Macau Business Daily, April 19, 2013 by Business Daily

www.macaubusinessdaily.com Year II

Number 265

Friday April 19, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief Vitor Quint達

MOP 6.00

April 19, 2013

Doing the maths on the property rush More on pages 12 & 13

April 19, 2013

Macau Inaugural edition of Business Daily published

April

Opening of Sands Cotai Central’s first phase 12

Baby-steps political reforms announced

May

Airport operator gets government bailout 15

Patent dispute dims G2E Asia’s prospects 24

Government presents rules on pre-sales of homes

Highs & lows of the past 12 months Border crossing evolution As the Lunar New Year chaos in Gongbei proved, Macau’s border crossings need improvement to deal with millions of tourists, especially with the new highspeed railway to Guangzhou opening. The present crossings are staying open for longer during holidays, a new crossing is being planned for Ilha Verde, while a revamp of the Outer Harbour Ferry Terminal will begin soon.

Cotai 2.0 update loading After years of waiting, Wynn Macau Ltd, MGM China Holdings Ltd and SJM Holdings Ltd have at last received grants of land for their Cotai resorts. The grants will create a new wave of foreign direct investment and new jobs in construction. From 2015 the new resorts will turn the Cotai strip into the undisputed gaming centre of Macau and, it is hoped, introduce more non-gaming elements.

Timid political reform Macau’s first political reforms since 1999 were approved last year and will come into effect in this year’s elections to the Legislative Assembly. But the step forward was a small one, lagging far behind the political reforms in Hong Kong, adding only four more seats, two of them directly elected, to the assembly.

Housing market curbs In October the government introduced new measures meant to cool the red-hot housing market. But the curbs have so far only pared the number of homes sold. Average prices of housing have continued to soar and set new records. Pressure is on the government to come up with more measures, after Hong Kong and mainland China came up with more of their own.

Ao Man Long’s corruption web The saga of La Scala, the high-end housing project, shone a harsh light on the corruption of Ao Man Long when he was secretary for transport and public works. The government stripped the developer of the land for the project, and the trial of two prominent Hong Kong businessmen is due to start this month. But the case has also left buyers worrying about the money they have invested in La Scala flats.

Public housing arrives late The government failed to keep its promise to build 19,000 homes in public housing by the end of last year, which was no surprise since some projects were well behind schedule. Worse, the government’s efforts to try to keep its promise led to questionable actions, such as building a massive housing complex in Seac Pai Van on Coloane, the city’s green lung.

Banks can’t resist gaming loans lure Despite reservations about regulatory risk, banks are still happy to finance new casinos Vítor Quintã

vitorquinta@macaubusinessdaily.com

ost of the big Macau gaming resorts have been financed partly by syndicated loans, but banks are wary of the legal constraints on casinos that make such loans more risky, lawyer Beatriz Segorbe says. However, an executive involved in the process of financing gaming concessionaires says regulatory risk no longer means casino operators have to pay higher interest rates. The city’s small financial industry has been incapable of satisfying the huge demand for money to invest in casinos in the past few years, so most of it has come from syndicated loans arranged among big international banks. Ms Segorbe told a seminar at the University of Macau last week that any loan above 5 million patacas (US$625,000) to a gaming concessionaire needed approval from the government beforehand. “Banks very often raise this issue,” she said. If a casino operator went bust and had to liquidate its assets, the government would have the last word on who got what, she said. “Banks have to manage their risks,” Ms Segorbe said. She said banks were aware that the government could

“take its time” in liquidating a bankrupt casino operator’s assets, impose conditions on the liquidation or even veto it. A gaming company executive, who asked to not be identified, told Business Daily: “When we began operating [after the 2002 market liberalisation], banks showed some fear, which was derived from their lack of knowledge of the Macau jurisdiction.” He said: “We would spent months explaining every single concession provision, and banks wanted to know how likely it was that any of them would actually be enforced.”

Trust earned This made borrowing more expensive for casino operators. “I believe that at the time there was a certain extra burden,” the executive said. But he said the government’s “increasingly consistent regulatory behaviour” had made the banks more trustful. Two bank executives, who also asked not to be identified, told Business Daily that interest rates were not necessarily higher for casino operators. One of the executives,

who works for a mainland Chinese bank, said interest rates varied according to “the operating cash flow of the company, its financial results, or whether the project financed is still undergoing construction or has already become operational and profitable”. Ms Segorbe told Business Daily on the sidelines of the University of Macau seminar that in the event of a casino going bust, the government could take back its concession and its premises, leaving creditors empty-handed. “This possibility frightens banks,” she said. An executive of a Macau bank said banks took time to arrange syndicated loans mainly because they were more complex than normal loans. Another bank executive said syndicated loans required more capital, the cooperation of banks in many different places and the juggling of different regulations in different jurisdictions. But despite the difficulties, Macau banks remained “very willing” to finance the projects of casino operators “as long as they have the capability”, he said. With T.L.

April 19, 2013

Macau Leonel Alves rejects allegations of Beijing bung

June

Records of Amax shares ‘misplaced’

July

Ao Man Long imprisoned again for corruption

16 Outcry halts pay rise for bus operators

Longer Gongbei opening hours for May 1 unlikely The success of the extension of border opening hours for the Ching Ming festival does not mean the experiment will be repeated

editorial

Renewed commitment

Stephanie Lai

sw.lai@macaubusinessdaily.com

Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

During the Ching Ming festival holidays over 1 million people entered Macau at the Gongbei border crossing (Photo: Manuel Cardoso)

t is unlikely that the Gongbei border crossing will be open for two hours extra during the May 1 holidays, Gongbei customs post supervisor Lao Ngai Leong has said. During the Ching Ming festival holidays, from April 4 to 6, the Gongbei crossing opened at 6:00am instead of 7:00am, and closed at 1:00am instead of midnight. Mr Lao, who is also a Macau deputy in the National People’s Congress (NPC), told Business Daily that the Macau police and customs had described the Ching Ming experiment as successful, but that it was still only an experiment. He said that for the crossing to be open longer during all national holidays, Zhuhai customs had to overcome its lack of staff. He said Zhuhai had about 600 customs and quarantine staff on the Macau border. “Expanding the customs and quarantine staff at the Zhuhai border involves a long and complicated process of getting approval from the central government,” Mr Lao said. “For the Ching Ming holidays they had to ask to allocate over 100 extra staff to the Gongbei border from

Guangzhou and Shantou customs for provisional support, on rather urgent notice of just one day,” he said. From April 4 to April 7, 1.09 million people crossed the border at Gongbei, making up 73.4 percent of all people entering or leaving Macau, Public Security Police data show. A Zhuhai customs spokesman told Business Daily in an email that the Zhuhai customs staff at the Gongbei crossing had been stretched during national holidays. “To cope with the extension for the Ching Ming festival we extended some of our customs colleagues’ working hours,” the spokesman said.

Don’t sneeze The Zhuhai and Macau police both said they had received no instructions about longer opening hours for the May 1 holidays. The Macau government said the central government would say only next week whether the border would be open longer. Mr Lao said: “It would be quite difficult for the extension measure to happen again for the upcoming Labour Day, as the recent H7N9

avian flu outbreak has added great pressure to the quarantine process and crowd monitoring.” Zhuhai customs expects work on expanding the facilities on the Zhuhai side of the Gongbei crossing to be completed by the end of June. The work will add two two-storey buildings, one to the east of the main customs inspection building and the other to the west. Mr Lao said that once the work was complete, the first floors of the two new wings would be put to use, increasing the daily capacity of the facilities to 350,000 travellers from 200,000. Once the new wings were fully opened, at a date yet to be set, the daily capacity would increase to 500,000, he said. “I am still waiting for an exact figure on how many more customs officers are needed to go with the expansion,” he said. Speaking as a member of the NPC, Mr Lao said: “The Macau deputies have repeatedly urged the central government to ascertain how to adjust the human resources at the Zhuhai border for extending the entry hours, and no answer has come to us yet.”

he issue in your hands today celebrates the first anniversary of Business Daily. What a year it has been. The first days were distinctly difficult, but what started as a turbulent journey has became a coherent project, one that we are proud of. A wobbly start was soon overtaken by one of the most amazing spans in my professional memory. And what was gratifying was how our writers, editors, designers and photographers, women and men who scarcely knew each other, some with years of experience and others taking their first steps in this profession, swiftly became a news army. In the past year our team has dug out, among other stories, a series of scoops: the plans of Sands China Ltd for an Eiffel Tower-themed development; the tale of Areia Preta’s sewage treatment plant; the dispute over a Taipa housing deal in which prominent businessman Ngan In Leng’s assets were seized; Galaxy Entertainment Group Ltd’s plans for a big arena in Cotai; and the boutique casino planned by Paul Y Engineering Group Ltd for the ColoaneCotai boundary. We have always pursued our stories with old-fashioned journalistic doggedness, but have kept our commitment to the accuracy, drive and flair that characterise the best traditions of journalism. There is no better way to judge the health of a news organisation than by how it stands up to unscripted examination. We have made mistakes and we have corrected them but, above all, we make our best efforts so that our readers are among the best informed. Our aim, each time, is to engage the reader in ways that are intense and provocative. Business Daily has been many things in its short history, but in the past year we have never been timid or biased and, thanks to the superb reporting of our team, I write these words with great satisfaction. It is in that spirit that we renew the commitment we made a year ago, which is to report Macau’s business and political scenes accurately and engagingly. Our main effort is still to bring you exclusive information and expertise, focusing on the business stories that matter most. One thing will never change, and that is our pledge to bring you journalism of the very highest quality. So, as we enter our second year of publication, we thank our readers, and ask you to join us as we move forward.

April 19, 2013

Macau Assembly raises age for admission to casinos

August

Government takes back La Scala land

NorthWest surrenders ferry licence

September

Boutique casino planned for Cotai 18

21 Sands moots Eiffel Tower replica

Malo Clinic in deep debt trouble

Veteran lobbyist Melco Crown gets completion next head of AGA extension on City of Dreams Apartment hotel plan to be re-gazetted as a five-star hotel tower Michael Grimes

michael.grimes@macaubusinessdaily.com

n executive with a background as a Washington D.C. lobbyist is to be next president of the American Gaming Association. The body is co-organiser of the Global Gaming Expo Asia held annually in Macau. Geoff Freeman (pictured) joins the AGA from the U.S. Travel Association, serving there as chief operating officer. The latter conducts lobbying, promotion and research for the country’s travel industry. Richard Haddrill, chairman of the AGA board and of gaming equipment supplier Bally Technologies Inc., in a statement praised Mr Freeman as “a thoughtful and energetic leader who already understands our industry, has a deep public policy background and extensive network of relationships in Washington, and has the skills to build coalitions and execute grass roots campaigns.” Mr Freeman will replace Frank J. Fahrenkopf, the leader of the AGA since its founding 17 years ago. The former Republican National Committee chairman has agreed to stay on as a consultant until at least the end of the year.

elco Crown Entertainment Ltd is to be given an extension by the Macau government on the completion date for the City of Dreams casino resort on Cotai. The deal was agreed in March but has yet to be published in the city’s Official Gazette. Depending on when gazetting occurs, it will give MCE a new completion deadline of as much as four years from the original one in 2013. The information is revealed in the company’s annual report for 2012 released to the Hong Kong Stock Exchange yesterday. The reason for the extra time is the firm wants to build another fivestar hotel tower on the site instead of an apartment hotel originally agreed in its sub-concession agreement with the government. The right to sell on to other investors legal title to apartment hotel property on Cotai has not so far been confirmed by the government. Las Vegas Sands Corp. is already sitting on many hundreds of millions of U.S. dollars worth of unsold apartment space across the road from City of Dreams. Union Gaming Research Macau said in a report in June last year that the sale of title to the Four Seasons apartments could realise as much as US$900 million (7.20

billion patacas) net of development costs and pre-tax.

