Macau Business Daily, April 26, 2013 by Business Daily

Sichuan quake money well spent: govt, NGO Cotai 2.0 to fuel new labour shortage: Chui Page 3 I SSN 2226-8294

acau Red Cross and the government have issued assurances to the public after online scepticism about how relief money from the city is spent following mainland natural disasters. “Hollow bricks and Styrofoam do not necessarily make ‘tofu’ building, but isn’t it improper if a large quantity of these materials is used in buildings sitting on quake-prone sites?” suggests ‘Toby’ a local blogger, questioning the quality of a school rebuilt with Macau money after the 2008 Sichuan earthquake. At the heart of the concern is that mainland officials could misuse money meant for victims. Cracks have appeared in the replacement school after the latest tremor on Saturday.

www.macaubusinessdaily.com

Hang Seng Index 22480

22428

22376

More on page 2

Year II

Number 270 Friday April 26, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief Vitor Quintã

MOP 6.00

April 19, 2013

22324

22272

Non-resident workers hit new high in March

22220

April 25

HSI - Movers

Macau firms hired over 42,600 non-residents in the last three years, with the numbers growing faster in the first three months of 2013. In the first quarter of the year imported labour jumped by 4,164. At the end of March there were 114,716 outside workers in Macau, up by 1,440 from February, data from the Human Resources Office showed yesterday.

Name

Page 4

%Day

CHINA SHENHUA-H

3.87

SANDS CHINA LTD

3.70

CNOOC LTD

2.85

TINGYI HLDG CO

2.49

HONG KONG EXCHNG

2.40

CATHAY PAC AIR

-0.45

CHEUNG KONG

-0.68

HENDERSON LAND D

-0.79

LENOVO GROUP LTD

-0.84

BELLE INTERNATIO

-1.40

Source: Bloomberg

Brought to you by

DB raises 2013 growth to 17 pct

Macau linked to China false invoicing: report

Stocks of Macau’s gaming operators all gained in Hong Kong trading yesterday. It appeared to be partly in reaction to a report from Karen Tang, research analyst at Deutsche Bank in Hong Kong. It increased to 17 percent the estimate on Macau market revenue growth for the year. Deutsche Bank had suggested 11 percent year-onyear expansion in earlier estimates.

An American research and advocacy group has launched a report that identifies Macau as one of the likely staging points for some of China’s illicit financial flows. With Chinese citizens able to open retail bank accounts denominated in yuan, Macau could be a spot of ‘trade misinvoicing’, the under-reporting of exports out of China, or an over reporting of imports into China.

Page 5

Page 6

2013-04-26

2013-04-27

2013-04-28

21˚ 26˚

20˚ 24˚

22˚ 26˚

April 26, 2013

Macau China wants stronger Macau investment Macau should pay a more active role in Pearl River Delta cooperation and in Hengqin Island investment, Wang Chao, China’s vice-minister of Commerce, said yesterday during an investment seminar here. Noting that the city has great potential for sightseeing, conventions and logistics, the Beijing official also voiced hope for a better partnership between the mainland and Macau in green technologies. In the first quarter Macau investors opened 58 companies in the mainland, down by 3 percent year-on-year while their investment amounted to US$100 million (800 million patacas), up by 7.6 percent, the vice-minister said.

Sichuan quake money well spent, says govt The Macau government and the Macau Red Cross say spending on reconstruction was well audited Stephanie Lai

sw.lai@macaubusinessdaily.com

The audit report on the reconstruction projects after the 2008 Sichuan earthquake will be released to the public very soon Eddie Wong Yue Kai, Macau Red Cross president

