Macau Business Daily, April 17, 2013 by Business Daily

Year II Number 263 MOP 6.00 Wednesday April 17, 2013 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: Vitor Quintã

Gold rush as price falls to two-year low www.macaubusinessdaily.com

Obama support for G2E Asia 2013 United States President Barack Obama has sent a message of support to the Global Gaming Expo Asia 2013 trade show to be held at The Venetian Macao next month. The message of U.S. political support at the highest level for G2E Asia comes four months after Macau businesses said they planned to set up their own casino industry conference and trade show in Macau.

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More hotel rooms, but occupancy tumbles

Airport hangar tender opens without approval Page 2

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HK film group eyes Old Taipa property

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2013-04-17

2013-04-18

2013-04-19

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22˚ 26˚

HANG SENG INDEX

Mass market a third of casino rev in Q1

21800

21740

Mass market gambling accounted for nearly a third of Macau’s casino gaming revenue in the first quarter, according to government figures released yesterday. But David Bain of independent brokerage Sterne Agee said in a note that margins on premium mass table gaming in Macau might be facing erosion as competition among the six operators intensifies to capture a larger portion of that segment.

21680

21620

21560

21500

April 16

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HSI - MOVERS Name

Extra La Scala land taken back The government has decided to take back the extra land granted in 2011 to the corruption-hit La Scala housing project, developer Chinese Estates Holdings Ltd announced yesterday. Once the decision is gazetted the company will have 15 days to ask the chief executive to reconsider. It is also pondering whether to appeal to the Court of Second Instance.

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%Day

WANT WANT CHINA

2.88

TINGYI HLDG CO

2.21

LENOVO GROUP LTD

1.97

CHINA LIFE INS-H

1.49

ESPRIT HLDGS

1.31

PETROCHINA CO-H

-1.86

CNOOC LTD

-1.89

LI & FUNG LTD

-2.33

CHINA SHENHUA-H

-2.63

CHINA MERCHANT

-3.63

Source: Bloomberg

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business daily April 17, 2013

macau

Private jet hangar ready next year Construction tender launched even though authorities have yet to approve project Vítor Quintã

vitorquinta@macaubusinessdaily.com

The airport’s master plan forecasts 3,400 private jet movements a year by 2030

new hangar exclusively for private jets will be ready next year at the Macau International Airport, according to the programme of a tender opened yesterday. The whole construction should be completed within 10 months after the

Air Macau boosts Beijing flights Flag carrier Air Macau Co Ltd launched a third daily flight to Beijing yesterday after receiving approval from the Civil Aviation Authority of Macau. The third flight – earlier than the existing two links – will allow passengers to catch Air China connecting flights to destinations in Europe and United States, the company announced on Monday. Air China Ltd is the major shareholder of Air Macau. Transit passengers can also benefit from a 72-hour visa-free stay in Beijing, according to a new policy that came into effect in January. “We estimate that the additional flight could attract new customers and potentially bring an incremental 40,000 visitors a year to Macau (this assumes seven flights per week, with a combined seat capacity for an A321 of 185 and a passenger load of 70 percent),” Union Gaming Research said in a note. Air Macau chairman Zheng Yan reiterated in March the company’s intention to expand its routes in mainland China. The airline has launched new routes to Shenyang, Wenzhou and Jinjiang so far this year. But Mr Zheng said Air Macau hopes to begin flights on at least one more route to the mainland in 2013. Zhengzhou, the provincial capital of Henan, is a possibility, he added.

project is awarded, the tender adds. The potential bidders can visit the site on May 7 and file proposals until June 17, the Macau International Airport Co Ltd (CAM) said. The Civil Aviation Authority of Macau received the design plan in February but it has yet to approve the project, the regulator told Business Daily. “Our approval will be concluded only after the other government bodies [the Fire Services and the Land, Public Works and Transport Bureau] have given their approval on the project,” the authority said. The hangar must be at least 36 metres high to accommodate the most common private or business jets, include an adjacent two-storey building and a workshop with a floor area of 2,000 square metres. The airport operator launched an open tender in August calling for bids to design the hangar and provide technical support during the construction. The airport is building a new hangar to “cope with the expansion of the general aviation facilities,” the tender document said. Companhia de Arquitectura e Design Chan Kam Ltda, better known as Z3A, won the tender. The new hangar will be an initial step in developing the private jet business, which is a priority in the airport master plan revealed a year ago to make it more profitable.

of logistic cargo development, Cui Guang, forecast that the number of business aviation flights would grow by 15 percent to more than 1,500 last year. In the first quarter of this year there were 398 private jet movements, an increase of 11.6 percent compared to the same period of 2012, the regulator said yesterday. The airport’s master plan forecasts around 3,400 business jet movements a year by 2030. The general and business aviation area will be expanded to 89,600 square metres after 2030 from the 12,000 square metres now, and particular attention will be given to the area for private jets and small planes. In the first two phases the number of parking spots for private jets should increase to 38, as the number of big inbound aircraft has been low. The plan’s third phase envisages 43 parking spots for small planes and budget airlines. The airport now has parking space for 24 small aircraft. The plan was drafted by ADP Ingenierie, a subsidiary of the group that operates all airports in the Paris metropolitan area. There is still no timeline for when the plan might be sent to the Executive Council, the Civil Aviation Authority said in January.

Promising growth Business aviation “has been increasing at a favourable growth,” the Civil Aviation Authority said. Since the Sands Macao – the city’s first Western-style casino – opened, private jet traffic has grown steadily, leaping from 383 aircraft movements in 2005 to 1,416 last year. However this figure was lower than the operator’s target. In October the airport’s director

398

first quarter Private jet movements in Macau airport

First airport director dies A

ntónio Rato, the first director of the Macau International Airport, died in the public hospital Conde S. Januário yesterday morning after prolonged illness. Portuguese news agency Lusa broke the story, quoting an unnamed source from the Macau International Airport Co (CAM). Mr Rato began his career at ANA Aeroportos de Portugal, the operator of Portugal’s airports, and later at the country’s Social Affairs Ministry. He first came to Macau in 1994 to create ADA - Administração de Aeroportos, Lda to run the city’s airport, which officially opened in December 1995. ADA was a joint venture between ANA and the local unit of state-owned China National Aviation Corporation Ltd. It was bought by CAM in 2011. Mr Rato became the first director of the Macau airport, a position he held until the 1999. He returned to Portugal before the administration handover. But the executive was back in Macau three years later, taking up management positions in CAM. At the time of his death he was still an advisor to the airport operator. V.Q.

April 17, 2013 business daily | 3

MACAU

Obama sends message of support for G2E Asia Last year’s casino trade show subject to an East-West trade dispute Michael Grimes

michael.grimes@macaubusinessdaily.com

rival to either the AGA or to the Association of Gaming Equipment Manufacturers – another U.S. –based trade body. Many of the firms that currently supply gaming equipment to Macau casinos are members either of one or both. “In the future we will need more technically-qualified people to understand the gaming business. And how to educate the young people is our association’s target. It’s not really like we want to organise [industry] exhibitions. That’s not our target,” Mr Chun told Business Daily at the time. Mr Chun is chairman of LT Game Ltd, which has been in a protracted Macau patent dispute with U.S.based casino games maker SHFL entertainment Inc. (formerly Shuffle Master) over multi-game electronic table games in the Macau market. That dispute flared again during G2E Asia 2012. A SHFL multigame product was covered for most of the first full day of the event on the orders of Macau customs officials, though a Macau court later lifted the requirement. The AGA threatened to expel LT Game from the show because of what the AGA’s president Frank Fahrenkopf described at the time as an attempt by LT Game to “leverage” its litigation.

Diplomatic moves

Mike Johnson, event director & general manager, G2E Asia 2013, held from May 21 to 23

nited States President Barack Obama has sent a message of support to the Global Gaming Expo Asia 2013 trade show to be held at the Venetian Macao next month. It follows the granting – by the U.S. Commercial Service of the U.S. Department of Commerce – of

Trade Fair Certification to Reed Exhibitions, to organise the official U.S. Pavilion. “…this prominent trade exhibition is an excellent venue for developing new business. U.S. Commercial Service staff are here working diligently to connect U.S. companies with international buyers

Rentable floor space 15 pct bigger this year

his year’s G2E Asia will be around 15 percent larger than the 2012 event in terms of rentable floor space. It will also introduce 27 new participating companies, the event organiser said yesterday. New zones will include a Security & Surveillance Pavilion. That reflects visitors’ interest in the latest security systems and technology to prevent cheating and protect revenue. There will also be an Arcade Gaming Pavilion, and an iGaming Pavilion. “Last year we ended with a little over 5,900 square metres of exhibition space. This year we’re already at 6,700 sq. m. and we’re forecasting to come in at a little over 6,800,” Mike Johnson, event director & general manager, told Business Daily. “We also have 27 new companies that will be joining us for the first time,” he added. He stated that although Reed

Exhibitions LLC wasn’t giving specific projections on visitor numbers for 2013, he expected there to be a rise of at least “a few percent” on the 6,161 attendees recorded last year. A number of exhibitors have told Business Daily that they are being asked to pay 10 percent to 15 percent more this year for the same amount of space – significantly above last year’s local 6.11 percent consumer price index inflation. “That scenario you’re talking about is applicable to certain customers on the floor, but not everyone,” said Mr Johnson, explaining a change in the pricing policy this year. “Stands that are located in premium locations along high traffic areas like in the front of the show or along major aisles – the rate for those locations is a little bit higher than in some areas that are towards the back,” he stated. M.G.

– providing leads, trade counseling and market research,” says the letter from President Obama. The message of U.S. political support at the highest level for G2E Asia comes four months after Macau businesses said they planned to set up their own casino industry conference and trade show in Macau, and just under a year since a trade dispute at last year’s event threatened to boil over into a U.S.China diplomatic incident. G2E Asia is organised by two bodies from outside Macau – the American Gaming Association, a trade body made up of casino operators and equipment suppliers, and Reed Exhibitions LLC, a global events organiser with corporate headquarters in the United Kingdom. In the past year however, the event’s monopoly as a Macaubased casino equipment trade show has been challenged. A new local trade body – the Macau Gaming Equipment Manufacturers Association – had its official launch in January. Macau casino executives including most prominently Angela Leong On Kei, an executive director of SJM Holdings Ltd, a company founded by former Macau gaming monopolist Stanley Ho Hung Sun, attended it.

Local show The association chairman Jay Chun announced during the event that the body would hold a convention and exhibition annually to “set up a platform of technology exchanges and trading for Macau casino equipment”. In August last year, Mr Chun told Business Daily that the new association was not meant as a

Mr Fahrenkopf told Business Daily at the time of the incident that he had called the U.S. Consul General’s Office in the region to ask him to attend the show to make those concerns known. Mr Fahrenkopf – who retires as AGA president after this year’s G2E Asia – is politically well connected in the U.S. He was chairman of the Republican National Committee from 1983 to 1989 – covering most of President Ronald Reagan’s time in office. Mike Johnson, event director & general manager, G2E Asia, told Business Daily yesterday at a press conference previewing G2E Asia 2013, he was confident there would be no trade disputes played out on the show floor this year. “We don’t anticipate any issues on site at the show this year. We’ve worked very hard [on that].” He added: “I want to stress we respect the laws that are in place here in Macau. We don’t get involved in that. But in terms of how it [such issues] impact the event and in terms of running a smooth event, we’ve been having a constant dialogue with both those companies.”

This prominent trade exhibition is an excellent venue for developing new business. U.S. Commercial Service staff are here working diligently to connect U.S. companies with international buyers – providing leads, trade counseling and market research U.S. President Obama

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business daily April 17, 2013

macau Brought to you by

HOSPITALITY Costlier visits Prices of the sorts of goods and services that tourists typically buy keep going up. The Tourist price index (TPI) was 7.9 percent higher in the first quarter of this year than a year earlier. Since the end of 2009 tourist prices have been rising steadily, and faster than consumer prices, as measured by the consumer price index.

