22.96

5.272811

17857606

CHINA COSCO HO-A

3.63

-0.8196721

10017200

HONG YUAN SEC-A

17.89

-0.9413068

7123024

WULIANGYE YIBIN

22.26

-2.196837

19510341

CHINA EAST AIR-A

3.09

1.980198

22236108

HUATAI SECURIT-A

9.5

-0.7314525

17149544

YANGQUAN COAL -A

13.07

-1.950488

6038463

CHINA EVERBRIG-A

3.06

-0.3257329

44894232

HUAXIA BANK CO

10.17

0.295858

11342935

YANTAI WANHUA-A

18.34

-0.596206

14376742 3531475

-1.880621

5065406

IND & COMM BK-A

4.08

0.2457002

21722017

YANZHOU COAL-A

16.51

-2.307692

CHINA LIFE INS-A

17.47

-0.5125285

13459250

INDUSTRIAL BAN-A

17.65

2.25956

99347924

YUNNAN BAIYAO-A

81.5

1020709

CHINA MERCH BK-A

12.39

-0.4019293

33431483

INNER MONG BAO-A

28.39

-1.696676

14403638

ZHONGJIN GOLD

13.92

-1.971831

12323328

CHINA MERCHANT-A

11.73

-1.59396

20628151

INNER MONG YIL-A

29.78

-0.6671114

11831647

ZIJIN MINING-A

10966093

INNER MONGOLIA-A

4.92

-2.95858

69996188

ZOOMLION HEAVY-A

30.5

-0.974026

7149186

61.7

-2.604578

4716828 8333177

CHINA INTL MAR-A

CHINA MERCHANT-A

25.72

0.586625

CHINA MINSHENG-A

9.65

0.1037344

112404120

JIANGSU HENGRU-A

CHINA NATIONAL-A

9.13

0.7726269

25434194

JIANGSU YANGHE-A

CHINA OILFIELD-A

15.89

-1.181592

3386002

JIANGXI COPPER-A

22.09

-1.559715

CHINA PACIFIC-A

19.33

-1.377551

16772579

JINDUICHENG -A

11.09

-1.070473

4476373

17.16

2.631579

19444326

168.92

-0.6119087

2972952

CHINA PETROLEU-A

7.18

0.2793296

25700311

KANGMEI PHARMA-A

CHINA RAILWAY-A

4.97

-0.7984032

15055339

KWEICHOW MOUTA-A

CHINA RAILWAY-A

2.77

-0.3597122

25279670

LUZHOU LAOJIAO-A

26.29

-1.646091

10870711

2.03

-0.9756098

9894576 10403110

CHINA SHENHUA-A

21.52

-1.057471

9137126

METALLURGICAL-A

CHINA SHIPBUIL-A

4.71

-1.05042

22383746

NINGBO PORT CO-A

2.51

-1.181102

8.63

-0.2312139

ZTE CORP-A

MOVERS

CHINA SOUTHERN-A

3.46

13137237

8373118

HIGH

2499.16

CHINA STATE -A

3.48

0.5780347

133032753

PING AN BANK-A

19.41

0.05154639

31178899

LOW

2468.88

CHINA UNITED-A

3.52

-1.675978

57792579

PING AN INSURA-A

41.23

0.1214182

16864634

-0.3623188

51563841

POLY REAL ESTA-A

11.61

-1.69348

36887647

7.16

-0.2785515

11303021

QINGDAO HAIER-A

12.85

-1.305684

9530194

10.23

2.917505

27609238

QINGHAI SALT-A

27.99

-1.651441

6559089

PRICE DAY %

Volume

PRICE DAY %

Volume

CHINA YANGTZE-A CHONGQING CHAN-A

-1.162791

37025976

31555387

11.42

0.4397537

16690703

21 2510

INDEX 2477.876

PETROCHINA CO-A

CHINA VANKE CO-A

195

3.4 8.19

52W (H) 2791.303 (L) 2102.135

2460

9-April

11-April

FTSE TAIWAN 50 INDEX NAME

NAME

ACER INC

25.15

0.3992016

6017196

ADVANCED SEMICON

24.25

0.8316008

10924830

ASIA CEMENT CORP

36.45

1.25

4245476

FUBON FINANCIAL

ASUSTEK COMPUTER

FORMOSA PLASTIC FOXCONN TECHNOLO

NAME

PRICE DAY %

Volume

2.189781

5895066

TAIWAN MOBILE CO

99.8

1.114488

80.3

0.6265664

5311791

TPK HOLDING CO L

635

0.9538951

3360443 3784630

0.2444988

10882040

TSMC

101.5

3.255341

54267486

