Macau Business Daily, April 22, 2013 by Business Daily

Real estate bubble will burst: Martins

Macau has a “serious” property asset bubble that will burst sooner or later, once easy access to cheap loans wears off, economist Albano Martins warned. In an interview with Business Daily he called on the government to intervene. He wants to see non-residents banned from buying more than one property in the city and to see banks required to raise their reserve rate. Mr Martins also predicted that gaming industry revenue growth would slow this year, but that the local economy would remain highly dependent on casinos.

Pages 6 & 7

Sellers need ‘realism’ on second-hand home prices

he market for second-hand flats is being strangled by unrealistic prices, Centaline (Macau) Property Agency Ltd reflected in a March property review. The special stamp duty implemented in 2011 was the major factor that dampened the second-hand homes market, the agency says. But a bank’s valuation of a recycled home is often far from the price being asked it, which then requires a hefty down payment from the buyer. In the end many prospective homeowners decide to buy newly built flats instead, the agency says. And that trend will continue unless owners of second-hand homes lower their prices. Centaline expects the first-hand home market to remain more active during the rest of the year, while the second-hand segment is forecasted to continue slumping. Page 3

www.macaubusinessdaily.com

Year II

Number 266

Monday April 22, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief Vitor Quintã

MOP 6.00

April 19, 2013

Non-residents missing out on benefits: report

I SSN 2226-8294

Hang Seng Index

Macau employers are using temporary contracts to shirk the benefits owed to nonresident workers, the U.S. Department of State said in a report. Imported labour often complains of discrimination in the workplace. But “the lack of coordination” between different public bodies means their plight usually goes unheard, it suggests. The report also mentions last year’s political reform as nothing more than “preserving the status quo”. Page 2

Okada gets supplier approval in California California’s gaming regulator has issued a gaming resource supplier licence to Aruze Gaming America, a casino equipment maker controlled by former Wynn Resorts Ltd director Kazuo Okada. But the California Gambling Control Commission says it will continue to monitor a U.S. Department of Justice inquiry into him. He’s officially under criminal investigation in the United States relating to a US$2.3 billion (18.4 billion patacas) Philippines casino project. Page 5

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Wise up on budgets, top auditor tells govt The administration must use public money more wisely. Heads of government departments and bodies must be held accountable for their actions, adds Commission of Audit director Ho Veng On. “…departments cannot treat public resources as their own and let their budgets balloon endlessly,” he told media on Friday. The Commission of Audit has been critical of the government in a number of recent reports, accusing it of mismanaging its budgets and the subsidies granted to non-profit organisations. Page 4

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April 19

HSI - Movers Name

%Day

LENOVO GROUP

9.46

CHINA UNICOM HON

7.32

CHINA OVERSEAS

5.79

CHINA RES LAND

5.42

IND & COMM BK-H

3.95

CLP HLDGS LTD

TINGYI HLDG CO

POWER ASSETS HOL

BELLE INTERNATIO

-0.16

LI & FUNG LTD

-0.59

Source: Bloomberg

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April 22, 2013

Macau opinion

Police state

Temporary contracts used to dodge staff benefits: report Non-resident workers still feel discriminated against, U.S. Department of State says Vítor Quintã

vitorquinta@macaubusinessdaily.com

Paulo Rego

paulorego.pontofinal@gmail.com

here was an appalling statement issued by the director of the Judiciary Police last week. It covered February’s arrest of New Macau Association president Jason Chao and two activists, who had attempted to hand the chairman of the National People’s Congress at the time, Wu Bangguo, a letter requesting universal suffrage. The arrests were what might have been expected in a police state rather than a special administrative region where the rule of law is firmly established by the Joint Declaration and the Basic Law. Judiciary Police director Wong Sio Chak said the “papers” presented were “dubious” and that one of the activists had “unfavourable records”. Fortunately, he dropped a previous attempt to justify the police action on the grounds that the papers were “soiling the ground”. In case there was any doubt, it is now official that the actions of the trio did not disturb public order and that there was no offence against the authorities. In the end, Mr Wong conceded that the petition was a challenge to the allconsuming pursuit of harmony. In other words, the clear political content of the letter and the activist past of one protagonist “legitimised” the arrests. There is a huge difference between barring access to the Macau Tower and barring access to the chairman of the National People’s Congress. Barring access to the chairman would have been legitimate, since none of the trio had journalist’s credentials and none had been invited. The decision to take the trio to a police station in order to teach them not to disturb the country’s leaders reveals how thin the line is between a police state and the sort of special administrative region we think we live in. In the Legislative Assembly, Mr Wong went so far as to mock questions by Au Kam San, in effect denigrating Mr Au’s intellect and his duty to explain to the police what the Basic Law says about freedom of expression. Even more uncomfortable was the silence in the assembly, which left the members of the New Macau Association looking like aliens from outer space, in a land where rights are observed with an authoritarian bias. I expect the day is coming when Mr Chao and other activists will be barred from entering Hong Kong or Taiwan, where the public is bound to be terrified by the “radical” theories and “dangerous” actions of Macau activists. No wonder, then, that accusations of breaches of human rights reach the United Nations and “those Americans” who are ignorant of Macau. I find it surprising that Macau wants to be a part of any international agreements on politics or rights. I suspect that this column, like others before it, will be classified as “dubious” and included in a file of “unfavourable” records. The Judiciary Police have apologised to journalists that, in circumstances similar to those of February’s arrests, have had “dubious papers” snatched from them. I should probably apologise to Mr Wong for being so agitated about his actions and speeches because I know that his words are not his own. I believe the decision to detain the activists was the police’s in much the same way that I believe in Santa Claus or that the trio’s petition contained any real threat to the country. Good people wonder why the New Macau Association is classified as a pro-democracy party. Their doubts would be justified if it were not for all the individuals shooting themselves in the feet and rolling out for the association a red carpet leading to that lofty pedestal. Paulo Rego is the news editor of the Portuguese-language newspaper Ponto Final

Imported labour accounts for almost one-third of all workers here

acau employers are using temporary contracts to shirk the benefits owed to non-resident workers, the U.S. Department of State said in a report. “Labour groups reported

that employers increasingly used temporary contracts to circumvent obligations to pay for such workers’ benefits as pensions, sick leave, and paid holidays,” the report adds. “The short-term nature of the

Hotel rooms cheaper in March

taying at Macau’s five- and four-star hotels last month was cheaper than a year earlier, data from the Macau Hotel Association show, while the price of three-star hotels soared. In March the average rate for a hotel room in the city was 1,367 patacas (US$171), down by 1.5 percent year-on-year. The drop was mostly due to a 3.1 percent cut to 1,599 patacas in the rate at five-star hotels, which represent most of the association’s members – and most of Macau’s hotels. As a result the average room rate at a five-star hotel for the first quarter fell by 0.7 percent to 1,717 patacas. It is the first time since 2009, when Macau was feeling the impact of the global financial crisis, that any of the city’s hotels are cheaper year-on-year. On the contrary the average price of three-star hotel rooms increased by 7.44 percent to 1,037 patacas. This figure is much higher than the 816-pataca average charged at four-star hotels. The Macau Hotel Association gathered its data from 40 of its 42 members, comprising 22 hotels with five stars, 11 with four stars and nine with three stars. Conrad and Holiday Inn, both at Cotai Central, were not yet included. V.Q.

written contracts made it easier to dismiss workers through nonrenewal,” the 2012 Human Rights Report on Macau says. At the end of February there were a record-high 113,276 non-resident workers here. “They often complained of discrimination in the workplace. The Macau Lawyers Association claimed that foreign workers were often paid less than their Macau counterparts,” the report adds. There is no available official data on the wages of non-resident workers. But the median wage for residents was 13,000 patacas (US$1,600) last year and 11,300 patacas for the overall workforce. A revision of the law on hiring imported labour enforced last week tries to ensure that if a worker can demonstrate a just cause – such as abuse, nonpayment of wages, or contract violation – for leaving their job he or she won’t have to leave Macau for six months. But “the lack of coordination” between the Labour Affairs Bureau and the Immigration Services “meant that workers filing complaints could be dismissed, deprived of their immigration status, and forced to depart before their complaints could be resolved,” the report says. The U.S. Department of State also highlighted on Friday that “there was a significant difference in salary between men and women, particularly in unskilled jobs”. The median wage of women here was 10,000 patacas last year, below the median salary of men, 12,000 patacas, official data show. The government-backed political reform introduced last year is also mentioned: “Most observers assessed the move as preserving the status quo rather than as a real political reform.” The move added two directly elected and two indirectly elected seats to the Legislative Assembly, while also increasing the members of the committee that elects the chief executive from 300 to 400. “Critics viewed this change as nothing more than expanding the size, rather than broadening the representativeness of the pro-Beijingdominated body,” the report says.

Workers filing complaints could be dismissed (...) and forced to depart before their complaints could be resolved U.S. Department of State

April 22, 2013

Macau SJM sponsors Macau Derby for 11th year A horse called Lucky and Wealthy won the SJM Macau Derby yesterday. The Group 1 race, run over 1.8 kilometres (1.1 miles) attracted a field of 14 runners. There was a prize pool of HK$2.60 million (US$335,000) for the headline event, and total prize money of HK$8.34 million for the whole meeting, held at the Macau Jockey Club, Taipa. It was the eleventh consecutive year the event has been sponsored by Macau casino operator Sociedade de Jogos de Macau S.A. Company directors Angela Leong On Kei and Ambrose So Shu Fai presented the prizes.

High cost of second-hand homes strangling market Buyers seeking out new flats in the face of unrealistic prices and poor bank valuations for second-hand homes Stephanie Lai

sw.lai@macaubusinessdaily.com

Centaline Macau’s property market review predicts that new homes will remain attractive investments this year

ver-priced, unloved and unwanted, second-hand flats are the least sought after property investment, according to a review of the real estate market by Centaline (Macau) Property Agency Ltd. Centaline’s March review of the market also says developers and estate agents have begun the rush to sell unfinished flats – including flats in Areia Preta’s Pearl Horizon development – before a bill governing pre-sales becomes law. The review says the special stamp duty imposed in 2011 has been the main calming influence on the market for second-hand homes. The government levies a special stamp duty of 20 percent on the sale of dwellings within 12 months of their purchase, and of 10 percent on the sale of dwellings within one to two years of their purchase. The review says bank valuations of second-hand homes are far from the prices asked by sellers. “The mortgage threshold for second-hand homes is high, as the banks’ valuation is usually 5 to 15 percent lower than the property price,” the estate agency’s sales director, Noelle Cheung, says in the review. “And as a big gap exists between

the banks’ valuation and the property price, that greatly adds to the buyers’ purchasing cost. “The property price for a twobedroom flat [in] a 10-year-old building is around 5 million patacas [US$625,000] and the downpayment is roughly 2 million patacas. “The downpayment is 40 percent of the property price, which is quite a burden on buyers switching to a new home.” The government imposed tighter limits on mortgage lending in October. Banks are now permitted to lend a Macau resident up to 60 percent of the value of a home priced between 6 million patacas and 8 million patacas. “The cash these buyers get from selling their original home is usually not enough to pay off the downpayment,” Ms Cheung said.

Sluggish market Centaline’s review cites sales of second-hand flats in the Villa de Mer development in Areia Preta as an example of how depressed the market is. Just 11 second-hand flats in Villa de Mer were sold last month. About half that number were sold in February.