espite reports of cracks in the walls of a Macau-financed school in the province of Sichuan after the earthquake there on Saturday, the government here has said the building has no structural problems. For its part, the Macau Red Cross has said that stringent checks meant the money it collected here for reconstruction after the earthquake in Sichuan in 2008 was put to good use. But the Red Cross has acknowledged difficulties in dealing with contractors and the authorities in Sichuan. Reports of cracks in the walls of the classrooms and corridors of the school rebuilt in Sichuan with Macau money stirred up concern among people here over donations made in 2008 – concern that they expressed in online forums. The Macau government spent 30.41 million yuan (US$39.39 million) on rebuilding Lingguan Secondary School in Baoxing county, which reopened three years ago. The government donated a total of 379 million yuan for 103 reconstruction projects in Sichuan such as the rebuilding of schools, hospitals and cultural centres, including 12 projects in the city of Ya’an. The cabinet of Secretary for Social Affairs and Culture Cheong U has said no serious problems with the school building have been found. “There were cracks on the walls and damage to the school facilities, but there has been no serious problem

found in the building structure,” the cabinet said in a written statement, which cited the provincial government as its source. A spokesperson for the cabinet told Business Daily that since Saturday’s earthquake no serious damage to any Macau-funded project in Sichuan had been reported. “For each funded project in Sichuan, the money was donated in phases, according to the progress and the quality of the construction, for which we got a double confirmation from our audit and engineering teams,” the spokesperson said.

Double auditing The Macau Red Cross, the main charity here that contributed to relief work after the quake in 2008, has said it is unaware of any structural problems with the reconstruction projects it funded. The Red Cross spent 719.6 million yuan on building 30 medical clinics, 10 county hospitals, 13 schools, 1,207 homes and seven care centres for the elderly in Sichuan and the neighbouring provinces of Shaanxi and Gansu. The Macau Red Cross is financially independent of its counterpart in mainland China. But after the quake in 2008, the Macau Red Cross had to follow mainland regulations in disbursing the donations it collected here. “What we did was set up a special account under the Chinese Red Cross

to put our donated money in,” said Owen Wong Ngai Wong, deputy director of disaster relief affairs of the Macau Red Cross. The president of the Macau Red Cross, Eddie Wong Yue Kai, said: “That mode of operation is basically safe, and we had no misappropriation.” He added: “The donations could be directed to the projects successfully and I think this donation withdrawal format will continue for the latest earthquake relief task.” The Macau Red Cross set up a system for auditing the relief work it financed. “We had an independent audit body employed in mainland China to check the construction expenses, and we also employed Ernst & Young to do another layer of auditing work,” said Mr Eddie Wong. “The audit report on the reconstruction projects after the 2008 Sichuan earthquake will be released to the public very soon,” he said.

Unwelcome charity The Macau Red Cross says it has had no trouble in coordinating with its counterpart in Sichuan. But the charity acknowledges that ensuring the construction work there was up to scratch was a “big test”. “In 2009 we found out that a construction team had tried to use hollow blocks in the load-bearing walls of dozens of homes, which was dangerous,” Mr Owen Wong said.

“We had to halt the project immediately, and ordered them not to do so.” The homes in question are in Tashui township in the city of Mianyang. “We did constant checks on the projects, not only with a local engineering team, but with one from Macau, as well,” Mr Owen Wong said. The Macau Red Cross paid for the reconstruction work in instalments, paying contractors only 40 percent once their contracts had been signed. It paid them another 40 percent after the buildings they built were topped off, and the final 20 percent after all work was completed. The charity says officials in some rural counties and villages did not always welcome the sudden flow of donations. “There were two instances when we had already signed a reconstruction agreement, but we were informed by a township official that they had opted for another deal offered by developers,” said Mr Eddie Wong. “Developers offered a bigger sum to get the land, and we had to back down,” he said. Since Saturday’s quake, the Red Cross has collected 18 million patacas in donations.

April 26, 2013

Macau

Labour shortage to worsen by 2016: Chui Public should discuss whether the city needs to absorb more ‘talents from elsewhere,’ chief executive says Tony Lai

tony.lai@macaubusinessdaily.com

Lack of human resources ‘will become more conspicuous by 2016’, said Chui Sai On (Photo: Manuel Cardoso)

acau’s labour shortage will worsen further in the next few years after the completion of several Cotai gaming resorts, and the public should consider

other means to supplement resident workers, the government said. “The lack of local talents, land plots and the economy’s reliance on gaming revenue are the hindrances”