33809717

UNI-PRESIDENT

59.5

5.871886

22165975

UNITED MICROELEC

11.2

1.818182

45541851

WISTRON CORP

30.7

1.153213

8828815

344

0.8797654

3985888

HON HAI PRECISIO

80.5 -0.1240695

13.25

1.532567

51845752

HOTAI MOTOR CO

247

4.219409

294733

CATCHER TECH

147

1.730104

16818249

HTC CORP

256.5

3.636364

17975914

CATHAY FINANCIAL

38.9

-0.511509

17577727

HUA NAN FINANCIA

17.05

1.488095

4762811

YUANTA FINANCIAL

14.6

1.038062

6049269

CHANG HWA BANK

17.05

0.2941176

10281233

LARGAN PRECISION

791

1.670951

1526839

YULON MOTOR CO

51.1

0.3929273

2701349

CHENG SHIN RUBBE

96.8

2.325581

11385278

LITE-ON TECHNOLO

51.4

2.186879

4290004

AU OPTRONICS COR

CHIMEI INNOLUX C

42509332

MEDIATEK INC

8.15

0.4932182

27477408

MEGA FINANCIAL H

CHINA STEEL CORP

25.65

0.5882353

14641231

NAN YA PLASTICS

52.4

2.745098

5706907

CHINATRUST FINAN

18.25

0.8287293

40363157

PRESIDENT CHAIN

174

2.654867

1907628

CHUNGHWA TELECOM

92.9

0.6500542

5935824

QUANTA COMPUTER

60.6 -0.3289474

8261008

COMPAL ELECTRON

20.3

0.9950249

7398947

SILICONWARE PREC

32.4

0.621118

9156333

CHINA DEVELOPMEN

DELTA ELECT INC

351 -0.4255319

5157799

23.55 -0.2118644

24601216

130.5

1.162791

3730866

SINOPAC FINANCIA

14.2

0.3533569

19266608

FAR EASTERN NEW

30.4

1.333333

4650195

SYNNEX TECH INTL

8230605

FAR EASTONE TELE

68.4 -0.2915452

3611167

TAIWAN CEMENT

0.6622517

6110238

FIRST FINANCIAL

17.8 -0.5586592

17248439

16.85

0.5970149

4370940

FORMOSA CHEM & F

67.5

0.896861

3798908

TAIWAN FERTILIZE

70.1

3255483

FORMOSA PETROCHE

76.1

1.331558

1136500

TAIWAN GLASS IND

27.2

1.115242

489825

TAIWAN COOPERATI

MOVERS

2 5480

INDEX 5471.32 HIGH

5471.32

LOW

5368.75

52W (H) 5639.93 5360

(L) 4719.96 9-April

11-April

April 12, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 60.5

32.80

60.4

32.65

Min 32.2

32.20

Last 32.3

16.7

60.2

32.35

Average 32.458

16.8

60.3

32.50

Max 32.7

16.9

16.6

60.1 Max 60.5

Average 60.316

Min 60

60.0

Last 60.4

Max 16.9

Average 16.667

Min 16.52

Last 16.64

19.6

40.2 40.0

21.5 21.4

19.4

39.8

21.3 19.2

39.6

Max 40.1

Average 39.816

Min 39.5

39.4

Last 39.65

Max 19.44

Average 19.349

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE May13

94.47

-0.179628064

1.406182911

106.0899963

BRENT CRUDE FUTR May13

105.6

-0.179601097

-2.645892874

117.4300003

91.54999542

GASOLINE RBOB FUT May13

286.23

-0.097727828

-1.09536973

330.369997

237.7199888

GAS OIL FUT (ICE) May13

888.25

-3.003003003

1000.75

801.25

4.128

1.052631579

19.54821894

4.180000305

3.072000027

NATURAL GAS FUTR May13 HEATING OIL FUTR May13 METALS

294.16

-0.213711456

-2.718433759

327.1399975

258.5000038

Gold Spot $/Oz

1555.76

-1.6133

-6.5306

1796.08

1527.21

Silver Spot $/Oz

27.4875

-0.9724

-8.7097

35.365

26.1513

Platinum Spot $/Oz

1523.85

-1.0326

0.4019

1742.8

1379.05

Palladium Spot $/Oz

716.48

-0.2881

2.404

786.5

553.75

LME ALUMINUM 3MO ($)