The estate agency’s data indicate that the average price at Villa de Mer was 6,704 patacas a square foot last month, 2 percent more than in February. The flats, built by Hong Konglisted Polytec Asset Holdings Ltd, range in size from 700 square feet (65 square metres) to 1,400 square feet. “We did not see an apparent rise in the transaction costs for secondhand flats,” Ms Cheung said. “As the purchasing cost for secondhand homes is high, buyers would rather opt for newly built flats.” The review predicts the new-home market will remain active and that there will be little improvement in sales of second-hand homes. The review says just one secondhand flat at another high-end development, One Grantai on Taipa, was sold between November and last month. The average price of a secondhand flat in One Grantai is 8,500 patacas a square foot. Flats vary in size from 1,944 square feet to 5,351 square feet. “Unless owners can become less aggressive on the price they quote for second-hand homes, there will be hardly any remarkable growth in second-hand flat sales in the near future,” Ms Cheung said.

editorial

A very particular problem

Michael Grimes

michael.grimes@macaubusinessdaily.com

ou may not believe in global warming, but you must surely by now believe in fine particulates. They’re part of the grim soup masquerading as fresh air that invaded your lungs every time you stepped outdoors in Macau last week. If anyone were in doubt that China’s environment is facing a disaster of monumental proportions, last week must surely have been a wake up – or perhaps a cough up – call. Last Monday the Meteorological and Geophysical Bureau told Business Daily that the concentration of fine particles – those smaller than 2.5 micrometres – recorded at roadside measuring points at 10am and again at 4pm was 180 micrograms per cubic metre. The World Health Organization’s air quality guidelines say a safe concentration for humans is an average – across a one-year period – of 10 micrograms of fine particles per cubic metre of air. I wouldn’t know what a micrometre particle was if it came up and kissed me on the lips before sliding down my throat. But I do know when I can’t breathe. And lack of breathability of the local air is not exactly a quality that I’m looking for in a global tourism destination. Lest this seem like China-bashing, I should point out that the whole country is essentially sacrificing its own air, water and land, in order to provide the rest of the world with cheap computer tablets, smartphones, fashion items and other goodies to which that same world has become addicted. Germany and Britain also sacrificed their environments in the 19th century when they became the workshops of the world. What’s less often remembered is it took about 150 years for their environments to recover. Arguably China is more of a team player – in the international sense – when it comes to reducing the scale and type of its own emissions than are the biggest per capita polluters in the West. China and India argue – with some justification – that it should be the countries that did most to get us in this mess that should move first and most decisively to get us out of it.

Good example Macau is rich enough and has enough autonomy on public policy to set examples for the rest of China – and the rest of the region – to follow. The gaming industry is already making some effort by extending the ‘Lights Out’ campaign – involving the dimming of exterior illuminations on casinos – from a once a year thing to a once a month event. The government could also help to reduce drastically the amount of energy needed to heat and also to cool local homes and offices. It could do so by introducing world-class insulation standards and double-glazed windows for newly built properties as part of a local building code. The administration could also give cash grants to owners of older properties to add insulation – as happens in some European Union countries. These might seem like small, ineffectual gestures, but it’s clear to me that events like last week simply cannot go on unchecked and unchallenged. What’s the point of 10 percent-plus GDP growth if the air is so wretched that your children cannot play outside?

I wouldn’t know what a micrometre particle was if it came up and kissed me on the lips. But I do know when I can’t breathe

April 22, 2013

Macau

Govt budgets ‘must not balloon endlessly’, audit chief warns

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HOSPITALITY Rising stars A rapid rise in the number of hotel rooms is the most tangible outcome of the development of the hospitality industry. In the past two years alone, the number of rooms has increased by more than 40 percent. This analysis compares data from beginning of 2011 with the most recent data, from February. In the intervening two years almost 8,000 hotel rooms were added to the city’s inventory, excluding rooms in guesthouses, which make up only a small proportion of all lodgings.

One feature of the recent growth is that the bulk of the new rooms are in top-tier hotels. Sometimes we listen to demands for a greater variety of room categories to cater to a broader range of tourists. But variety has not increased and that diversification seems unlikely to happen. Almost 6,700 of the 8,000 new rooms are in five-star hotels. The number of rooms in five-star hotels increased by 55.6 percent between January 2011 and February this year – from about 12,000 to just under 18,700. The growth in five-star accommodation accounts for about 84 percent of the increase in room supply. Including the 1,226 new rooms in four-star hotels, growth in top-tier accommodation accounts for 99.3 percent of all new rooms added in the past two years. Any increase in the number of rooms at three-star and twostar hotels is negligible. Consequently, rooms in three-star and two-star hotels make up a declining proportion of all hotel rooms. J.I.D.

The commissioner of audit says the government cannot treat public resources as its own Stephanie Lai

sw.lai@macaubusinessdaily.com

Ho Veng On says the Commission of Audit is not a court of auditors

he government must use public money more wisely, Commission of Audit director Ho Veng On has said. The Commission of Audit has been critical of government departments

and public bodies in a number of recent reports, and accused the government of mismanaging its budgets. Mr Ho did not say how or if the government had reacted to the

Birmingham Int. scores HK$74 mln half-year loss

B 68 %

The proportion of hotel rooms in five-star hotels in February

irmingham International Holdings Ltd, owner of Birmingham City Football Club in the United Kingdom, recorded a net loss of HK$74.18 million (US$9.6 million) for the six months ending December 31, 2012. In a profit warning to the Hong Kong Stock Exchange in early April the firm blamed a “decrease on profit on sales of players”. The soccer club is currently 10th in the Football League Championship, the second tier of English professional football and is BIHL’s main asset. BIHL bought ‘The Blues’ – then playing in the elite English Premier League – for 81.5 million pounds (1.03 billion patacas) in October 2009. The deal was underwritten by Kingston Securities Ltd – a unit of Hong Kong-listed Kingston Financial Group Ltd. The latter firm bought Casa Real casino hotel in Macau in 2005. BIHL’s chairman Carson Yeung Ka Sing is currently facing unrelated money laundering charges in Hong Kong. He faces trial later this month. M.G.

commission’s criticisms when he spoke to reporters on Friday. The government was not legally bound to take the commission’s advice on resource management and government departments singled out for criticism could ignore recommendations, he said. “We are an audit commission, not a court of auditors,” said Mr Ho. “Department heads and officials have to be responsible for their actions. “And the departments cannot treat public resources as their own and let their budgets balloon endlessly.” He said his comments were not directed at any particular government department or public body. Government spending has more than doubled since 2008, reaching 56.7 billion patacas (US$7.1 billion) last year. This year’s expenditure is budgeted at 73.99 billion patacas. Mr Ho promised to continue to improve the professional skills of his auditing team and to keep an eye on the management of public resources, but an expanded mandate for the commission had not been considered. The commission recently published reports on mismanagement of the budget for the Macau pavilion at the 2010 Shanghai World Expo, and the oversight of subsidies given by the Macau Foundation. The commission has criticised the Education and Youth Affairs Bureau’s continuing education scheme, and cost overruns in the construction of the University of Macau’s campus on Hengqin Island. The Macau Foundation, the city’s biggest sponsor of not-forprofit entities, has been the target of sustained criticism by members of the Legislative Assembly for the lenient administration of its grants. Macau Foundation director Wu Zhiliang said on March 25 that the institution had proposed to the government a standardised assessment of how recipients spent their grants. “By 2014 we will have a new accounting and audit standards for local not-for-profit organisations’ applications for our funding,” Mr Wu said. The bulk of the foundation’s money comes from a levy of up to 2 percent on the gross gaming revenue generated by gaming companies – about 6.1 billion patacas last year.

news where it matters

April 22, 2013

Macau

Okada gets California approval

Corporate MGM plans entertainment district for Las Vegas

But regulator ‘monitoring’ U.S. Federal investigation into him

Carnevale comes to The Venetian Macao

Michael Grimes

michael.grimes@macaubusinessdaily.com

alifornia’s gaming regulator has issued a gaming resource supplier licence to Aruze Gaming America, a casino equipment maker controlled by former Wynn Resorts Ltd director Kazuo Okada. But the California Gambling Control Commission says it will continue to monitor a U.S. Department of Justice investigation into him. Tina Littleton, executive director for the Commission, said in a prepared statement: “The pending investigation was a concern, but the commission ultimately unanimously decided to issue Aruze and Okada a two-year finding of suitability with the directive to keep the commission apprised of the investigation.” She added: “If there’s any finding of criminal activity, a revocation or other action may take place.” A statement from Mr Okada welcoming the California decision said that he and his companies have obtained first-time licences in 18 jurisdictions and licence renewals in several others since Wynn Resorts claimed in February 2012 he was “unsuitable” as a partner and posed a threat to the firm’s Nevada gaming licence because of alleged cash payments and gifts to Filipino gaming regulators. “Each of these new licences and renewals has been based on a determination that I am ‘suitable’,” Mr Okada said in a statement. According to a Nevada state

Kazuo Okada

court filing lodged by U.S. federal authorities on April 8, Mr Okada is officially under criminal investigation in the United States. The inquiry relates to a US$2.3 billion ( 1 8 . 4 b i l l i o n p a ta ca s ) Philippines casino project Mr Okada is planning, and alleged possible breaches of the U.S. Foreign Corrupt Practices Act say the papers. The statute bars payments to foreign officials. In January Cristino Naguiat, current chairman of the Philippines’ gaming regulator Pagcor – the Philippine Amusement and Gaming Corporation – told local media Mr Okada faced a Federal Bureau of Investigation probe in the U.S. – in addition to a Philippines Department of Justice inquiry into how he got a Philippines casino permit. That was not confirmed at the time by U.S. federal authorities. Reuters reported in March that the FBI and the Philippines’ National Bureau of Investigation were investigating allegations of US$40 million (320 million patacas) in payments to Rodolfo Soriano. Mr Soriano – understood to be a Philippine national – was described by Reuters as a “former consultant” to Pagcor and a “fixer” who assisted Mr Okada in his bid for a gaming resort on a planned strip of new Las Vegas-style casinos at Manila Bay. Mr Okada has denied any wrongdoing.

Representatives from Macau Government Tourist Office will attend the opening ceremony for Sands China Ltd’s Venetian Carnevale. It begins at The Venetian Macao on Thursday and runs until May 26. The event uses the theme of the Carnevale di Venezia, an annual festival in Venice, Italy, with roots dating back to the 12th century. The Macau version will feature Venice-themed activities including street entertainment and masked shows. During the original Italian version, all the participants wore masks, giving the opportunity for people of all social classes to mix anonymously and for lovers to meet secretly. Carnevale di Venezia was actually banned in 1797 by the city’s then Austrian rulers and only restored by the city authorities in 1979 after a near 200-year absence. The tradition of Sands China’s Venetian Carnevale began in 2011. The firm says that because of its past popularity with visitors this year’s event will be the longest and largest ever.

MGM Resorts International Inc last week unveiled details of a plaza and public park surrounding a 20,000-seat arena under development in Las Vegas. An entertainment district that will include dining, bar and retail spaces will connect the New York-New York and Monte Carlo resorts, the company said in a statement. Construction will begin in the front facades of New York-New York and Monte Carlo the coming weeks, with anticipated completion in early 2014. Jim Murren, chairman and chief executive officer of MGM Resorts International, said, “All great cities offer vibrant pedestrian experiences, and Las Vegas is certainly no exception, as The Strip is one of the world’s greatest boulevards”. “Our vision is to extend the excitement we traditionally create within our world-class resorts outside onto The Strip, and ultimately in an entertainment district leading to our new arena,” he added.