Re-gazetting MCE said in its filing yesterday about City of Dreams: “On December 9, 2011 we requested an amendment to the City of Dreams land grant in order to allow us to develop additional five-star hotel areas in replacement of the fourstar apartment hotel areas currently contemplated in such land grant and to extend the development period of the City of Dreams land grant.” The company adds: “On February 25, 2013, the Macau government issued a land grant amendment proposal which contemplates the amendments requested, extension of the development period until the date falling four years after publication of the amendment in the Macau Official Gazette, as well as the payment of 187.1 million patacas (equivalent to approximately US$23.3 million). In March 2013, Melco Crown (COD) Developments and Melco Crown Macau accepted the land grant amendment proposal,” adds the filing. In MCE’s earnings call for the second quarter 2012 in August, Lawrence Ho Yau Lung, cochairman, mentioned plans for a fifth

tower at CoD. He told analysts: “…because this [tower] started as an apartment hotel in the early days so we do need to have the land re-gazetted – but as soon as that is done we would like to begin construction of that as early as next year.” The land concession for City of Dreams was first gazetted in August 2008. At that time the government gave MCE 60 months to complete the scheme. It was described in a 2007 regulatory filing as a US$2.1 billion project.

City of Dreams on Cotai

April 19, 2013

Macau Citic Telecom in talks to buy CTM

October

Business Daily unveils Galaxy Macau‘s arena plan 22

November

SJM gets Cotai land, days after Wynn and MGM

Court seizes Ngan In Leng’s assets

5 Caesars wants to sell golf course

Junket investor SHFL versus LT Game Suncity has case opened and adjourned new community Hearing of an ongoing patent dispute dating back to 2009 initiative Tony Lai

tony.lai@macaubusinessdaily.com

uncity Group Ltd – one of the biggest investors in Macau casino junket operations with VIP rooms in 10 venues – yesterday launched a contest inviting young people to develop a new logo for the business. The top prizewinner will have a chance to work with The Brand Union Hong Kong, part of one of the world’s leading brand and design consultancies. Suncity is already involved in community work in Macau, including Inspirational Youth Association, which offers prizes for young people with good business ideas. The latest move appears to be in step with the central government’s desire to diversify the local economy beyond gaming. Choong Yoon Ming, Suncity’s senior vice president of marketing strategy, told Business Daily: “The future of Macau depends on the younger generation as people with innovative ideas. That’s why we organised this local design competition.” Mr Choong declined to comment on the persisting reports of greater scrutiny by Beijing of Macau junkets. But he confirmed Suncity’s chairman Alvin Chau Cheok Wa had recently been elected to a local assembly on the mainland of the Chinese People’s Political Consultative Conference. Such appointments are common for business leaders in China including very senior Chinese executives from Macau casino concessionaires. M.G.

senior executive from casino games maker SHFL entertainment Inc. declined at this early stage an opportunity to comment in a Macau court on a patent dispute between local unit SHFL Entretenimento (Ásia) Lda, LT Game Ltd, a Hong Kong-based subsidiary of Hong Kong-listed Paradise Entertainment Ltd. SHFL is the defendant, and LT Game is what’s known under Macau’s Civil Code legal system as a party to proceedings. The Public Prosecutions Office has brought the case – based on a complaint dating back to 2009 – over an alleged infringement of an LT Game patent by SHFL. In Macau patent infringement is a criminal offence. SHFL and its units deny any infringement. The Court of First Instance began yesterday analysing the lawsuit. LT Game is controlled by businessman Jay Chun. It complains that the Macau subsidiary of SHFL entertainment Inc. displayed an electronic baccarat table containing equipment allegedly subject to an LT Game patent during the gaming industry trade show G2E Asia 2009 held in Macau, the lawyer representing LT Game said yesterday. Mr Chun’s company also took out a temporary injunction last year to ban SHFL from displaying its Rapid Baccarat games at G2E Asia 2012

The patent dispute caused an uproar in last year’s G2E Asia edition

here. That temporary injunction was enforced by Macau Customs Service on the first day of the public part of the event. SHFL went to court and had the temporary injunction lifted the next day allowing it to display its product. Adrian Patrick Halpenny, president of SHFL’s Australasia office, attended the trial yesterday as the representative of the defendant. He told the court he had nothing to say “at this point”. The executive also declined at this stage to disclose the financial results of his company, following a request by the judge and the public prosecutor in charge of the case. The court also summoned the first

witness, Liu Yuwei, a worker at Casino Kam Pek Paradise. Jay Chun is one of the shareholders of the casino. But before the hearing was adjourned Mr Liu was only able to say he was familiar with Mr Chun’s Live Baccarat electronic game machines, which were installed in Kam Pek. The trial was suspended about 30 minutes after it began, as the lawyers from the two companies claimed they had to leave in order to attend the Lawyers’ Association general meeting. The judge postponed the hearing, with the next sessions scheduled for May 2. Mr Chun was present yesterday but did not enter the courtroom.

Congratulations on the 1st Anniversary of Business Daily

April 19, 2013

Macau Broken Tooth released from prison

December

Airport forecasts first profit ever

Melco probed in Taiwan over money transfer

January

14 Smoking banned in half of every casino

Public housing target missed, Lau admits

PokerStars launches at City of Dreams Will have four cash tables for daily play post-tournament Michael Grimes

michael.grimes@macaubusinessdaily.com

okerStars launches its branded poker room at the City of Dreams casino resort on Cotai today. ‘PokerStars LIVE at the City of Dreams’ starts with the Macau Poker Cup, running from April 19 to 28. The event has a guaranteed prize pool of HK$5 million (US$650,000). The organisers are confident they can surpass the previous attendance record of 635 players. “We expect more than 50 percent of players at the tournament to be from outside Greater China,” Danny McDonagh, PokerStars’ director of live operations for Asia Pacific told Business Daily. He expects around 100 players to join the tournament by qualifying for the buy-in through victory in online tournaments linked to PokerStars. com. But he points out that during the Macau Poker Cup there will be no pre-qualification for the main event. “The great thing about poker is that anyone can join in. You can buy in at the tournament and sit next to a world champion. You don’t get that in other sports,” says Mr McDonagh. There will be 28 tournament tables in the poker room of the resort – a property developed and managed by Melco Crown Entertainment Ltd – for the duration of the Macau Poker Cup only. PokerStars has been given permission by the Gaming Inspection and Coordination Bureau to run daily

Gaming shares outpace Hang Seng by 10 pct plus

Danny McDonagh of PokerStars

events beyond the Macau Poker Cup, using four cash tables. “Those four tables will count on a one-to-one basis towards the table cap,” says Mr McDonagh. He was referring to the fact that one poker table will be equal to one baccarat table for the purposes of MCE’s live dealer table allocation under the government’s capping measures on the market.

In his view poker is a good way of diversifying Macau’s tourism industry. “We’re keen to show that poker tournaments are good for the Macau economy. People do spend money on other goods and services when they come here for events,” he points out. “Poker events here are getting popular with people from Russia and India. We expect about 40 people from Russia and 30-40 from India.”

acau gaming stocks have outperformed the growth of Hong Kong’s Hang Seng Index by more than 10 percent so far this year says a report from Morgan Stanley, a bank. The report by Praveen K Choudhary, managing director, and Katherine Sun, an analyst at Morgan Stanley Research in Hong Kong, previews the first quarter earnings reporting season for the six Macau concessionaires and sub-concessionaires. It’s expected to start in late April. “The Macau sector has outperformed [the] Hang Seng Index by more than 10 percent this year on the back of stronger first quarter revenue growth of 15 percent year-on-year (and 5.5 percent quarter-on-quarter),” states the report. It adds: “More importantly, it seems that VIP growth that was tracking zero to negative since August 2012 is back on track. March revenue growth of 25 percent year-on-year was stronger than expected. We expect the second quarter to deliver 17 percent yearon-year growth. With the annual revenue growth of more than 15 percent in 2013, we expect EBITDA [earnings before interest, taxation, depreciation and amortisation and EPS [earnings per share] could grow even higher.” M.G.

April 19, 2013

Macau U.S. congressman says Delta Asia helping North Korea

Chaos at Gongbei border crossing at Lunar New Year

February

March

Legislative Assembly president announces departure

18 Increases in ferry fares approved

Court orders auction of Viva Macau shares

Comment

Now everyone’s heard of Macau Jacky So

Dean and Chair Professor, Faculty of Business Administration, University of Macau

hree years ago when I asked some international freight forwarding and moving companies in Texas to help me move some of my furniture to Macau, they asked me to contact companies in Houston, New York and Las Angles. Those companies told me that they could help me move my belongings to Hong Kong, but not Macau. Now things are different. These days when I go to the United States for meetings, many people ask me about Macau. They know that Macau is ‘bigger’ than Las Vegas in gaming revenue terms. Because Macau’s high gaming growth also brings high income per capita, second only to Japan, foreigners believe that Macau people are wealthy. The recent successful IPOs of many of the casino companies in Macau reinforced the above misperception. The skewed nature of the city’s income distribution is the problem. Beside a small number of billionaires, most people in Macau actually are middle- or below middle-income families.

Perhaps Macau should try to promote its positive image and global recognition by focusing on its benefit as a free port, its history, heritage, rule of law, transparent government policy and democratic society. Of course, at the same time Macau should do its best to improve the quality of life of its residents in term of housing, education, transportation and health care. That’s not easy. Macau is a small city, with limited land and other resources. To remain competitive and to maintain its current growth, Macau must become an integrated part of Greater China, especially in the Pearl River Delta.

Challenges ahead While the government has signed the Closer Economic Partnership Arrangement with China, the document itself is not sufficient to generate actual economic development. Sufficient capital, labour and management talent must be provided. Infrastructure is also critical to regional integration.

Luckily, the Light Rapid Transit railway project, the Hong Kong-Zhuhai-Macau bridge, and the Pac On Ferry Terminal at Taipa will be completed in the near future. Regulations, immigration laws and border arrangements must also be updated and improved so that investors will be attracted to the region. The 2010 direct investment statistics provided by the Statistics and Census Service show that there were almost 1,900 foreign direct investment companies in Macau providing slightly fewer than 99,000 jobs. Hong Kong entities are the largest group of foreign investors (US$5.11 billion), followed by Cayman Islands firms (US$2.90 billion), the U.S. (US$2.21 billion) and China (US$1.71 billion). I predict the same pattern will continue with the exception that the recent 7.5 percent economic growth rate in mainland China – below some analyst estimates – may have some impact on the investment in Macau. As the U.S. economy is getting better, its investment

These days when I go to the United States for meetings, many people ask me about Macau

may increase a little bit. Most likely, the foreign investors will continue to back the top four industries: gaming; banking and securities; wholesaling and retailing, and construction. With all the investment in Macau, economic growth of around 15 percent, based on GDP expansion, seems likely. The big uncertainty will come when the U.S. ends its Quantitative Easing policy. China, Hong Kong, Macau and most Asian countries will be adversely affected.

Tight control If mass-market tourists are in fact starting to become the most important revenue generators for the casino industry as some gaming analysts suggest, then it would be a good indicator of the general economic condition in China. However, the VIPs generate most of the casino revenues in Macau. That trade is affected by central government regulation, especially inward visa policy, rather than VIPs’

income or their willingness to travel here. I am not sure therefore if gaming industry growth here is a good indicator of China’s overall development. Statements made by senior government officials in Beijing indicate that gaming perhaps will be under tight control. Extremely high revenue growth rates might not be possible in future. Given that the first quarter China economic growth rate was 7.7 percent, down on the past performance of eight percent, perhaps mainland tourist numbers will also be down. But since China has a very large population; the impact of slightly slowing GDP growth over the border will not be felt in Macau. The more challenging issue however is the competition from new casinos in other Asian cities such as Singapore, Manila in the Philippines, Ho Chi Minh City in Vietnam, and other possible projects in Taiwan and South Korea. They definitely will attract some rich Chinese gamblers if they prefer to try their luck in new surroundings.