1910

-0.468994268

-7.863000482

2200.199951

1827.25

LME COPPER 3MO ($)

7575

-0.720838794

-4.488715168

8496.75

7219.5

LME ZINC

1910

-0.546732622

-8.173076923

2230

1745

16050

-0.956494909

-5.92028136

18920

15236

15.76

0.542264753

1.775912173

16.95000076

14.5

634

0.23715415

-9.071351739

824

527

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) May13 CORN FUTURE

Min 19.14

Jul13

Last 21.1

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP

21.1

MACAU RELATED STOCKS 1890221

CROWN LTD

12.75

3.238866

19.49391

12.9

8.06

3415921

17.54999924

AMAX HOLDINGS LT

0.045

#N/A N/A

13645500

69.94999695

BOC HONG KONG HO

25.6

-0.967118

6.224065

27.1

20.85

19857551

-7.455700435

202.1999969

134.8000031

SUGAR #11 (WORLD) Jul13

17.78

-0.559284116

-9.929078014

24.06999969

COTTON NO.2 FUTR Jul13

88.06

0.663008688

14.55704436

94.19999695

NAME ARISTOCRAT LEISU

CENTURY LEGEND

World Stock MarketS - Indices 14802.24 3297.253

FTSE 100 INDEX

6408.83

0.3359755

DAX INDEX

7857.8

0.6039206

0.3

13.20755

0.42

0.215

-5.509178

6.74

2.8

480000

CHINA OVERSEAS

21.6

0.2320186

-6.493508

25.6

14.624

17799645

CHINESE ESTATES

13.02

-4.123711

7.342328

13.68

7.697

116500

CHOW TAI FOOK JE

10.58

3.72549

-14.95177

13.4

8.4

8208600

EMPEROR ENTERTAI

2.16

14.28572

2.49

1.1

466200

FUTURE BRIGHT

2.25

84.42623

2.75

0.65

6576000

32.3

0.310559

6.42504

35.7

16.94

9476578

124.5

1.219512

4.886271

131.5

99.2

1796093 1429044

YTD %

(H) 52W

(L) 52W

0.8776389

12.9585

14826.66016

12035.08984

1.834392

9.198146

3299.157

2726.68

8.664572

6533.99

5229.76

HOPEWELL HLDGS

30.3

1.168614

-8.87218

35.3

19.049

3.223819

8074.47

5914.43

HSBC HLDGS PLC

82.1

0.2442002

0.984006

88.45

59.8

8701873

HUTCHISON TELE H

3.77

0.5333333

5.898878

4.05

2.98

1912000

LUK FOOK HLDGS I

23.25

-4.713113

30.05

14.7

1378000

MELCO INTL DEVEL

13.5

0.2971768

49.83351

13.96

5.12

3841000

16.64

-0.8343266

25.31744

18.449

9.509

2832958 1236000

NIKKEI 225

13549.16

1.964385

30.3408

13549.16016

8238.96

HANG SENG INDEX

22101.27

0.3027517

-2.452453

23944.74

18056.4

CSI 300 INDEX

2477.876

-0.2990775

-1.786635

2791.303

2102.135

TAIWAN TAIEX INDEX

7857.98

1.356671

2.058315

8089.21

6857.35

1949.8

VOLUME CRNCY

5.66

CHEUK NANG HLDGS

0.9582 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1907 51.295 28.87 1.2152 28.913 40.54 9153 74.482 1.20051 0.77553 7.7018 9.6245 94.12 1.029

2.29

0.036140224

1.0625 1.6381 0.9972 1.3711 99.88 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 105.4 1.25692 0.88151 8.4957 10.9254 130.54 1.0314

(L) 52W

138.4

NASDAQ COMPOSITE INDEX

1.8212 -4.958 -1.7917 -0.8491 -13.5716 -0.1576 -0.1572 0.5552 0.862 5.303 -1.2691 -3.0229 0.0976 0.8964 -15.1481 -0.9475 -4.1382 1.3343 0.7164 -12.8262 -0.0097