April 22, 19, 2013

Macau

Unpeg pataca, Martins urges

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Financial Monitor Rising red tide Macau’s merchandise trade deficit continues to increase. The deficit was 62.7 billion patacas (US$7.8 billion) last year, 69 percent more than in 2010 and 132 percent more than in 2008. In 2008, Macau still had a trade surplus with the Americas and, in particular, with the United States. One year later, as the global economic slowdown continued, Macau had a deficit in trade with the Americas and the city’s overall trade deficit had increased by 8 percent. Those years were exceptional as the international crisis was affecting the economy and its normal trade flows. However, the recovery since 2012 has not changed the fact that deficits are now the norm in Macau’s dealings with all major trading regions.

Macau should un-peg its currency from the U.S. dollar, says economist Albano Martins. Mr Martins believes low interest rates in the United States – and therefore in Macau – are making it too easy for outsiders to borrow to buy property here. In an interview with Business Daily, he said the consequence was a real estate bubble that might burst once access to cheap credit became harder. Mr Martins also warned about the perils of the economy being too dependent on the gaming industry. And he predicted that the casino industry’s growth would slow this year, inevitably hampering the economy Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

What are your expectations for Macau’s economy this year?

Since 2010, trade deficits with every part of the globe – the European Union, the Americas, Asia and the rest of the world – have increased. The increases in the city’s deficits with each trading area have developed at similar rates. The fastestgrowing deficit is in trade with the European Union, the deficit having risen by almost 71 percent. The slowest-growing trade deficit, with the countries in rest-of-the-world category, has grown by 67.2 percent. So the proportions of the trade deficit due to trade in goods with major trading partners have hardly changed. These figures are another manifestation of the disappearance of the manufacturing industry. And they underestimate it. The deficits would be bigger if re-exports, which have been increasing in value and relative share, were excluded from this analysis. J.I.D. The content of this column is the work of Business Daily’s journalists.

59.1 %

The proportion of Macau’s total trade deficit attributed to Asian partners

One of the main sectors responsible for the growth of Macau’s economy is the gaming industry. Everyone is happy with gaming growth, but people forget to see it in comparative terms. In absolute value, the gaming industry is growing (and it will not grow only if there are problems with the Chinese authorities regarding individual visas) but not at the same pace as in 2012. Gaming Inspection and Coordination Bureau data show that up to March accumulated growth in casino income was 13.8 percent. Last year, it was 27 percent. It means that last year growth in absolute terms, compared to 2011, was 16 billion patacas [US$2 billion] and this year only 11 billion patacas. It is growing but at a lower rate, compared to last year. When we transpose this to GDP, it means that growth in the gaming industry – a big component of GDP, almost the same size as GDP itself – will be less than 14 percent in real terms, probably around 6 percent to 8 percent. It means growth in the economy will not be much higher than that.

bigger than product imports. So the casino industry is the only one really pushing up GDP. We have a lot of casinos increasing their investment and this is also something that can push up GDP, but we still do not know if any project will be fully underway this year – maybe only the foundations. At nominal value, growth of the casino industry in 2012 was 13.5 percent, but in 2011 it was 42.5 percent and in 2010 it was 58.7 percent. So unless new casinos are built, the absolute value will be growing, but at a slower pace. The casino industry is still the main economic sector but the government is pushing for diversification. Do we see signs of that happening? In 2012, the total revenues of the casino industry was 302 billion patacas and our GDP was 348 billion patacas. We do not see any

manifestation [of diversification]. Even those industries that the government wants to grow, we cannot see them in the statistics. Can Macau diversify its economy if we change our strategy? It is difficult. I do not think Macau has much more to offer other than the gaming industry. Others will grow for sure, like the convention sector, but what kind of diversification is it when other sectors go down if the gaming industry goes down? This is not really diversification. It means we are too dependent on the gaming industry. Maybe later on, in 50 years’ time, we will have people coming here to enjoy this town, if the town is still enjoyable at that time. We have traffic. The prices are increasing at a rate even higher than in mainland China. Our human resources are very expensive and other industries around the gaming industry cannot survive because all these people will rush to the casino industry when, in 2015, new casinos open. We will have no human resources for the other industries. How can we achieve diversification if we do not have human resources?

Why is that?

Should the government change its policy regarding imported workers?

Because usually the casino industry dictates the growth pace, so it will be under two digits. The casino industry is growing too fast, but they are also buying too fast. They are buying from the outside. It means that imports will push down GDP, because the majority of our consumption comes from outside. In 2012 the biggest GDP component was service exports because of the gaming industry, but the second component, which had a negative effect on GDP, was service imports. Since 2010 service imports have been much

The government should look very carefully, and forget the idea that this is a free economy and that “we cannot intervene”. In real estate, the price of houses is jumping. The growth rate of the number of houses sold by nonresidents was much lower than the sales in value terms. The increase of sales is only 52.95 percent in housing, but in value terms it is 154.18 percent. This concerns us. If we look at who bought into the market there were more residents in 2012, which is understandable, considering the government measures to grant access to credit.

I do not think Macau has much more to offer other than the gaming industry

Stay in the finest hotels in Macau and read Business Daily

news where it matters

April 22, 19, 2013

Macau As for non-residents, they are buying fewer homes and spending less money, which means they are leaving the market. I think we have a serious bubble problem that will appear once there is no credit at all. Nonresidents will leave the market and there are not enough residents to buy those properties. The value of those properties has to go down. Is there a possibility of that bubble bursting in the near future? The question is when it will happen. If the government decides that non-residents cannot buy more than one property or nonresidents cannot enter the market just for speculation, the bubble will explode immediately. Residents have no say in any of this. Macau needs non-residents. We cannot close the market to them. But they should be allowed to buy only one property because we need property for residents. We cannot ask them to sleep in China. The government should act and forget that this is a “free market”. It is not a free market for the exchange rate, as we are pegged. It is not a free market for almost all telecommunications. Were the government measures to curb speculation effective? These still need to be upgraded. It is not only a problem of acting on the purchase of real estate but also of looking at the real problem. And the problem is that credit is too cheap. We have a problem being linked to the U.S. dollar because interest rates are so low that people from outside Macau come here and easily get credit. How much of residents’ deposits is lent to them? Fifty percent in 2010, and so far in 2013 it is 47.8 percent. If we look at non-residents, in 2010 145 percent was lent, and in January 2013 they were lent 168 percent, which means that non-residents come to Macau to get credit that is cheaper for them, and they easily buy property. As long as this continues there is no way the government can do anything. How to solve that? Unpeg. Other solutions: for instance, the government should set a ceiling in absolute terms determining how much money can be lent. In monetary policy, besides the interest rates, we have the reserve rate. The reserve rate compares credit with deposits. If the reserve rate is 60 percent, it means that for every one-hundred deposited the bank can lend only 40 percent. Another thing is that, in a reflection of that bubble, people that live in Macau cannot afford the rents. Rents are jumping and there are no statistics at all in Macau regarding rents. We have these numbers for buying and selling of property, so why not

How can we achieve diversification if we do not have human resources?

the same for rents? This means the government is totally blind to this process because the most important thing for people that live here is renting. All the other people that want to play with the bubble are property owners. They do not need to sell it, but if they want to sell it they will lose money if the bubble explodes. The government needs to supervise all these contracts with the real estate companies to see if they are playing according to the law – the majority are not – and to try to prevent scams. Apart from human resources, what are the main obstacles to Macau’s economic growth? Leaving aside inflation, the main concern is the peg and human resources. If the government insists [on its present policy] when we have almost no unemployment, it is because it does not know exactly what the needs of the community are. People say that inflation is driven mostly by demand, but it is not the only problem. From 2010 to 2012 the rate of the yuan increased from 1.18 to 1.26. We buy products from mainland China. Mainland China already has inflation and it is higher for the main products that we buy. When these products come to Macau and we have oligopolies handling them, they increase again. It means that inflation in China generally is not that important for us. What is more important is inflation in the areas of China from where we buy, and these will still have two-digit inflation or, at least, 8 percent or 9 percent. Private consumption grew 14.7 percent last year but in real terms only 9.1 percent. Around 5 percent was inflation. This, plus the peg, makes our pataca weaker than the yuan, means we have to pay not only for imported inflation, but also pay in a currency on which we are spending more patacas. We have a double effect here, so I do not believe that it is only a problem of demand. It is also a peg problem. Will inflation continue to increase in Macau? Up to February we had already 5.99 percent [in annualised inflation], and as you see from January this year we have had an increase. This year, from January to February, we had a smaller increase than the same period of 2012. If we continue to grow at the same

pace as last year, we will have lower inflation of 6.04 percent. If we have lower inflation it will be between 4 percent and 6 percent. I am sure that unless something very strange happens, inflation in 2013 will be lower than in 2012. How much lower we still do not know. All the predictions by analysts match this. Inflation is a rate. This does not necessarily mean that prices will stop rising and that after a period they will slowly begin to go down. It means the increase is smaller, but they will continue to increase.

If we continue to grow at the same pace as last year, we will have lower inflation of 6.04 percent

April 22, 2013

Greater China Earthquake kills 186, injures 11,300 in Sichuan China’s worst earthquake in three years on Saturday killed at least 186 people and injured more than 11,300, the Ministry of Civil Affairs said. The magnitude 6.6 quake hit a remote mountainous area of southwestern China’s Sichuan province at 8.02 am, close to where an earthquake killed more than 70,000 people in 2008. Premier Li Keqiang flew into the disaster zone by helicopter to voice support for the rescue operation. “The first 72 hours is the golden period for rescue,” Mr Li told officials, the Xinhua news agency reported. “We cannot delay by a minute.”

HK says inflation Slower growth needed risks ‘manageable’ as economy restructures: Zhou Monetary authority Further steps taken toward interest-rate liberalisation, to manage PBOC’s Governor says appreciating yuan while holding dollar peg hina’s slower expansion in rising 3.2 percent in February which uncertainties linger,” said Chen

ong Kong Monetary Authority can manage inflation risks caused by an appreciating yuan and is committed to its currency’s dollar peg in place since 1983, chief executive Norman Chan said. The yuan’s appreciation against the dollar will make food and other goods slightly more expensive, which is “manageable,” Mr Chan said at a conference in Washington during meetings of the International Monetary Fund. “Having a fixed exchange-rate system, we are committed to make the nominal exchange rate unchanged through the issuance of bank note system and foreign-exchange intervention.” The Chinese yuan had the biggest weekly gain in six months versus the U.S. dollar and yuan forwards rose to a record, after People’s Bank of China deputy governor Yi Gang said on April 17 the currency’s trading band will widen “in the near future,” spurring speculation the yuan will rise further. Hong Kong banks’ borrowing costs are tied to the U.S. because of its currency peg, while the city’s economic growth is linked to China. A stronger yuan also means Hong Kong’s services and goods will become cheaper to mainland consumers, helping the city attract tourists from mainland China and sell services there, said Mr Chan, the city’s de facto central bank chief. “We don’t have our own independent monetary policy, so the interest rates in Hong Kong are determined by the inflow and outflow of money into Hong Kong dollars, and all the other variables have to adjust around this anchor,” said Mr Chan. “We are meeting those challenges reasonably well,” he added. Consumer prices in Hong Kong rose 4.4 percent in February from a year earlier, the fastest pace since April 2012. The HKMA will weigh if more measures are needed to curb property price gains in the city, according to Mr Chan. The monetary authority told banks to maintain the risk weighting for new home loans at a minimum of 15 percent, and the city’s government doubled the stamp duty in February on all property transactions higher than HK$2 million (US$257,000). “We actually will respond and react to the development of the market,” he said. “Our measures are counter-cyclical and it depends on how the market cycle is evolving.” Bloomberg News

the first quarter is “normal” as the world’s second-largest economy sacrifices growth to make structural reforms, People’s Bank of China Governor Zhou Xiaochuan said. While a “mild” slowdown in the global economy does have an impact on China, the 7.7 percent growth rate in gross domestic product is “overall normal” compared with the government’s 2013 target of 7.5 percent, Mr Zhou told Bloomberg News outside a meeting of the International Monetary Fund in Washington yesterday. “China’s undergoing economic restructuring, which sometimes is not in lockstep with growth,” he said. “We need to sacrifice short-term growth for the purposes of reforms and structural adjustments.” The nation’s growth pace in the first quarter missed the 8 percent median of economists’ forecasts compiled by Bloomberg and also slowed from a rate of 7.9 percent in the previous three months, when Asia’s biggest economy emerged from a seven-quarter slowdown. Premier Li Keqiang said earlier this month more efforts should be made to improve the quality and benefits of economic development, focusing on restructuring and upgrading, as the government seeks to shift away from an export-reliant growth model. March consumer prices increased 2.1 percent from a year earlier, after

We need to sacrifice short-term growth for the purposes of reforms and structural adjustments Zhou Xiaochuan, Governor, People’s Bank of China

was the quickest pace in 10 months. While inflation has been “relatively stable,” China’s government remains on guard due to rising costs for labour and raw materials, pricing reforms and excessive global liquidity, Mr Zhou said in a statement to the IMF meeting. For China’s financial sector reform, the nation “has decided to further interest-rate liberalisation, capital account convertibility and exchange rate reform,” Mr Zhou said. The government has also taken steps to improve the expenditure structure and reform the budget system, according to the statement.