For most of 2008 and 2009 the TPI barely budged, tourist prices going up or down by just 1 percent or 2 percent. At the end of 2009 they started rising much faster. The annual rate of tourist price inflation jumped from 1.8 percent in the second quarter of 2009 to 12.3 percent a year later. The quarterly rate of tourist price inflation peaked at 18.9 percent in the fourth quarter of 2011. The rising trend is still visible. Rises in tourist prices every quarter indicate continuous inflation. But in recent quarters the quarterly rate of tourist price inflation has slowed. From the second quarter of 2010 to the first quarter of last year, the quarterly rate of tourist price inflation was always above 10 percent. Then it slowed, reaching just 3.4 percent in the third quarter. The let-up did not last. In the fourth quarter of last year and the first quarter of this year the quarterly rate of tourist price inflation speeded up again. This fits the normal pattern: tourist prices usually rise the most in the first and last quarters of any given year. Only future figures will tell us if the slowing of tourist price inflation last year was just temporary.

Mass market a third of casino revenue in Q1 But possible erosion of margins in premium mass table games, says analyst Michael Grimes

michael.grimes@macaubusinessdaily.com

ass market gambling accounted for nearly a third of Macau’s casino gaming revenue in the first quarter, according to government figures released yesterday. The high-margin mass sector – mainly live dealer baccarat games – generated 27.47 billion patacas (US$3.44 billion) – 32.2 percent of all revenue – in the first three months, compared to 57.82 billion patacas from high stakes VIP baccarat. The split between the mass segment and the VIP was given in data supplied by the local regulator, the Gaming Inspection and Coordination Bureau. In the first quarter of last year the mass sector made up 29.1 percent of gross gaming revenue, and in the same period of 2011 it was 27.3 percent. Analysts have noted since last year that as well as a slowing in VIP growth, much of the marketwide expansion has been in the so-called ‘premium mass’ segment. This typically has minimum bets of HK$2,000 or higher, but without the same casino overheads associated with traditional junket gaming. Rob Goldstein, Las Vegas Sands

Corp.’s president of global gaming operations, told analysts recently at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum in Las Vegas that its premium mass tables in Macau could yield margins as high as 42 percentage points, compared to “10-12” percentage points for traditional VIP. He said premium mass live tables were nearly as profitable on a straight-line basis as mass-market live tables yielding 45 percent margins but offered much higher volumes of revenue. But David Bain, of independent brokerage Sterne Agee in the United States, said in a note issued on Monday U.S. time that margins on premium mass table gaming in Macau might be facing erosion as competition among the six operators intensifies to capture a larger portion of that segment. There was, he said: “…the possibility of lower margin potential from the ‘Holy Grail’ of mass GGR growth, premium mass, due to increasingly aggressive rebating [for players] by some operators.” Meanwhile Kenneth Fong of J.P.

Morgan in Hong Kong said in a note on Monday that April’s total gaming revenue was tracking 13 percent year-on-year expansion, which would mean a monthly total of 28.2 billion patacas. “We believe the robust revenue trend, together with the strong mass traffic we observed on the ground, should alleviate investor concerns over the impact of H7N9 bird flu on Macau,” stated Mr Fong. In other developments, Union Gaming Research Macau said in a note that from tomorrow Macau would follow Hong Kong in allowing some passport holders stamp-free border clearance. The information was disclosed during a session at the Legislative Assembly on Monday. “… Macau is now set to introduce a similar system for all Chinese two-way permit holders (as we had speculated),” said the research house. “After the system’s implementation on Thursday, a landing slip bearing the conditions and length-of-stay limit will be issued to two-way permit holders rather than having their travel documents stamped,” added Union Gaming.

J.I.D.

51.2 % TPI rise, 2008Q1-2013Q1

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April 17, 2013 business daily | 5

MACAU

Glut of rooms means hotel occupancy at two-year low The number of hotel rooms is growing faster than the number of tourists Tony Lai

tony.lai@macaubusinessdaily.com

Chi Kit, said the new rooms were in the Sheraton, Holiday Inn and Conrad hotels in the Sands Cotai Central casino resort, whose first phase opened last April. Sands Cotai Central’s third hotel tower, the Sheraton’s Earth Tower, opened in January, adding 2,067 rooms to the market.

Room rates fall

Sands Cotai Central’s third hotel tower, the Sheraton’s Earth Tower, opened in January

he city’s hotels were less busy in February than they had been at any time since 2010 as new rooms flooded the market, the government and the hotel industry say. Data released yesterday by the Statistics and Census Service show the average rate of occupancy of hotels here was 77.3 percent in February, 8.5 percentage points less than a year before. This was the lowest since September 2010, when the hotel occupancy rate was 74.2 percent. Any year-on-year comparison, however, is skewed by the Lunar New Year holidays having falling this year in February, having fallen last year in January. In the first two months of this year the average rate of occupancy

of hotels was 82.3 percent, 2.2 percentage points lower than a year earlier. The occupancy rate of four-star hotels, the most popular, fell furthest. The government blamed the fall on “the substantial increase of 5,812 guest rooms year-on-year”. People in the hotel industry agree. The president of the Macau Travel Industry Council, Andy Wu Keng Kuong, said the fall was mostly due to more rooms in the market. “I think the overall occupancy rate was acceptable,” Mr Wu told Business Daily. At the end of February Macau had over 28,100 hotel rooms, a quarter as many again as a year earlier and 8 percent more than in January. The president of Macau Hoteliers and Innkeepers Association, Chan

“There has been growth of only about 2 percent in visitor arrivals so far this year but an increase of more than 20 percent in rooms, so a plunge of some 8 percent in occupancy is actually not a bad result,” Mr Chan said. All hotels, however many stars they had, charged more than 2,600 patacas (US$325) per night during the Lunar New Year holidays in February, according to figures from the Macau Government Tourist Office.

But the hotel industry believes higher room rates did little to prevent visitors from staying overnight. “Apart from a few days during Chinese New Year, in which frantic speculation pushed room rates up, the price on other days that month was actually lower than a year before,” Mr Chan said. “Prices were at an unreasonable level. Some even charged 7,000 patacas to 8,000 patacas a night, because the supply was tight at Chinese New Year, when many VIP junket operators reserved rooms for their big-spending customers,” he said. Mr Chan said room rates in all grades of hotel were about 10 percent to 15 percent lower now than a year ago. “Many hotels cut prices to poach customers owing to more competition,” he said. Although the occupancy rate fell in February, hotels put up nearly 775,000 guests, 7.5 percent more than a year earlier. Official figures show over 682,000 guests from Greater China stayed in hotels here, 13.4 percent more than a year earlier. But the number of guests from elsewhere fell by 22.4 percent. The number of visitors on package tours increased by 21.6 percent to over 803,900. The government attributed the increase to the long Lunar New Year holidays. The number of package tourists from mainland China, Macau’s main source of such visitors, rose by about one-third to over 600,000.

Occupancy Rate Classification of establishments

Jan. - Feb. 2012

2013

Difference (percentage point)

GRAND TOTAL

82.3

80.1

- 2.2

Hotels - total

82.9

80.6

- 2.3

5-star hotels 5-star hotels

84.0

81.9

- 2.1

4-star hotels 4-star hotels

84.1

80.4

- 3.7

3-star hotels 3-star hotels

78.2

76.4

- 1.8

2-star hotels 2-star hotels

71.8

68.9

- 2.9

Guesthouses Guesthouses

61.0

59.3

- 1.7

Source: Monthly survey of hotels and similar establishments/DSEC

Two years ago Essential Macau was first published, defining what is luxury in town. In the same month but one year later, in 2012, Business Daily the group’s first newspaper was launched. From then on we gave luxury a name and we defined business with a colour!

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business daily April 17, 2013

macau

HK film company invests in Old Taipa Village plot

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Mass imports Merchandise imports come in three main categories: consumer goods; capital equipment; and materials used for production, including raw materials and unfinished products. Goods in a fourth category, fuels and lubricants, we shall ignore here. In recent years Macau has been importing more consumer goods and fewer materials.

Universe International seeks income from investment in property here Stephanie Lai

sw.lai@macaubusinessdaily.com

Consumer goods make up the greater part of our imports. Most goods sold here are imported. Shops must cater to Macau people and visitors alike. The numbers of both have grown considerably in recent years. Not surprisingly, imports of consumer goods have been rising. The proportion of imports that consumer goods account for rose by about 15 percentage points between 2008 and 2011, when it reached almost two-thirds. The proportion decreased last year, but only slightly. The proportion of imports that capital equipment accounts for has changed little. Roughly following the investment cycle, it decreased from 18.4 percent in 2008 to 15.4 percent in 2010, and then rose again to 18.6 percent last year. Materials make up a declining proportion of imports, which decreased from 21.6 percent in 2008 to 9.6 percent last year. The proportional decrease reflects rises in imports of consumer goods and capital equipment as much as falls in imports of materials. Imports of materials fell by more than one-quarter, a sign of the decline of manufacturing industry here, while imports as a whole rose by more than two-thirds.

ong Kong film distribution company Universe International Holdings Ltd is taking part in a joint venture that seeks to develop a plot in Old Taipa Village. Universe International told the Hong Kong Stock Exchange yesterday that a subsidiary, Digital Programme Production Ltd, had agreed to join three other partners in the joint venture, a Macau-registered company called Sun Billion Property Ltd. Universe International said Sun Billion had agreed to buy the plot, in Rua Ho Lin Vong, for HK$21.3 million (US$2.74 million). The joint venture put down a deposit of HK$2 million on March 22 and intends to pay the rest before May 2. The partners will have to provide an unsecured and interest-free loan of HK$22 million before April 29. Digital Programme Production’s share of the loan is HK$8.8 million. Business Daily asked Universe

International for more information about this investment but had received no reply by the time we went to press. Universe International told the stock exchange that its investment in Taipa was meant to let it benefit from the growth in the property market here. Universe International distributes and shows films, licenses and sub-licenses film rights, and lets investment property. Universe International’s revenue from its main businesses fell in the second half of last year. The company’s interim report says its revenue in the six months ended December was HK$35.1 million, 18.9 percent less than a year earlier. Its revenue from showing films and from licensing and sub-licensing film rights, which accounted for 77.6 percent of turnover, fell by 22.1 percent to HK$27.3 million.

Urban planning law to restrict casino location New bill inching closer to Legislative Assembly approval Tony Lai

tony.lai@macaubusinessdaily.com

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

115.2 % Rise in consumer goods imports, 2008-2012

asinos and other gaming venues will only be allowed in lands plots reserved for tourism uses, once the city’s first urban planning bill becomes law. Macau’s future land usage will be divided into eight categories, Chan Chak Mo, president of the Legislative Assembly’s second standing committee, told reporters yesterday. Residential, commercial, industrial and tourism and entertainment would be part

of the land uses, Mr Chan said, after a closed-door meeting with government officials on the urban planning draft bill. The bill also allows for four other categories: public facilities, ecological conservation, public open spaces and infrastructures. For instance, developers will only have authorisation to build casinos and gaming facilities in the tourism and entertainment areas, Mr Chan said. Schools, churches and temples,

Old Taipa Village remains a low-rise district

and hospitals will only be built on land plots for public facilities whereas public open spaces will be reserved for venues like parks, he said. Mr Chan added the bill would further sub-divide the eight big land uses, considering the city’s strategies on urban planning. The land for residential usage would be further categorised depending on the maximum height allowed for developments on those sites, he explained. But the details of this sub-division will only be spelled out in related regulations, which, unlike laws, do not require the assembly’s approval. The committee had “no big disagreements” over these provisions, the president said. Mr Chan’s committee was previously concerned about the composition of the urban planning committee, an advisory body to deal with core planning issues. They wanted the details to be set in the law instead of in related regulation. The legislators aim to finish discussing this bill before the assembly is dissolved this summer, with elections coming in September.