(L) 52W

3.94

COFFEE 'C' FUTURE Jul13

DOW JONES INDUS. AVG

0.4086 0.4443 -0.1287 -0.1451 -0.0703 -0.0038 -0.0039 -0.0371 0.11 -0.1033 0.0647 0.0802 0.0684 -0.1442 -0.4797 0.0197 0.6019 0.1998 0.1597 0.0768 0

(H) 52W

1218.75

DAY %

1.0567 1.5374 0.9321 1.3078 99.62 7.9958 7.7628 6.1962 54.525 29.04 1.2371 29.938 40.965 9706 105.274 1.21903 0.85062 8.1093 10.4555 130.28 1.03

YTD %

17.77777

664.75

1639.5

PRICE

DAY %

YTD %

900

-0.857602287

COUNTRY

PRICE

0.5420054

-11.05511811

-0.394902172

S&P/ASX 200 INDEX

Min 21.1

DAY %

0.426742532

1387.25

0.7346635

-2.36599

2042.48

1758.99

5007.069

0.7865145

7.703216

5163.5

3985

4924.263

0.9592668

14.07506

4985.852

3635.283

FTSE Bursa Malaysia KLCI

1707.04

0.6390756

1.071085

1710.35

1526.6

NZX ALL INDEX

938.716

-0.2606333

6.423994

946.292

PHILIPPINES ALL SHARE IX

4270.57

0.4516191

15.45263

4290.5

JAKARTA COMPOSITE INDEX

Average 21.325

3.71

706

SOYBEAN FUTURE May13

KOSPI INDEX

Max 21.45

PRICE

WHEAT FUTURE(CBT) Jul13

NAME

19.0

Last 19.28

21.2

CURRENCY EXCHANGE RATES

NAME ENERGY

16.5

GALAXY ENTERTAIN HANG SENG BK

MGM CHINA HOLDIN

3.4

-2.298851

-8.108109

3.249

NEPTUNE GROUP

MIDLAND HOLDINGS

0.142

-0.6993007

-6.578944

0.226

0.084

5880000

NEW WORLD DEV

12.74

1.111111

5.990013

15.12

7.95

10386286

SANDS CHINA LTD

8099438

39.65

0.5069708

16.78939

41.05

20.65

SHUN HO RESOURCE

1.44

2.857145

1.67

1.03

SHUN TAK HOLDING

4.05

0.9975062

-3.34129

4.65

2.56

1891567

755.149

SJM HOLDINGS LTD

19.28

0.4166667

7.111111

22.15

12.34

5249174

3238.77

SMARTONE TELECOM

0.619195

-7.670454

17.38

12.5

718000

WYNN MACAU LTD

21.1

0.4761905

0.7159868

25.5

14.62

5992596

ASIA ENTERTAINME

4.59

2.684564

6.2

2.4

240090

BALLY TECHNOLOGI

1.708706

11.83181

52.7

41.74

496382 6500

HSBC Dragon 300 Index Singapor

641.02

0.06

3.21

STOCK EXCH OF THAI INDEX

1505.16

1.000503

8.134747

1601.34

1099.15

HO CHI MINH STOCK INDEX

504.07

1.524673

21.83549

518.46

372.39

BOC HONG KONG HO

3.35

9.120524

3.59

2.7

Laos Composite Index

1333.74

0.6907798

9.79362

1455.82

980.83

GALAXY ENTERTAIN

4.18

1.95122

5.289672

4.57

2.25

4640

INTL GAME TECH

16.65

2.209945

17.50176

17.49

10.92

2297663

JONES LANG LASAL

99.85

1.226683

18.95401

100.91

61.39

284850

LAS VEGAS SANDS

55.5

1.18505

20.23397

58.3216

32.6127

3703705

MELCO CROWN-ADR

23.43

2.718106

39.13302

23.69

9.13

4223707

MGM CHINA HOLDIN

8.108107

2.44

1.36

5000

MGM RESORTS INTE

12.93

2.294304

11.08247

14.11

8.83

10845950

SHFL ENTERTAINME

15.57

4.356568

7.37931

18.37

11.75

327771

SJM HOLDINGS LTD

2.51

1.619433

8.658011

2.85

1.65

11450

126.36

2.290941

12.32999

129.6589

84.4902

903648

Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily April 12, 2013

Opinion

Cyprus can save itself by fleeing the euro Megan Greene

Bloomberg View columnist and chief economist at Maverick Intelligence

ypriots sitting in the cafes on Nicosia’s Ledra Street are asking one another if there isn’t an alternative to their island’s bailout. It has been just weeks since the series of rollercoaster negotiations that produced a deal to support Cyprus, in the process devastating its banks and economic prospects. After the initial shock, the reality of the agreement’s implications is sinking in. The answer to their question is that there may be another way: Leaving the euro would be a better option for Cyprus if – and only if – it can secure cooperation from its troika of creditors: the International Monetary Fund, the European Commission and the European Central Bank. To figure out whether they should stay or go, the Republic of Cyprus’s 800,000 people and their leaders need to first conduct a simple cost-benefit analysis of whether euro-area membership is worth it.

Huge pain The pain inflicted by the terms of the US$13 billion bailout deal will be huge. Cyprus’s banking sector has