the city’s development faces, Chief Executive Fernando Chu Sai On told members of the Legislative Assembly yesterday. Mr Chui remarks came after several legislators, including businessmen Kou Hoi In and Tsui Wai Kwan, urged him to follow China’s new President Xi Jinping’s comments on the need for economic diversification. During yesterday’s question and answer session Mr Chui pledged to increase the non-gaming elements in new casino resorts and to put resources into developing other industries. “The economy’s reliance on gaming will continue for a long time but this will not prevent [the development of] the non-gaming elements,” said Mr Chui. He pledges there will be “a closer ratio” between the gaming and nongaming facilities within the new big Cotai casino resorts which are expected to be completed by 2015-16. The official also said the resorts “will need a large number of employees, which will further tighten the number of workers available for the SMEs [small and medium enterprises].” “So when there are not enough resident workers, can we absorb qualified talents from elsewhere…

Public urged to stay calm amid home buying rush But the government laid out no new property cooling measures

to serve the city and contribute to Macau’s economic development?” he questioned. The public should discuss this possibility, he added. “We may not face this problem this year but it will become more conspicuous by 2016,” Mr Chui said.

Education, SMEs The chief executive also emphasised the importance of personnel training for the city’s economic development. He believes the University of Macau will make good use of the new campus on Hengqin Island, slated to be up and running in September, to help the city train up its professionals. “It now comes to a new stage: how can we better support other tertiary education institutes to cultivate local talents,” Mr Chui said. Such plans would be written down in November’s Policy Address for next year, he said without revealing any details. “It is not something we can achieve in a short period of time but we should make a first step for long-term planning,” he said. The government is also working on establishing a human resources database to better plan for the labour market in different sectors. Mr Chui added they would help residents without higher qualifications to “have a second chance” in learning and moving up in the social ladder. For further diversifying the city’s economy, the government would also lay out more measures to help small and medium enterprises develop their businesses beyond Macau borders.

KEY POINTS Inflation could remain below 5 pct this year Consumer rights’ law to be reviewed

Tony Lai

tony.lai@macaubusinessdaily.com

Chui apologised for delay in social housing applications

hief Executive Fernando Chui Sai On has again asked the public to “stay calm” before buying homes but made no mentions of new curbs during yesterday’s session at the Legislative Assembly. Mr Chui admitted that the last two rounds of measures – implemented in 2011 and last October – had failed to suppress the hike in property prices despite declines in the number of transactions. “The market is overheated and the [home] prices are too high,” he said, adding there is a growing asset bubble in the estate sector. According to data from the Financial Services Bureau, the housing price in February stood at 70,385 patacas (US$8,803) per square metre, increasing by 70.8 percent year-on-year. Mr Chui said there were “changes” in the structure of the property market, as more residents planned to buy homes as investment vehicles against inflation and making use of low interest rates.

But it warned that even interest rates might change in the future. “But do they have to hurry up in buying homes when there is a supply of about 30,000 private housing units in the future?” he questioned. Mr Chui did not say whether there would be a new round of housing curbs, following similar moves in Hong Kong and mainland China in the last two months. The chief executive only said raising the special stamp duty on home re-sales or further tightening home mortgages would be two possible measures.

New levy The other alternative would be to impose a new levy for home purchases when the buyers own more than one house, according to Mr Chui. Legislator Kwan Tsui Hang, however, said the government would unlikely roll out new curbs as the last two rounds “seem to have been futile”.

Ms Kwan and many other legislators asked the chief executive for more solutions to ensure that residents were able to buy a home, like building more affordable public flats. Mr Chui pledged to find more plots for public housing. For instance the authorities had started legal procedures to seize 28 unused and undeveloped plots. He also said there would be a possible supply of 43,000 flats – both private and public – in the five new reclaimed areas. As for the idea of restricting home sales in some areas to Macau residents only, Mr Chui said the administration had already asked two academic institutions to study the concept. This concept could help the middle class and “reduce residents’ housing worries”, the official said. But it might also “bring injustice to the disadvantaged groups,” he warned. Mr Chui stressed “there is still time” to go before there is a consensus over “this new idea”.