Stay in the finest hotels in Macau and read Business Daily

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April 17, 2013 business daily | 7

MACAU

Gold rush as price falls to two-year low

Corporate

One of the largest corrections in modern history lures consumers to jewellery shops Stephanie Lai

sw.lai@macaubusinessdaily.com

ewellers in Avenida Horta e Costa saw mainland Chinese tourists and residents flocking to their shops yesterday as the price of gold has fallen to its lowest level in two years. The slump, which drove prices to their lowest level since January 2011, was exacerbated as the metal fell below so-called technical-support levels, Goldman Sachs Group Inc’s analysts including Jeff Currie and Damien Courvalin said in a report yesterday, entitled “There Are Weeks When Decades Happen”. “The fall in gold prices did even draw the individual traveller [from mainland] to jewellery shops in the less popular destinations, which traditionally deal with local clients,” Lei Chi Fong, Macau Goldsmith’s Guild president, told Business Daily. Gold rebounded more than 2 percent yesterday as the market tried to find its feet after it tumbled more than 8 percent on Monday, posting its biggest ever daily drop in dollar terms. Spot gold dropped to US$1,321.35 an ounce in New York’s Comex before reversing the losses driven by physical buying to more than 2 percent to around US$1,390. Gold futures plunged 9.3 percent on Monday, as traders’ worried over Chinese weaker-than-expected economic growth and by investor concern that European governments may have to follow Cyprus in selling part of their holdings. “The sharp sell-off in gold was triggered by growing fears that the central bank of Cyprus would sell its gold reserves, potentially reflecting a larger monetisation of gold reserves across other European central banks,” the Goldman analysts wrote

Gold has plunged into a bear market

in yesterday’s report. “Some consumers still hesitated as they think there is still room for the gold price to fall further,” said Mr Lei.

Bear market Mr Lei’s Goldsmith’s Guild is an association of more than 100 retailers, including Hong Kong-listed jewellery chains Chow Tai Fook Jewellery Co Ltd and Tse Sui Luen Jewellery (International) Ltd. “The plunge might have to do with the sell-off resulted from economic uncertainty, as the U.S. recovery is picking up,” said Mr Lei. “Now it’s still hard to say for how long the drop is going to last,” the gold trader added. “But personally I would expect that the gold price will be more stable in the second half of the year when the market might shift its focus to other commodities.” Gold has plunged into a bear market as investors reduced holdings in exchange-traded products amid signs the U.S. economy is recovering, paring haven demand. Goldman said last week the turn in the gold cycle was quickening and investors should sell the metal. The drop in the past two days was one of the largest corrections in modern history, according to Deutsche Bank AG. The decline in prices was exacerbated by the breach of a key technical-support level at US$1,530 an ounce, and then at the US$1,434 200-week moving average, triggering th e lar g es t o n e- d a y d r o p , th e Goldman analysts wrote in the report. With Bloomberg News

World champion joining Special Olympics Golf The entry list to this year’s Special Olympics Golf Masters is complete as Austria and South Africa confirmed their presence in Macau from April 22 to 27. A total of 14 teams from 12 countries will bring 47 athletes and 27 coaches to city. The introduction this year of the Level 5 format – the highest level – is the highlight. The best Special Olympics golf players in the world will meet and compete against the best local golfers acting as guardian players. And the entry list include Thomas Lugg, three times Special Olympics World Games gold medallist from South Africa and considered to be the world’s best golfer with a mental disability. In February he made a historic debut as the first Special Olympian to join an Amateur Golf

Championship in Johannesburg. Mr Lugg’s goal is to one day play against his idol Tiger Woods, the current leader of the world ranking and one of most successful professional golf players of all time. The event will allow Special Olympics athletes “to share their talents with other participants,” said Michael Mecca, president and chief operating officer of Galaxy Entertainment Group Ltd. “But it also provides a platform for them to showcase to a much wider audience their determination and enthusiasm in the world of sports,” said the executive of Galaxy, one of the tournament sponsors. Sands China Ltd is also a sponsor and for the company “the watchword is ‘service’,” the company’s president and chief operating officer Edward Tracy said. “One outlet for service is to look at the larger community in Macau to find ways we can help. For this reason we are proud to be sponsoring the Special Olympics Golf Masters once again this year,” he added.

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business daily April 17, 2013

GREATER CHINA

Moody’s lowers China outlook Rating agency cuts credit outlook to stable

Alibaba reboots push for mobile OS Alibaba Group Holding Ltd is working with five Chinese handset makers to use its operating system as the nation’s biggest e-commerce company competes with Google Inc. and Tencent Holdings Ltd for mobile device users. The company, based in Hangzhou, will pay the handset makers a fee of 1 yuan (16 U.S. cents) a month for every phone they sell with the Alibaba Mobile Operating System, or AMOS, as long as the owner continues using the software, according to Alizila website, operated by Alibaba. It also will encourage developers to create apps for AMOS through a 1 billion-yuan (US$161.7 million) fund using revenue sharing and other incentives. Alibaba is expanding into mobile devices and cloud computing as more online shoppers order from smartphones and tablets. A Chinese government research institute said last month the nation’s smartphone makers are “heavily dependent” on Google’s Android software and that is hampering the development of the domestic industry. “Alibaba is a potential competitor to Google to some extent,” said Duncan Clark, the Beijingbased chairman of BDA China Ltd, which advises technology companies. “The mobile operating system will give it a competitive advantage to defend its position.” The company’s billionaire founder, Jack Ma, said last month Alibaba may use acquisitions to boost growth through apps because it hasn’t been able to keep up with Tencent’s WeChat messaging service. WeChat had more than 300 million users by January. China has more than 300 local Android-handset manufacturers, accounting for 97.7 percent of domestically produced smartphones, said a February report from the China Academy of Telecommunication Research.

Foxconn hiring ahead of new Apple’s iPhone Foxconn Technology Group, the world’s largest custom manufacturer of electronics, resumed hiring at a Chinese factory as it prepares to make a new Apple Inc. iPhone, said a person familiar with the plans. Workers have been recruited at Foxconn’s plant in Zhengzhou, eastern China, for the past month, ending a hiring freeze imposed in February, said the person, who asked not to be named because the plans haven’t been made public. The extra workers will assemble the new device as well as existing models and have been added at Apple’s request to boost capacity, the person said. A new iPhone could help Apple regain share amid new smartphone models being released globally this quarter by Samsung Electronics Co. and HTC Corp. Foxconn recommenced hiring at Zhengzhou a month ago, with the facility currently employing about 250,000 to 300,000 people, Liu Kun, a spokesman for the Taipei-based company, said by phone yesterday without saying how many employees were added. He declined to comment on products or clients. Carolyn Wu, a Beijing-based spokeswoman for Apple, declined to comment. Hon Hai Precision Industry Co., the Taipeilisted flagship of Foxconn, makes iPhones in Zhengzhou, Shenzhen and Taiyuan as well as Jundiai, Brazil, according to an Apple supplier list published in January. IPhones are the only Apple product assembled in Zhengzhou, while Taipei-based Pegatron Corp. also makes iPhones in Shanghai, the list shows. Apple sold a record 47.8 million iPhones in the fiscal first quarter of 2013, which ended December 29, after releasing its iPhone 5 in the prior quarter. Bloomberg News

oody’s Investors Service lowered its outlook for China’s credit rating to stable from positive, saying the nation has made less progress than anticipated in reducing risks from local-government debt and credit expansion. It is the second pessimistic revision by a foreign ratings agency this month. The rating agency yesterday affirmed China’s government’s bond rating of Aa3 but. Last week, Fitch Ratings cut China’s long-term local currency credit rating to A-plus from AA-minus, citing concerns about the risk that excessive local government borrowing posed to the wider economy. Moody’s referred to the same issue in justifying its negative revision. “Progress has been less than anticipated in the process of both reducing latent risks by making local government contingent liabilities more transparent and in reining in rapid credit growth; therefore, some of the upward pressure on the Aa3 rating has eased,” Moody’s said. The rating agency said it affirmed the Aa3 rating because of China’s credit fundamentals, which have been underpinned by continued robust economic growth, strong central government finances and an exceptionally strong external payments position.

“Structural reforms under the new leadership” may not be sufficient over the next 12 to 18 months to justify an upgrade, it said. The report added more reform would be necessary to prevent a build-up of pressures that could increase the risks of a hard landing for the Chinese economy. But it credited China for maintaining better fiscal metrics than Belgium or France, and noted that China’s massive international investment position means its external assets exceed its domestic liabilities to the tune of US$1.8 trillion. “Only a handful of highly rated advanced industrial economies – such as Norway, Switzerland, Japan, Hong Kong and Singapore – have a stronger international investment position.”

Lack detail China has seen rapid credit expansion as a result of Beijing’s stimulus in 2008-09 to counter the global crisis, but the country has had trouble shaking off the hangover created by sloppy asset allocation and investment bubbles resulting from the flood of cheap cash. Local government financing vehicles stand accused of making investments in vanity projects and ghost cities that are unlikely to produce sufficient returns to

China has seen rapid credit expansion

pay off bank loans. The head of China’s National Audit Office recently estimated that outstanding debt of local and central governments was 15 to 18 trillion yuan – equal to 29 to 35 percent of GDP – at the end of 2012. But even as Beijing has moved to clean up balance sheets at Chinese banks, borrowers and lenders have

China stuck with sub-8pct growth Fourth period in a row makes it first time in two decades

Global institutions have cut their growth forecasts

hina’s longest streak of expansion below 8 percent in at least 20 years is sending a message to suppliers and investors around the world to get used to slower growth in the second-biggest economy. The 7.7 percent increase in firstquarter gross domestic product from a year earlier marked the first time in data going back two decades that four periods in a row have seen growth of less than 8 percent. The figure released on Monday by the National Bureau of Statistics in Beijing was also the worst miss of analyst estimates since

the third quarter of 2008, according to data compiled by Bloomberg. A sustained shift to a lower-growth gear would affect everything from iron-ore demand in Australia to the fortunes of companies including carmaker General Motors Co., who are counting on China to drive profits. It increases challenges for global policy makers contending with Europe’s debt turmoil and Japan’s record monetary easing, with BHP Billiton Ltd saying GDP gains will moderate toward 6 percent later this decade. “While this is a shock in the short term, it is part of the growing-up

of China’s economy,” said Louis Kuijs, Hong Kong-based chief China economist at Royal Bank of Scotland Group Plc, who cut his forecast for 2013 expansion to 7.8 percent from 8.4 percent after Monday’s data. Investment in productive capacity lacks the knock-on effects on GDP it once had because of reduced overseas demand for the products of the nation’s factories, he said. As the nation’s growth fails to pick up steam, global finance chiefs from the Group of 20 nations gathering in Washington later this week may find little ground to criticise Japan’s efforts to stoke its economy, with Europe facing the risk of blame for overzealous fiscal cuts. Australian Treasurer Wayne Swan said last week that he supports the Federal Reserve’s quantitative easing and Japan’s reflation policy, in contrast to Europe’s “too-harsh” pursuit of austerity as the world economy struggles to shake off the global financial crisis.