Recovery on track China’s economic growth is forecast to pick up slightly to 8.0 percent in 2013, a Reuters poll shows, as government spending on infrastructure and steady monetary policy help activity regain momentum after an unexpected slowdown in the first quarter. The economy is then expected to grow 8.1 percent in 2014, based on the median forecast of 35 economists in the poll. The forecast for 2013 was trimmed from 8.1 percent in the previous poll in January, while the outlook for 2014 was unchanged. “China’s economic growth may pick up this year but the pace of recovery may be shallow as global

Letian, an economist at Rising Securities in Beijing. One concern, however, was a recent boom in credit did not appear to have delivered a growth dividend and could instead exacerbate property and inflationary risks. New home prices jumped 3.6 percent in March from a year ago, a third straight increase. The poll found the inflation rate was forecast to rise to 3.0 percent in 2013 and 3.5 percent in 2014 from last year’s 2.6 percent. Analysts said the People’s Bank of China would have to tread cautiously to balance growth and inflation risks, and forecast that monetary policy would not be tightened this year. The PBOC is expected to keep the benchmark one-year bank lending rate at 6 percent and the one-year bank deposit rate at 3 percent through 2013, as well as holding banks’ reserve requirement ratios (RRR) steady, the poll showed. However, analysts expected it may start tightening policy in early 2014 to temper inflation, with the one-year bank lending rate seen rising to 6.25 percent and one-year deposit rate to 3.25 percent. The central bank, which cut interest rates twice in June and July 2012 and RRR three times between late 2011 and May last year, has not changed policy so far this year. Bloomberg News/Reuters

April 22, 2013

Greater China GM to add 4 more plants General Motors Co will add four new plants in the next three years in China to bring its production capacity to 5 million vehicles a year, the head of GM China said on Saturday at the Shanghai auto show. The planned manufacturing capacity comes after GM added two plants last year, boosting its capacity by 20 percent. Bob Socia, head of GM China, said that the company and its joint venture partners will spend US$11 billion in capital expenditure in China by 2016, but did not break out the cost of the four new assembly plants. The four new factories will bring to 17 the number of assembly plants owned by GM and its joint venture partners, and increase production by another 30 percent. “We’re confident about playing here in China,” Mr Socia told reporters. “We’re here for the long term.” When GM plant capacity increases to 5 million in 2015, the company will export about 300,000 vehicles, Mr Socia said, up from over 100,000 GM expects to export this year.

Sinopec sells US$3.5b of bonds China Petroleum & Chemical Corp. raised US$3.5 billion in the second-largest sale of dollardenominated bonds in Asia outside of Japan, as the region’s biggest refiner expands overseas. Sinopec, as the company is known, sold US$750 million of three-year bonds for a 1.25 percent coupon and US$1 billion of 1.875 percent five-year debentures, according to a company filing. It also sold US$1.25 billion of 10-year securities at 3.125 percent and US$500 million of 30-year debt at 4.25 percent, the statement showed. The proceeds will help finance the purchase of overseas assets and fund the refiner’s international business, according to the release. Chinese companies are looking abroad for oil and gas assets to feed the energy needs of the world’s second-biggest economy. Sinopec expects more asset deals with its stateowned parent China Petrochemical Corp. after creating a US$3 billion joint venture to replace dwindling reserves with oilfields in Kazakhstan, Colombia and Russia, vice chairman Wang Tianpu said in Hong Kong last month.

Hot-money inflows add to yuan pressure Researcher says China’s situation opposite of Japan

he Chinese yuan is set to strengthen as rising inflows of speculative capital add to pressure on the currency, the head of a Ministry of Commerce research institute said. “Hot money is flowing into China, and that will push up the yuan exchange rate,” Huo Jianguo, president of the Chinese Academy of International Trade and Economic Cooperation under the ministry, said in an interview in Beijing yesterday. The yuan had its biggest weekly gain in six months last week. The largest jump in foreign-exchange reserves in almost two years in the first quarter adds to signs capital inflows are increasing. “China’s situation is exactly the opposite” of Japan’s, said Mr Huo, who previously worked as a trade official in the commerce ministry. The yen is expected to continue weakening amid the Bank of Japan’s policy easing, Mr Huo said, estimating the currency could drop to 110 per dollar this year. The yen has dropped almost 20 percent since mid-November, when the election which brought Prime Minister Shinzo Abe to power was announced. He won on a platform of unlimited monetary easing to end more than a decade of deflation.

PBOC showing increasing tolerance of a stronger yuan

The People’s Bank of China allows the yuan to fluctuate against the U.S. dollar by as much as 1 percent either side of a daily reference rate. The currency has been within 0.1 percent of the upper end of its permitted trading range most days since October. The spot rate on Friday was 1 percent stronger than the PBOC fixing. The yuan has appreciated 0.9 percent this year, reaching a 19-year high of 6.1723 per dollar on April 17, according to China Foreign Exchange Trade System prices. The currency gained 0.24 percent this week to close

at 6.1776 per dollar in Shanghai. Direct trading between the yuan and the Australian dollar that started this month may also help to boost demand and confidence in the currency, Mr Huo said. HSBC Holdings Plc raised its estimate for yuan appreciation this year after stronger-than-expected gains in the first quarter, according to an April 17 report. The bank now sees the yuan trading at 6.14 per dollar by the end of the year, up from a previous estimate of 6.18, a full-year gain of around 1.5 percent. Bloomberg News

April 22, 2013

Asia

Japan joins talks to form free-trade bloc Final TPP pact may cover 40 percent of global economic output

apan will be admitted to the Trans Pacific Partnership trade talks, the existing 11 members of the negotiations said in a joint statement issued yesterday after a meeting in Indonesia. Trade ministers from the TPP nations “agreed by consensus to finalise with Japan the process for entry in a manner that allows the negotiations to continue expeditiously toward conclusion – as was done with other members that joined the negotiations in progress,” according to the statement. Japan, the world’s third-largest economy, will be able to join the talks after the existing TPP members complete their domestic processes to add participants, according to the statement. Japanese Prime Minister Shinzo Abe’s government had pushed for speedy approval since announcing last month a plan to join the talks. The negotiations are aimed at eliminating tariff barriers between the member countries in a region the U.S. says accounts for more than 40 percent of world trade.

Mr Abe has vowed to defend Japan’s farming industry, which is protected by a 778 percent tariff on rice, and which has traditionally supported his ruling Liberal Democratic Party. Canada, Australia and New Zealand want Japan to include all items in the talks, the Asahi newspaper reported on April 18. The Japanese government estimated that removing tariffs would provide a 3.2 trillion yen (US$32.2 billion)

KEY POINTS Eleven nations endorse Japan’s participation in talks Invitation follows last week deal with U.S. Tough talks ahead for Japan to uphold tariffs on farm

boost to gross domestic product, while reducing agricultural and marine production by 3 trillion yen.

Japanese cars In a preliminary bilateral agreement unveiled on April 12, the U.S. said it would maintain tariffs on Japanese automobiles for the time being, while Japan said it would increase the number of American cars that can be imported under a simplified system. TPP member countries currently plan to complete negotiations by the end of the year, according to the trade ministers’ statement. The Nikkei newspaper said on Saturday Japan may take part in the negotiations as soon as July, following a required period of 90 days’ notice after Congress is informed of the plan. The existing parties to the TPP talks are the U.S., Canada, Mexico, Peru, Chile, Australia, New Zealand, Vietnam, Malaysia, Singapore and Brunei. Japan is simultaneously pushing ahead with talks on a raft

India would welcome rate cut: Chidambaram As the government aims for a fiscal gap of 4.8 percent of GDP Unni Krishnan

ndia’s finance minister said a further cut in interest rates by the central bank would help revive economic expansion, and flagged the possibility of bettering his target for the budget deficit. “The government would welcome lower interest rates,” Palaniappan Chidambaram, 67, said in an interview in Washington yesterday. “But how low can interest rates go is a function of a number of other factors, especially inflation, and that’s a call the governor has to take.” Mr Chidambaram met investors including pension funds in the U.S. and Canada before the Spring meetings began, striving to woo capital to fund India’s record current-account deficit. The imbalance, together with a consumer-inflation rate exceeding 10 percent, has restricted the central bank to a reduction of 50 basis points in borrowing costs in 2013 even as growth falters. Reserve Bank of India Governor Duvvuri Subbarao will lower the repurchase rate by 25 basis points to 7.25 percent in his policy decision due May 3, according to 14 of 16 analysts in a Bloomberg survey. The other two predict no change, following quarter-point reductions in January and March each. “I can only act on the fiscal

PM Abe announced last month a plan to join the talks

of trade pacts, including with South Korea and China, Australia and the European Union. Kazuhito Yamashita, research director at the Canon Institute for Global Studies, said Japan should be looking beyond the TPP to boost broader trade ties. “Japan can have bargaining power as the nation is the only

the week ended April 19, climbing the most in six weeks and paring its 12-month loss to 3.4 percent. “One has to see a persistent trend in prices before one can say that this is helping or hurting the currentaccount deficit, because the final number is a cumulative result of 365 days,” Mr Chidambaram said. Inflation in Asia’s third-biggest economy, as measured by the wholesale-price index, slowed to a more than three-year low of 5.96 percent in March. The consumer gauge climbed 10.39 percent last month from a year earlier. The central bank said in March’s policy statement that the “headroom” for further monetary easing remains limited. Indian GDP rose 5 percent last fiscal year, the weakest pace since 2003, the statistics agency estimates. The government, facing a general election by May 2014, has changed policies since September to open the economy to more foreign investment, curb the budget shortfall and speed up stalled infrastructure projects. Bloomberg News

The rupee appreciated 1 percent against the dollar last week

space,” Mr Chidambaram said. The governor will take a “decision appropriately,” he said. The Congress-led ruling coalition is aiming for a fiscal gap of 4.8 percent of gross domestic product in the year ending March 2014, which would be a six-year low. It has estimated the shortfall at 5.2 percent of GDP for 2012-2013. “If the actual number for 201213 turns out to be a shade lower than 5.2 percent, then I think wisdom lies in aiming for a better number than

4.8 percent,” Mr Chidambaram said. “If we have chance and we have an opportunity, we should try to do slightly better than 4.8 percent.” The deficit in the current account, the broadest measure of trade, reached US$32.6 billion in the quarter ended December 31, or 6.7 percent of GDP. A recent plunge in gold and oil prices, and a rebound in exports, has increased optimism that the gap will narrow, supporting the rupee. The currency appreciated 1 percent to 53.9725 per dollar in

How low can interest rates go is a function of a number of other factors, especially inflation, and that’s a call the governor has to take Palaniappan Chidambaram, India’s finance minister

April 22, 2013

Asia Monetary policy no substitute for reforms, Weidmann says

one involved in trade talks such as the TPP, Japan-EU, JapanChina-Korea, and the RCEP,” he said. “Japan is in a very interesting strategic position. Japan could become a hub in South East Asia and a bridge between the region and the West if the authorities clearly understand this.”