been all but destroyed in the course of just a few days. The second-largest bank, Laiki, was split into a good and a bad bank. The good assets, as well as about 9 billion euros in emergency liquidity that Laiki has received, are being moved over to the larger Bank of Cyprus Plc. Bondholders and uninsured depositors at both institutions will take hefty losses, destroying the economy’s offshore-finance business. It remains unclear whether Bank of Cyprus will be solvent following its inheritance from Laiki. Even if it is, Bank of Cyprus is illiquid. The massive liquidity crunch in Cyprus is being exacerbated by capital controls, which the government imposed to avoid deposit and capital flight out of the country. Many businesses are unable to pay their suppliers – one more month of such tight liquidity will push many into bankruptcy. The banking sector accounts for only 9 percent of Cypriot gross domestic product. Yet business services attached to it – lawyers, accountants, auditors and bookkeepers – will suffer from the banking collapse, too.

By some estimates, these services and banking generate as much as half of Cyprus’s gross domestic product. The IMF forecasts that the country’s economy will contract 9 percent this year. The government is now predicting a 13 percent drop

The main challenge is that if Cyprus were to reissue the Cypriot pound, the new currency would devalue significantly and drive up the inflation rate

in output, but I expect the contraction to be sharper still. In this case, Cyprus will miss its deficit targets and will have to put in place more austerity in an attempt to catch up. The result will be an endless spiral of austerity and recession, ensuring that Cyprus will either need a second bailout or a debt restructuring. Exiting the euro area is also difficult, but it could be the less painful choice if designed well. Among the greatest costs of any euro-area exit would be bank defaults on their liabilities, capital controls and a sovereign default. Cyprus has already experienced the first two and will most likely see the latter in the next year or two if it stays in the euro area.

Devaluation benefit So if Cyprus is going to incur some of the worst costs of abandoning the euro anyhow, it might as well print its own currency and benefit from a devaluation and the immediate boost in competitiveness that would follow. The island has three main industries that would do well if they were made much cheaper for foreigners: real estate (12 percent of GDP), tourism (about 7 percent) and business services (as much as 40 percent). When it comes to leaving the euro area, however, choreography is key. A unilateral, disorderly default would be the worst possible option for Cyprus. Instead, this small country would need to negotiate its exit with each member of the troika of international creditors. The main challenge is that if Cyprus were to reissue the Cypriot pound, the new

currency would devalue significantly and drive up the inflation rate. This is a huge problem for a country that has to buy most of its raw materials and all of its energy from abroad, and has only enough foreign reserves to pay for a few weeks of imports. A bridge loan would be required to avoid facing power cuts and food shortages. Luckily, the IMF exists specifically for this purpose, “providing resources to help members in balance of payments difficulties”. An amicable divorce from the euro area would also need to be negotiated with the rest of the bloc’s members and the European Commission. There is no mechanism through which Cyprus could be pushed out of the European Union in retaliation, but given the serious threat that Turkey poses to the tiny island, Cyprus has a major geopolitical motivation for remaining fully engaged with its European partners. Oddly, the one member of the troika whose blessing Cyprus wouldn’t absolutely require to exit the euro area is the ECB. So far, Cypriot banks have borrowed about 14 billion euros in emergency liquidity assistance and if Cyprus were to leave the euro area, this money would de facto represent a loss for the ECB. Still, Cyprus would want to negotiate a settlement with the ECB if it could, rather than push the loss onto the countries that recapitalise the central bank, angering them. Put all of these elements in place and a negotiated euro area exit is probably the lesser of two evils for Cyprus. It would be up to the members of the troika to cooperate, however, and that could prove a hard sell. Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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April 12, 2013 business daily | 15