April 19, 2013

Macau

Macau drawn to home-buyin

Mortgages becoming harder to repay even as interest rates remain ‘abnorm Stephanie Lai

sw.lai@macaubusinessdaily.com

hris Leong Chi Fong decided in 2011 to purchase a 600-square-feet (55.7 square metres) flat near the Border Gate with his then girlfriend, now his wife. The three-bedroom flat, a former subsidised housing project, was priced at 2.08 million patacas (US$260,150), which Mr Leong deemed acceptable compared with similar flats in the same district. The hunt for a home was a long struggle. The price of a threebedroom apartment in the north district could easily reach 2.4 million patacas at the time, which Mr Leong found hard to accept. “We had tried to find a suitable flat for over half a year without success. We were very disappointed at the time because as soon as the owners knew you wanted the flat, they would just push up the price,” said Mr Leong. “With the support of our families we finally settled the deal with a down payment of 400,000 patacas in cash,” the 30-year-old explained. “My wife and I split the monthly contribution of 7,000 patacas, with a 2.5 percent interest rate spread over 25 years,” the social worker added. “The contribution amount is still fair as it occupies roughly one-third to one-fourth of our salaries.” This ratio is below the threshold s u g g es t ed by C hief E xec u tive Fernando Chui Sai On in his 2013 Policy Address.

“In the property market the mortgage payment should not occupy over 40 percent of a household’s income,” said Mr Chui at the Legislative Assembly in November. Mr Leong was a typical example of first-time homeowners being supported by their parents. Their elders were concerned with securing a home for their children once they reached adulthood.

The government ought to remind residents that the interest rates will not always stick to the current low level Jacky Feng Wei Wei, Bank of China Macau Youth Association researcher

“Actually I am quite glad about buying the house, because the monthly instalment did not differ much from the rental at the time,” said Mr Leong. “And home rents have also shot up terribly these years.” “We wanted to make the homebuying decision quickly because there just seemed to be no end to the surging property price,” he added. “In the coming five years we do not expect a big fall in price, as long as the gaming development and our economy is very strong.” Jessie Ng, a 26-year-old civil servant, also decided to buy a home last autumn. Fearing her income would be too high to qualify for subsidised housing, Ms Ng decided to buy a 400-squarefeet one-bedroom flat in Fai Chi Kei priced at 2.07 million patacas. Ms Ng also had to reach into her family’s savings to match the down payment of 600,000 patacas. She is now paying 8,000 patacas a month as part of a 1.5-million-pataca mortgage spread over 20 years, at an interest rate of two percent.

Rigid demand “The flat is basically for a couple’s use,” said Ms Ng. “The idea is: we could buy a home first, wait for some time and sell it off to change to a bigger one.”

In the past three years Macau’s housing market has been supported by very strong demand thanks to robust economic performance here and in mainland China, as well as “abnormally low” interest rates following worldwide quantitative easing, says the Bank of China Macau Youth Association. “The strong demand for homebuying is normal when Macau has

Proportion of monthly contribution over median value of local household income 20

April 19, 2013

Macau said they had felt an urge to opt for a mid- to low-priced flat. “I remembered back in 2011 when we were seeking a home, the price shot up to almost double in a blink,” said Mr Leong. “My friends said that if they were to purchase a three-bedroom flat similar to mine now, two million patacas was no longer enough, unless [they were] very old flats,” he added.

that had the capacity to buy a bigger flat,” the executive said. “And the result was that, after these big flats were gradually completed, their price was actually detached from the purchasing capacity of the mass,” said Mr Ieong. “Now you can see the developers are readjusting their strategy and have started building one-bedroom apartments and studios.” The new housing trend has not actually answered the demand from resident buyers, Chris Leong and Jessie Ng reckon. “Those studio flats cannot quite fit married couples that are planning to have children or have their parents move in, in the future,” said Mr Leong. “We checked out those studio flats but we did not buy one,” said Ms Ng. “This kind of small flat is more suitable for outside workers that are planning a short stay in the city.”

Fast price surge

ng rush

mally low’

experienced a robust economy,” said Jacky Feng Wei Wei, Bank of China (Macau) Ltd asset and liability management officer and academic researcher at the association. Ronald Cheung Yat Fai, managing director of Midland Realty (Macau) Ltd, told Business Daily in January that demand for homes was more than just ‘strong’. “People are hoarding homes as if they were water because they are afraid there won’t be any [supply] available in a year’s time,” said Mr Cheung. “But I do not think residents’ home buying could be described as panicbuying yet, at least not so when we are compared with other neighbouring regions,” Mr Feng added. Stephen Ieong Chi Kuong, Bank of China Macau Youth Association director, said residents’ increasing wealth since the handover has pushed not only their desire to buy a residence, but also a secure investment tool. “Many people were seeking to compensate for the weakening pataca – which is pegged with the U.S. dollar – with a good investment tool,” said Mr Ieong. “And for residents, investing in bricks-and-mortar is often the favourite option as it is much easier to grasp than foreign exchange or stocks, which undergo bigger fluctuations,” he added. Both Chris Leong and Jessie Ng

Speculation aside, a lack of supply is often blamed by scholars and estate agents as the major cause triggering the surge in home prices in the past few years. Mac a u h a d n ea r l y 2 0 0 , 0 0 0 housing units last year. About 45 percent were completed in the 1990’s and a further 40 percent were built even earlier. Only 15 percent were completed after 2000, official data shows. “In the recent decade the annual supply of flats was only 2,700 units,” said the association’s academic researcher Mr Feng. “If we are having an average of two people living in a unit, that supply would only accommodate 5,400 residents a year. That indicates we do have a very tight housing market.” The projected housing supply for this year will only be around 1,000 to 1,500 new flats, said Mr Feng, after compiling data from estate agents. These figures would represent a drop of 40 to 60 percent when compared with last year, Business Daily calculations show. “We may expect that some of the first batch of second-hand flats previously ‘locked up’ under the special stamp duty could be released to the market this June. That could help this year’s supply a little bit,” said Mr Feng. “The main driver behind the fast price surge in the housing market is strong economic growth and the demand outweighing supply,” he stressed. “Unlike Hong Kong, outsider speculation in property in Macau is not really fiery,” he added. “Less than 10 percent of the property purchasers here are mainlanders.” Association director Mr Ieong suggests that another major factor was the housing design popular prior to the severe acute respiratory syndrome (SARS) outbreak in 2002. “From Macau’s handover period to the time of SARS, the economy and property market here was doing rather poorly,” he said and new homes were aimed at attracting “quick investment”. “The developers then tried to put forward big luxury units with about 1,000 square feet aimed at mainland immigrants, or residents

Bubble risk The rapid surge in home prices has induced “a certain risk” of a property bubble, asset management professional Jacky Feng told Business Daily.

KEY POINTS Residents think of homes as investment tool Lack of supply worsening: experts Small flats not popular with private buyers Home prices growing much faster than incomeLow interest rates could end next year

From 2010 to the end of 2012 the average property price has doubled from 1.88 million patacas per flat to 4.54 million patacas. Meanwhile a two-person household had to set aside on average 66 percent of their income for mortgage payments last year, up from 40 percent in 2010. “You can see in the third quarter last year, the median price of Hong Kong property was 13.5 times the median yearly household income,” said Mr Feng. “In Vancouver and Sydney, the median price for property was 9.5 times and 8.3 times the median family

income respectively.” He added: “Macau’s median property price in the third quarter last year exceeded the yearly family income by 14.15 times.” The Bank of China Macau Youth Association researcher does not think that the risk of a property bubble in Macau is “very serious”. “Last year outstanding home mortgages accounted for 23.7 percent of local banks’ loans, and the number of properties tied to loans occupied 37.3 percent of all property transactions in Macau.” “That is still a stable and reasonable range these few years,” said Mr Feng. “If the proportion of outstanding home mortgages would be over 40 percent of all bank loans it could be considered as a risky level,” he added.

Looming rate risk Macau’s mortgage rate is in lockstep with interest rates in the United States thanks to the currency peg between the pataca and the U.S. dollar. The six-month benchmark bank interest rate in Macau was at 0.54 percent yesterday. The rock-bottom prime rate that Macau sees now results from Washington’s money-printing policy to stimulate its crisis-stricken economy says Mr Ieong. Bank executive Mr Ieong believes American interest rates will not rise significantly before next year. “If the U.S. is really sticking to what the Federal Reserve said, the quantitative easing measures will stop only when the unemployment rate drops to 6.5 percent,” said Mr Ieong. “I do not expect the first rise in the interest rate to come before 2014.” “I would suggest that buyers should think calmly and clearly whether they can afford a flat, and keep in mind that the interest rates could be lifted any time soon, once the U.S. sees some recovery signs in its economy,” he added. Hong Kong Monetary Authority announced in late February a pressure-test guideline for banks to strengthen the risk management of their mortgage lending business. The stress test starts from the premise that people paying off home mortgages should be able to deal with a interest rate hike of at least 2 to 3 percentage points. Macau has not implemented a similar measure. “I think the government ought to remind residents that the interest rates will not always stick to the current low level,” said Mr Feng. “Potential buyers could consider adding at least one to two percentage points to their mortgage loan rates to test if they are really affordable,” he suggested.

Family income (patacas)

Prime rate P-2.25(%)

Average home price (patacas)

Family monthly contribution Monthly contribution/ (patacas) income

2010Q1

20000

1.88 million

7,953

39.77%

2010Q2

20000

2.24million

9,488

47.44%

2010Q3

20000

2.12 million

8,990

44.95%

2010Q4

20000

2.34million

9,894

49.47%

2011Q1

20000

2.68million

11,335

56.68%

2011Q2

20000

3.09million

13,115

65.58%

2011Q3

22000

2.54million

10,767

48.94%

2011Q4

24000

2.90millon

12,300

51.25%

2012Q1

26000

3.18million

13,466

51.79%

2012Q2

25000

3.88million

16,421

65.68%

2012Q3

26000

4.08million

17,273

66.43%

Source: Statistics and Census Service Family income standard is marked as the local median salary times 2 members of the household The average home price has taken reference on local flats of 70 square metres Mortgage rate is counted over a contribution period of 30 years

April 19, 2013

Macau

Our first year in quotes April 12, 2012 “Of course we’re sorry that we didn’t finish this two years ago” Michael Leven, president and chief operating officer of Las Vegas Sands Corp., at the first phase opening of Sands Cotai Central

April 18, 2012

“Unfinished property is sold and bought without any rules. That’s very bad for the end-user” Executive Council spokesperson Leong Heng Teng on why Macau needs to tighten its property registration system.

May 17, 2012 May 15, 2012 “It will be used to repay bank loans deriving from the financing needs of the airport infrastructure back in its early stage of construction” Macau International Airport Co Ltd on why it needed 1.95 billion patacas (US$244 million) to cover shortterm cash needs

“The new border checkpoint will turn Ilha Verde into a prosperous area, which will undoubtedly raise property prices” Zhao Yu Ling, owner of a real estate agency, on the benefits of a planned new crossing into the mainland

June 1, 2012

“Predatory and insatiable…” Presiding judge Sam Hou Fai’s description of disgraced former secretary Ao Man Long at the end of his third corruption trial

May 24, 2012 “If the [Macau] government’s going to get involved and interfere over litigation, that’s not a good environment” Frank Fahrenkopf, president and CEO of the American Gaming Association, on the patent row between LT Game and SHFL entertainment Inc. during G2E Asia

September 21, 2012 June 25, 2012

“From my point of view, I find it acceptable and fully understand it” Chief Executive Fernando Chui Sai On on Executive Council member Leonel Alves’ explanation of the “US$300 million” e-mail referring to money asked for by an anonymous fixer offering to help Sands China

“It will be significantly nicer than the one in Vegas. I’ve been to the one in Vegas. It’s kind of tacky” Michael Leven, president and COO of Las Vegas Sands Corp. on plans in Macau for Eiffel Tower-themed resort The Parisian

July 12

“Operators must improve the services they provide and only then will we resume those procedures” Transport Bureau director Wong Wan on why the government was suspending plans for a 23 percent increase in public bus subsidies

October 18 August 16, 2012 “The land law and urban planning law are lagging behind the city’s development” Lawmaker Ho Ion Sang, welcoming the government’s decision to take back the land concession for the La Scala residential site

“The deal is not completed yet, but it would mean more investment in the Macau operation” Citic Telecom’s chief executive, Norman Yuen Kee Tong, on the firm’s plans to take a controlling stake in CTM

November 5, 2012

“The financial stability of Mr Ngan is unwavering. It won’t be affected by this case.” Lawyer for local businessman Ngan In Leng after court-ordered seizure of assets to cover a more than 100 million patacas (US$12.5 million) debt

December 3, 2012

“The release of Mr Wan will not change it [the gaming scene], nor make it chaotic. We’ll all be earning our profits. Chau Cheok Wa, chairman of VIP operator Sun International Group Ltd, on the release of triad leader Wan Kuok Koi – known as ‘Broken Tooth’

February 14, 2013

January 2, 2013 “From 12am to 7pm today, 42 people were fined for violating the new [partial] ban [on smoking].”