Bundesbank President Jens Weidmann said monetary policy can’t solve the problems of slowgrowing economies such as Japan and urged policy makers to take measures to ensure sustainable economic expansion. “Monetary policy is no cure-all for the economic difficulties we’re currently facing,” Mr Weidmann said yesterday in an interview on the sidelines of the Spring meeting of the International Monetary Fund in Washington. “This is also true for Japan, where the demographic challenges and the sustainability of public debt have to be tackled.” Mr Weidmann said he welcomed that the Spring meeting put the spotlight on the risks associated with the “ongoing expansive monetary policies” in some regions of the world, adding the Bundesbank has time and again pointed to the “risks and sideeffects” that low interest rates can have over an extended period of time.

Bloomberg News/Reuters

Minutes detail stand-off over Kingfisher’s jets

ndian airports have claimed international law must take a back seat to local courts in a row with foreign aircraft leasing firms over the future of grounded Kingfisher Airlines Ltd jets, according to government minutes seen by Reuters. The stance taken by Mumbai and Delhi airports could further complicate the leasing firms’ attempts to recover jets supplied to Kingfisher, as other creditors also try to recoup some of the US$2.5 billion of debt left when the airline, set up by liquor baron Vijay Mallya, halted flights in October. That in turn could affect leasing firms’ willingness to deal with Indian airlines in future, or at least make financing for local carriers more expensive, aviation analysts said. Aircraft leasing firms like ILFC Holdings Inc are at the heart of the US$100 billion-a-year passenger jet industry. Their role has grown dramatically as cash-pinched airlines try to contain their capital spending, and experts say lessors now account for about 40 percent of the modern jetliner fleet. An international treaty aimed at

making it attractive for leasing firms to invest offers lessors similar rights to repossess unpaid jets as in the United States. However, efforts by foreign lessors to repossess over a dozen Airbus jets parked at airports around India have been hampered by disputes over competing claims and confusion over the power of international agreements to trump local courts. Both lessors and airports are owed money by Kingfisher, along with staff, tax authorities and other creditors. Lessors say the jets do not belong to Kingfisher and can’t be touched. At the March 26 meeting attended by airport officials, as well as government and tax authorities, it was agreed that jets already deregistered by India must be released, according to minutes of the gathering held at the aviation ministry. “The concerned airport operators shall release all the de-registered aircraft to the respective owners/ lessors immediately so that these aircraft can fly out of the country,” the document said. Reuters

Booming Thai banks wary of credit bubble Bank profits soar on high loan demand, higher fees, lower tax

hailand’s booming banks are warily watching for signs of a credit bubble, even as they rake up record profits on robust loan growth on the back of a strong economy. Bangkok Bank PCL, Thailand’s largest lender by assets, said it had raised its loan loss reserve coverage to 203.3 percent of non-performing loans (NPLs) in the first quarter, more than double the central bank’s minimum requirement. The Bank of Thailand has cautioned banks on rising household debt in Southeast Asia’s second biggest economy, and expressed concern that cheap home loans could cause a steep rise in prices similar to that seen in Singapore and Hong Kong. The country’s leading private lenders say there are not worried about a property bubble, but concede there is a possible excess supply of condominiums along Bangkok’s mass transit routes. The country’s third-largest lender by assets, Siam Commercial Bank PCL (SCB), said it had “prudently set aside higher provisions in the quarter as a counter-cyclical buffer against future uncertainties”. “It’s our policy that when we have strong earnings, we will set aside more general reserves to help cushion risk in the future,” Arthit Nanthawithaya, senior executive vice president for SCB’s corporate banking, told

The sector is facing pressure to limit their profit growth Sarachada Sornsong, Thanachart Securities analyst

Some lenders have set aside higher loan provisions

Reuters, without elaborating. Minutes from the April meeting of the Bank of Thailand reflected concerns about the risks to financial stability centred on household credit growth and “incipient signs of speculation” in the property market. The government’s tax rebate for first-time car buyers has led to a boom in consumer lending for cars, while low mortgage rates have spurred

demand in housing projects especially in the provinces. Although current provision levels meet the central bank’s requirement, the market has speculated the central bank may impose tightening measures to curb lending to home buyers. Some possible measures include raising loan-to-collateral-value ratio for home buyers and increasing down

payments for car buyers. Some major banks have adopted the central bank’s macro prudential policies, including increasing counter-cyclical provisions. That has raised market concerns that such measures could limit profit growth in the next few years. “The sector is facing pressure to limit their profit growth,” said Thanachart Securities analyst Sarachada Sornsong, who recently cut earning forecasts for the sector by 3-4 percent for 2013-2015 to reflect higher credit costs and provisions. Kasikornbank PCL, Thailand’s fourth-largest lender by assets, said it is tightening its credit lines – lending less to small property developers, and focusing more on large-sized operators and good track record clients. “We should take a closer look at housing loans. The number of housing units has increased sharply, while purchasing demand should not rise at the same rate,” said Patchara Samalapa, executive vice president in charge of SME clients. Reuters

April 22, 2013

Markets Hang Seng Index NAME

NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

33.3

2.936631

22239280

CHINA UNICOM HON

ALUMINUM CORP-H

2.85

1.423488

11658960

CITIC PACIFIC

BANK OF CHINA-H

3.52

2.923977

393933978

BANK OF COMMUN-H

5.88

2.797203

27776507

30.15

2.37691

2859280

12.7

-0.1572327

36984000

ESPRIT HLDGS

BOC HONG KONG HO

25.65

1.383399

15589892

CATHAY PAC AIR

13.08

0.770416

5928776

CHEUNG KONG

BANK EAST ASIA BELLE INTERNATIO

116.5

2.014011

4091574

CHINA COAL ENE-H

6.32

2.265372

23256466

CHINA CONST BA-H

6.24

3.654485

311946834

CHINA LIFE INS-H

20.7

3.5

34237498

CHINA MERCHANT

24.85

1.635992

1517987

CHINA MOBILE

82.15

1.294698

CHINA OVERSEAS

23.75

5.790646

CHINA PETROLEU-H

8.5

CHINA RES ENTERP

24.9

CLP HLDGS LTD

PRICE

DAY %

VOLUME

10.26

7.322176

65011241

9.53

1.167728

7170000

NAME POWER ASSETS HOL

VOLUME 2182210

39.4

0.7672634

6701497

SINO LAND CO

12.76

2.73752

7051652

110.9

2.590194

6239762

1.159115

1439024

253

2.346278

4778154

TINGYI HLDG CO

20.15

6443839

1009100

WANT WANT CHINA

11.66

3.552398

16620076

2.749771

7607778

WHARF HLDG

68.3

0.8118081

5097060

0.6501951

1616000

2459970

2.985075

57906103

10.58

1.340996

9610000

SWIRE PACIFIC-A

10.1

6380756

TENCENT HOLDINGS

HANG LUNG PROPER

30.25

2.195946

7152142

HANG SENG BK

124.8

1.545972

HENDERSON LAND D

56.05 77.4

HONG KG CHINA GS

23.05

0.8752735

7892380

HONG KONG EXCHNG

HENGAN INTL

SUN HUNG KAI PRO

13.8

COSCO PAC LTD

DAY %

73.05

SANDS CHINA LTD

67.05

CNOOC LTD

PRICE

MOVERS

128.4

1.904762

4273329

HSBC HLDGS PLC

81.1

1.820465

15211906

11439947

HUTCHISON WHAMPO

80.8

1.443817

6366590

42242554

IND & COMM BK-H

5.26

3.952569

340268851

1.796407

68932732

LI & FUNG LTD

10.06

-0.5928854

22921429

3.75

5119552

30.1

0.1663894

2771066

23.35

5.417607

10382941

NEW WORLD DEV

13.16

3.949447

12234006

CHINA RES POWER

23.4

1.518438

6189000

PETROCHINA CO-H

9.47

1.718582

96409954

CHINA SHENHUA-H

26.1

2.95858

29062115

PING AN INSURA-H

60.1

3.710095

17160400

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

27.8

4.708098

14483800

YANZHOU COAL-H

8.84

2.314815

32008104

CHINA PETROLEU-H

8.5

1.796407

68932732

ZIJIN MINING-H

2.29

2.690583

54313091

8.1

4.651163

19937426

11.78

5.935252

6162050

CHINA RES LAND

MTR CORP

22030

INDEX 22013.57 HIGH

22013.57

LOW

21440.33

52W (H) 23944.74 (L) 18056.4

21430

17-April

19-April

Hang Seng China Enterprise Index NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.53