Growth target China last month set a 7.5 percent growth target for this year and new Premier Li Keqiang said March 17 that the nation must maintain that pace through 2020 as the country seeks to double per capita income this decade. China doesn’t need to expand faster than 8 percent in part because

April 17, 2013 business daily | 9

GREATER CHINA

BoC, BoCom change top managers

ank of China Ltd, the nation’s fourth-biggest lender, appointed a new party secretary while Bank of Communications Co.’s chairman resigned. Tian Guoli, former vice chairman of Citic Group, was listed on Beijingbased Bank of China’s website as party secretary yesterday, paving the way for him to become chairman. Hu Huaibang, who had led Bank of Communications since 2008, resigned due to “the demands of national financial work,” the country’s fifth-largest lender said in a statement yesterday. The changes come as part of a once-a-decade leadership transition that also saw the breakup of the Railway Ministry, the nomination of a new finance minister and Zhou Xiaochuan’s reappointment as central bank governor. Mr Tian, 52, will take over the only Chinese lender included in the Financial Stability Board’s global list of 28 systemically important financial institutions. Mr Hu, 57, will replace Chen Yuan as chairman of Beijing-based China Development Bank Corp., the world’s largest policy bank, two people familiar with the matter said on April 12. The 68-year-old Mr Chen, son of one of Communist China’s founding fathers, will help set up a new development bank for the BRICS countries, which group China with Brazil, Russia, India and South Africa, Caixin reported on April 11. Bank of China held a monopoly on the nation’s foreign-exchange dealings and overseas banking from 1949 to 1994. The lender today has

collaborated to develop new forms of off-balance sheet financing that regulators feel are both concealing and complicating the risk bad loans pose to the wider economy. Official figures may not “represent the full extent” of risks from localgovernment financing vehicles, while “elevated growth in credit,” increasingly driven by so-called

shadow banking, is a risk to the economy, Moody’s said. Policy-reform guidelines announced by the government “lack specific detail, and there is no clear indication when such measures will be implemented and when they would gain traction in producing systemic changes,” Moody’s said.

the number of new workers from 15 to 24 years old, the main source of job seekers, has been in decline since 2010, according to Li Wei, a Shanghai-based economist at Standard Chartered Plc. “This pressure on creating new jobs is easing,” he said. “The leadership has finally realised that this economy doesn’t really need double-digit growth.” At least four other institutions cut their growth forecasts after the data, including JPMorgan Chase & Co., Daiwa Capital Markets, Nomura Holdings Inc. and Mizuho Securities Asia Ltd. Li Miaoxian, a Beijing-based economist at Bocom International Holdings Co., the investment-bank unit of China’s fifth-largest lender, said slower growth is “no longer cyclical”. “Growth in the first quarter is neither good nor bad,” Mr Li said. “It’s a level around China’s potential growth rate that is set to continue.”

Ford outsells Toyota as US$4.9b bet pays off

Bloomberg News

While this is a shock in the short term, it is part of the growing-up of China’s economy Louis Kuijs, Royal Bank of Scotland Group

Reuters

Carmaker wants to capture 6 pct of Chinese auto market by 2015

ord Motor Co. is on a tear in China, with sales up 54 p er cen t th i s y ea r o n th e strength of its Focus small car. Long an also-ran in the world’s largest auto market, Ford is now outselling Toyota Motor Corp. in the mainland market. While Ford is benefiting from Chinese consumer backlash against Japanese products, the secondlargest U.S. automaker also is beginning to reap the rewards of spending US$4.9 billion to expand its line-up and double production capacity in China. Its pre-tax operating losses in the Asia Pacific region narrowed to US$77 million last year, from US$92 million in 2011. Ford does not break out financial results for China only. “We are about at break-even and we’re also at the height of our investment,” chief executive Alan Mulally said. “We’re doing that with the biggest investment we have ever made. Think about when those plants are in. Just think about where those margins go.” Mr Mulally said the progress Ford has made in China was on the back of a limited line-up, but that is about to change, which has

him encouraged about continuing to turn profits in China and Asia. Ford this year is launching three sport utility vehicles in China, part of the company’s plan to introduce 15 new or significantly refreshed vehicles in the world’s biggest auto market by 2015. Since 2006, Ford has open five new plants in China, including three assembly plants, by 2015. It will double its 2012 production in China along with its joint venture partner Changan Automobile Co, to 1.56 million vehicles annually by 2015, including 1.2 million passenger cars. The 67-year-old Ford chief said he is encouraged the company is starting to be profitable in China while “doing that with the biggest investment we have ever made. Now think about when the plants are in, just think about where those margins go.” Ford’s vehicle sales rose 21 percent in 2012 in China, where industry sales rose only 4 percent. Ford sold 626,616 vehicles in China last year. Ford in 2012 held a 3 percent market share, well behind industry leaders Volkswagen AG and

Overseas operations account for about 23 pct of the bank’s assets

the biggest overseas operations of any Chinese bank, accounting for about 23 percent of its assets at the end of December, according to data compiled by Bloomberg. Under former chairman Xiao Gang, who resigned on March 17 to become chairman of China Securities Regulatory Commission, Bank of China steered through the global economic crisis to report record profits. Mr Tian has also served since May 2011 as chairman of China Citic Bank Corp., which last month reported a 0.7 percent gain in 2012 profit, the weakest among the nine mainland lenders traded in Hong Kong, as bad loan charges surged. At Bank of China, non-performing loans dropped to 0.95 percent of the total from 1 percent, helping profit beat estimates. Reuters/Bloomberg News

General Motors Co. Ford’s sales gains have been impressive, but like Volkswagen’s recent gains in the U.S. market, they come from a low base. Ford’s China sales in the first quarter were 186,596, up 54 percent. By contrast, GM sold 2.84 million vehicles in China last year, up 11 percent. The carmaker said it can capture 6 percent of the Chinese automotive market by 2015, David Schoch, president of the company’s Asia Pacific region, told reporters in Shanghai. “I think we can get to that,” Mr Schoch said. “This can be a turbocharged year for us to really kick us into high gear.” Reuters

626,616 vehicles Ford sold in China last year

10 |

business daily April 17, 2013

ASIA

S. Korea in US$15.4b stimulus move Government unveils fiscal package to support growth Cynthia Kim

New funds to help small and medium-sized exporters

outh Korea unveiled a 17.3 trillion won (US$15.4 billion) supplementary budget to support exporters pressured by a weaker Japanese currency and revive an economy that grew last year at the slowest pace since 2009. The package will boost growth by 0.3 percentage points and create 40,000 jobs, the Finance Ministry said in a statement in Sejong. The net increase is 5.3 trillion won after covering expected revenue shortfalls, the government said. Another 2 trillion won will be available for support measures from outside the budget, it said. The government plan may boost consumption and confidence as China’s economy shows signs of weakness and North Korea’s Kim Jong-un ratchets up threats against the U.S. and the South. A stronger won, which has risen more than 21 percent against the yen in the past six months, has hindered export-reliant companies such as Hyundai Motor Co. and Samsung Electronics Co. by making their products more expensive overseas. “The extra budget will lift up the recovery in the second half of this year, which is needed as sentiment has been weak,” said Jun Min Kyoo, a Seoul-based economist at Korea Investment & Securities Co. “The focus on job growth and exporters will boost private consumption.” P r es i d en t P a r k G e u n - h y e ’ s government announced plans for

India considers freeing oil, gas price controls Finance minister tries to lure more overseas investors

ndia is considering freeing prices of oil and natural gas drilled locally from state controls in a bid to lure more foreign investment, Finance Minister Palaniappan Chidambaram said. “We are at an advanced stage – a cabinet paper is under consideration on how to move from an administratively fixed price to a market-related price for oil and gas explored and excavated by companies,” he told investors in Toronto as he started a tour of Canada and the U.S. to woo investors. Measures to cap prices of diesel and cooking gas to make them affordable to farmers and poor households, a significant voting bloc, have widened the budget deficit. A threat of a sovereign credit downgrade to junk by Standard & Poor’s and Fitch Ratings has prompted Mr Chidambaram to rein in subsidies amid the slowest pace of economic growth and the biggest 12-month decline in foreign direct investment in a decade. While India has allowed stateowned refiners to sell gasoline at market rates, it has only partially freed diesel prices, allowing

companies to raise them gradually until they wipe out losses from belowcost sales in about two years. A panel headed by Chakravarthy Rangarajan, chief economic adviser to Prime Minister Manmohan Singh, has recommended benchmarking gas rates to global prices, a move that may boost production of the fuel by companies including Reliance Industries Ltd.

Reversing slump Mr Chidambaram, 67, a Harvard Business School graduate and thirdtime finance minister in India, has been visiting major global financial centres since January as he seeks US$75 billion in two years to fund the current-account gap, which widened to a record 6.7 percent of gross domestic product in the quarter ended December 31. In his budget on February 28, he outlined a plan to narrow the budget deficit to 3 percent of GDP by the 12 months through March 2017, from an estimated 5.2 percent for last year. Mr Singh’s administration is trying revive the US$1.8 trillion economy, which probably expanded

5 percent in the year ended March 31, compared with an average 8.8 percent in the six fiscal years through March 2011. The shortfall in the current account, the widest measure of trade, and elevated inflation have limited the central bank’s scope to cut interest rates. India’s consumer-price inflation remains the fastest among major emerging economies even as it eased to 10.39 percent in March from a year earlier, according to data released last Friday. Reserve Bank of India Governor Duvvuri Subbarao has said price gains remain “stubborn and elevated”. Mr Chidambaram said he “hopes” the Reserve Bank of India has taken note of the recent easing of inflation after the benchmark wholesaleprice index in March cooled to an unexpected 5.96 percent, the smallest gain in 40 months. The central bank has cut its policy rate by 50 basis points so far this year to spur growth. The government is also keen on replacing the production- sharing model for oil and gas exploration with a revenue-share model, Mr Chidambaram said. Bloomberg News

a stimulus package on the same day last month it lowered its 2013 growth forecast to 2.3 percent from 3 percent. The government moved yesterday after the Bank of Korea last week resisted pressure to cut the benchmark interest rate.

Create jobs Of the money, 3 trillion won will be used to help create jobs, stabilise consumer prices and finance efforts to revitalise the housing market, the ministry said. Another 1.3 trillion won will support small- and mediumsized exporters. “With the extra budget, we will be able to see growth at the high end of the 2 percent range this year,” Finance Minster Hyun Oh Seok said at a briefing last week. Goldman Sachs Group Inc. yesterday cut its 2013 GDP growth forecast to 2.9 percent from 3.1 percent on weaker-than-expected first quarter activity. Australia & New Zealand Banking Group Ltd. said yesterday it was raising its estimate to 2.6 percent from 2.4 percent. “The government is trying to kickstart domestic activity,” said Ronald Man, a Hong Kong-based economist at HSBC Holdings Plc, highlighting money earmarked for job creation. “We expect that growth will rebound this year,” he said, adding that the economy’s expansion may be more than 3 percent. Asia’s fourth-largest economy

A cabinet paper is under consideration on how to move from an administratively fixed price to a market-related price Palaniappan Chidambaram, India’s Finance Minister

April 17, 2013 business daily | 11

ASIA posted quarterly growth of less than 1 percent for seven consecutive periods. It grew 2 percent last year, the slowest rate since 2009. The Bank of Korea cited the recent depreciation of the yen when it cut its growth estimate for the year to 2.6 percent from 2.8 percent. Earlier this month, Japan’s central bank embarked on unprecedented monetary easing in a bid to end almost 15 years of deflation. “Korean and Taiwanese producers are the front line facing newly competitive Japanese producers,” Timothy Condon, head of Asian research at ING Goep NV in Singapore, said before the release. He said that’s why the won and Taiwan dollar have “depreciated more than other Asian currencies this year.” Of the package, 15.8 trillion won will be financed by issuing new bonds and adjusting a debt buyback programme, the ministry said. National debt will increase to 480.5 trillion won, or 36.2 percent of GDP, after the extra budget, up from 34.8 percent in 2012, the ministry estimates.

SoftBank seen fighting for Sprint As Japanese founder aims to create global company not about how much he can afford, it’s about how much return he wants to get,” he said. “If Son did not think of a rival offer like this he was careless, but I don’t think he’s careless. He is a thoughtful, careful businessman… and all the lender banks are willing to lend to him.” SoftBank will go ahead with a dual tranche bond issue in dollars and euros that is worth US$2 billion, a company spokesperson told IFR, a Thomson Reuters company. That bond issue is to help fund its Sprint deal.