“This shows that the government had not carried out enough preparation for peak times” Edmund Loi Hoi Ngan, of Macao Polytechnic Institute on the chaos at the Gongbei border gate during Lunar New Year

A Health Bureau spokesman on the first day of the new smoking policy in casinos

March 18, 2013

“We considered its affordability for residents, the consumer price index and the actual operation status of the ferry operators” The Maritime Administration on why it capped ferry fare rises at six percent – half of what operators requested

April 19, 2013

Greater China TSMC profit up on chip demand Taiwan Semiconductor Manufacturing Co., the world’s largest contract manufacturer of chips, reported quarterly profit that beat analyst estimates as growing smartphone demand drove revenue higher. First-quarter net income rose 18 percent to NT$39.6 billion (US$1.3 billion) from NT$33.5 billion a year earlier, the Hsinchu, Taiwanbased company said in a statement yesterday. TSMC’s sales beat its own forecast as Samsung Electronics Co. and HTC Corp. join Sony Corp. and ZTE Corp. in releasing new smartphones, driving orders for mobile chips. Revenue may rise after clients such as Qualcomm Inc. cut stockpiles and China smartphone demand continues to climb.

Yuan trading band to be widen in near future: Yi Exchange rate to be ‘more market-oriented’, says PBOC’s deputy governor Belinda Cao

he yuan’s trading band will be widened “in the near future,” said Yi Gang, deputy governor of the People’s Bank of China, after the currency rallied on Wednesday to a 19-year high. “The exchange rate is going to be more market-oriented,” Mr Yi said at an International Monetary Fund conference in Washington yesterday. “Last year, they increased the floating band from 0.5 percent to 1 percent. I think in the near future they’re going to increase the floating band even further.” China may come under pressure to quicken appreciation of the yuan from members of the Group of 20 nations and the IMF meeting in Washington this week. A U.S. Treasury Department report last week called the currency “significantly undervalued,” and asked Japan to refrain from devaluing the yen. The yuan closed yesterday at a 19-year high of 6.1723 per dollar in Shanghai, the upper limit of a trading range that spans 1 percent either side of the central bank’s daily reference rate. The fixing was cut 0.12 percent yesterday to 6.2416, the biggest decline since August and forcing a weakening of the currency. The spot rate slipped 0.13 percent to 6.1805 on Thursday, the biggest drop in two months, based on China Foreign Exchange Trade System prices. “It is to encourage two-way volatility and is a part of their strategy for managing capital flows,” said Ramin Toloui, global co-head of emerging markets in Singapore at Pacific Investment Management Co., referring to the widening of the band. “They are trying to inject a bit of uncertainty into the market and some two-way movements in the currency, in order to avoid people believing that the renminbi is a one-way bet.” The central bank in April 2012 widened the trading band to 1 percent from 0.5 percent on either

Taiwan first yuan fund taps US$1.1t savings

yesterday, citing Wang Yu, deputy director-general of the PBOC’s research bureau. The monetary authority will also free up trading in its currency by allowing more market participants and lower transaction costs, the state-run China Daily said. The report didn’t give details of how much the yuan’s band will be widened or when the change will be made. Mr Yi told reporters after the conference in Washington that current market conditions make it “appropriate” to consider widening the band. “It’s good for the market,” he said. The band will probably be widened this quarter, Credit Agricole CIB analyst Anthony Lam wrote in a research note yesterday. Speculation of such a move may be “the force” driving gains in the yuan, which set new 19-year highs on each of the last four trading days.

aiwan’s first yuan bond fund, tapping the island’s US$1.1 trillion of savings, is bullish on China’s economy and favours a mixture of investmentgrade renminbi notes and riskier dollar-denominated property debt. Fuh Hwa Securities Investment Trust Co. plans to raise as much as 8 billion yuan (US$1.3 billion) for its Emerging Market Renminbi Fixed Income Fund and invest around 40 percent of its portfolio in emerging-market high-yield dollar bonds, including Chinese property developers, fund manager Huang Yuanchun said. The average yield on the nation’s U.S. currency notes, favoured targets for offshore yuan funds with broad mandates, rose 31 basis points to 5.42 percent this year, a JPMorgan Chase & Co. index shows, compared with 3.41 percent for Dim Sum bonds, according to a Deutsche Bank AG and Standard & Poor’s gauge. “We think China’s economic growth will continue and meet the government’s target,” Taipei-based Mr Huang said in an interview, referring to the administration’s 7.5 percent expansion goal in 2013. “Although China has been clamping down on property, it doesn’t want to see prices drop drastically because that will hurt the wealth of many Chinese people.” Fuh Hwa won the right to sell the island’s first yuan bond fund this month, allowing local investors to boost returns on their savings, as Taiwan’s sovereign yields drop to the world’s third lowest after Japan and Switzerland. The Chinese currency returned 5 percent including interest income in the past 12 months, as the Taiwan dollar lost 0.4 percent, driven by a flood of cash from developed nations with near-zero interest rates seeking higher returns.

Bloomberg News

Move will be ‘good for the market’, Yi Gang says

side of its daily fixing against the dollar. The yuan has been within 0.1 percent of its ceiling most days since October. Of 20 analysts surveyed by Bloomberg News in November, 12 forecast the yuan’s trading band would be widened in 2013, while eight predicted it would take place in 2014. Seventeen said the next change would lead to the yuan being allowed to diverge 1.5 percent to 2 percent from the reference rate.

‘Appropriate’ timing The PBOC scrapped a decade-old peg of 8.3 per dollar in July 2005 and the currency has since strengthened 34 percent. It kept the yuan near 6.83 for about two years through June 2010 as the global financial crisis battered exports. The central bank will broaden the currency’s trading range in the next step of its exchange-rate reforms, the China Daily newspaper reported

Congratulations on the 1st Anniversary of Business Daily

April 19, 2013

Greater China

China FDI moves up value chain

Bird ‘flu adding risks to growth

More money going into high-value sectors such as services Aileen Wang and Jonathan Standing

it is a small contributor to China’s overall inflows compared with exports, which were worth about US$2 trillion in 2012. China attracted a total of US$111.7 billion in FDI in 2012, just shy of 2011’s record US$116 billion and marking the first annual fall in three years. Beijing has said it wants to bring in US$120 billion worth of FDI each year between 2012 and 2015.

China’s deadly bird-flu outbreak is rippling through industries from restaurants to travel, adding economic headwinds after last quarter’s unexpected slowdown. The disease “may suppress domestic consumption in the near term,” Goldman Sachs Group Inc. said in a report this week. Ding Shuang, a Citigroup Inc. economist in Hong Kong, sees a danger of “shortterm volatilities” in growth and inflation and of bigger effects if found to transmit between humans. The outbreak, which has sickened at least 82 people and killed 17 so far, threatens to extend the longest streak of growth below 8 percent in at least 20 years in the world’s secondlargest economy. The 2003 global pandemic of severe acute respiratory syndrome showed the risks associated with such incidents, with Credit Suisse Group AG estimating China’s expansion in the second quarter of that year was cut by about 2.4 percentage points after seasonal adjustments. “Consumption is likely to stay weak in the second quarter because of the outbreak,” said Li Wei, a Shanghai-based economist at Standard Chartered Plc. “We don’t know how the bird flu is going to evolve.”

Steady growth

Investment from the European Union rose 45 percent

hina’s foreign direct investment inflows reversed the longest streak of annual declines in the first quarter, as a mild but steady recovery in the economy helped bolster global investor confidence. The figures also showed that investment was focused more on advanced manufacturing industries and the service sector, in line with Beijing’s broader goal of moving up the global value chain and shaking off its tag as the world’s factory. “All these point to a better investment structure that could help sharpen our competitive edge in the future,” Commerce Ministry spokesman Shen Danyang told a briefing yesterday. China drew US$29.9 billion in

foreign direct investment in the first three months, up 1.4 percent from a year earlier period. The rise put an end to persistently negative year-todate growth since early 2012 and was mainly driven by investment from U.S. and European companies, according to ministry data. In the first quarter, computer and telecommunication firms attracted 29.33 percent more foreign capital from a year ago and investment in sophisticated equipment rose 5.6 percent. In contrast, investment to the traditionally capital-guzzling property sector fell 6.32 percent during the same period. FDI is an important gauge of the external economy to which China’s vast factory sector is oriented, though

Despite the rebound in FDI growth in the first quarter, Mr Shen repeated that the FDI inflows in 2013 may remain at a similar level with last year. “The upswing in the FDI figure is basically chiming with the improving outlook on the global economy,” said Zhou Hao, economist at ANZ in Hong Kong. “I think the FDI inflows will mainly grow at a steady pace in the coming months and I don’t think there is a spectacular surge in the months ahead.” The Commerce Ministry data also showed investment inflows from the European Union rose 45 percent in the first quarter from a year earlier to US$2.1 billion, while investment by U.S. firms rose 18.5 percent during the same period to US$1.1 billion. FDI from the 10 top Asian economies, including Hong Kong, Japan and Singapore, fell 0.3 percent year on year in the first quarter, to US$25.8 billion, the ministry said. Service sector inflows were US$14.4 billion in the first three months, up 2.8 percent on a year earlier. Manufacturing sector inflows totalled US$13.2 billion in the same period, up 0.6 percent versus a year earlier. Reuters

Home prices rise for third month China’s property rebound gathered pace in March as new home prices in the southern city of Guangzhou jumped the most in more than two years, underscoring concerns that a bubble may be building. Guangzhou prices rose 11.1 percent from a year earlier while those in Beijing climbed 8.6 percent and Shanghai posted a 6.4 percent increase, the National Bureau of Statistics said in a statement yesterday, all showing the biggest gains since January 2011 when the government changed its methodology for the data. Prices rose in 68 of 70 cities tracked by the government, the most since September 2011. “Today’s data shows demand is still strong, especially in major cities; the government’s measures in the past didn’t work,” Shen Jian-guang, a Hong Kong-based economist at Mizuho Securities Asia Ltd, said. “Home prices will continue to rise because local governments are refraining from fully implementing the measures.” Major cities also led gains in existing home prices. They rose 9.1 percent in Beijing last month from a year ago, the most among the 70 cities. Existing prices increased 7.2 percent in Shanghai, 7.5 percent in Guangzhou and 6.2 percent in Shenzhen. Reuters

April 19, 2013

Asia Indian shipments down 1.76 pct Faced with declining exports, India’s government yesterday announced a slew of measures including extension of the Export Promotion Capital Goods (EPCG) scheme to all sectors. The initiatives announced by Commerce and Industry Minister Anand Sharma are aimed at pushing exports which declined by 1.76 percent to US$300.6 billion during 2012-13 and pushed up the trade deficit to US$190.91 billion. The EPCG scheme, which allows exporters to import capital goods at zero duty, would be extended beyond March 2013 and would be applicable to all sectors, Mr Sharma said.