3.823529

185910639

AIR CHINA LTD-H

6.23

-0.1602564

7406051

ALUMINUM CORP-H

2.85

1.423488

11658960

CHINA RAIL CN-H

7.3

0.1371742

11407746

ZOOMLION HEAVY-H

ANHUI CONCH-H

28.8

2.857143

11425755

CHINA RAIL GR-H

3.81

3.532609

18165216

ZTE CORP-H

BANK OF CHINA-H

3.52

2.923977

393933978

CHINA SHENHUA-H

26.1

2.95858

29062115

BANK OF COMMUN-H

5.88

2.797203

27776507

CHINA TELECOM-H

3.77

3.856749

106960595

BYD CO LTD-H

24.2

8.035714

5786500

DONGFENG MOTOR-H

11.2

3.321033

9759074

CHINA CITIC BK-H

4.11

4.050633

42601136

GUANGZHOU AUTO-H

5.97

2.753873

6255595

CHINA COAL ENE-H

6.32

2.265372

23256466

HUANENG POWER-H

8.04

0.5

30250000

CHINA COM CONS-H

7.47

1.219512

19015468

IND & COMM BK-H

5.26

3.952569

340268851

CHINA CONST BA-H

6.24

3.654485

311946834

JIANGXI COPPER-H

15.38

3.221477

17067440

CHINA COSCO HO-H

3.49

4.179104

12589561

PETROCHINA CO-H

9.47

1.718582

96409954

CHINA LIFE INS-H

20.7

3.5

34237498

PICC PROPERTY &

9.73

3.400638

14548080

CHINA LONGYUAN-H

7.33

3.824363

16511356

PING AN INSURA-H

60.1

3.710095

17160400

CHINA MERCH BK-H

15.32

2.818792

26101649

SHANDONG WEIG-H

6.62

-0.6006006

8413175

CHINA MINSHENG-H

9.38

5.630631

92028768

SINOPHARM-H

24.55

0.8213552

3064400

CHINA NATL BDG-H

9.91

6.216506

57692035

TSINGTAO BREW-H

51.6

1.375246

756362

14.96

3.030303

7606690

WEICHAI POWER-H

1.313321

2116130

CHINA OILFIELD-H

CHINA PACIFIC-H

MOVERS

0 10600

INDEX 10587.32 HIGH

10592.48

LOW

10191.56

52W (H) 12354.22 10180

(L) 8987.76 17-April

19-April

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

6.55

1.393189

12050135

CITIC SECURITI-A

12.82

5.514403

200617534

16510128

CSR CORP LTD -A

4.12

1.980198

2.392344

34968324

DAQIN RAILWAY -A

7.21

8.77

4.653938

50905724

DATANG INTL PO-A

4.43

BANK OF CHINA-A

2.92

1.388889

54277165

EVERBRIG SEC -A

BANK OF COMMUN-A

4.73

2.380952

105779504

GD MIDEA HOLDI-A

10.73

3.671498

22503705

GD POWER DEVEL-A

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.74

1.858736

128326069

AIR CHINA LTD-A

5.51

1.286765

13584743

ALUMINUM CORP-A

4.15

1.965602

ANHUI CONCH-A

19.26

BANK OF BEIJIN-A

BANK OF NINGBO-A

NAME CHONGQING WATE-A

NAME

PRICE

DAY %

VOLUME

RISESUN REAL -A

15.82

0.9572431

12749291

SAIC MOTOR-A

15.85

1.602564

32884200

53895283

SANY HEAVY INDUS

10.19

3.242148

32184170

2.124646

27869680

SHANDONG GOLD-MI

32.13

4503942

1.372998

5697287

SHANG PHARM -A

12.57

1.863857

13476445

14.22

3.871439

31099600

SHANG PUDONG-A

10.14

5.29595

178675031

14.18

0.4249292

39574508

SHANGHAI ELECT-A

3.9

1.827676

2670622

2.82

1.438849

47032804

SHANXI LU'AN -A

17.08

3.829787

17206243

BAOSHAN IRON & S

4.81

1.05042

24758138

GEMDALE CORP-A

7.55

1.752022

91254700

SHANXI XISHAN-A

11.08

2.687674

16537191

BEIJING TONGRE-A

22.87

4.191344

15262999

GF SECURITIES-A

13.73

3.388554

44667426

SHENZEN OVERSE-A

6.11

0.9917355

63226723

BYD CO LTD -A

22.65

3.424658

6980072

GREE ELECTRIC

27.66

2.368616

15128217

SICHUAN KELUN-A

63.39

1.003824

697476

CHINA AVIC AVI-A

22.79

2.796572

3647071

GUANGHUI ENERG-A

19.6

4.144527

22214216

SUNING COMMERC-A

6.28

1.453958

34678892

CHINA CITIC BK-A

4.47

3.953488

71475684

HAITONG SECURI-A

10.91

4.401914

172656426

TASLY PHARMAC-A

69.19

0.64

1940656

CHINA CNR CORP-A

4.17

1.707317

37475748

HANGZHOU HIKVI-A

38.16

2.857143

7404292

TSINGTAO BREW-A

38.5

1.049869

1956610

CHINA COAL ENE-A

7.02

2.481752

11608183

HENAN SHUAN-A

3.633572

2459667

WEICHAI POWER-A

23.3

3.097345

9507724

20.7

3.759398

40784138

WULIANGYE YIBIN

22.64

1.524664

23349376

CHINA CONST BA-A

4.68

2.631579

34078810

HONG YUAN SEC-A

CHINA COSCO HO-A

3.53

0.2840909

16917250

HUATAI SECURIT-A

10.09

3.913491

62702864

YANGQUAN COAL -A

13.21

3.770621

9112643

CHINA EAST AIR-A

3.19

0.6309148

19272171

HUAXIA BANK CO

10.61

4.223969

51958149

YANTAI WANHUA-A

19.41

7.953281

25384907

CHINA EVERBRIG-A

3.11

2.980132

114990614

IND & COMM BK-A

4.11

1.231527

70008889

YANZHOU COAL-A

16.3

2.774275

5600801

18.19

5.694364

148872193

YUNNAN BAIYAO-A

85.45

0.5294118

1850054

CHINA LIFE INS-A

17.67

1.318807

22884497

INDUSTRIAL BAN-A

CHINA MERCH BK-A

12.62

3.782895

159685249

INNER MONG BAO-A

28.48

2.815884

29132820

ZHONGJIN GOLD

12.64

2.764228

26879364

CHINA MERCHANT-A

12.49

3.91015

58307862

INNER MONG YIL-A

31.4

1.486749

10690131

ZIJIN MINING-A

3.19

1.916933

58023072

CHINA MERCHANT-A

27.92

1.527273

17187745

INNER MONGOLIA-A

4.91

2.079002

37991811

ZOOMLION HEAVY-A

7.66

2.406417

43514360

CHINA MINSHENG-A

10.11

8.128342

357576201

JIANGSU HENGRU-A

30.44

2.18194

8218871

11.22

4.761905

29012511

51665173

JIANGSU YANGHE-A

61.82

2.827678

4759076 12303017

CHINA NATIONAL-A

9.28

3.803132

CHINA OILFIELD-A

15.6

2.228047

6300025

JIANGXI COPPER-A

20.78

2.465483

CHINA PACIFIC-A

20.18

0.7992008

36846323

JINDUICHENG -A

10.51

2.636719

7397390

CHINA PETROLEU-A

6.94

1.759531

38925152

KANGMEI PHARMA-A

17.63

1.5553

21726366

CHINA RAILWAY-A

5.15

1.778656

28994043

KWEICHOW MOUTA-A

179.23

0.04465532

3923838

CHINA RAILWAY-A

2.84

2.158273

37616696

LUZHOU LAOJIAO-A

26.05

1.283048

9131033

CHINA SHENHUA-A

21.32

2.10728

15660040

METALLURGICAL-A

2.04

0.990099

29091077

CHINA SHIPBUIL-A

4.56

2.242152

30969247

NINGBO PORT CO-A

2.51

1.209677

18195165

31187356

PETROCHINA CO-A

8.56

0.9433962

22611114

PING AN BANK-A

20.24

5.968586

147838012

CHINA SOUTHERN-A

3.63

1.966292

CHINA STATE -A

3.58

2.578797

165276911

CHINA UNITED-A

3.53

1.729107

82276635

PING AN INSURA-A

42.9

1.514434

56854870

CHINA VANKE CO-A

11.91

1.794872

86913542

POLY REAL ESTA-A

12.66

1.118211

66243965

CHINA YANGTZE-A

7.17

0.9859155

16333566

QINGDAO HAIER-A

13.46

1.892506

16815591

5.876686

30659709

QINGHAI SALT-A

27.48

1.777778

9606852

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

CHONGQING CHAN-A

10.99

ZTE CORP-A

MOVERS 286

0 2550

INDEX 2533.827 HIGH

2540.22

LOW

2440.34

52W (H) 2791.303 (L) 2102.135

2430

17-April

19-April

FTSE Taiwan 50 Index NAME ACER INC

23.7

1.066098

9757206

25.95

3.386454

50589097

ASIA CEMENT CORP

36.6

1.666667

ASUSTEK COMPUTER

328.5

AU OPTRONICS COR

13.15

CATCHER TECH

ADVANCED SEMICON

NAME

PRICE DAY %

Volume

FORMOSA PLASTIC

68.4

0.8849558

5731463

TAIWAN MOBILE CO

104

1.960784

FOXCONN TECHNOLO

78.6

0.7692308

4674529

TPK HOLDING CO L

632

2.100162

3774597 4156193

2309143

FUBON FINANCIAL

41.2

1.980198

20659970

TSMC

106.5

6.606607

66950314

1.388889

3969955

HON HAI PRECISIO

77.6

1.173403

48406658

UNI-PRESIDENT

58105091

HOTAI MOTOR CO

256

1.992032

489244

279.5 -0.8865248

19629814

58.4

1.919721

8246784

UNITED MICROELEC

11.35

2.252252

78392178

149.5

0.3355705

18029008

HTC CORP

WISTRON CORP

29.05

0.1724138

13231245

CATHAY FINANCIAL

38.5

3.355705

25121767

HUA NAN FINANCIA

16.9

1.501502

4074619

YUANTA FINANCIAL

14.65

2.447552

12435872

CHANG HWA BANK

16.85

1.506024

7051014

LARGAN PRECISION

716 -0.8310249

3311735

YULON MOTOR CO

50.9

0.5928854

2268966

CHENG SHIN RUBBE

99.8

0.5035247

4849937

LITE-ON TECHNOLO

50.4

0.5988024

5470817

CHIMEI INNOLUX C

17.6 -0.2832861

38683451

MEDIATEK INC

358

3.468208

16260277

8.1

2.531646

46696564

MEGA FINANCIAL H

23.1

1.538462

21244544

CHINA STEEL CORP

25.35

16086391

NAN YA PLASTICS

53.6

0.9416196

3243334

CHINATRUST FINAN

17.65

1.146132

52956765

PRESIDENT CHAIN

180 -0.5524862

1251174

CHUNGHWA TELECOM

93.6

0.4291845

3505048

QUANTA COMPUTER

57.1 -0.1748252

COMPAL ELECTRON

18.6 -0.2680965

27609841

SILICONWARE PREC

4.928458

52344796

CHINA DEVELOPMEN

8497796

DELTA ELECT INC

135

2812771

SINOPAC FINANCIA

14.4

1.408451

19180162

FAR EASTERN NEW

31.7

1.602564

7687440

SYNNEX TECH INTL

50.9

1.192843

2321326

FAR EASTONE TELE

71.1

0.9943182

5539483

TAIWAN CEMENT

38.4

0.9198423

5254299

FIRST FINANCIAL

17.8

1.714286

8268565

TAIWAN COOPERATI

16.7

0.6024096

9668676

FORMOSA CHEM & F

67.4

0.8982036

2599413

TAIWAN FERTILIZE

70.6 -0.1414427

3287625

FORMOSA PETROCHE

3.311258

2963326

TAIWAN GLASS IND

27.7

2.025783

819355

MOVERS

3 5530

INDEX 5524.22 HIGH

5524.22

LOW

5378.09

52W (H) 5639.93 5360

(L) 4719.96 17-April

19-April

April 22, 2013

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

Max 31.2

average 31.097

Min 31

31.2

57.8

16.80

31.1

57.6

16.65

31.0

57.4

16.50

30.9

57.2

16.35

30.8

Last 31.15

Max 57.8

average 57.612

Min 57

Last 57.75

57.0

Max 16.66

average 16.495

Min 16.26

Last 16.66

18.8

39.40 39.25

21.40 21.35

18.7

39.10

21.30 18.6

38.95

Max 39.4

average 39.114

Min 38.85

38.80

Last 39.4

Max 18.74

average 18.584

Commodities PRICE

WTI CRUDE FUTURE May13

DAY %

YTD %

88.01

0.319149664

BRENT CRUDE FUTR Jun13

99.65

GASOLINE RBOB FUT May13

277.24

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

Min 18.5

Last 18.56

(H) 52W

(L) 52W

-5.528123658

106.0899963

0.524563704

-7.6801927

116.6699982

90.91999817

0.613318817

-4.201796821

330.369997

237.7199888

836.5

0.510663863

-8.278508772

992.75

799.25

4.408

0.15905476

27.65710976

4.429000378

3.072000027

278.76

0.305854413

-7.811363185

327.1399975

258.5000038

Gold Spot $/Oz

1403.79

0.698

-15.6609

1796.08

1322.06

Silver Spot $/Oz

23.25

-0.8994

-22.7831

35.365

22.0713

1427.35

-0.6784

-5.9562

1742.8

1374.55

677

0.8716

-3.2387

786.5

553.75

1887

-1.28171593

-8.972503618

2200.199951

1818

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

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

6990

-1.38261851

-11.86483419

8496.75

6800

1886.5

-0.105904157

-9.302884615

2230

1745

15170

-2.443729904

-11.07854631

18920

15160

15.23

-0.943089431

-1.646754924

16.95000076

14.5

633

0.516077809

-9.21477232

824

527

WHEAT FUTURE(CBT) Jul13

711.5

0.672090555

-10.36220472

900

664.75

SOYBEAN FUTURE Jul13

1382.5

-0.539568345

-0.913814729

1605.75

1217.75

COFFEE 'C' FUTURE Jul13

143.2

1.704545455

-4.246071548

202.1999969

133.5500031

NAME

17.43000031

ARISTOCRAT LEISU

69.94999695

CROWN LTD

LME ZINC

3MO ($)