Easy gains Sprint – investors battling for wireless network

Bloomberg News

The extra budget will lift up the recovery in the second half of this year, which is needed as sentiment has been weak Jun Min Kyoo, Korea Investment & Securities

asayoshi Son, billionaire founder of Japanese mobile carrier SoftBank Corp, is expected to stay in the battle for U.S. wireless service provider Sprint Nextel Corp – even though he could walk away with more than US$3.5 billion in gains from currency hedging, a convertible bond and break-up fee. Mr Son, a rare risk-taker in Japan’s conservative corporate culture, is likely to put his ambition to create a global company, with Sprint giving SoftBank a toehold in the United States, ahead of quick financial gains, analysts said yesterday. Dish Network Corp, the No. 2 U.S. satellite TV provider, on Monday offered to buy Sprint for US$25.5 billion in cash and stock, trumping SoftBank’s proposal last October to buy 70 percent of Sprint for US$20.1 billion in what would be Japan’s biggest overseas acquisition. The offer by Dish, which wants to combine its satellite service with Sprint’s wireless network in an attack on telecoms powerhouses Verizon Wireless and AT&T Inc, represents a 13 percent premium to Softbank’s bid, but the Japanese firm said its proposal would offer Sprint

shareholders “superior short- and long-term benefits to Dish’s highly conditional preliminary proposal. SoftBank said it was in the advanced stages of receiving the necessary approvals, and expected to wrap up the deal by July 1. “The issue for Son is that he wants to build a global company, he promised to do that. This is probably the one shot he has of doing that and I don’t think he’s going to walk away,” said Neil Juggins, Hong Kong-based regional telecoms analyst at JI Asia, an affiliate of Societe Generale.

Higher offer A Tokyo-based analyst, who declined to be named, also said Mr Son was unlikely to back off and would probably raise his offer to seal the Sprint deal. “Son isn’t going to give up that easily. I expect him to come back with a higher offer,” he said. That should prove straightforward, said a Tokyo-based banking source, who noted SoftBank was unlikely to face any obstacles in securing additional financing from banks. “Son won’t be short of money thanks to all the banks. The crucial point is

Yen’s recovery stalls, but sentiment shaky Aussie recovers after sharp fall, gold still in focus

he yen’s recent bounce ran out of steam yesterday as stocks and commodities stabilised, but investors remained wary that another rout in gold prices could spur demand for the safe haven Japanese currency. The yen, which is very liquid and tends to benefit in times of stress in the global economy or financial markets, has been a big beneficiary in the past few days after poor Chinese data, a dramatic drop in gold prices and explosions in Boston combined to drive investors to seek safe havens for their money.

But its recovery stalled yesterday with analysts saying its mediumterm trend toward more weakness remained in place after the Bank of Japan earlier this month unveiled an aggressive plan of monetary easing aimed at beating deflation. The U.S. dollar rose 1 percent to 97.90 yen, though it was still down about 2 percent from a four-year high of 99.95 yen hit last week following the Bank of Japan’s US$1.4 trillion stimulus launch announced on April 4. The euro also jumped 1.5 percent to 128.03 yen. “We had a clear rout of positions in

Announcing the Sprint investment last year, SoftBank said it hedged its acquisition with a forward exchange rate of 82.2 yen to the U.S. dollar, saving some 200 billion yen (US$2.04 billion) in the process. The yen has since weakened 24 percent against the dollar as a result of an aggressive monetary policy by Japan’s central bank to lift the country out of deflation. In addition, SoftBank stands to make around a US$1 billion gain from a US$3.1 billion convertible bond it purchased from Sprint last year at US$5.25 per share. SoftBank can convert the bond as soon as it abandons a Sprint deal. Sprint shares last traded at US$7.06 after jumping as much as 17.8 percent on Monday to a near 4-1/2-year high. On top of all that, SoftBank would also be paid a US$600 million breakup fee if Dish walks away with Sprint. “Short-term, yes, there are benefits that they would gain if they walked away, but I think SoftBank shareholders would mark them down quite heavily,” said Mr Juggins. Softbank fell the most in six months in Tokyo trading after Dish’s offer, on concerns the Japanese wireless carrier may raise its own bid. Japan’s third-largest mobilephone company fell 6.8 percent to 4,365 yen at the close of trade, the biggest drop since October 12. Reuters

the past few days,” said Paul Robson, senior currency strategist at RBS. “But any pullback in dollar/yen is temporary and we are fairly confident that dollar will rise against the yen in the medium term given capital outflows from domestic Japanese investors.” Earlier yesterday, the U.S. currency had fallen to 95.67 yen, its lowest since April 4. News of explosions in Boston, which a White House official said are being treated as an “act of terror”, prompted speculators to sell the euro, the dollar and growthlinked currencies. Traders said investors would need to see a clearer sign that commodity prices are stabilising before their appetite for riskier assets returns. Gold fell 9 percent on Monday, its biggest percentage loss since 1983, spooking many traders. The Australian dollar traded up 0.6 percent at US$1.0370 , after Monday’s 1.8 percent fall, which took the Aussie unit to a one-month low of US$1.0291. Reuters

12 |

business daily April 17, 2013

MARKETS Hang SENG INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

32.25

-1.376147

32542489

CHINA UNICOM HON

9.76

-0.1023541

20704316

ALUMINUM CORP-H

2.91

10294000

CITIC PACIFIC

9.57

0.7368421

7068050

BANK OF CHINA-H

3.49

0.2873563

306178541

5.8

0.6944444

24519975

30.1

1.176471

2738871

NAME AIA GROUP LTD

BANK OF COMMUN-H BANK EAST ASIA BELLE INTERNATIO

12.98

-0.9160305

30721956

BOC HONG KONG HO

25.55

-0.776699

9174762

CATHAY PAC AIR

12.62

13885525

CHEUNG KONG

115.6

0.9606987

4562698

6.28

-0.3174603

19578430

CHINA COAL ENE-H CHINA CONST BA-H

NAME

CLP HLDGS LTD

NAME

PRICE

DAY %

POWER ASSETS HOL

73.65

0.06793478

VOLUME 2650654

SANDS CHINA LTD

37.95

-1.55642

10794584 5202641

67.5

0.5961252

2912862

SINO LAND CO

12.52

0.805153

CNOOC LTD

13.48

-1.892285

79927713

SUN HUNG KAI PRO

107.9

0.8411215

8327014

COSCO PAC LTD

10.18

-0.5859375

11482380

SWIRE PACIFIC-A

-0.5291005

1118548

TENCENT HOLDINGS

244.6

-0.5691057

4615298

20.8

2.211302

7640189

11.44

2.877698

14064068

66.5

-0.8202834

5299338

ESPRIT HLDGS

10.04

1.311806

11469163

HANG LUNG PROPER

29.25

-0.3407155

6150730

TINGYI HLDG CO

123

-0.4854369

1491259

WANT WANT CHINA WHARF HLDG

HANG SENG BK HENDERSON LAND D

55.5

1.277372

7910818

HENGAN INTL

78.1

0.9696186

1729856

6.1

-0.1636661

209593471

CHINA LIFE INS-H

20.45

1.488834

32950832

CHINA MERCHANT

23.9

-3.629032

2808244

CHINA MOBILE

81.4

-0.6711409

17096524

HUTCHISON WHAMPO

CHINA OVERSEAS

21.8

0.9259259

26113646

IND & COMM BK-H

CHINA PETROLEU-H

8.51

-1.16144

111884897

HONG KG CHINA GS

22.5

-0.4424779

5310154

126.8

-1.092044

6049303

80.4

-0.8019741

13839694

81.25

-0.7330483

7946360

5.15

-0.3868472

223109162

LI & FUNG LTD

10.04

-2.33463

33393743

HONG KONG EXCHNG HSBC HLDGS PLC

CHINA RES ENTERP

24.1

-1.026694

3001610

MTR CORP

30.35

-0.6546645

2554967

CHINA RES LAND

21.8

0.4608295

6355920

NEW WORLD DEV

12.66

-0.3149606

13421135

CHINA RES POWER

22.6

-0.6593407

12008264

PETROCHINA CO-H

9.49

-1.861427

75466464

CHINA SHENHUA-H

25.95

-2.626642

31987746

PING AN INSURA-H

58.4

12474706

PRICE

DAY %

VOLUME

27.05

3.441683

12914744

MOVERS

2 22190

INDEX 21772.67 HIGH

22185.36

LOW

21506.22

52W (H) 23944.74 (L) 18056.4

21500

12-April

16-April

Hang SENG CHINA ENTErPRISE INDEX NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.48