Slower public spending growth in next three years Better interaction with legislators over project overruns Chui doubts study showing income gap growth Loan scheme for young entrepreneurs coming soon Population policy consultation ready in September Certification for doctors, urban planners in second half No plots in new reclaimed areas have been granted Environmental protection to get boost next year

April 26, 2013

Macau

Imported labour rising even faster this year

Brought to you by

HOSPITALITY

Macau firms hired over 42,600 non-residents in the last three years

Meeting demand The number of hotels and hotel rooms has increased over the years. This has meant two things. First, capacity to accommodate tourists has increased. Second, competition among hotels has become fiercer. Occupancy rates indicate that hotels have been quite successful in filling their extra capacity with guests. This analysis focuses on fourstar and five-star hotels, which contain by far the biggest numbers of rooms and bed spaces. The plots for the average rates of occupancy are smoothed out using threemonth moving averages.

Vítor Quintã

vitorquinta@macaubusinessdaily.com

The construction sector is hiring thanks to new projects in Cotai

he number of non-resident workers has been growing even faster in the first quarter of this year, pushing imported labour to new records. At the end of March there were 114,716 outside workers in Macau, up by 1,440 from February, data from the Human Resources Office showed yesterday. Companies here hired almost as many people last month as during the whole last quarter of 2012 (1,514). In

The plot for five-star hotels is strikingly similar to the plot for all hotels. Fivestar hotels predominate so much that how they perform is, in essence, how the whole hotel industry performs. Occupancy rates have risen slowly but steadily. The increase in the supply of hotel rooms and greater competition among hotels have not stopped the average occupancy rate from rising. The only interruption in the upward trend in the average occupancy rate was a dip of some 15 percentage points in the first half of 2009. But the interruption was brief, and when the average occupancy rate resumed its climb, it rose more steeply than before. The average rate of occupancy of four-star hotels is consistently higher than average rate of occupancy of five-star hotels, suggesting there is room for further expansion of the supply of four-star hotel rooms. J.I.D.

80 %

Lowest average rate of hotel occupancy in any month in the past two years

the January-March period imported labour jumped by 4,164. The hiring spree is not surprising given that there were over 8,000 job vacancies in gaming, wholesale and retail trade, security and transport at the end of last year, official data show. With the unemployment rate at 1.9 percent – the third-lowest in the world – and just 6,700 people out of a job, outside labour has been the alternative for many firms. The number of non-resident

workers has increased by 42,624 since May 2010 as the city’s economy recovered from the global financial crisis. Last month’s growth was fuelled by the construction sector, which hired a further 844 outside staff, taking its total to 15,698. With the launch of several new construction sites in Cotai the industry has increased its workforce for a second consecutive month, after firing 10 percent of its imported labour in the November-January period. The wholesale and retail trade also hired a further 326 non-resident workers to cope with tourists’ shopping demand, reaching a total of 12,514. Visitor arrivals edged up by 1.9 percent year-on-year in the first quarter, official data show. On the other hand Macau’s hotels and restaurants saw their imported staff decrease by 100 to 35,332 last month, for the first time since May 2010. The gaming sector also saw its non-resident workers decrease to 11,286, mostly because the number of construction labour hired directly by casino operators fell by 135 in March.

Legislator questions soaring consultancy expenses Tony Lai

tony.lai@macaubusinessdaily.com

he government should employ “scientific and enforceable” mechanisms when hiring third-party consultancy and research services as these expenses have been soaring, a legislator has urged. Chan Meng Kam is concerned that public spending on research, consultancy and translation “has been getting higher and higher in recent years”. The administration plans to spend over 560 million patacas (US$70 million) in this field, up by 31 percent from 2012, Mr Chan stressed in a written inquiry, quoting the 2013 government budget. Different public bodies commission “hundreds of research

or investigation projects” to academic institutions or associations each year, he pointed out. The most recent example is a survey on the city’s energy efficiency commissioned to the Macau University of Science and Technology. The Office for the Development of the Energy Sector did not disclose in Wednesday’s Official Gazette the amount it will pay for the study. So Mr Chan is asking the administration if there are any “scientific and enforceable guidelines” for government departments to follow when launching a study. “Quite a few public bodies

seemingly require [a third-party] institution to conduct research before they start their own work and some research projects have been repeated,” Mr Chan wrote. “This leads to doubts over the decision-making powers of public bodies, as well as a possible waste of public money,” the legislator said. He singled out the Social Welfare Bureau for employing different parties to conduct studies on elderly care without disclosing the results to the public. Mr Chan questioned how the administration could “evaluate the usefulness of research projects worth a large amount of public money”. T.L.