N.Korea lays out conditions for talks North Korea said the U.S. must remove all its nuclear weapons from the Korean peninsula and end military exercises with South Korea before it will agree to talks, laying out conditions the U.S. has already rejected. The U.S. and South Korea are to blame for increased tensions in the region and must apologise for their provocations, the official Korean Central News Agency said, citing a statement from the National Defence Commission. Kim Jong-un’s regime this week said negotiations are possible only after North Korea has enough nuclear weapons to deter an attack. The region has been on edge since North Korea tested an atomic weapon in February then said annual U.S.-South Korean drills that began last month have brought the peninsula to the brink of war. U.S. Secretary of State John Kerry, who returned this week from a trip to Seoul, Tokyo and Beijing, yesterday said the prospect for negotiations depended on progress toward ending North Korea’s nuclear weapons programme. Negotiations can’t take place until the United Nations removes sanctions and no preconditions are made to give up its “sovereign right” to develop nuclear capabilities for self-defence, yesterday’s statement said. South Korean Foreign Ministry spokesman Cho Tai-young called the demands “illogical” and urged North Korea “to wisely choose the right path”.

Japan in record annual trade deficit March exports rise as weak yen helps economy

Exports exceeded estimates in March

Goodman to boost rents as land, building costs rise Goodman Group, the world’s second-biggest industrial property manager by market value, plans to increase rents in Japan by about 5 percent amid rising land and construction costs. Prices of land sites used for distribution centres and the cost of construction, which has increased as much as 20 percent, are making development more expensive, said Paul McGarry, chief executive of Goodman Japan Ltd. Even as demand for modern warehouses and investor interest remain strong, the supply of such facilities will be limited, he said. The logistics property market in Tokyo is rebounding from record-high vacancy rates three years ago amid increasing demand for modern storage. The city is Asia’s second-most active warehouse market after Hong Kong with US$1.6 billion of transactions in the past one year, according to New York-based Real Capital Analytics Inc. “What we have seen in the last six months is a sharp increase in land prices for logistics,” said Mr McGarry in an interview in Tokyo, declining to provide an estimate of how much land prices have risen. “There will be less supply moving forward just because the numbers don’t add up.” Bloomberg News

apan has reported a record trade deficit for the year to March 31, reflecting a slump in global demand and higher fuel import costs. The deficit hit 8.17 trillion yen (US$83.4 billion) as a slump in global demand hurt exports, while greater domestic consumption of fuel boosted imports. A weak yen, which has dipped nearly 20 percent against the U.S. dollar since November, also boosted the value of the imports. Analysts said the deficit was likely to shrink in the coming months as the weaker yen will help Japan’s exports. There were some signs of recovery in the data for March, which showed a 1.1 percent increase in exports during the month, from a year earlier, Ministry of Finance data showed yesterday. The figures showed exports to the United States jumped 7.0 percent from a year earlier, but shipments to China fell 2.5 percent. Separately, the monthly Reuters Tankan survey showed manufacturers’ sentiment improved

for a fifth successive month in April, although pessimists still slightly outnumber optimists. “The broad picture remains intact as the weaker yen is having more of an impact on boosting imports than exports, while the recovery in the world economy, particularly China, is tepid,” said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo. “We’ll need to wait at least until around summer before the weaker yen enhances price competitiveness of Japanese products abroad to boost exports.” The yen fell to a four-year low after the Bank of Japan unleashed a massive US$1.4 trillion stimulus programme this month, enacting a key part of Prime Minister Shinzo Abe’s push for aggressive policy to end deflation and revive the economy.

Less pessimistic

import costs, weakening the trade balance. Still, the weak yen is boosting business morale. The monthly Reuters poll, which is closely correlated with the Bank of Japan’s quarterly tankan corporate survey, showed the manufacturers’ sentiment index rose by seven points to minus 4 in April, and was expected to improve to plus 10 in July. A negative reading in the Reuters Tankan survey means there are still more pessimists than optimists, but the poll of 400 firms taken March 29 – April 15, of which 260 responded, shows the gap has been steadily narrowing since the end of 2012. “The Reuters Tankan underlines rising expectations among Japanese firms for a brighter outlook, although the real economy is lagging behind those expectations,” Mr Minami said. The trade data showed imports were up 5.5 percent in the year to March, a fifth consecutive gain, against a 6.3 percent rise expected, leaving the trade balance in the red for nine months in a row, the longest such run since 1979-1980 when the country was hit by surging oil prices. The 362.4 billion yen deficit for March compared with 493.8 billion yen deficit expected by economists. For decades, Japan had accumulated solid trade surpluses, but its trade balance swung to deficit in 2011 and 2012 after the Fukushima crisis two years ago forced the nation to idle its nuclear power plants and import more oil and gas. Reuters

We’ll need to wait at least until around summer before the weaker yen enhances price competitiveness of Japanese products abroad to boost exports Takeshi Minami, Norinchukin Research Institute in Tokyo

Analysts say it takes time for the yen’s slide to boost exports while it immediately boosts

Congratulations on the 1st Anniversary of Business Daily

April 19, 2013

Asia

Mining companies lead stocks lower As global demand for raw materials shrinks Jonathan Burgos and Adam Haigh

sian stocks fell, with the regional benchmark index set for its biggest drop in a month, led by mining companies as commodities slumped on concern weaker global economic growth will crimp demand for raw materials. BHP Billiton Ltd, the world’s biggest miner, sank 4.3 percent in Sydney. LG Display Co., which supplies touch screens for Apple Inc., dropped 4.8 percent in Seoul after audio-chip maker Cirrus Logic Inc. reported an inventory glut that suggests iPhone sales may fall short of expectations. Softbank Corp, Japan’s third-largest wireless carrier, lost 1.6 percent as a rival’s bid for Sprint Nextel Corp. gained shareholder support. The MSCI Asia Pacific Index slipped 1.1 percent to 135.89 as of 5.08 pm in Tokyo, heading for its biggest drop since March 18. All 10 industry groups fell on the gauge, which is set for its third decline in four days after China’s economy expanded less than economists estimated. “Weak corporate earnings results and renewed concerns about the global economy saw traders switch to a risk-off mode,” said Matthew Sherwood, Sydney-based head

of markets research at Perpetual Investments, which manages about US$25 billion. The MSCI Asia Pacific Index advanced 6.2 percent this year through Wednesday amid signs the U.S. economy is recovering and as Japanese shares rallied on optimism the Bank of Japan will step up efforts to stimulate the economy. Japan’s Nikkei 255 Stock Average fell 1.2 percent as the yen swung between gains and losses. The benchmark last week climbed to the highest since July 2008. South Korea’s Kospi index declined 1.2 percent. Australia’s S&P/ASX 200 Index sank 1.6 percent and New Zealand’s NZX 50 Index dropped 0.8 percent. Taiwan’s Taiex Index lost 0.2 percent. Hong Kong’s Hang Seng Index slid 0.3 percent. China’s Shanghai Composite Index added 0.2 percent.

Price decline Raw-material producers posted the biggest decline among the 10 industry groups in the MSCI Asia Pacific Index as copper futures headed for the lowest price since October 2011.

Miners among hardest-hit amid commodities slump

Jiangxi Copper Co., China’s biggest producer of the metal, fell 2.5 percent to HK$14.90 in Hong Kong. Rio Tinto Group, the world’s No. 2 mining company, sank 4.6 percent to A$52.07 in Sydney. Fortescue Metals Group Ltd, Australia’s third-biggest iron ore exporter, tumbled 7.8 percent to A$3.43. The company said its thirdquarter shipments of the steelmaking material rose 61 percent, missing analyst estimates. BHP sank 4.4 percent to A$30.65.

The company said yesterday it will pay its income chief executive officer Andrew Mackenzie less than his predecessor at a time of declining commodity prices and revenue for the industry. Japanese exporters dropped. Toyota Motor Corp., the world’s biggest carmaker, slipped 2.2 percent to 5,430 yen. Fanuc Corp., a supplier of industrial robots, slid 2.3 percent to 14,870 yen. Camera maker Nikon Corp. fell 2.1 percent to 2,125 yen. Bloomberg News