0.2881844

101496562

AIR CHINA LTD-H

6.26

4.159734

28719843

CHINA PETROLEU-H

8.51

-1.16144

111884897

ALUMINUM CORP-H

2.91

10294000

CHINA RAIL CN-H

6.89

-0.7204611

6888398

ANHUI CONCH-H

27.35

2.434457

16858265

CHINA RAIL GR-H

3.63

-1.089918

13200132

BANK OF CHINA-H

3.49

0.2873563

306178541

CHINA SHENHUA-H

25.95

-2.626642

31987746

CHINA TELECOM-H

CHINA PACIFIC-H

5.8

0.6944444

24519975

3.64

-0.8174387

40064635

22.35

1.131222

3460644

DONGFENG MOTOR-H

10.86

-1.808318

8390000

CHINA CITIC BK-H

4.02

29213232

GUANGZHOU AUTO-H

5.71

-1.039861

5527220

CHINA COAL ENE-H

6.28

-0.3174603

19578430

HUANENG POWER-H

8.09

-0.8578431

19492000

CHINA COM CONS-H

7.23

-0.1381215

11988832

IND & COMM BK-H

5.15

-0.3868472

223109162

CHINA CONST BA-H

6.1

-0.1636661

209593471

JIANGXI COPPER-H

15.36

-1.915709

37867078

BANK OF COMMUN-H BYD CO LTD-H

3.38

-1.169591

15134497

PETROCHINA CO-H

9.49

-1.861427

75466464

20.45

1.488834

32950832

PICC PROPERTY &

9.42

0.856531

11408403

CHINA LONGYUAN-H

7.29

1.25

14832000

PING AN INSURA-H

58.4

12474706

CHINA MERCH BK-H

15.3

13041073

SHANDONG WEIG-H

6.68

-0.8902077

6653000

CHINA COSCO HO-H CHINA LIFE INS-H

CHINA MINSHENG-H

9.06

-0.330033

48905287

SINOPHARM-H

24.75

-2.366864

8730312

CHINA NATL BDG-H

9.43

2.947598

47915845

TSINGTAO BREW-H

52.05

1.166181

1877898

15.06

-2.207792

12178000

WEICHAI POWER-H

26.35

-1.125704

2884500

CHINA OILFIELD-H

NAME

PRICE

DAY %

VOLUME

YANZHOU COAL-H

8.83

-1.670379

34169050

ZIJIN MINING-H

2.29

-1.716738

84236189

ZOOMLION HEAVY-H

7.63

0.2628121

20421280

11.48

0.525394

4287966

ZTE CORP-H

MOVERS

4 10760

INDEX 10440.76 HIGH

10752.37

LOW

10308.97

52W (H) 12354.22 (L) 8987.76

10300

12-April

16-April

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.71

-0.3676471

64064773

CITIC SECURITI-A

12.16

4.109589

113646216

AIR CHINA LTD-A

5.21

1.559454

14713985

CSR CORP LTD -A

4.1

1.736973

27837738

4.1

0.4901961

12252292

DAQIN RAILWAY -A

7.01

ANHUI CONCH-A

18.87

1.725067

41962133

DATANG INTL PO-A

4.5

BANK OF BEIJIN-A

8.58

26483750

EVERBRIG SEC -A

BANK OF CHINA-A

2.89

-0.6872852

35535527

BANK OF COMMUN-A

4.63

-0.856531

65166971

BANK OF NINGBO-A

10.49

0.3827751

10963247

BAOSHAN IRON & S

4.82

0.2079002

16770013

NAME ALUMINUM CORP-A

NAME

PRICE

DAY %

VOLUME

15.49

3.750837

26576565

SANY HEAVY INDUS

1.214575

16734948

25780127

SHANDONG DONG-A

45.45

-0.219539

5261977

5715411

SHANDONG GOLD-MI

32.13

4503942

13.59

4.618938

18300245

SHANG PHARM -A

12.33

-1.438849

17320396

GD MIDEA HOLDI-A

13.71

-0.0728863

39364405

SHANG PUDONG-A

9.74

-0.9155646

126274720

GD POWER DEVEL-A

2.84

0.3533569

86049405

SHANGHAI ELECT-A

3.81

0.2631579

2124099

GEMDALE CORP-A

7.42

6.76259

124769709

SHANXI LU'AN -A

16.71

1.272727

14493850

GF SECURITIES-A

13.18

3.291536

32176997

SHANXI XISHAN-A

10.84

-0.8234218

14248960

26.89

1.014275

14355730

SHENZEN OVERSE-A

6.02

3.793103

70478083

SICHUAN KELUN-A

60.65

0.1982488

652346

6.18

1.477833

19018717

SAIC MOTOR-A

BYD CO LTD -A

21.02

2.386751

2823805

GREE ELECTRIC

CHINA AVIC AVI-A

21.96

1.244813

2174798

GUANGHUI ENERG-A

19.06

-0.1571503

19722285

CHINA CITIC BK-A

4.29

0.9411765

29910717

HAITONG SECURI-A

10.38

3.8

126765817

CHINA CNR CORP-A

4.15

2.469136

26578342

HANGZHOU HIKVI-A

36.72

1.717452

2973001

TASLY PHARMAC-A

66.86

2.216786

1823419

75.4

-3.333333

3322696

TSINGTAO BREW-A

37.32

-0.7182761

4066167

CHINA COAL ENE-A

6.92

2.064897

10035496

HENAN SHUAN-A

SUNING COMMERC-A

CHINA CONST BA-A

4.68

-0.4255319

45643333

HONG YUAN SEC-A

18.21

3.465909

13967657

WEICHAI POWER-A

22.88

1.060071

6924591

CHINA COSCO HO-A

3.54

-1.939058

14820548

HUATAI SECURIT-A

9.63

3.883495

36480860

WULIANGYE YIBIN

22.12

-0.270514

13843210

CHINA EAST AIR-A

3.16

3.606557

20763942

HUAXIA BANK CO

10.17

0.0984252

21615487

YANGQUAN COAL -A

12.87

1.73913

7054666

CHINA EVERBRIG-A

3.04

55392251

IND & COMM BK-A

4.04

39184563

YANTAI WANHUA-A

17.85

-1.217488

12539745

CHINA LIFE INS-A

17.42

2.230047

13962189

INDUSTRIAL BAN-A

17.29

-1.649602

116775149

YANZHOU COAL-A

16.01

1.073232

3889123

CHINA MERCH BK-A

12.35

0.8163265

55597507

INNER MONG BAO-A

27.91

0.43181

16476082

YUNNAN BAIYAO-A

83.22

0.2650602

1090849

CHINA MERCHANT-A

11.8

3.237095

35951694

INNER MONG YIL-A

29.93

-0.1001335

5003952

ZHONGJIN GOLD

12.51

-3.24826

40820635

CHINA MERCHANT-A

27.4

4.301485

20378778

INNER MONGOLIA-A

4.85

1.464435

31068124

ZIJIN MINING-A

3.16

-1.25

82860563

CHINA MINSHENG-A

9.52

-1.34715

275167496

JIANGSU HENGRU-A

30.21

0.8344459

6611200

ZOOMLION HEAVY-A

7.61

-0.2621232

43192579

JIANGSU YANGHE-A

59.75

-1.451427

3696722

ZTE CORP-A

10.67

1.041667

19521020

JIANGXI COPPER-A

20.74

-0.7180469

10873178

8.7

0.811124

28833067

CHINA OILFIELD-A

CHINA NATIONAL-A

15.22

-1.104613

7469371

CHINA PACIFIC-A

19.94

4.288703

30312179

JINDUICHENG -A

10.34

-0.6724304

7309460

6.87

0.1457726

31072341

KANGMEI PHARMA-A

17.19

3.181273

14013365

CHINA RAILWAY-A

1.626016

13950769

KWEICHOW MOUTA-A

173.16

0.24314

3913792

CHINA RAILWAY-A

2.78

1.090909

21585386

LUZHOU LAOJIAO-A

25.21

-1.446443

7343327

CHINA SHENHUA-A

20.89

-1.415762

21671859

METALLURGICAL-A

2.02

0.4975124

17627550

NINGBO PORT CO-A

2.49

0.8097166

8340187

CHINA PETROLEU-A

CHINA SHIPBUIL-A

4.46

1.363636

25650020

CHINA SOUTHERN-A

3.49

2.647059

24330922

PETROCHINA CO-A

8.53

0.1173709

12520401

PING AN BANK-A

18.75

1.023707

MOVERS 212

18 2490

INDEX 2436.818

CHINA STATE -A

3.5

2.339181

150426439

65549248

HIGH

2486.93

CHINA UNITED-A

3.46

0.2898551

58231614

PING AN INSURA-A

41.53

2.517897

25035017

LOW

2419.51

CHINA VANKE CO-A

11.64

5.530372

142495345

POLY REAL ESTA-A

12.46

5.952381

93060811

CHINA YANGTZE-A

7.08

14703022

QINGDAO HAIER-A

12.84

1.26183

6911312

CHONGQING CHAN-A

10.06

1.513623

22670166

QINGHAI SALT-A

27.07

0.7068452

7600679

CHONGQING WATE-A

6.31

2.76873

5807697

RISESUN REAL -A

15.48

5.306122

22215619

PRICE DAY %

Volume

PRICE DAY %

VOLUME

52W (H) 2791.303 (L) 2102.135

2410

12-April

16-April

FTSE TAIWAN 50 INDEX NAME

NAME

ACER INC

23.45

0.8602151

11478531

FORMOSA PLASTIC

ADVANCED SEMICON

25.05

0.2

36910112

36.5 -0.5449591

ASIA CEMENT CORP

NAME

PRICE DAY %

VOLUME

-1.428571

6581223

TAIWAN MOBILE CO

103

0.9803922

FOXCONN TECHNOLO

78.4

0.6418485

4480890

TPK HOLDING CO L

630

0.3184713

3798717

1854304

FUBON FINANCIAL

40.4 -0.1236094

16290581

TSMC

100.5

1.10664

33444924

77 -0.1297017

71107727

UNI-PRESIDENT

ASUSTEK COMPUTER

322

3.870968

7132877

HON HAI PRECISIO

AU OPTRONICS COR

12.9

0.3891051

24495517

HOTAI MOTOR CO

245

1.871102

129686

263.5

58.6 -0.8460237

6320851

7437872

UNITED MICROELEC

11.25

1.809955

34539952

CATCHER TECH

147.5

2.430556

13353432

HTC CORP

2.131783

8113343

WISTRON CORP

29.05 -0.5136986

12535187

CATHAY FINANCIAL

38.15

0.2628121

17698461

HUA NAN FINANCIA

16.9 -0.2949853

3064336

YUANTA FINANCIAL

14.3 -0.3484321

9765023

CHANG HWA BANK

16.95

1.19403

9106891

LARGAN PRECISION

755

-1.30719

892539

YULON MOTOR CO

51.3

4427193

CHENG SHIN RUBBE

3.125

11231849

LITE-ON TECHNOLO

49.9

-2.348337

5599240

17.75

3.498542

36107213

MEDIATEK INC

340.5

0.8888889

4908841

7.99

1.395939

33676746

MEGA FINANCIAL H

22.95

-1.077586

27125403

CHINA STEEL CORP

25.55

0.1960784

10609708

NAN YA PLASTICS

54.1

0.744879

7190831

CHINATRUST FINAN

17.95

0.5602241

41583377

PRESIDENT CHAIN

185

0.5434783

2460168

CHUNGHWA TELECOM

93.6

0.3215434

5630907

QUANTA COMPUTER

58.9

0.5119454

10539510

COMPAL ELECTRON

19.3

0.7832898

7819510

SILICONWARE PREC

32.25

-1.526718

12219008

CHIMEI INNOLUX C CHINA DEVELOPMEN

DELTA ELECT INC

135

5589009

SINOPAC FINANCIA

14.2

0.3533569

15693264

FAR EASTERN NEW

31.05

0.3231018

6392431

SYNNEX TECH INTL

51.6

1.775148

2464735

FAR EASTONE TELE

69.1

0.728863

2836353

TAIWAN CEMENT

38.45

0.1302083

4314230

FIRST FINANCIAL

17.7

0.5681818

13631610

TAIWAN COOPERATI

16.8 -0.2967359

5182200

FORMOSA CHEM & F

67.1 -0.4451039

2801745

TAIWAN FERTILIZE

69.9

-0.56899

3024599

FORMOSA PETROCHE

75.7

1177476

TAIWAN GLASS IND

27.65

0.9124088

592215

0.2649007

MOVERS

3.219316

1 5460

INDEX 5386.14 HIGH

5454.05

LOW

5352.09

52W (H) 5639.93 5350

(L) 4719.96 12-April

16-April

April 17, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 31.6

60.4

16.5

31.4

59.9

16.4

31.2

59.4

31.0

58.9

16.3 16.2

Max 31.45

Average 31.177

Max 38.35

Average 37.997

Min 30.85

Min 37.3

30.8

Last 31.3

Average 58.770

PRICE

Average 16.270

Min 16

38.1

18.7

21.4

37.8

18.6

21.3

37.5

18.5

21.2

Max 18.72

Average 18.623

DAY %

YTD %

(H) 52W

(L) 52W

87.89

-0.924360275

-5.656934307

106.0899963

BRENT CRUDE FUTR Jun13

99.56

-1.063301202

-7.763572355

116.6699982

90.91999817

GASOLINE RBOB FUT May13

274.78

-0.355381491

-5.051831375

330.369997

237.7199888

844

-0.76425632

-7.456140351

992.75

799.25

4.158

0.507614213

20.41702867

4.290000439

3.072000027

GAS OIL FUT (ICE) Jun13 NATURAL GAS FUTR May13 HEATING OIL FUTR May13 Gold Spot $/Oz Silver Spot $/Oz

279.78

-1.109854376

-7.474039288

327.1399975

258.5000038

1376.93

-2.3024

-17.2747

1796.08

1322.06

23.44

-0.5043

-22.1521

35.365

22.0713

Platinum Spot $/Oz

1429.05

-0.9008

-5.8442

1742.8

1374.55

Palladium Spot $/Oz

673.42

-1.2624

-3.7504

786.5

553.75

LME ALUMINUM 3MO ($)

1866

0.674399784

-9.98552822

2200.199951

1818

LME COPPER 3MO ($)

7202

-2.761088233

-9.191779095

8496.75

7085

LME ZINC

1868

-0.373333333

-10.19230769

2230

1745

3MO ($)

LME NICKEL 3MO ($)

Min 18.42

18.4

Last 18.5

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

15695

-0.977917981

-8.001172333

18920

15236

15.515

0.485751295

0.193735873

16.95000076

14.5

626.5

-0.238853503

-10.1470061

824

527

WHEAT FUTURE(CBT) Jul13

698.25

-0.143010368

-12.03149606

900

664.75

SOYBEAN FUTURE Jul13

1362.75

0.497787611

-2.329331661

1605.75

1217.75

COFFEE 'C' FUTURE Jul13

137.05

0.698016165

-8.358408559

202.1999969

133.5500031

CROWN LTD

AGRICULTURE ROUGH RICE (CBOT) May13

Max 21.5

Average 21.335

Min 21.1

Last 21.45

Jul13

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

PRICE

DAY %

1.0354 1.5292 0.9315 1.3052 97.69 7.9955 7.7626 6.1832 54.3662 29.06 1.2365 29.899 41.316 9717 101.145 1.21588 0.85352 8.0674 10.4365 127.51 1.03

-0.5379 -0.3064 -0.2899 -0.1912 0.0512 -0.0038 -0.0026 0.0598 0.4828 0.0688 0.0485 -0.0702 -0.1476 -0.0309 0.5942 -0.111 -0.1218 0.1264 0.1888 0.2353 0

YTD %

(H) 52W

-0.2313 -5.4649 -1.7284 -1.0462 -11.8641 -0.1538 -0.1546 0.7666 1.1566 5.2306 -1.2212 -2.8964 -0.7527 0.7821 -11.6842 -0.6909 -4.4639 1.8606 0.8997 -10.9325 -0.0097

1.0625 1.6381 0.9972 1.3711 99.95 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 105.433 1.25692 0.88151 8.4957 10.9254 131.12 1.0314