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

Jul13

SUGAR #11 (WORLD) Jul13

17.88

COTTON NO.2 FUTR Jul13

85.36

1.533219761 -0.140383715

-9.422492401 11.04462079

23.18999863 94.19999695

World Stock Markets - Indices NAME

18.5

21.25 Max 21.4

average 21.287

Min 21.25

Last 21.25

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

1.0277 1.5231 0.9334 1.3052 99.52 7.9966 7.7642 6.1777 53.9725 28.67 1.2371 29.813 41.105 9705 102.28 1.21865 0.85685 8.0759 10.4648 129.88 1.03

-0.4552 -0.1639 -0.225 -0.0459 -1.1555 -0.0113 -0.0167 0.055 0.4308 0.1744 -0.1455 0.2247 0.3163 0.1133 -0.7088 -0.2175 -0.112 -0.1523 -0.2303 -1.101 0

-0.9732 -5.842 -1.9284 -1.0462 -13.4847 -0.1676 -0.1752 0.8563 1.8945 6.662 -1.2691 -2.6163 -0.2433 0.9067 -12.6643 -0.9166 -4.8352 1.7534 0.6269 -12.5577 -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 28.56 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

3.6

0.5586592

14.28571

3.94

2.29

VOLUME CRNCY 3738227

12.45

-2.352941

16.68229

12.95

8.06

1174953

AMAX HOLDINGS LT

0.83

1.219512

-40.71428

1.9

0.75

84450

BOC HONG KONG HO

25.65

1.383399

6.431534

27.1

20.85

15589892 104000

CENTURY LEGEND

0.31

3.333333

16.98114

0.42

0.215

CHEUK NANG HLDGS

6.11

0.4934211

2.003343

6.74

2.8

84000

CHINA OVERSEAS

23.75

5.790646

2.813851

25.6

14.624

42242554

CHINESE ESTATES

13.52

0.8955224

11.46454

13.68

7.697

887690

CHOW TAI FOOK JE

10.1

3.483607

-18.81029

13.4

8.4

7381400

EMPEROR ENTERTAI

2.25

4.166667

19.04762

2.49

1.1

910000

FUTURE BRIGHT

2.08

70.4918

2.75

0.77

4694000

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14547.51

0.07133453

11.01461

14887.51

12035.08984

NASDAQ COMPOSITE INDEX

3206.056

1.253615

6.17789

3306.95

2726.68

GALAXY ENTERTAIN

31.15

0.483871

2.635913

35.7

16.94

5659222

FTSE 100 INDEX

6286.59

0.6874162

6.591935

6533.99

5229.76

HANG SENG BK

124.8

1.545972

5.139009

131.5

99.2

1009100

DAX INDEX

7459.96

-0.1842454

-2.002396

8074.47

5914.43

HOPEWELL HLDGS

29.35

3.710247

-11.72932

35.3

19.049

1291400

HSBC HLDGS PLC

81.1

1.820465

-0.2460062

88.45

59.8

15211906

HUTCHISON TELE H

3.75

1.626016

5.33708

4.05

2.98

4780741

LUK FOOK HLDGS I

20.95

2.948403

-14.13934

30.05

14.7

4282000

MELCO INTL DEVEL

13.28

-0.8955224

47.39178

13.96

5.12

2727649 4399900

NIKKEI 225

13316.48

0.72927

28.10246

13568.25

8238.96

HANG SENG INDEX

22013.57

2.329109

-2.839528

23944.74

18056.4

CSI 300 INDEX

2533.827

2.798384

0.4310427

2791.303

2102.135

TAIWAN TAIEX INDEX

7930.8

1.789805

3.004089

8089.21

6857.35

MGM CHINA HOLDIN

16.66

2.208589

25.46806

18.449

9.509

KOSPI INDEX

1906.75

0.3520941

-4.521672

2042.48

1758.99

MIDLAND HOLDINGS

3.45

1.173021

-6.756758

3.249

804000

S&P/ASX 200 INDEX

4931.911

0.1522008

6.086555

5163.5

3985

NEPTUNE GROUP

0.139

0.7246377

-8.552629

0.226

0.084

1910000

4998.461

-0.2828251

15.79392

5023.707031

3635.283

NEW WORLD DEV

13.16

3.949447

9.484189

15.12

7.95

12234006

FTSE Bursa Malaysia KLCI

1706.28

0.001172154

1.026086

1716.47

1526.6

SANDS CHINA LTD

39.4

0.7672634

16.05302

41.05

20.65

6701497

SHUN HO RESOURCE

1.48

1.369863

5.714288

1.67

1.03

2000

NZX ALL INDEX

948.796

0.1388948

7.566783

954.265

755.149

SHUN TAK HOLDING

3.99

1.012658

-4.773271

4.65

2.56

3292000

PHILIPPINES ALL SHARE IX

4348.67

0.9975103

17.56403

4350.49

3238.77

SJM HOLDINGS LTD

18.56

0.6507592

3.111111

22.15

12.34

6364200

SMARTONE TELECOM

13.08

0.6153846

-7.102272

17.38

12.5

1682672

WYNN MACAU LTD

21.25

-0.2347418

1.431977

25.5

14.62

3636800

ASIA ENTERTAINME

4.68

-2.296451

52.94118

2.4

155233

47.9

1.20431

7.134871

52.7

41.74

496881 33795

JAKARTA COMPOSITE INDEX

21.20

Currency Exchange Rates

NAME ENERGY

16.20

HSBC Dragon 300 Index Singapor

641.87

0.12

3.35

STOCK EXCH OF THAI INDEX

1545.46

1.026305

11.03

1601.34

1099.15

HO CHI MINH STOCK INDEX

473.21

-2.227319

14.37652

518.46

372.39

BALLY TECHNOLOGI

Laos Composite Index

1331.7

-0.6075352

9.625685

1455.82

980.83

BOC HONG KONG HO

3.22

4.885996

3.59

2.7

GALAXY ENTERTAIN

4.086

0.6403941

2.921914

4.93

2.25

10002

INTL GAME TECH

16.07

0.8788449

13.40861

17.49

10.92

2932933

JONES LANG LASAL

92.54

1.893856

10.24541

100.91

61.39

189979

LAS VEGAS SANDS

53.06

2.117013

14.94801

56.83

32.6127

4490737

MELCO CROWN-ADR

22.58

3.199269

34.08551

23.69

9.13

4918797

MGM CHINA HOLDIN

2.1

13.51351

2.44

1.36

10000

MGM RESORTS INTE

12.23

1.409619

5.068725

13.89

8.83

4486301

SHFL ENTERTAINME

14.77

1.09514

1.862069

18.37

11.75

171307

SJM HOLDINGS LTD

2.402

2.212766

3.982687

2.85

1.65

2200

WYNN RESORTS LTD

127.56

2.920768

13.39675

129.6589

84.4902

1293740

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

AUD HKD

USD

April 22, 2013

Opinion

Can China adapt? Zhang Jun

Professor of Economics and Director of the China Centre for Economic Studies at Fudan University, Shanghai

hina’s “Two Sessions” – the annual gatherings of the National People’s Congress and the Chinese People’s Political Consultative Conference held every March – have always drawn global attention. But the meetings this year seemed particularly significant, owing not only to the country’s leadership transition, but also to its economic slowdown amid calls for deeper reform. How, then, will China’s new leaders respond? The problem is simple: No one can predict accurately how long the slowdown will last. The authorities, lacking confidence in their ability to restore pre-2009 rates of annual GDP growth, have lowered the official target to 7.5 percent. Many economists are becoming even more pessimistic, pointing to Japan as evidence that, after three decades, China’s breakneck growth may be coming to an end. Japan’s economy, they point out, achieved more than 20 years of sustained rapid growth; but, in the 40 years since 1973, annual growth has exceeded 5 percent only a handful of times, and output has stagnated for the last two decades. But today’s pessimists

need to account for some fundamental differences between the two economies. For example, Japan was already a high-income country in 1973, with per capita income (in terms of purchasing power parity) at roughly 60 percent of the United States’ level. The “Four Asian Tigers” (Hong Kong, Singapore, South Korea, and Taiwan) experienced a slowdown in GDP growth at a similar relative income level. By contrast, China’s per capita income is only about 20 percent of the U.S. level. In other words, we should not underestimate the Chinese economy’s potential to converge toward developed countries.

those systems adopted in Japan and the Four Tigers? China’s economic system, which developed from the institutions of central planning, must have had some merits during this period. But the development and ultimate structure of economic institutions are closely related to a country’s income level or stage of economic development. If some aspects of the current system cannot be adapted to support further economic development, they could end up hindering it. What really

Institutional flexibility

Open to reform The pessimists, however, doubt that China can maintain catch-up economic growth. They argue that the current growth model, if not the economic system more broadly, is driving the country into a “middleincome trap”. Attributing problems to systemic causes is a typical habit of thought in China. But can a system that has sustained 30 years of hypergrowth really be worse than

matters for economic growth is not whether a system is the “best,” but whether it can be adjusted to serve a new phase of economic development. From this perspective, it is vital to ensure that an economic system is open to institutional reform. No economic system, however “optimal,” can sustain long-term growth once it is no longer reformable. After its extraordinary post-1945 economic miracle, Japan fell into a pattern of ultra-slow growth because it lacked the flexibility to adapt its institutions for a new phase of economic development, characterised by heightened global competition. By contrast, South Korea has maintained its growth momentum since the Asian financial crisis of the late 1990’s. Western economists often criticise its economic system, but the key point is that its institutions are flexible and open to change, which implies a high degree of economic resilience.

The authorities must ensure that the system remains open to change in the long run

Why is one system amenable to reform, while another is not? In recent years, research has indicated that vested interests and powerful lobbies distort economic policies and cause governments to miss good opportunities. A system receptive to reform requires the government to have greater power or wealth than any interest group, thus enabling it to pursue long-term policy goals and ensure the success of reform. For example, Yao Yang of Peking University has argued that the Chinese government is

able to decide the right policies at critical points, because it is not unduly swayed by any interest group. It is this neutrality, he says, that explains the success of China’s economic transition and its three decades of rapid economic growth. But what about now? China is entering a new phase of development, and institutional reform in key areas – particularly the public sector, income distribution, land ownership, the household registration system, and the financial sector – has become imperative. Obviously, reform is more difficult today than it was when China began its economic transition. Stateowned enterprises, for example, currently account for 40 percent of total corporate assets, but only 2 percent of all firms, which implies significant policy influence. But China seems unlikely to go the way of, say, Russia. On the contrary, the accumulation of wealth in the Chinese government’s hands should enhance its ability to press ahead with reform. Institutional flexibility has been the key to China’s economic transition and rapid growth over the last three decades, and it is vitally important that the Chinese government remains neutral and avoids being captured by interest groups. In short, the authorities must ensure that the system remains open to change in the long run. Successful implementation of another round of far-reaching reform depends on it. © Project Syndicate

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 22, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Economic Times

In the face of a soaring euroyen exchange rate that restricts German exports, the government in Berlin might conclude that fiscal stimulus is just the right medicine to restore growth

Finance Minister P Chidambaram has rejected suggestions that India is imposing restrictions on investments and said the country’s economy is opening up in a gradual manner. “I think the right way to look at it is we are not restricting. We are opening up in a gradual manner. Where were we in 1991. What are we today, in 2013? In the space of 22 years we have opened practically 90 percent of India’s economy,” Mr Chidambaram was quoted as saying. “There are still some areas which are closed or which are restricted. But they will open up,” he added.