April 19, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

32.35

-0.154321

16762552

ALUMINUM CORP-H

2.81

-0.3546099

8733000

BANK OF CHINA-H

3.42

-0.8695652

263580396

AIA GROUP LTD

BANK OF COMMUN-H

NAME

PRICE

DAY %

VOLUME

CHINA UNICOM HON

9.56

0.5257624

22894639

CITIC PACIFIC

9.42

-0.2118644

4118234

SANDS CHINA LTD

67.05 -0.07451565

2462441

CLP HLDGS LTD CNOOC LTD

5.72

-0.1745201

16904611

BANK EAST ASIA

29.45

-1.340034

1976059

BELLE INTERNATIO

12.72

-0.9345794

33356206

ESPRIT HLDGS

25.3

11488345

HANG LUNG PROPER

BOC HONG KONG HO

COSCO PAC LTD

NAME

PRICE

DAY %

VOLUME

73.05

1965023

39.1

3.30251

9684132

SINO LAND CO

12.42

-0.64

4476956

SUN HUNG KAI PRO

108.1

3719721

94.9

1.334757

1598426

POWER ASSETS HOL

13.4

-0.297619

47857566

10.44

-0.1912046

9690920

SWIRE PACIFIC-A

0.2004008

6166784

TENCENT HOLDINGS

247.2

-1.12

3124119

29.6

0.1692047

4981077

TINGYI HLDG CO

20.15

0.2487562

5303682

CATHAY PAC AIR

12.98

5901357

HANG SENG BK

122.9

-1.046699

1178295

WANT WANT CHINA

11.26

-1.401051

10070178

CHEUNG KONG

114.2

0.4397537

3514382

HENDERSON LAND D

54.55

-1.888489

6049058

WHARF HLDG

67.75

0.07385524

3609457

CHINA COAL ENE-H

6.18

-0.8025682

11065508

76.9

-1.347017

2446252

CHINA CONST BA-H

6.02

-0.3311258

213205957

22.85

1.330377

11417811

126

-0.1584786

2581617

HSBC HLDGS PLC

79.65

-0.3752345

11016272

79.65

-1.362229

6175801

5.06

-0.3937008

217863868

CHINA LIFE INS-H CHINA MERCHANT CHINA MOBILE

-0.7444169

20442122

24.45

0.204918

2706992

HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG

81.1

0.2472188

12700315

HUTCHISON WHAMPO

22.45

1.58371

26516014

IND & COMM BK-H

CHINA PETROLEU-H

8.35

-0.1196172

85968919

LI & FUNG LTD

10.12

0.3968254

18464613

CHINA RES ENTERP

3042717

MTR CORP

30.05

-1.151316

2638798

CHINA RES LAND

22.15

2.309469

12382846

NEW WORLD DEV

12.66

-1.401869

19610326

CHINA RES POWER

23.05

0.6550218

6791054

PETROCHINA CO-H

9.31

-0.534188

58760769

CHINA SHENHUA-H

25.35

-1.169591

19349282

PING AN INSURA-H

57.95

0.2595156

11495905

PRICE

DAY %

VOLUME

26.55

-0.7476636

9262156

CHINA OVERSEAS

MOVERS

5 21800

INDEX 21512.52 HIGH

21797.52

LOW

21440.33

52W (H) 23944.74 21430

(L) 18056.4 16-April

18-April

Hang Seng China Enterprise Index NAME

NAME

PRICE

DAY %

VOLUME

YANZHOU COAL-H

8.64

-1.144165

23146800

85968919

ZIJIN MINING-H

2.23

-1.762115

54126349

3.846154

23849500

ZOOMLION HEAVY-H

7.74

-0.257732

15446860

3.68

0.2724796

20556000

ZTE CORP-H

11.12

-0.8912656

2903802

25.35

-1.169591

19349282

3.63

1.680672

46203011

10.84

-0.3676471

4946720

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.4

120494868

AIR CHINA LTD-H

6.24

0.6451613

6538399

CHINA PETROLEU-H

8.35

-0.1196172

ALUMINUM CORP-H

2.81

-0.3546099

8733000

CHINA RAIL CN-H

7.29

2.3766

13995000

CHINA RAIL GR-H

BANK OF CHINA-H

3.42

-0.8695652

263580396

CHINA SHENHUA-H

BANK OF COMMUN-H

5.72

-0.1745201

16904611

CHINA TELECOM-H

BYD CO LTD-H

22.4

1.818182

1223411

DONGFENG MOTOR-H

CHINA CITIC BK-H

3.95

-0.2525253

24180400

GUANGZHOU AUTO-H

5.81

-0.3430532

9343505

CHINA COAL ENE-H

6.18

-0.8025682

11065508

HUANENG POWER-H

-1.719902

16352000

CHINA COM CONS-H

7.38

2.785515

30197425

IND & COMM BK-H

5.06

-0.3937008

217863868

CHINA CONST BA-H

6.02

-0.3311258

213205957

JIANGXI COPPER-H

14.9

-2.486911

19823087

CHINA COSCO HO-H

3.35

0.9036145

4037994

PETROCHINA CO-H

9.31

-0.534188

58760769

-0.7444169

20442122

PICC PROPERTY &

9.41

-0.4232804

11900140

CHINA LONGYUAN-H

7.06

-2.080444

15278000

PING AN INSURA-H

57.95

0.2595156

11495905

CHINA MERCH BK-H

14.9

-0.7989348

22745439

SHANDONG WEIG-H

6.66

0.1503759

6692000

CHINA MINSHENG-H

8.88

2.068966

77668815

SINOPHARM-H

CHINA NATL BDG-H

9.33

-0.533049

21478000

TSINGTAO BREW-H

14.52

-2.941176

7268758

WEICHAI POWER-H

ANHUI CONCH-H

CHINA LIFE INS-H

CHINA OILFIELD-H

CHINA PACIFIC-H

24.35

-0.204918

4819300

50.9

581000

26.65

-1.478743

NAME

MOVERS

2 10480

INDEX 10266.59 HIGH

10488.94

LOW

10191.56

52W (H) 12354.22 10180

(L) 8987.76 16-April

2678184

18-April

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

6.46

1.572327

10403286

RISESUN REAL -A

CITIC SECURITI-A

12.15

0.6628003

67314671

10598292

CSR CORP LTD -A

4.04

-0.4926108

-1.259843

25069928

DAQIN RAILWAY -A

7.06

-0.1191895

35201828

DATANG INTL PO-A

4.37

2.88

21432765

EVERBRIG SEC -A

4.62

0.8733624

50168826

GD MIDEA HOLDI-A

BANK OF NINGBO-A

10.35

0.9756098

12813898

BAOSHAN IRON & S

4.76

-0.41841

BYD CO LTD -A

21.9

3.155911

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.69

59191017

CHONGQING WATE-A

AIR CHINA LTD-A

5.44

2.448211

14300577

ALUMINUM CORP-A

4.07

-0.4889976

ANHUI CONCH-A

18.81

BANK OF BEIJIN-A

8.38

BANK OF CHINA-A BANK OF COMMUN-A

PRICE

DAY %

VOLUME

15.67

2.018229

11442205

SAIC MOTOR-A

15.6

1.10175

20597101

27750550

SANY HEAVY INDUS

9.87

-0.4036327

12693185

22167398

SHANDONG GOLD-MI

32.13

4503942

-0.6818182

4560080

SHANG PHARM -A

12.34

-1.673307

10952988

13.69

1.48258

16068365

SHANG PUDONG-A

9.63

0.4171011

103421937

14.12

1.001431

35959777

SHANGHAI ELECT-A

3.83

2285775

GD POWER DEVEL-A

2.78

61750576

SHANXI LU'AN -A

16.45

8042077

12140686

GEMDALE CORP-A

7.42

61822374

SHANXI XISHAN-A

10.79

-0.2772643

11410457

3811783

GF SECURITIES-A

13.28

0.7587253

22959895

SHENZEN OVERSE-A

6.05

0.1655629

39414024

GREE ELECTRIC

27.02

0.07407407

11065333

SICHUAN KELUN-A

62.76

1.800487

1021093

SUNING COMMERC-A

6.19

0.6504065

15734851 2235957

CHINA AVIC AVI-A

22.17

0.09029345

1460279

CHINA CITIC BK-A

4.3

1.176471

24558216

GUANGHUI ENERG-A

18.82

0.4805125

20499658

NAME

CHINA CNR CORP-A

4.1

17824676

HAITONG SECURI-A

10.45

0.4807692

84815386

TASLY PHARMAC-A

68.75

1.490995

CHINA COAL ENE-A

6.85

5025182

HANGZHOU HIKVI-A

37.1

-1.356022

6727468

TSINGTAO BREW-A

38.1

0.9538951

2156826

CHINA CONST BA-A

4.56

-0.6535948

37410816

HENAN SHUAN-A

78.16

0.2694035

3929539

WEICHAI POWER-A

22.6

-3.377512

11789503 14705303

CHINA COSCO HO-A

3.52

-0.2832861

8980485

HONG YUAN SEC-A

19.95

4.177546

33131721

WULIANGYE YIBIN

22.3

-0.8448199

CHINA EAST AIR-A

3.17

0.955414

13807568

HUATAI SECURIT-A

9.71

1.145833

25483061

YANGQUAN COAL -A

12.73

-0.07849294

5209589

CHINA EVERBRIG-A

3.02

0.3322259

50432163

HUAXIA BANK CO

10.18

1.092354

33119645

YANTAI WANHUA-A

17.98

-1.04568

10164291

17.44

0.8675535

9605317

IND & COMM BK-A

4.06

0.4950495

29713214

YANZHOU COAL-A

15.86

-0.2515723

3241517

57567757

INDUSTRIAL BAN-A

17.21

1.294879

103824667

YUNNAN BAIYAO-A

-0.770488

1292263 14398648

CHINA LIFE INS-A CHINA MERCH BK-A

12.16

CHINA MERCHANT-A

12.02

2.999143

36608988

INNER MONG BAO-A

27.7

-0.03608805

15413443

ZHONGJIN GOLD

12.3

-0.3241491

CHINA MERCHANT-A

27.5

0.0727802

11354700

INNER MONG YIL-A

30.94

-1.339286

5308388

ZIJIN MINING-A

3.13

-0.6349206

36676334

CHINA MINSHENG-A

9.35

1.081081

219540410

INNER MONGOLIA-A

4.81

-1.635992

27807104

ZOOMLION HEAVY-A

7.48

-0.5319149

31030759

CHINA NATIONAL-A

8.94

23833687

JIANGSU HENGRU-A

29.79

-2.135348

8150155

10.71

0.3748828

16195409

JIANGSU YANGHE-A

60.12

-0.9881423

2705059 11585111

CHINA OILFIELD-A

15.26

-1.548387

5209847

CHINA PACIFIC-A

20.02

0.3508772

18596640

JIANGXI COPPER-A

20.28

-1.648885

CHINA PETROLEU-A

6.82

-0.5830904

23843374

JINDUICHENG -A

10.24

-0.1949318

4638030

CHINA RAILWAY-A

5.06

1.2

18885584

KANGMEI PHARMA-A

17.36

-0.7432819

23740923

CHINA RAILWAY-A

2.78

0.3610108

18192257

KWEICHOW MOUTA-A

179.15

0.3697686

4195684

CHINA RESOURCE-A

29.37

2003356

LUZHOU LAOJIAO-A

25.72

-0.3100775

5268726

CHINA SHENHUA-A

20.88

0.2881844

8786675

METALLURGICAL-A

2.02

8994893

CHINA SHIPBUIL-A

4.46

0.6772009

21717033

NINGBO PORT CO-A

2.48

6337872

CHINA SOUTHERN-A

3.56

2.298851

28950426

PETROCHINA CO-A

8.48

-0.4694836

17626052

PING AN BANK-A

19.1

3.299081

90124467

1.076298

30663629

CHINA STATE -A

3.49

100823457

CHINA UNITED-A

3.47

0.2890173

52956284

PING AN INSURA-A

42.26

CHINA VANKE CO-A

11.7

0.4291845

65582888

POLY REAL ESTA-A

12.52

50162533

CHINA YANGTZE-A

7.1

0.2824859

11289904

QINGDAO HAIER-A

13.21

-0.3018868

8315444

10.38

1.964637

27787434

QINGHAI SALT-A

PRICE DAY %

Volume

CHONGQING CHAN-A

ZTE CORP-A

MOVERS 146

118

36 2470

INDEX 2464.851 HIGH

2468.32

LOW

2419.51

52W (H) 2791.303 (L) 2102.135

2410

16-April

18-April

0.03705076

4224804

PRICE DAY %

Volume

PRICE DAY %

Volume

67.8 -0.2941176

6046529

TAIWAN MOBILE CO

102 -0.9708738

2309306

78 -0.3831418

3535690

TPK HOLDING CO L

619

-1.275917

4494427 32294804

FTSE Taiwan 50 Index NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP ASUSTEK COMPUTER AU OPTRONICS COR CATCHER TECH

23.45

NAME

0.4282655

11331412

FORMOSA PLASTIC

25.1 -0.9861933

17567455

FOXCONN TECHNOLO

36 -0.6896552

2553661

FUBON FINANCIAL

40.4 -0.2469136

19510112

TSMC

99.9

-0.1

UNI-PRESIDENT

57.3

-2.051282

9229410

UNITED MICROELEC

11.1 -0.8928571

24814388

4254606

HON HAI PRECISIO

76.7

-1.287001

45482579

13.15

324 -0.6134969 1.937984

101853112

HOTAI MOTOR CO

251

255700

149

1.360544

17050802

HTC CORP

282

3.676471

23049123

-1.023891

7776441

CATHAY FINANCIAL

37.25 -0.6666667

19087529

HUA NAN FINANCIA

16.65

0.3012048

3358629

YUANTA FINANCIAL

14.3

1.41844

7615850

CHANG HWA BANK

16.6 -0.3003003

4887176

LARGAN PRECISION

722

-3.217158

1972671

YULON MOTOR CO

50.6 -0.7843137

3644010

CHENG SHIN RUBBE

99.3

0.5060729

9098859

LITE-ON TECHNOLO

50.1

-1.183432

4339175

CHIMEI INNOLUX C

17.65

0.5698006

59829290

MEDIATEK INC

7.9 -0.3783102

26590479

MEGA FINANCIAL H

22.75

0.2202643

17931536

CHINA STEEL CORP

25.35 -0.5882353

10856586

NAN YA PLASTICS

53.1

-1.848429

5739355

CHINATRUST FINAN

17.45 -0.2857143

61476166

PRESIDENT CHAIN

181

-2.162162

1071659

93.2 -0.4273504

4465688

QUANTA COMPUTER

57.2

-1.37931

12806276

31.45 -0.9448819

15141200

CHINA DEVELOPMEN

CHUNGHWA TELECOM COMPAL ELECTRON

346 -0.2881844

3357445

18.65

-1.061008

17887336

SILICONWARE PREC

DELTA ELECT INC

135

3275668

SINOPAC FINANCIA

14.2

0.7092199

11348667

FAR EASTERN NEW

31.2 -0.6369427

9981401

SYNNEX TECH INTL

50.3 -0.5928854

4458576

FAR EASTONE TELE

70.4

4528202

TAIWAN CEMENT

38.05 -0.9114583

5396843

0.8595989

WISTRON CORP

FIRST FINANCIAL

17.5

5571839

TAIWAN COOPERATI

16.6 -0.3003003

5546704

FORMOSA CHEM & F

66.8 -0.5952381

2985946

TAIWAN FERTILIZE

70.7

1.873199

5081142

FORMOSA PETROCHE

75.5 -0.2642008

1636935

TAIWAN GLASS IND

27.15

-1.092896

719911

MOVERS

3 5420

INDEX 5388.48 HIGH

5418.78

LOW

5352.09

52W (H) 5639.93 5350

(L) 4719.96 16-April

18-April

April 19, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 31.4

59.2

16.5

31.2

58.6

16.4

31.0

58.0

16.3

30.8

57.4

16.2

39.20

18.50

21.5

38.85

18.45

21.4

38.50

18.40

38.15

18.35

37.80

18.30

21.2

Commodities PRICE

WTI CRUDE FUTURE May13

DAY %

YTD %

86.92

0.27688048

BRENT CRUDE FUTR Jun13

98.17

GASOLINE RBOB FUT May13

274.38

GAS OIL FUT (ICE) Jun13 NATURAL GAS FUTR May13 HEATING OIL FUTR May13 METALS

(H) 52W

(L) 52W

-6.698153714

106.0899963

0.491360476

-9.05132481

116.6699982

90.91999817

0.542323195

-5.190048376

330.369997

237.7199888

829

-0.120481928

-9.100877193

992.75

799.25

4.195

-0.450878026

21.48856067

4.290000439

3.072000027

275.23

0.647261025

-8.978768437

327.1399975

258.5000038

Gold Spot $/Oz

1387.24

0.513

-16.6553

1796.08

1322.06

Silver Spot $/Oz

23.42

0.4181

-22.2185

35.365

22.0713

Platinum Spot $/Oz

1432.3

-0.3097

-5.63

1742.8

1374.55

672

-0.6432

-3.9533

786.5

553.75

1895

-0.992685475

-8.586589484

2200.199951

1818 7038.75

Palladium Spot $/Oz LME ALUMINUM 3MO ($) LME COPPER 3MO ($)