OPINION

The use and abuse wires of monetary history Business

Leading reports from Asia’s best business newspapers

Inquirer Business The Philippine Amusement and Gaming Corp. on Wednesday unveiled a plan to upgrade its nationwide slot machine system (SMS) by integrating all its units in various casinos around the country in a single network. In a statement, the gaming regulator and operator (Pagcor) said the new system, costing 516 million pesos (US$12.6 million), would put an end to its cumbersome manual system of validating, documenting and paying slot machine winnings. “The SMS procured by Pagcor will connect 5,083 machines installed in 18 different casinos and arcades nationwide,” it said.

Barry Eichengreen

Professor of Economics and Political Science at the University of California, Berkeley

Devastating consequences

Korea Herald South Korea and the U.S. stepped up their intelligence and surveillance activities on Wednesday amid growing signs of North Korea’s imminent multiple missile launches. The allied forces raised the Watch Condition, or Watchcon, by one notch to level 2, and bolstered their intelligence personnel. Intelligences indicated Pyongyang has finalised preparations to launch its Musudan intermediate-range missiles from its east coast, Seoul officials said. During a parliamentary session, Seoul’s Foreign Minister Yun Byungse confirmed the possibility of North Korea launching missiles was “considerably high”.

Jakarta Post Indonesia’s largest low-cost carrier, Lion Air, says its fullservice Batik Air will start service this month, connecting Jakarta to Manado, North Sulawesi, and Balikpapan, East Kalimantan. Lion Air general affairs director Edward Sirait said that the maiden flight of Batik Air would be on April 26. “We will gradually operate more aircraft every year to expand our business,” Mr Sirait said. Plans call for Batik to offer 12 business class seats and 160 economy seats on the aircraft. “We plan to operate six aircraft by the end of this year to connect major cities in Indonesia,” Mr Sirait said.

The Star AirAsia X will re-start Kuala Lumpur-New Delhi and Kuala Lumper-Mumbai routes soon, group chief executive Tony Fernandes said. “AirAsia X will be re-starting routes to India very soon. KL-Bombay and KL-New Dehli are around the corner,” he was quoted as saying on Wednesday. The long-haul budget airline axed flights to Mumbai and New Delhi on January 31 last year, citing high operating costs. Both routes were commenced in 2010. The routes could serve as a feeder for its latest venture in India, given that domestic aviation rules did not permit new airlines to operate international routes for the first five years of operations.

when low interest rates fuelled stock-market and real-estate bubbles, or 2003-2005, when interest rates were held down in the face of serious financial imbalances. At a minimum, the Fed might develop a “portfolio” of analogies, test them for fitness, and distil their lessons, as President John F. Kennedy famously did when weighing his options during the Cuban missile crisis in 1962. Similarly, the ECB might consider not only how monetary accommodation allowed governments to run large budget deficits in the 1920’s, but also how central bankers’ failure to respond to the financial crisis of the 1930’s fed political extremism and undermined support for responsible government. Again, rigorous analysis requires testing these historical analogies for fitness with current circumstances.

magine two central banks. One is hyperactive, responding aggressively to events. While it certainly cannot be accused of ignoring current developments, its policies are widely criticised as storing up problems for the future. The other central bank is unflappable. It remains calm in the face of events, seeking at all cost to avoid doing anything that might be construed as encouraging excessive risktaking or creating even a whiff of inflation. What I have just described is no mere hypothetical, of course. It is, in fact, a capsule depiction of the United States Federal Reserve and the European Central Bank. One popular explanation for the two banks’ different approaches is that they stem from their societies’ respective historical experiences. The banks’ institutional personalities reflect the role of collective memory in shaping how officials conceptualise the problems that they face. The Great Depression of the 1930’s, when the Fed stood idly by as the economy collapsed, is the moulding event seared into the consciousness of every American central banker. As a result, the Fed responds aggressively when it perceives even a limited risk of another depression. By contrast, the defining event shaping European monetary policy is the hyperinflation of the 1920’s, filtered through the experience of the 1970’s and 1980’s, when central banks were enlisted once again to finance budget deficits – and again with inflationary consequences. Indeed,