April 26, 2013

Macau Deutsche Bank raises 2013 growth to 17 pct Return of VIP market to double-digit expansion a factor, says analyst Karen Tang Michael Grimes

michael.grimes@macaubusinessdaily.com

report dated April 23. “Incorporating this pick up in VIP demand we raise Macau’s 2013 VIP growth from five percent to 13 percent year-on-year,” she writes. “We also slightly raise mass table revenue growth forecast from 27 percent year-on-year to 28 percent year-on-year. Overall, these changes mean that our 2013 gross gaming revenue forecast for Macau goes up from 11 percent year-on-year to 17 percent year-on-year,” she adds.

VIP competition

Sands China at all time high yesterday in HK trading

tocks of Macau’s gaming operators all gained in Hong Kong trading yesterday. It appeared to be partly in reaction to a report from Karen Tang, research analyst at Deutsche Bank in Hong Kong. It increased to 17 percent the estimate on Macau market revenue

growth for the year. Deutsche Bank had suggested 11 percent year-onyear expansion in earlier estimates. “Junkets said VIP growth has finally returned to double-digit, as they start to extend more credit on [the] back of China’s GDP recovery,” states Ms Tang in her

The report also indicates that competition between the six operators for VIP business intensified in the second half of last year. Deutsche Bank says casino payments to junkets and ‘comps’ to players as a percentage of all VIP revenue rose from 44.8 percent in the first half 2012 – equivalent to US$4.3 billion (34.39 billion patacas) to 46.1 percent in the second half 2012 – equal to US$4.5 billion. “This was mainly driven by the jump in MGM China’s junket commission and comps from 46.0 percent of VIP revenue in 1H12 to 50.5 percent in 2H12. We think

this should be due to MGM China offering higher junket commissions in order to attract new junkets for the two new VIP rooms (40 tables) it opened in October,” says Ms Tang. “Galaxy (43.2 percent), Melco Crown (44.6 percent) and Wynn Macau’s (44.2 percent) junket commission and comps as a percentage of VIP revenue also increased by around one percentage point half-on-half in 2H12,” she adds. Galaxy Entertainment Group Ltd gained 3.04 percent in Hong Kong trading yesterday to close at HK$33.90. Melco Crown Entertainment Ltd was up 0.74 percent to HK$61.20, while MGM China Holdings Ltd rose 2.14 percent to HK$ 18.10. Sands China Ltd added 3.70 percent to end the day at HK$42.05, and SJM Holdings Ltd gained 2.53 percent to reach HK$19.48. The best gain of the day was Wynn Macau Ltd, which put on 6.15 percent to close at HK$23.00. The parent company Wynn Resorts Ltd – which receives more than 70 percent of its earnings before interest, taxation, depreciation and amortisation from Macau – was due to report its first quarter earnings overnight U.S. time.

April April 26, 19, 2013 2013

Macau Brought to you by

Financial Monitor Rising bilateral deficits Macau’s growing dependence on external trade for everything that is consumed here entails a growing merchandise trade deficit. As manufacturing here dwindles, the trade deficit increases. Our main trading partner is mainland China, and our biggest bilateral trade deficit is with the mainland. Except in 2008, when the international crisis disrupted trade patterns, in recent years about one-third of our total trade deficit has been due to trade with the mainland. Our trade deficit with the mainland has constantly been at least three times bigger than our trade deficit with our next-biggest trading partner.