7080

-3.01369863

-10.73004665

8496.75

LME ZINC

1877

-1.002109705

-9.759615385

2230

1745

15425

-1.782871697

-9.583821805

18920

15236 14.5

3MO ($)

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

Jul13

SUGAR #11 (WORLD) Jul13

CROSSES

-0.515132003

-0.226025186

16.95000076

-8.031552528

824

527

714

0.954400848

-10.04724409

900

664.75

1387

0.507246377

-0.591291883

1605.75

1217.75

137.35

0.365363537

-8.157806754

202.1999969

133.5500031

NAME

17.52999878

ARISTOCRAT LEISU

69.94999695

CROWN LTD

17.83

COTTON NO.2 FUTR Jul13

ASIA PACIFIC

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

15.45

SOYBEAN FUTURE Jul13 COFFEE 'C' FUTURE Jul13

COUNTRY MAJOR

641.25

WHEAT FUTURE(CBT) Jul13

21.0

86.61

0.224845419 -0.046162724

-9.675785208 12.67074281

23.54999924 94.19999695

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

1.0325 1.5229 0.9318 1.3045 98.09 7.9956 7.7629 6.1811 54.0475 28.75 1.2353 29.88 41.235 9716 101.278 1.2155 0.85659 8.0636 10.4299 127.96 1.03

-0.2608 -0.1704 -0.7512 -0.6852 -0.1733 -0.0013 -0.0039 -0.1359 0.2914 0.313 -0.0486 -0.0368 0 -0.0515 0.082 -0.0576 0.5218 0.7987 0.7037 0.5158 0

-0.5107 -5.8544 -1.76 -1.0993 -12.2235 -0.1551 -0.1584 0.8008 1.7531 6.3652 -1.1252 -2.8347 -0.5578 0.7925 -11.8002 -0.6598 -4.8063 1.9086 0.9636 -11.2457 -0.0097

1.0625 1.6381 0.9972 1.3711 99.95 8.0111 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 1.032

0.9582 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1699 51.3863 28.74 1.2152 28.913 40.54 9175 74.482 1.20051 0.77553 7.7018 9.6245 94.12 1.029

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

3.58

-3.763441

13.65079

3.94

2.29

1852420

12.75

-0.8553655

19.49391

12.95

8.06

1792566

AMAX HOLDINGS LT

0.82

-1.204819

-41.42857

1.96

0.75

61750

BOC HONG KONG HO

25.3

4.979251

27.1

20.85

11488345

CENTURY LEGEND

NAME

21.1

Currency Exchange Rates

NAME ENERGY

21.3

CHEUK NANG HLDGS

VOLUME CRNCY

0.3

13.20755

0.42

0.215

6.08

0.6622517

1.502508

6.74

2.8

42650

CHINA OVERSEAS

22.45

1.58371

-2.813854

25.6

14.624

26516014

CHINESE ESTATES

13.4

-0.5934718

10.47521

13.68

7.697

1187396

CHOW TAI FOOK JE

9.76

-0.4081633

-21.54341

13.4

8.4

3345767

EMPEROR ENTERTAI

2.16

-4.845815

14.28572

2.49

1.1

1070364

FUTURE BRIGHT

2.08

-1.886792

70.4918

2.75

0.74

4196000

-0.8

2.141679

35.7

16.94

8134151

122.9

-1.046699

3.538335

131.5

99.2

1178295

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14618.59

-0.9364509

11.55704

14887.51

12035.08984

NASDAQ COMPOSITE INDEX

3204.673

-1.836533

6.132094

3306.95

2726.68

FTSE 100 INDEX

6263.17

0.3036413

6.194839

6533.99

5229.76

HANG SENG BK

DAX INDEX

7543.64

0.541248

-0.9031329

8074.47

5914.43

HOPEWELL HLDGS

28.3

-3.577513

-14.88722

35.3

19.049

2633505

HSBC HLDGS PLC

79.65

-0.3752345

-2.029524

88.45

59.8

11016272

NIKKEI 225

13220.07

-1.216628

27.17501

13568.25

8238.96

HANG SENG INDEX

21512.52

-0.2649554

-5.050997

23944.74

18056.4

CSI 300 INDEX

2464.851

0.2594293

-2.302891

2791.303

2102.135

TAIWAN TAIEX INDEX

7791.35

-0.2269156

1.192936

8089.21

HUTCHISON TELE H

3.69

3.651687

4.05

2.98

2436000

LUK FOOK HLDGS I

20.35

-0.4889976

-16.59836

30.05

14.7

3975600

MELCO INTL DEVEL

13.4

48.72364

13.96

5.12

1625000

6857.35

MGM CHINA HOLDIN

16.3

-1.212121

22.75687

18.449

9.509

4571539

MIDLAND HOLDINGS

3.41

-7.837839

3.249

934000

NEPTUNE GROUP

0.138

-0.7194245

-9.210523

0.226

0.084

1667000

NEW WORLD DEV

12.66

-1.401869

5.324455

15.12

7.95

19610326

1526.6

SANDS CHINA LTD

39.1

3.30251

15.16936

41.05

20.65

9684132

SHUN HO RESOURCE

1.46

1.388889

4.285716

1.67

1.03

954.265

755.149

SHUN TAK HOLDING

3.95

-1.002506

-5.727925

4.65

2.56

1528000

4307.78

3238.77

SJM HOLDINGS LTD

18.44

-0.2164502

2.444444

22.15

12.34

7411892

-7.670454

17.38

12.5

1583299

WYNN MACAU LTD

21.3

-0.234192

1.670641

25.5

14.62

3412355

ASIA ENTERTAINME

4.85

-2.610442

58.49673

6.12

2.4

166584

41.74

539697 26365

KOSPI INDEX

1900.06

-1.23607

-4.856663

2042.48

1758.99

S&P/ASX 200 INDEX

4924.416

-1.601321

5.925334

5163.5

3985

5008.373

0.1944524

16.02354

5011.091

3635.283

FTSE Bursa Malaysia KLCI

1709.98

-0.05786191

1.245154

1716.47

NZX ALL INDEX

947.48

-0.7091455

7.417582

PHILIPPINES ALL SHARE IX

4305.72

0.1553835

16.40291

JAKARTA COMPOSITE INDEX

GALAXY ENTERTAIN

SMARTONE TELECOM

HSBC Dragon 300 Index Singapor

641.11

0.04

3.22

STOCK EXCH OF THAI INDEX

1522.02

0.03220443

9.346013

1601.34

1099.15

HO CHI MINH STOCK INDEX

473.21

-2.227319

14.37652

518.46

372.39

BALLY TECHNOLOGI

47.75

-1.322587

6.799376

52.7

Laos Composite Index

1339.84

0.6883699

10.29577

1455.82

980.83

BOC HONG KONG HO

3.28

6.840393

3.59

2.7

GALAXY ENTERTAIN

4.12

3.778337

4.57

2.25

200

INTL GAME TECH

16.21

-1.458967

14.39661

17.49

10.92

4067091

JONES LANG LASAL

91.47

-2.867155

8.97069

100.91

61.39

486884

LAS VEGAS SANDS

52.87

-2.883909

14.5364

56.83

32.6127

6109309

MELCO CROWN-ADR

22.14

-3.73913

31.47268

23.69

9.13

7103624

MGM CHINA HOLDIN

2.1

13.51351

2.44

1.36

10000

MGM RESORTS INTE

12.45

-0.3202562

6.95876

14.08

8.83

11228996

SHFL ENTERTAINME

14.91

-2.357564

2.827586

18.37

11.75

229204

SJM HOLDINGS LTD

2.35

-3.292181

1.731604

2.85

1.65

17100

124.33

-2.133186

10.52538

129.6589

84.4902

1360105

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

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April 19, 2013

Opinion

Central banks’ outdated independence

Mario I. Blejer

Former governor of the Central Bank of Argentina and former Director of the Centre for Central Banking Studies at the Bank of England

he global financial crisis has raised fundamental questions regarding central banks’ mandates. Over the past few decades, most central banks have focused on price stability as their single and overriding objective. This focus supported the ascendancy of “inflationtargeting” as the favoured monetary policy framework and, in turn, led to operational independence for central banks. The policy was a success: the discipline imposed by strict and rigorous concentration on a sole objective enabled policymakers to control – and then conquer – inflation. But, as a consequence of this narrow approach, policymakers disregarded the formation of asset- and commodity-price bubbles, and overlooked the resulting banking-sector instability. This, by itself, calls for a review of the overall efficacy of inflation-targeting. Moreover, after the financial crisis erupted, central banks were increasingly compelled to depart from inflation targeting, and to implement myriad unconventional monetary policies in order to ameliorate the consequences of the crash and facilitate economic recovery. With advanced economies struggling to avoid financial collapse, escape recession, reduce unemployment, and restore growth, central banks are being called upon to address, sometimes simultaneously, growing imbalances. This has triggered a search for a radical redefinition of central banks’ objectives – and has cast doubt on the appropriateness of maintaining their independence. In particular, central banks’ behaviour during the crisis has called into question whether inflation-targeting is an effective framework in the presence of systemic shocks, and, more broadly, whether it can be sustained throughout economic cycles. After all, a policy regime that sets aside its only goal during a crisis seems to lack the ability to cope with unexpected challenges. Critics identify this “crisis straitjacket syndrome” as the main problem with single-minded inflation targeting.

departures from policy, the reality is that in the post-crisis world, advanced-country central banks’ goals are no longer limited to price stability. In the United States, the Federal Reserve has essentially adopted a quantitative employment target, with nominal GDP targets and other variations under discussion in other countries. And financial stability is again a central-bank responsibility, including for the more conservative European Central Bank. This shift toward multiple policy objectives inevitably reduces central-bank independence. Some analysts have recently claimed that this is because the pursuit of GDP growth, job creation, and financial stability, as well as the establishment of priorities when there are trade-offs, clearly requires political decisions, which should not be made by unelected officials alone. Moreover, by pushing interest rates toward zero, the current policy of quantitative easing (increasing money supply by buying government securities) has strong, often regressive, income effects. Opponents of central-bank independence contend that, given the allocational and distributional consequences of current monetary-policy interventions, central banks’ decision-making should be

subject to political control. But this argument neglects an important point. While it is true that multiple policy targets tend to increase the political sensitivity of central banks’ decisions, concentrating only on price stability also has important distributional consequences and political implications.

In fact, politicisation is a matter of scale, not a substantive transformation of monetary policymaking. The real reason why central-bank independence tends to create a democratic deficit under a multi-target monetary-policy regime, and why it has become increasingly vulnerable, is that the two main arguments in favour of it no longer apply.