Thanh Nien Daily Vietnam’s Ministry of Finance announced a plan to slash corporate income tax to 22 percent from the current 25 percent starting next year. However, the new rate of 22 percent will apply earlier to small- and medium-sized enterprises – from this July – as they are most vulnerable in the depressed economy, Finance Minister Vu Thi Mai was quoted as saying. The ministry has also announced a 30-50 percent cut in value added tax for affordable housing developers this July. The preferential tax policy is expected to lead to a 2.647 trillion dong (US$126.6 million) reduction in this year’s tax revenues.

How the falling yen can save the euro Melvyn Krauss

Bangkok Post Several experts have called on the government to enhance the credibility of feasibility studies and balance the decision-making power of projects listed under the government’s 2 trillion baht (US$69.7 billion) borrowing bill. Of the total amount, 80 percent will go to the rail system, with the remainder allocated to upgrading seaports, roads and customs checkpoints. “The bill is similar to a blank cheque to a certain extent. And parliament has only one opportunity to review it in seven years,” said Somchai Jitsuchon, a senior researcher who is a member of parliament’s standing committee screening the bill.

Inquirer Business The Bangko Sentral ng Pilipinas has eased the rules on foreign exchange to give the public wider access to the enormous dollar resources kept in the country’s banking system. The liberalised foreign exchange rules are expected to help tame a strengthening peso by making it easier for people and companies to bring foreign currencies out of the country and tempering the effect of foreign currency inflows on the exchange rate. This is the sixth time since 2007 that the BSP eased foreign exchange rules. The last such action was done in 2011.

Emeritus economics professor at New York University and a senior fellow at the Hoover Institution at Stanford University

apan’s new bond-buying programme amounts to a declaration of currency war against its trading partners, no matter how you sugarcoat it. Yet it may also prove constructive for the euro area, jolting Germany to at last adopt more growth-friendly policies. How else is Europe to overcome the deflationary sting of a depreciated yen, if not with a growth boost from the German government? The Japanese currency fell by more than 20 percent against the euro in the past four months. Japan accounts for between 3 percent and 4 percent of Europe’s trade, but that understates the impact a weak yen has. Exports make up about 50 percent of gross domestic product in Germany, the euro area’s dominant economy. German carmakers and heavy machinery giants go head to head with their Japanese equivalents around the world, and they will have to cut prices to compete. The European Central Bank can’t be expected to let the German government off the hook by adopting its own round of quantitative easing in response to this deflationary threat. The ECB’s immensely successful bond-

buying programme was one thing, quantitative easing by purchasing sovereign bonds is another. It isn’t anywhere on the bank’s agenda.

Poor timing The timing of Japan’s drastic policy change is bad for Europe, and shows it isn’t a good partner. Major new German policy initiatives have been put on hold until after the country’s parliamentary elections in September. This means it will be at least five months before Germany can respond; Europe will have to muddle through until then. Japan would have been a much better partner had it waited with its shockand-awe until September. Still, Japan’s quantitative easing may turn out to be the straw that breaks the back of German resistance to expanding its fiscal deficit, with the aim of rebalancing its economy to favour consumer demand over exports. In the face of a soaring euro-yen exchange rate that restricts German exports, the government in Berlin might conclude that fiscal stimulus is just the right medicine to restore growth. Japan’s policies will also

create pressure for Germany to loosen its purse strings for other euro-area countries. Germany needs to spend more on euro-area structural reforms, the key for periphery partners to become cost competitive on global markets. Trading bailout money for structural reform makes sense for Germany. And it doesn’t mean going soft – Germany can always cut off the funds if the periphery countries stop reforms. Logically, once the elections are over, Japan’s move should also goad Germany to action in

creating a banking union, which is necessary if Europe’s banks are to be put on a firmer footing. Stronger banks would help offset the deflationary effects of a weaker yen. Critics are trying to sort out whether Japan’s new policy is a beggar-thy-neighbour move or something constructive to aid a global economic recovery. At the International Monetary Fund meetings this week in Washington, Japan’s partners looked as if they’ll soft-pedal the issue in public, while the IMF described the large scale quantitative easing as “appropriate”. Certainly, the U.S., the International Monetary Fund and Europe have been trying to get Japan to do something like this for years. But Japan’s timing creates suspicions about its motives. Had Bank of Japan Governor Haruhiko Kuroda waited just six months, such a huge injection of quantitative easing would look like a good partner doing something constructive. Instead, it seems a ploy to gain advantage – even if it usefully pushes Germany in the direction of more growth-friendly policies. Bloomberg View

April 22, 2013

Closing Fitch downgrades U.K. credit rating

Italy’s Napolitano re-elected

Britain’s credit standing took a further blow when Fitch Ratings became the second major international agency to strip the country of its top-notch credit rating. Fitch downgraded the U.K. to AA+ owing to a weakened economic outlook. The move, after Moody’s downgrade in February, came as Chancellor George Osborne (pictured) defended the government’s austerity plan. Mr Osborne has said his was the “right plan” and that the economy was “healing”. Fitch said its downgrade “primarily reflects a weaker economic and fiscal outlook” but returned its outlook to “stable”, removing the threat of further rate action in the near term.

Italian President Giorgio Napolitano was elected to a second term after accepting a last-minute appeal from party leaders to run again, a step that may resolve the nation’s political crisis two months after inconclusive elections. Mr Napolitano’s re-election came in Parliament’s sixth attempt to elect a president last week. His first task will be to try and break the political impasse after the February 24-25 elections produced a hung parliament. Italy’s next government must combat the longest recession in more than two decades and tackle public debt that will reach 130.4 percent of GDP this year, more than twice the euro-region limit.

G20 rejects hard debt cut targets Finance leaders of the G20 economies edged away from a long-running drive toward government austerity in rich nations, rejecting the idea of setting hard targets for reducing national debt in a sign of worries over a sluggish global recovery. The G20 club of advanced and emerging economies also said it would be watching for negative effects from massive monetary stimulus, such as Japan’s – a nod to concerns of developing nations that those policies risk flooding their economies with hot capital and driving up their currencies. Russian Finance Minister Anton Siluanov said at a news conference that officials from the Group of 20 nations believed overall debt reduction was more important than specific figures. “We agreed that these would be soft parameters, these would be some kind of strategic objectives and goals which might be amended or adjusted, depending on the specific situations in the national economies,” he said. Russia – this year’s G20 chair – had hoped to secure an agreement on setting fixed targets for reducing debt by the time G20 leaders meet in St. Petersburg in September. But the United States and Japan have firmly opposed the idea of committing to fixed debt-toGDP targets, with Washington trying to keep the focus of the G20 on growth. “Quite frankly, the language could have been stronger but it’s sufficient to move this forward,” said Canadian Finance Minister Jim Flaherty. In a communique after a two-day meeting, the G20 said it would be “mindful” of possible side effects from extended periods of monetary stimulus, a phrase added at the insistence of South Korea to take into account the concerns of emerging markets. “Monetary policy should be directed toward domestic price stability and continuing to support economic recovery,” the statement said.

IMF urges action to boost confidence Finance leaders warn on over-reliance on monetary policy Lesley Wroughton and Krista Hughes

lobal finance officials on Saturday said monetary policy alone was not enough to restore confidence in the shaky global economy as they urged countries to take other steps to reinvigorate growth and create jobs. “We need to act decisively to nurture a sustainable recovery and restore the resilience of the global economy,” the International Monetary Fund’s steering committee said at the conclusion of the world lender’s spring meeting. Central banks in the biggest economies should continue their accommodative monetary policies amid an uneven and weak economic recovery, the International Monetary and Financial Committee (IMFC) said in a communique. Easy-money initiatives alone, however, cannot be counted upon to provide sufficient stimulus, it said as it called for “credible” plans to tighten budgets over time and structural reforms to make economies more productive. “The commodity that is in shortest supply now is confidence,” Singaporean Finance Minister Tharman Shanmugaratnam, chairman of the IMFC, told a news conference. But in order to shore-up

confidence, a range of policy actions were needed to nurse the recovery, he said. “There is strong and common recognition that achieving growth and jobs cannot rest on one policy alone - there is no single bullet that will get us to normal growth and some normality with regard to jobs,” said Mr Tharman.

Policy risks Aggressive stimulus from central banks in the United States, Britain, the euro zone and now Japan has so far failed to spark a reliable recovery, and questions are already being raised over how much more monetary policy can – or should – do. The head of China’s central bank, Zhou Xiaochuan, told the IMF panel that “the marginal benefits and costs” of central bank policies in rich nations needed to be re-evaluated. “Unco n v en ti o n a l m o n eta r y policies alone cannot solve the structural problems faced by advanced economies,” he said. IMF Managing Director Christine Lagarde told reporters the extraordinary efforts by these central banks were appropriate for now, but acknowledged the concerns of emerging countries

about the potential for destabilising capital flows and upward pressure on their currencies. “We affirm our commitment to refrain from competitive devaluations and any form of trade and investment protectionism,” the IMFC said. Worries nations may try to seek a trade advantage by lowering the value of their currencies have been heightened by Japan’s recent efforts to overcome years of deflation. The Bank of Japan earlier this month pledged to pump US$1.4 trillion into its economy, some of which is expected to find its way into emerging markets. In the days following the BOJ’s announcement, for example, the Mexican peso jumped 2.5 percent against the dollar to its strongest level in 20 months. Ms Lagarde said the IMF would step up its efforts to monitor the spillover effects on emerging nations from the extraordinary monetary easing in the developed world to guard against the risk of asset bubbles forming in poorer countries. “Prolonged easing could exacerbate the financial vulnerabilities and affect the stability of the international monetary system,” Mr Zhou warned the IMF committee. Reuters

EU defends growth plans European officials sought to convince policy makers from the rest of the world that they’re not cutting budgets at the expense of stronger growth. As the U.S. and others prodded the 27-nation bloc to play a bigger role in the global recovery, European Union participants in Washington last week offered a united front in defence of their push to rein in fiscal deficits and revamp their workforces. There is a “misunderstanding” that the EU and the euro zone are “only fixated on austerity,” Dutch Finance Minister Jeroen Dijsselbloem told reporters yesterday at the World Bank and International Monetary Fund’s spring meetings. He said the EU will slow down the pace of debt-cutting efforts to account for economic weakness, giving crisis-stricken nations such as Portugal more time if necessary. Five euro-area nations have so far sought bailouts during a financial crisis that has left 19 million workers without jobs and required trillions of euros in financial-sector assistance. The euro area’s response has focused on lowering national debts, even as forecasts project a second straight year of economic contraction. U.S. Treasury Secretary Jacob J. Lew, in a statement, said weak domestic demand has undercut the euro-area’s efforts to return to growth. He said it will be vital for export-oriented economies to step up to protect Europe from being crushed under its so-called austerity strategies. “Stronger demand in Europe is critical to global growth,” Mr Lew said. “It is vital to see rebalancing within the euro area with surplus economies contributing more to demand in order to ease the periphery’s adjustment process, avoid austerity fatigue, and renew Europe’s economic vibrancy.”