False invoicing major route for China money flows: report Washington D.C.-research centre gives fresh insight into use of global trade for tax avoidance and sending assets offshore Michael Grimes

michael.grimes@macaubusinessdaily.com

Manifest truth? Hard for customs officers to assess value of specialised items

Japan was our second-biggest trading partner until 2010, when France replaced it. Japan was our third-biggest trading partner for only a year, until Italy became the third-biggest and Hong Kong the fourth-biggest. It is not that trade with Japan has decreased. Indeed, our trade with Japan has been rising steadily for the past four years. Our trade with other places has simply risen much faster. This has meant the trade deficit with France has more than tripled since 2008, the trade deficit with Italy has almost quintupled and the trade deficit with Hong Kong is 2.5 times greater than it was. Our trade with our sixth-biggest trading partner, Taiwan, has followed a trend similar to our trade with Japan. But the trade deficit with Taiwan has always been the smallest of the bilateral trade deficits with our main trading partners. Trade with France, Italy, Hong Kong, Japan and Taiwan, taken together, accounts for another one-third of the total trade deficit. Trade with the rest of the world accounts for the remainder of the total trade deficit. J.I.D. The content of this column is the work of Business Daily’s journalists.

230 %

Increase in trade deficit with France since 2008

acau is often mentioned by Western government agencies and Western journalists as a centre for ‘money laundering’. A Washington D.C.-based research and advocacy group called Global Financial Integrity, focuses instead on Macau’s possible role in the misuse of otherwise legal trade. The group’s 26-page report is titled ‘Illicit Financial Flows from China and the Role of Trade Misinvoicing’. The document – written by Dev Kar, a former senior economist at the International Monetary Fund, and economist Sarah Freitas – estimates that between 2000 and 2011, “cumulative illicit financial flows from China” totalled US$3.79 trillion (30.31 trillion patacas) globally. It identifies Hong Kong and Macau – the only places outside the mainland where Chinese citizens can open retail bank accounts denominated in yuan rather than purely trade settlement accounts – as likely staging points for some of it. Business Daily reported on March 19 – quoting the Monetary Authority of Macau – that the value of yuan trade settlement increased by two-thirds last year, reaching 97.25 billion yuan (US$15.8 billion). The GFI report states: “As there are no estimates of how much trade between China and Hong Kong is destined for domestic consumption and how much is merely passing

through as re-exports, economists have estimated illegal capital flight from China by both including and excluding Hong Kong and Macao from the trade misinvoicing calculations.” ‘Trade misinvoicing’ is shorthand for the under-reporting of exports out of China, or an over reporting of imports into China. The under reporting of exports gives an opportunity for the economic value of goods or services to change hands abroad without being declared and taxed, while the over reporting of imports provides a pretext for sending an excess of cash outside the country under the cover story of invoice settlement. “…the more specialised a product, the easier it is to misinvoice because an inspector would need specialised knowledge in order to judge whether the product is under- or over-valued,” states the paper. “The sharp rise in [Chinese] illicit outflows, from US$172.6 billion in 2000 to US$602.9 in 2011, implied an increase of about 7.2 percent per year in inflation-adjusted terms, which was just below the 10.2 percent average rate of economic growth,” suggest the report authors.

Overseas assets It’s been reported for many years in the Chinese and overseas media

that when mainland residents gain significant wealth, many like to place a portion of their assets offshore. GFI’s report cites several possible reasons. One is as a hedge against domestic political risk; the suggestion being that either mainland officials will expropriate wealth if it remains onshore, or that China’s political system might itself experience a sudden change in the manner of 1949. Another argument is that moving money offshore and having it denominated in a foreign currency such as U.S. dollars could be a hedge against Chinese domestic consumer price inflation – officially running at four percent last year – or indeed a hedge against any dramatic upward revaluation of the yuan, which the U.S. currently claims is seriously undervalued relative to China’s economic growth. Another reason cited is the desire of high net worth individuals to conceal the full extent of their wealth to avoid paying tax. “One of the adverse effects of illicit flows from China has been a worsening of the country’s income inequality as the rich get richer through tax evasion (which comprises by far the major portion of such outflows) and through using the world’s shadow financial system to shelter and multiply their illicit wealth,” suggests the report.