Restoring balance

Given that central banks are likely to continue to pursue multiple objectives for a long time, their independence will continue to erode

The first argument in favour of central-bank independence is that, without it, politicians can exploit expansionary monetary policy’s positive short-run effects at election time, without regard for its long-run inflationary consequences. (By contrast, fiscal and exchange-rate policies rarely imply comparable temporal trade-offs, and thus are difficult to exploit for political gain.) But this argument becomes irrelevant when ensuring price stability is no longer monetary policymakers’ sole task. The second argument for institutional independence is that central banks have a clear comparative advantage in dealing with monetary issues, and can therefore be trusted to pursue their targets independently. But this advantage does not extend to other policy areas. Given that central banks

are likely to continue to pursue multiple objectives for a long time, their independence will continue to erode. As long as governments do not encroach excessively on central-bank decision-making, this development will restore balance in policymaking and support policy coordination, particularly in times of stress. To ensure a positive outcome, policymakers should develop a fully transparent framework with well-defined “rules of engagement”. A strict framework for allowing, and at the same time limiting, government’s involvement in central-bank decisionmaking is particularly crucial in emerging markets, given that, in most of them, centralbank independence has contributed not only to the eradication of inflation, but also to institution-building. Central-bank independence is a peculiar institutional innovation. Seemingly irrefutable theoretical models underlie a paradigm that has changed in significant ways, and that, if preserved, is bound to cause serious political problems. Like it or not, policymakers must accept that central-bank independence will continue to weaken, and they should prepare to cope with the consequences. © Project Syndicate

Multiple objectives While theoretical arguments can be made to justify recent

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 19, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

A Chinese pivot? Jaswant Singh

Former Indian finance minister, foreign minister, and defence minister

China Daily Premier Li Keqiang called for better efforts to ensure growth and boost domestic consumption, as the State Council met to review the economy’s performance and map out its policy focus in the coming months. The National Bureau of Statistics reported on Monday that GDP growth in the first quarter was 7.7 percent year-on-year, compared with 7.9 percent in the fourth quarter. Mr Li was quoted as saying first quarter growth was at a “reasonable level”. The State Council expressed readiness to make greater headway in reforms, while keeping macroeconomic policies largely steady.

Asahi Shimbun Prime Minister Shinzo Abe will head a large delegation of industry executives to Russia at the end of this month as part of an initiative to crack open the Russian market. Executives from nearly 50 major corporations are joining the delegation. The Japan Bank for International Cooperation is slated to sign a memorandum with the Russian Direct Investment Fund over the establishment of a system to jointly invest in new businesses. The total amount of investments is estimated around 200 billion yen (US$2.04 billion).

Korea Herald The Defence Ministry said it will submit a 217.4 billion won (US$194.3million)supplementary budget to the parliament for approval to increase spending on weapons on the frontlines and shelters on border islands. The Cabinet approved an extra budget worth 17.3 trillion won for this year in a bid to revitalise the economy faced with gloomy market conditions at home and abroad. The budget is the largest since 2009. If the bill is passed in parliament, a total of 34.5 trillion won will be set aside for this year’s defence spending.

Jakarta Globe Indonesia appears to be softening a controversial mining policy amid industry criticism and legal challenges to rules whose implementation could cost Southeast Asia’s largest economy up to US$10 billion a year in lost exports. The world’s top exporter of thermal coal, refined tin and nickel ore has pushed to boost exports of finished products and maximise benefits from the sector. Last year Indonesia asked all miners to submit plans to build refineries or smelters ahead of a January 2014 ban on raw mineral exports. Until then a 20 percent tax on ore exports has been levied.

s China, under its new president, Xi Jinping, undertaking its own diplomatic pivot, parallel to the United States’ “pivot to Asia”? Xi’s first significant international initiatives – making Russia his first official visit abroad, followed immediately by his attendance at the BRICS summit in South Africa – suggest that China may be seeking to place its relations with the world’s most powerful emerging countries on a par with its U.S. diplomacy. Indeed, this possibility is supported by Xi’s recent statement about relations with India, which he termed “one of the most important bilateral relationships” for China. Xi’s early focus on SinoIndian relations is unusual for a Chinese leader. He enunciated a five-point platform, rather like Jawaharlal Nehru’s “five principles of peaceful coexistence,” implemented in the two countries’ Panchsheel Treaty of 1954. According to Xi’s platform, pending a final settlement of territorial issues, the two countries should cooperate to maintain peace and tranquillity and prevent border disputes from affecting the overall relationship. China and India should maintain close strategic communications in order to keep bilateral relations on the “right track”. Moreover, the two countries should harness each other’s comparative strengths and expand mutually beneficial cooperation in infrastructure, investment, and other areas; strengthen cultural ties to advance an expanding friendship; and enhance their cooperation in multilateral forums to safeguard the legitimate rights and interests of developing countries in tackling global challenges. Finally, they should accommodate each other’s core concerns. While Xi has been preoccupied with his country’s domestic challenges since becoming Chinese Communist Party (CCP) General-Secretary last November, and now as president since March, relations with India can have a direct impact on internal conditions. For example, China’s desire to prevent drug trafficking in its southern province of Yunnan means that its police and security forces are taking a keen interest in what happens in Myanmar, a country that is also of special interest to India. Then, of course, there is Tibet, perhaps China’s greatest domestic security concern, and also a perennial source of tension with India, owing to territorial disputes. China’s recent anger over a visit by the Dalai Lama to the Tawang monastery in Arunachal Pradesh, Indian territory claimed by China, suggests just how potent this issue remains. Hu Shisheng, a leading South Asia

strategic analyst at the China Institutes for Contemporary International Relations, has suggested that such visits do not mean that “India-China relations are [in a state of] disturbance,” though the potential for trouble remains high.

New chapter Under Xi, however, China seems to be accentuating the positive. The CCP’s official newspaper, the People’s Daily, recently identified the “two areas of interest with India” that matter most. With the border issue “effectively controlled,” there should be greater focus on “trade and multilateral issues,” where success could bring about a “new” and welcome “chapter” in bilateral ties. So is “mistrust” between the two powers diminishing? The People’s Daily seems to consider bilateral relations as normal at this point. India appears to be equally hopeful. Indeed, a senior Indian official, speaking a b o u t tensions in the South China Sea, was recently q u o t e d as saying: “You can’t assume that India-China maritime rivalry is inevitable.” The “IndoPacific is one geopolitical area,” the o f f i c i a l reportedly said, “but look at the situation in the Indian Ocean. The situation near China, whether in the East China

Sea, near Japan, or in the West Pacific, is completely different. India, China, and the U.S. – everyone needs sea links; everybody’s energy goes through it.” A classified report from India’s defence ministry, however, emphasises the “increasing number of Chinese submarines venturing into the Indian Ocean region, thus posing [risks] to India’s security interests”. The report indicated that at least “22 contacts were recorded with vessels suspected to be Chinese attack submarines patrolling outside Beijing’s territorial waters last year,” and warned that the “implicit focus” of China’s navy appears to be “to control highly sensitive sea lines of communication.” Xi’s efforts to cement ties with China’s other huge neighbour, Russia, should be seen as complementing his outreach to India. Here, Xi has been aided by Russian President Vladimir Putin’s

evident disdain for the U.S. and the West. China shares Russia’s suspicions in this regard; indeed, Xi proclaimed that, in terms of geopolitics, Russia and China “speak a common language.” There are, of course, perfectly legitimate reasons for close Sino-Russian relations. They are partners in the Shanghai Cooperation Organisation. China is the world’s largest energy consumer, while Russia is the biggest energy provider. And bilateral trade is booming, worth US$88 billion per year. Xi’s own regional pivot should be viewed as part of his grand vision of a “revitalisation of the Chinese nation,” which essentially calls for China to resume the paramount leadership in Asia that it has exercised for much of its history. His ambitions are vast, yet he, and the Chinese people, appear determined to achieve them. That is far more than can be said of India’s rather woolly strategic meanderings. © Project Syndicate

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April 19, 2013

Closing Italy’s first presidential vote fails

No need for ‘drastic’ Spain budget cut

Italy’s Parliament failed to elect a president in a first round of voting yesterday after a compromise candidate sparked dissent in Pier Luigi Bersani’s Democratic Party. The failure after defections from Mr Bersani’s bloc prevented ex-Senate speaker Franco Marini (pictured) from gaining the necessary twothirds majority. Mr Bersani and Silvio Berlusconi came together to back Mr Marini in a deal that was contested by some Democratic Party members and its allies. A second vote was set to take place later yesterday.

Spain, which wants Brussels to agree to relax its deficit targets, should avoid a “drastic” reduction to its public deficit, the International Monetary Fund head said in an interview published yesterday. Countries “which follow a pattern of high debt and high deficits have to adopt immediate measures. The key question is the speed which they take those measures,” Christine Lagarde told Expansion. For Spain “there is no objective reason to rush towards a drastic reduction in the deficit,” she added.

German parliament backs Cyprus aid

Morgan Stanley posts higher profits

Bundestag also approves deal to give Ireland, Portugal more time

US investment bank Morgan Stanley said yesterday it had swung to positive earnings as gains in global wealth management and asset management offset declines in some advisory and trading divisions. Morgan Stanley reported net income of US$958 million on revenues of US$8.2 billion, up from a loss of US$119 million on revenues of US$6.9 billion. However, Morgan Stanley said the results were weaker excluding some borrowings whose value fluctuates. Morgan Stanley said advisory revenues were lower due to lower levels of market activity, although equity underwriting revenues rose. The company also garnered higher revenues in debt underwriting. Fixed income and commodities sales were lower. Revenues in equity sales and trading also declined. Morgan Stanley reported higher global wealth management profits and a boost in asset management. Chief executive James Gorman said the company was looking forward to new business opportunities in Japan, given some of the shifts in Japan’s economic policy.

Angela Merkel votes on the rescue package for Cyprus

he German parliament approved an international bailout package for stricken eurozone member Cyprus by a large majority yesterday. In the Bundestag lower house, 486 deputies voted for the measure with 104 against and three abstentions. MPs also overwhelmingly backed a deal by eurozone finance ministers giving Ireland and Portugal an extra seven years to repay aid they have received to allow them to consolidate progress. Eurozone finance ministers formally approved on Friday new terms for the Cyprus debt rescue that will cost far more than first thought -- 23 billion euros (US$30 billion) rather than 17 billion euros. Eurozone partners and the International Monetary Fund are to provide 10 billion euros of this amount while the Cypriot government will have to find the rest.

Germany will kick in about onethird of the international assistance. The debt rescue involves a radical restructuring of Cyprus’s bloated banking sector, with an economy heavily dependent on financial services now expected to shrink by up to 12.5 percent over the next two years. Finance minister Wolfgang Schaeuble had urged MPs to back the Cyprus rescue, citing the gradual recovery of other stricken eurozone members as evidence the aid-forreforms strategy worked. Speaking to the Bundestag, he said that countries such as Portugal and Ireland had shown that tough budget cutting coupled with international assistance could save a debt-mired country. “Both have undertaken enormous efforts, are fulfilling the requirements of their (rescue) programmes and are on the right track,” he said.

Mr Schaeuble also noted substantial progress made in the past three years in taming the eurozone crisis, with economic progress such as a hike in exports from southern European countries as well as a sharp drop in public deficits. Striking a conciliatory note, the usually tough-talking Mr Schaeuble noted that Germany’s preaching of austerity in Europe sometimes lacked compassion for the sacrifices made by the people of crisis-battered countries. “In our country in particular where the euro crisis is not felt in everyday life we must issue a reminder that the people in Greece, Portugal and Cyprus are going through tough times,” he said. But he stressed there was “no other way” than fiscal discipline to achieve sustainable long-term stability and growth. AFP

Nokia sales tumble overshadows Lumia pick-up A big fall in sales of Nokia’s basic phones overshadowed a stronger performance from its Lumia smartphones in the first quarter, and it said it expected operating margins to deteriorate, sending its shares tumbling. The Finnish mobile phone maker also reported an unexpected fall in sales at its previously upbeat equipment venture Nokia Siemens Networks. Investors have been growing impatient about seeing results from chief executive Stephen Elop, who was hired in 2010 and took the decision to switch to the untried Windows software in early 2011. Mr Elop had said the transition would take about two years, a period that’s now over, raising questions about how much longer he has to show the company is on the right track. The company has been bleeding cash in the meantime and was forced to cancel its dividend and sell and lease back its headquarters.

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