0.9582 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1796 51.3675 28.87 1.2152 28.913 40.54 9170 74.482 1.20051 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS NAME ARISTOCRAT LEISU

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

3.67

16.50793

3.94

2.29

VOLUME CRNCY 1847778

12.52

-1.649647

17.33833

12.9

8.06

855683

SUGAR #11 (WORLD) Jul13

17.65

0.56980057

-10.58763931

23.59000015

17.52999878

AMAX HOLDINGS LT

0.8

-2.439024

-42.85714

1.96

0.75

92150

86.32

0.232234092

12.2934825

94.19999695

69.94999695

BOC HONG KONG HO

25.55

-0.776699

6.016596

27.1

20.85

9174762

CENTURY LEGEND

0.3

13.20755

0.42

0.215

6.01

3.979239

0.3338937

6.74

2.8

142000

CHINA OVERSEAS

21.8

0.9259259

-5.627707

25.6

14.624

26113646

CHINESE ESTATES

13.42

0.2989537

10.64009

13.68

7.697

856000

CHOW TAI FOOK JE

9.66

-3.206413

-22.34726

13.4

8.4

13732800

EMPEROR ENTERTAI

2.24

-1.321586

18.51852

2.49

1.1

435000

FUTURE BRIGHT

2.06

-0.4830918

68.85246

2.75

0.7

6636000

GALAXY ENTERTAIN

31.3

-0.1594896

3.130147

35.7

16.94

6479963

HANG SENG BK

123

-0.4854369

3.622581

131.5

99.2

1491259

CHEUK NANG HLDGS

World Stock MarketS - Indices COUNTRY

PRICE

DOW JONES INDUS. AVG

NASDAQ COMPOSITE INDEX

FTSE 100 INDEX

6299.18

DAX INDEX

7652.34

NIKKEI 225

13221.44

HANG SENG INDEX

CSI 300 INDEX TAIWAN TAIEX INDEX KOSPI INDEX

S&P/ASX 200 INDEX

DAY %

YTD %

(H) 52W

(L) 52W

14599.2

-1.788489

11.40907

14887.51

12035.08984

3216.49

-2.381072

6.523445

3306.95

2726.68

-0.7002333

6.805409

6533.99

5229.76

HOPEWELL HLDGS

29.55

-1.827243

-11.12782

35.3

19.049

1072739

-0.7817048

0.5247985

8074.47

5914.43

HSBC HLDGS PLC

80.4

-0.8019741

-1.107015

88.45

59.8

13839694

-0.4084166

27.18818

13568.25

8238.96

HUTCHISON TELE H

3014629

21672.03

-0.4622309

-4.346975

23944.74

18056.4

2459.592

0.9345794

-2.511338

2791.303

2102.135

7801.05

0.4832853

1.318914

8089.21

6857.35

1922.21

0.09164519

-3.747532

2042.48

1758.99

4950.846

-0.3434444

6.493853

5163.5

3985

4945.253

1.03504

14.5613

4985.852

3635.283

FTSE Bursa Malaysia KLCI

1700.53

0.1625662

0.6856377

1716.47

NZX ALL INDEX

943.64

-0.5435304

6.982238

PHILIPPINES ALL SHARE IX

4254.91

-0.5613553

15.02928

JAKARTA COMPOSITE INDEX

21.1

(L) 52W

COTTON NO.2 FUTR Jul13

NAME

16.0

Last 16.42

21.5

WTI CRUDE FUTURE May13

CORN FUTURE

Max 16.42

CURRENCY EXCHANGE RATES

NAME

METALS

58.4

Last 58.5

18.8

Commodities ENERGY

Min 58.4

38.4

37.2

Last 37.95

Max 60.35

16.1

3.75

0.536193

5.33708

4.05

2.98

LUK FOOK HLDGS I

-3.225806

-13.93442

30.05

14.7

9462000

MELCO INTL DEVEL

13.4

-0.1490313

48.72364

13.96

5.12

3043400

MGM CHINA HOLDIN

16.42

-0.3640777

23.6606

18.449

9.509

2108590

MIDLAND HOLDINGS

3.44

-0.2898551

-7.027028

3.249

1416000

NEPTUNE GROUP

0.141

3.676471

-7.236839

0.226

0.084

3640000

NEW WORLD DEV

12.66

-0.3149606

5.324455

15.12

7.95

13421135

SANDS CHINA LTD

10794584

37.95

-1.55642

11.78203

41.05

20.65

SHUN HO RESOURCE

1.44

2.857145

1.67

1.03

1526.6

SHUN TAK HOLDING

3.97

1.017812

-5.250598

4.65

2.56

2413668

948.797

755.149

SJM HOLDINGS LTD

18.5

-2.528978

2.777778

22.15

12.34

10046842

4299.39

3238.77

SMARTONE TELECOM

12.66

-0.9389671

-10.08523

17.38

12.5

1010530

WYNN MACAU LTD

21.45

-0.6944444

2.386631

25.5

14.62

6196910

ASIA ENTERTAINME

4.65

-8.554572

51.96079

6.127

2.4

194872

BALLY TECHNOLOGI

48.39

-2.889825

8.230823

52.7

41.74

436351 26365

HSBC Dragon 300 Index Singapor

638.83

-0.31

2.86

STOCK EXCH OF THAI INDEX

1527.32

0.6929015

9.726774

1601.34

1099.15

HO CHI MINH STOCK INDEX

478.07

-0.4062331

15.5512

518.46

372.39

BOC HONG KONG HO

3.28

-1.796407

6.840393

3.59

2.7

Laos Composite Index

1330.68

-0.22943

9.541727

1455.82

980.83

GALAXY ENTERTAIN

4.12

-1.435407

3.778337

4.57

2.25

200

INTL GAME TECH

16.43

-3.010626

15.94919

17.49

10.92

3437205

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

JONES LANG LASAL

94.34

-5.33815

12.3898

100.91

61.39

315907

LAS VEGAS SANDS

53.55

-4.357921

16.00953

56.83

32.6127

7887677

MELCO CROWN-ADR

22.47

-4.788136

33.4323

23.69

9.13

5853750

MGM CHINA HOLDIN

2.1

13.51351

2.44

1.36

100

MGM RESORTS INTE

12.27

-5.904908

5.412368

14.08

8.83

11534834

SHFL ENTERTAINME

15.08

-3.271328

18.37

11.75

407957

SJM HOLDINGS LTD

2.45

-0.8538707

6.060609

2.85

1.65

15500

124.13

-3.430839

10.34759

129.6589

84.4902

1507410

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily April 17, 2013

Opinion

Battleground budget Michael Spence

Nobel laureate in economics, is Professor of Economics at New York University’s Stern School of Business

he world’s developed economies, of which the United States is by far the largest and systemically most important, face a range of difficult political and social choices. President Barack Obama’s proposed U.S. budget acknowledges and addresses those choices and trade-offs directly and fully for the first time in the post-crisis period. Obama’s proposal is an important, honest, and politically courageous document. The debate that follows will largely determine whether the U.S. shifts toward a strong, inclusive, and sustainable pattern of growth and employment, and how the burden of moving to such a path will be shared by Americans of various ages, educational levels, incomes, and wealth. We know that powerful technological and global market forces have reduced dramatically the number of routine professional and bluecollar jobs, shifted employment options for the middle class toward the non-tradable side of the economy, and channelled growth in national income toward capital and high-end employment, with stagnating income elsewhere. Job creation remains weak, and employment continues to diverge from growth. These trends cannot be blamed entirely on poor policy

choices or short-sighted government. They arise mainly from an increasingly integrated global economy’s shifting technological landscape; but they have been exacerbated by a systematic pattern of publicsector underinvestment. The lesson from many developed and developing countries is that underinvestment in infrastructure, human capital, institutions, and the economy’s knowledge and technology base reduces long-term growth. Short- and medium-term growth can be sustained for a while by substituting public and private debt for investment – that is, borrowing against future income and consumption. But this approach establishes a self-limiting pattern, because balance sheets are damaged, demand falters, and expectations have to be adjusted downward.

Restoring growth This brings us to the choices that Obama’s budget embodies. First there is the issue of how fast to reduce government deficits and the accumulation of public debt. Sudden fiscal contraction would reduce domestic aggregate demand faster than the economy’s deleveraging and structural shifts could replace it, thereby killing off growth and hiring, with

adverse feedback effects on budget deficits. But delaying the debt reckoning for too long would undermine confidence in the U.S. government’s capacity for fiscal discipline. Deficits have to fall within a time horizon of 5-10 years. The alternative is either a sovereign-debt crisis, followed by a destructive spike in borrowing costs, or a growing burden for subsequent generations of taxpayers. In an ideal world, where compromise is unnecessary, U.S. fiscal policy would maintain the commitments embedded in the socialwelfare system, even as demographic and other forces drive up costs (especially for health care). It would also maintain current consumptions levels and avoid tax increases, while redressing publicinvestment shortfalls in order to boost growth and expand employment options for today’s middle class and future generations. Finally, future generations would not be asked to bear the entire burden of rebalancing. Obviously, it is impossible to reconcile all of these objectives. To be fair, some reforms – including tax, regulatory, and health-care measures – will help to restore balance without imposing large additional costs on the public sector. But these are

not sufficient to rebalance the economy and restore its growth momentum. Simply put, one cannot sustain current levels of consumption and entitlements without crowding out publicsector investment, unless one believes that the state’s borrowing power is unlimited, and that the intergenerational burden shift is unimportant. So choices have to be made. Gridlock, too, implies a choice – one that ensures that some version of the status quo will be the outcome. What would that look like?

Hard choices

now and an intergenerational issue (and potentially one of inclusiveness and social stability) in the longer term. It is an invitation to the U.S. Congress and the American public to acknowledge and address the choices and trade-offs that are needed to establish a sustainable pattern of economic growth – and to ensure a fair distribution of the burden of getting there. The choices are more extreme in countries where the imbalances are more severe and markets suffer more policy-induced impediments to the private-sector flexibility, mobility, and dynamism that continue to benefit the U.S. In Italy and Spain, growth is negative, and youth unemployment is 35 percent and 55 percent, respectively. To be sure, this is a moral issue, but it is also an issue of political and social stability. Every country has its own version of a social contract that defines the rights and responsibilities of citizens, the role of the state, and the idea of inclusiveness. The most successful public policies and fiscal choices are those that are not only guided by the enduring values embedded in the social contract, but that are also adapted to changing demographic, technological, and global circumstances. That sometime means making hard choices of the type that the U.S. and many other developed countries are facing now. If we make these choices poorly, growth will suffer and future distributional choices will be far more painful. © Project Syndicate

Here some guess work is required. Entitlement programmes would likely be reduced, but not enough to offset a substantial intergenerational burden transfer. Taxes might rise somewhat in the high-income ranges, with the proceeds going to fund entitlements and redistribution. The desire to avoid substantial tax increases (and to sustain consumption levels) will almost surely be reflected in a continuing shortfall of public-sector investment, in turn undermining long-term growth. Obama’s proposed budget recognises that all objectives and expectations cannot be met, and that growth is partly a distributional issue

If we make these choices poorly, growth will suffer and future distributional choices will be far more painful

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 17, 2013 business daily | 15

OPINION

Europe wins the Google wires battle that U.S. couldn’t Business

Leading reports from Asia’s best business newspapers

Straits Times Singapore’s Housing Board should set the price of public housing, rather than take its cue from the resale market. No longer will HDB let “the tail wag the dog” as it did for decades when it used a marketbased approach to price its Build-To-Order (BTO) flats, said National Development Minister Khaw Boon Wan. This resulted in soaring new flat prices as the resale market spiked 80 percent over the last six years. Mr Khaw put a stop to this by “delinking” BTO prices from the resale market in 2011. “We should be the price-setter, not be the price-follower… The social objective is to ensure home ownership and affordability,” he said.