April 19, 2013

April April 26, 19, 2013 2013

Macau

Friends & Fun Business Daily celebrated its first anniversary last week, the same month as Essential Macau marked its second anniversary. We couldn’t have made it without all our readers, subscribers and partners. Thank you for celebrating with us this important date and we hope you join us as we move forward.

Ana Telo Mexia and Rafael Gama

Bruce Hawker (Essential Macau) gives a CTM prize to Carmo Correia

Jane Tsai (Galaxy Entertainment) gives a prize to Cristina Lobo

Edwin and Kera Whelan

Frederico Conde and Rebecca Choi

Ian and Denise Gould

Jack and Denise Galati

Paulo A. Azevedo, Peter Kendall, Janette Kendall and Gabe Hunterton

Nuno Simões and Vítor Gomes

Ken Jolly

Kylie Rogers and Chris Rogers

Paulo Azevedo gives The Venetian prize to José I. Duarte

Marco Macedo got the SJM prize

Maria Isabel Siqueira and João Manuel Conduto

Martin Schnider (Mandarin Oriental) delivers prize to lucky Vítor Gomes

Mimi Chan

April April 26, 19, 2013 2013

Macau

Paulo Azevedo gives MGM’s prize to Paulo Barbosa

Rashid Suliman, Simon Broad and Chris Rogers

Karen Kwan gets the biggest prize from City of Dreams, handed by Charles Ngai

Pedro Cortés, Bruno Ascensão, José Braz Gomes and José Costa Santos

Ronald Cheung

Tim Shepherd and Hannah Shepherd

Katharine Liu delivers Wynn Macau’s fab package to Luís Melo

Zoe Sou and James Chu

10 10

April April 26, 19, 2013 2013

Greater China Dock workers won’t rule out further escalation of protest

The gradual recovery of operation is weakening the strikers’ bargaining power Lawrence Li, UOB Kay Hian Holdings

Ships returning to HK as waiting time cut Operation at Kwai Tsing terminals gradually recovering Jasmine Wang

illionaire Li Ka Shing moved to end a four-week strike at his docks in Hong Kong, hiring new workers to handle ships and demanding protesters leave his building in the city’s Central District. The new workers and the return of some strikers to work has cut the waiting time for ships to an average 20-to-25 hours, compared with about 60 hours when the strike started, Hongkong International Terminals Ltd said in an e-mailed statement yesterday. The docks are operating at about 90 percent of capacity. The biggest industrial action ever faced by Mr Li has led at least 100 vessels to skip Hong Kong

in favour of nearby ports. Some dock workers, who are seeking better pay and working conditions, remain camped around Cheung Kong Center building in the central business district even after Mr Li gave them a noon deadline to leave. “The gradual recovery of operation is weakening the strikers’ bargaining power,” Lawrence Li, an analyst at UOB-Kay Hian Holdings Ltd said. “It puts the workers in a very difficult situation.” The workers, who walked out of their jobs on March 28, will continue to press for better pay and working conditions, and won’t rule out further escalation of protest, said Wong Yu Loy, a representative of the Union of Hong Kong Dockers.

China Wireless targets Lenovo, Samsung

Samsung. Samsung will be another few years in the future.” Total smartphone shipments in China will rise 44 percent to 300 million units this year, driven by handsets costing about 700 yuan (US$113), researcher IDC forecast in December. Demand is surging as China Mobile Ltd, the world’s largest carrier by subscribers, aggressively encourages users of second-generation networks to upgrade to third-generation service with low- and middle-end smartphones. China Wireless, formed in 1993, has sold phones through China Mobile for a decade. “Unlike Lenovo, which may rely more on open market channels, China Wireless’ strong business relationship with domestic telco operators secures a high level of shipment growth,” said Yuji Fung, a Hong Kong-based analyst with Oriental Patron Financial Group. “Strong smartphone growth is driven by the operator channel at the moment, via handset subsidies.”