delegating national monetary policies to a Europe-wide central bank was intended to solve precisely this problem. It is not only in central banking, of course, that we see the role of historical experience in shaping policymaking. President Lyndon Johnson, when deciding to escalate U.S. intervention in Vietnam, drew an analogy with Munich, when the failure to respond to Hitler’s aggression had catastrophic consequences. A quarter-century later, President George H.W. Bush, considering how best to roll back Iraq’s invasion of Kuwait, drew an analogy with Vietnam, where the absence of an exit strategy had caused U.S. forces to get bogged down.

Fitness test But a key conclusion of research on foreign policy is that decision-makers all too often fail to test their analogies for “fitness”. They fail to ask whether there is, in fact, a close correspondence between historical circumstances and current facts. They invoke specific analogies not so much because they resemble current conditions, but because they are seared into the public’s consciousness. As a result, analogical reasoning both shapes and distorts policy. It misleads decision-makers, as it did both Johnson and Bush. The same dangers arise for monetary policy. For the Fed, it is important to ask whether the 1930’s, when its premature policy tightening precipitated a double-dip recession, really is the best historical analogy to consider when contemplating how to time the exit from its current accommodating

stance. Certainly, the Great Depression is not the only alternative on offer. The Fed might also consider policy in 1924-1927,

The ECB’s failure to provide more monetary support for economic growth appears to be directly analogous to Europe’s disastrous monetary policies in the 1930’s

Anyone who does so will find it hard to defend the ECB and its stubborn inaction in the face of events. There is exactly zero evidence in Europe today that inflation is just around the corner. And, if current European governments are not committed to austerity and fiscal consolidation, then which governments are? When I consider the European economy, the ECB’s failure to provide more monetary support for economic growth appears to be directly analogous to Europe’s disastrous monetary policies in the 1930’s. The political consequences could be similarly devastating. Europeans should ponder why the inflationary 1920’s, rather than the politically catastrophic 1930’s, have become the historical lodestar for current monetary policy. On the other hand, when I contemplate the U.S. economy, I conclude that recovery from the Great Depression, and not 1924-1927 or 2003-2005, is the episode that most closely resembles current circumstances. Only in the 1930’s were interest rates near zero. Only in the 1930’s was the economy digging itself out from a major financial crisis. Then again, perhaps it is to be expected that I find the analogy with the 1930’s compelling. That was the defining episode for American monetary policy. And I am, after all, an American. © Project Syndicate

16 |

business daily April 12, 2013

CLOSING HK boat crash captains charged

Cyprus to sell gold reserves

Hong Kong police yesterday charged two captains with manslaughter after a ferry collision last year that claimed 39 lives in the city’s worst maritime disaster in decades. The two men were each charged with 39 counts of manslaughter and were due to appear in a magistrates’ court later in the day, police said in a statement. The captains were arrested along with five crew after the October 1 crash between their two boats. The accident saw a high-speed ferry collide with a pleasure craft carrying around 120 passengers on a company trip to watch national day fireworks.

Cyprus is to sell off much of its gold reserves to help finance part of its bailout. An assessment by the European Commission says Cyprus must sell about 400 million euros (US$525 million) worth of gold. The country has already been forced to wind down one of its largest banks in order to qualify for a 10 billion euro lifeline from international lenders. Cyprus’s total bullion reserves stood at 13.9 tonnes at the end of February, according to data from the World Gold Council. At current prices, 400 million euros’ worth of gold amounts to about 10.36 tonnes of metal.

Beijing probes use of affordable housing funds Local govts, companies may be barred from selling debt

currency debt rating. Fundraising for subsidised housing had been excluded from those limits because the projects are part of China’s bid to control home prices. The Ministry of Finance said on December 31 that regional governments were increasingly using “illegal and irregular” methods to finance project and must correct their conduct. China’s plan to build 36 million units of affordable housing in the five years through 2015 has been funded primarily by financing companies set up by local governments. Provinces and cities, barred from directly taking bank loans or selling bonds, have set up more than 10,000 such financing units, China’s central bank estimated in 2011.