Nikkei.com Japan’s finance minister said on Monday said he would explain at a planned meeting of Group of 20 finance officials later this week that the Bank of Japan’s monetary easing is strictly aimed at reversing deflation. “The main goal of a series of policy measures being taken in Japan, including the BOJ’s monetary steps, is to pull the Japanese economy out of a protracted deflationinduced slump,” Taro Aso said at a news conference after a regular Cabinet meeting. “I will continue to emphasise that even though those measures have set off various movements, they are not part of our goal.”

Korea Herald Woori Finance Holdings Co., South Korea’s top banking group, is likely to launch a committee next week to select a new head to replace Chairman Lee Pal-seung, officials said on Monday. Chairman Lee offered to resign from the top post of the state-owned Woori Finance on Sunday, 11 months ahead of the official end of his term, as political pressure mounts. A seven-member committee to select a new chief was launched yesterday, according to officials. A shareholders’ meeting is slated for June 10 for approval. “Shortlists for a new head would be drawn up by around mid-May,” said an official.

Paula Dwyer

Member of the Bloomberg View editorial board

he European Union’s antitrust authority just accomplished what the U.S. Federal Trade Commission concluded in January it could not: It partially pried Google Inc.’s hands off the Internet steering wheel. To settle an antitrust investigation, Google is agreeing to distinguish between its own services and those of competitors in search results, Bloomberg News reports. This will slow – though not stop – the digital economy’s gatekeeper from leveraging its dominance in search into market power in other areas. Currently, when a consumer looks for, say, flights on Google, the search engine provides a list of airfares offered by Google’s advertisers. Next comes a box, dubbed a “Google flight search,’’ listing the major carriers and their prices. Only after that do online travel services, including Expedia, Kayak and TripAdvisor, appear; they often provide less expensive fares yet can require more time to filter through the many options. The same goes for shopping services. Google Shopping caught on slowly until the company began inserting the price-comparison site near the top of search results, pushing down competitors’ listings and reducing the odds that a consumer would see or click on them. Google also has created specialised search results that provide direct answers to queries before providing links to shopping search engines. The strategy has worked: Google Shopping ranks among the highest product sites, while traffic to rivals, including Nextag, Shopper.com and PriceGrabber, has plummeted. Google says it’s making

Jakarta Globe Austindo Nusantara Jaya, a mining and plantation company controlled by Indonesia’s Tahija family, will go public in May to help finance its planned business expansion. The company aims to raise as much as US$160 million from selling shares with its initial public offering. Eko Yuliantoro, president director of underwriter Bahana Securities, one of the banks hired to arrange the IPO, said the company had set the share price from 1,200 rupiah to 1,800 rupiah (12 to 18 U.S. cents) a piece. The company plans to offert about 24 percent of its shares to investors on May 2-3, and expects to list the shares on the Indonesia Stock Exchange on May 8.

If the EU-imposed changes fail to help rivals whose Internet traffic has been decimated because of Google’s algorithms, EU antitrust authorities could strike again

life easier for us all by listing its specialised results and services first. Those wishing to use the discounters are free to keep clicking. The EU apparently disagrees and has “invited” Google to change its practices to avoid a lawsuit.

will try to cement its Internet dominance whichever way it can. Google’s market share for search is about 90 percent in the EU and more than 80 percent in the U.S.

Different approaches

Competitors who instigated the EU investigation can claim a partial victory, though they aren’t pleased that Google won’t have to change its algorithms. The company can keep giving preferred placement in results to in-house services so long as they’re clearly labelled. The EU settlement also contains no finding that the company broke antitrust rules. Still, the agreement is legally binding for five years, with a third party monitoring compliance. Google could face a fine of as much as 10 percent of annual sales for failing to keep its promises. The FTC’s decision, on the other hand, isn’t binding. In the U.S., Google voluntarily agreed to small changes having to do with advertising without

Google has proposed, and the EU appears willing to accept, a three-part approach, according to the Financial Times: For sites on which Google doesn’t sell ads, such as news and weather, it will label its in-house services as Google-owned. In other words, the EU wants consumers to consider results that give priority to Google’s own services as if they were paid advertisements. For sites on which Google sells ads, including travel and local company reviews, it will more prominently display links to at least three competitors, such as travel-service rivals Expedia, TripAdvisor and Kayak. And for areas in which search results consist of paid ads, such as shopping, Google will hold auctions for competitors who wish to have their links displayed. The upshot is that, because of the FTC’s hesitance, searches in the U.S. will produce less consumerfriendly results. The FTC, after a two-year investigation, closed its case after concluding that Google was motivated more by wanting to improve the user’s experience than by a desire to stifle competition. The FTC was giving Google the benefit of the doubt. EU Competition Commissioner Joaquin Almunia seems to have started from the opposite vantage point – that Google is an aggressive competitor and

Partial victory

signing a consent decree. If the EU-imposed changes fail to help rivals whose Internet traffic has been decimated because of Google’s algorithms – or if the labelling backfires and confers a special status on Google’s services – EU antitrust authorities could strike again. State attorneys general, consumer advocates and members of Congress will also be watching the EU’s upcoming market test of Google’s proposed changes. The FairSearch Coalition, a group of technology companies including Microsoft, Expedia and Nokia, will make sure of that. They are among the companies that claimed Google gave itself preferential treatment in search results. FairSearch already has filed a separate complaint against Google over its Android operating system on mobile phones. And Google’s Motorola Mobility unit is the subject of another EU probe related to patent licensing. This war – Google versus everyone else – is just warming up. Bloomberg View

16 |

business daily April 17, 2013

CLOSING Luk Fook sales up in Macau, HK

Suntech considers Italian assets sale

Sales at the self-operated jewellery shops of Luk Fook Holdings (International) Ltd in Macau and Hong Kong were up 29 percent for the first three months of 2013, the retailer announced on Monday. As of Marchend, the jewellery retailer had nine selfoperated shops in Macau, 37 shops in Hong Kong, 78 shops in the mainland and four shops overseas. Luk Fook also said same-store sales growth in its mainland shops went up by 14 percent. Together with 944 licensed shops in the mainland, there are altogether 1,072 Luk Fook shops worldwide.

Suntech Power Holdings Co Ltd could offload its solar power generation assets in Italy, a company spokesman said yesterday, as the struggling Chinese solar panel maker scrambles to trim debts of more than US$2 billion. The company last month defaulted on US$541 million of its dollar-denominated bonds. A source said last week Suntech might consider selling its 88.15 percent stake in Global Solar Fund Sicar (GSF Sicar). “We intend to operate GSF for the time being and will consider all options to maximise the value for our stakeholders,” a Suntech spokesman told Reuters.

Chui cancels second La Scala land deal

EU tightens up bank lending rules New rules on bankers’ bonuses and the amount of capital that banks must hold as a buffer have been approved by the European Parliament by a big majority. The package was agreed with the 27 EU governments and most of it is likely to take effect on January 1, 2014. The EU plans to cap bonuses at 100 percent of a banker’s annual salary, or 200 percent if shareholders approve. The aim is to curb the sort of high-risk lending that contributed to the financial crash in 2008. The package, called Capital Requirements Directive 4 (CRD4), brings the EU into line with the so-called “Basel III” rules on banking standards, which set new capital requirements for banks. MEPs want banks to hold more money in their reserves, in order to stop them going bust through reckless lending. But they have also pushed for banks to focus on lending to the real economy, especially small businesses and business start-ups. Under the new rules, banks will also have to provide more data about their profits and taxes, on a country-by-country basis. The centre-right European People’s Party (EPP) – the biggest grouping of MEPs – calls the new rules “the most comprehensive and most far-reaching banking regulation in the history of the EU”.

Govt decides to take back all the land granted to corruption-linked HK developer Vítor Quintã

vitorquinta@macaubusinessdaily.com

he government has decided to take back the extra land granted in 2011 to the corruption-hit La Scala housing project, developer Chinese Estates Holdings Ltd announced yesterday. Chief Executive Fernando Chui Sai On has declared the 2011 land grant “invalid” on April 9, the company told the Hong Kong Stock Exchange in a filing. But Chinese Estates says it only received a notice from the Land, Public Works and Transport Bureau on the decision yesterday. The decision has not yet been published in the Official Gazette. Once it happens the company will have 15 days to ask the chief executive to reconsider. Chinese Estates “may also appeal to the Court of second Instance,” the Hong Kong developer stressed. The group “is currently taking legal advice” on the decision “and [on] the appropriate actions to take,” the filing adds. A Chinese Estates subsidiary,

Moon Ocean Ltd, paid a further HK$624 million (US$78 million) in 2011 for eight additional parcels of land for the La Scala project. Moon Ocean had won a public tender in 2006 for the land near the Macau airport with an offer of HK$1.3 billion (US$167.6 million) and saying it would build a high-end residential project. The Court of Final Appeal said in May that the former Secretary for Transport and Public Works, Ao Man Long, had taken HK$20 million

Paschi prosecutors seize US$2.4 bln of Nomura assets I

talian prosecutors are seizing about 1.8 billion euros (US$2.4 billion) of assets from Nomura Holdings Inc. as part of a probe into Banca Monte dei Paschi di Siena SpA’s use of derivatives to hide losses. Sadeq Sayeed, Nomura’s former European head, and Raffaele Ricci, a managing director in fixed-income sales, have also been put under probe for colluding to obstruct regulators and making false statements, prosecutors in Siena, where the bank is based, said in a statement yesterday. They are also sequestering 14.4 million euros of assets from three of the Italian lender’s former

managers who are already under probe, including chairman Giuseppe Mussari, general manager Antonio Vigni and finance chief Gianluca Baldassarri. The seizures are linked to allegations of fraud and usury, prosecutors said. Monte Paschi has claimed Nomura colluded with its former managers to devise one of two derivatives in 2008 and 2009 that hid total losses of much as 557 million euros. Nomura reaped at least 88 million euros from the transaction, dubbed Alexandria, according to Italian lender. “The amount in question is

in bribes from Chinese Estates boss Joseph Lau Luen Hung and BMA Investment chairman Steven Lo Kit Sing to ensure their bid for the land was successful. Both Hong Kong billionaires have since been charged with bribery and money laundering. The start of the trial has already been postponed two times and is due to begin on April 29. Last year the government had already taken back the land originally granted in 2006. Chinese Estates has appealed to court.

unprecedented,” said Andrea Castaldo, a criminal lawyer and professor at the University of Salerno, Italy who isn’t involved in the case. “The allegation of usury raises concern as to why it wasn’t spotted by regulators before.” Monte Paschi sought a 4.1 billion-euro bailout in February, its second in four years, as its capital shortfall widened. The bank has lost 33 percent of its market value since January 17, when Bloomberg News first reported the lender’s use of derivatives, which had never been fully disclosed to shareholders. Monte Paschi has said Nomura’s transaction, and a similar derivative designed by Frankfurt-based Deutsche Bank AG, “should never have been put together.” The two firms “were perfectly aware of the context, the illicit objectives” of Monte Paschi’s former executives, the company said in a report released last month. Bloomberg News

Glencore-Xstrata deal approved Glencore International Plc, the world’s largest publicly traded commodities supplier, cleared the final regulatory hurdle in its US$30 billion takeover of Xstrata Plc after gaining approval from Chinese authorities. China’s Ministry of Commerce agreed to the takeover on the condition the new company sells the Las Bambas copper mine in Peru, according to a statement posted on the ministry’s website yesterday. The deal won agreement from South Africa’s antitrust regulator in January and the European Union in November. The clearance removes the last obstacle to completing the 14-month-old deal, allowing Glencore to create the fourth-largest mining company by adding coal, copper, nickel and zinc mines to its commodities trading empire. The combined business will have revenue of about US$250 billion this year, according to Paul Gait, an analyst at Sanford C. Bernstein & Co. China’s competition regulator focused its review on the new company’s influence in the copper-concentrate market, Glencore chief executive Ivan Glasenberg said March 6. The group will be the world’s third-biggest producer of mined copper. The combined group will also be the world’s largest zinc miner and the biggest exporter of power-station coal. The company will have about 11 percent of the 13 million-metric-ton global zinc market and about 40 percent of the 1.9 million tonnes of the metal produced in Europe. It will employ 130,000 people.