Debt suspensions Financing companies found to have misused funds and to have failed to correct such abuses will have their right to sell bonds suspended, the

The International Energy Agency (IEA) trimmed its estimate for growth in oil demand in 2013, becoming the third of the world’s top oil forecasters this week to predict weaker consumption due to subdued economic growth. World oil use will rise by 795,000 barrels per day (bpd) this year, the IEA, which advises 28 industrialised countries on energy, said in a monthly report yesterday. That is 25,000 bpd less than it previously estimated. “Overall, a slightly weaker demand trend is forecast for 2013 than in last month’s report,” the Paris-based IEA said. This marked the third straight reduction in the IEA’s 2013 demand growth forecast and it follows similar moves this week from the U.S. government’s Energy Information Administration and the Organisation of the Petroleum Exporting Countries (OPEC). Oil prices are trading just over US$105 a barrel, down from a 2013 high of US$119.17 on February 8, partly due to concerns over the strength of economic recovery. The IEA warned it was too early to call a bear market, citing supply risks. The agency also lowered its oil supply forecast for countries outside OPEC this year for the first time in several months and said worsening security in Libya and oil theft in Nigeria had contributed to a decline in OPEC output last month. “There are signs that some of the recent easing of upward price pressures could be relatively short-lived,” the IEA said. “Crude supply risk remains elevated.” On oil demand growth, the IEA now has the lowest 2013 forecast of the three main forecasting agencies.

WTO sees protectionist threat

China plans to build 36 million affordable units until 2015

hina’s top economic planning agency has ordered a nationwide probe of how proceeds from bond sales meant to finance affordable-housing projects have been used, said two people with direct knowledge of the matter. Local branches of the National Development and Reform Commission were sent notices this month instructing them to complete the checks by the end of April, said the people, who asked not to be identified because they weren’t authorised to speak publicly about the investigation. Companies and local governments found to have misused funds will have their ability to sell debt suspended, the people said. China has sought to curb borrowing by local governments for roads, bridges and sewage systems on concern poor returns on some projects will leave banks saddled with bad loans, a risk Fitch Ratings Ltd highlighted this week when it cut the nation’s long-term local-

IEA cut 2013 oil demand estimates

people said. If a local government is found to have misused money meant for affordable housing, all of its financing units will have their ability to issue debt frozen, they added. China’s local governments may have more than 20 trillion yuan (US$3.2 trillion) of debt, former Finance Minister Xiang Huaicheng said on April 6 at the Boao Forum for Asia. That’s almost double the 10.7 trillion yuan figure given in a 2011 report by the National Audit Office. Fitch said on Tuesday that it cut its rating for China’s long-term local currency debt by one step to A+, the fifth-highest grade, citing rising risks to the country’s financial stability given the lack of transparency in borrowing by local governments. The company estimated that total credit in China’s economy, including various forms of so-called shadow banking, may have reached 198 percent of gross domestic product at the end of 2012, rising from 125 percent four years earlier.

The World Trade Organization slashed its forecast for trade growth in 2013, saying it feared protectionism was on the increase. It cut its forecast for global trade growth in 2013 to 3.3 percent from 4.5 percent and said trade grew only 2.0 percent in 2012. That was the smallest annual rise since records began in 1981 and the second weakest figure on record after 2009, when trade shrank. WTO Director General Pascal Lamy (pictured) warned that 2013 could turn out even weaker than expected, especially because of risks from the euro crisis, and countries might try to restrict trade further in a desperate attempt to shore up domestic growth. “The threat of protectionism may be greater now than at any time since the start of the crisis, since other policies to restore growth have been tried and found wanting,” he said. Mr Lamy, who will step down at the end of August this year, called the 2012 growth rate “sobering”. Despite the hope of quickening trade this year and a provisional forecast of 5.0 percent growth in 2014, the annual rises are expected to stay below the historical trend of long-term growth, which was 6.0 percent for the 20 years leading up to the financial crisis but now stands at 5.3 percent. “Traditionally we’ve reckoned on a 2:1 ratio of trade growth to GDP growth. This year it was 1:1 and we would expect to see that relationship re-establish itself,” said the WTO’s chief economist Patrick Low.

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