hina Wireless Technologies Ltd, the nation’s third-largest smartphone vendor, said it will eventually overtake market leaders Samsung Electronics Co. and Lenovo Group Ltd, helped by demand for low-cost phones. A 50 percent surge in smartphone shipments will allow China Wireless to pass Lenovo for the No. 2 spot this year, while catching Samsung will take longer, chief financial officer Jiang Chao said in a Bloomberg Television interview yesterday. “Lenovo’s share is only 2 percent higher than our company, so we will catch up to them very fast,” Mr Jiang said in Shenzhen. “This year we could catch up with Lenovo, but not

Bloomberg News

“We will continue to think about escalating actions,” Mr Wong said. “To be honest, we did expect the strike to last a long period, but I have to say that we didn’t expect it could last such a long time, four weeks. But we are determined.” The workers surrounded Mr Li’s 70-story building – home to the offices of Barclays Plc and Goldman Sachs Inc. – last week after rejecting a pay raise aimed at ending the strike. Dozens of striking workers are sleeping in tents surrounding the building. They have put up caricature pictures of Mr Li while police and security guards patrol the area. Cheung Kong Center told the workers that if they didn’t leave by noon, they could be subject to

Huawei says U.S. not key market

hinese telecoms giant Huawei Technologies Co. says it would no longer focus on the United States market for its core business, months after Washington effectively closed the door on it by labelling it a security threat. The U.S. Congress last year warned telecom equipment supplied by Huawei and another Chinese company, ZTE Corp, could be used for spying and called for their exclusion from government contracts and acquisitions. Huawei has denied those claims and accused the U.S. government of protectionism, while seeking to improve transparency by releasing annual reports despite not being a listed company, but to no effect.

criminal prosecution, according to a notice the building management put up yesterday. The demonstrators, with their tents surrounding the entrances, showed no signs of moving. An eviction of the demonstrators at Cheung Kong may be days later. When protesters of the Occupy movement were given a deadline last year to leave the premises of HSBC Holdings Plc’ Asian headquarters, court bailiffs only moved them out more than two weeks later.

Daily loss A section of a road around terminals in Hong Kong’s Kwai Tsing district was blocked yesterday, according to a notice from the transport department. Some of the striking workers were demonstrating in that area. The striking workers are in a weak position as they account for only a small portion of the total workforce, said Paul Tsui, chairman of Hong Kong Association of Freight Forwarding and Logistics Ltd, which represents 345 freight forwarders in the city. “Even though the operations are getting better, we still hope it can be resolved soon, because it hurts everybody in the city,” Mr Tsui said. The daily financial loss caused by the strike has been “significantly” reduced in the last two weeks, Hongkong International said in the statement, without elaboration. The daily loss was narrowed to HK$2.4 million (US$309,000) on April 5 from HK$5 million earlier, according to the company. Bloomberg News

“Considering the situation our company currently faces in the U.S., it would be very difficult for the U.S. market to become a primary revenue source or a key growth area for our carrier network business in the foreseeable future,” Huawei said in a statement. The carrier network sector, in which it provides telecom companies with equipment and services to run their telecoms operations, is Huawei’s main business. A news report quoted Huawei’s executive vice-president Eric Xu as telling analysts in a meeting at its headquarters in the southern Chinese city of Shenzhen that the firm had shifted away from the U.S. over the past year. “We are not interested in the U.S. market any more,” he was quoted as saying by the Financial Times. A statement provided to AFP said Mr Xu’s comment applied to its carrier network business, which derived growth mainly from developed markets outside the United States. AFP

11 11

April April 26, 19, 2013 2013

Asia Bourse to probe Siam Makro trades Thailand’s stock exchange will investigate trading that preceded the announcement of the nation’s largest takeover bid, the purchase of discount wholesaler Siam Makro Pcl by 7-Eleven chain operator CP All Pcl. Siam Makro’s shares rose 30 percent in the six trading sessions before CP All’s US$6.6 billion bid was announced. “It’s our job to investigate any irregularities,” Charamporn Jotikasthira, president of the Stock Exchange of Thailand, said yesterday. “We have seen it and begun the process to investigate that.”

South Korea growth hits two-year high Weak global recovery, indebted households pose risks Se Young Lee and Choonsik Yoo

Seoul offers talks over industrial park

Hyundai profit beats estimates Hyundai Motor Co., South Korea’s largest carmaker, reported firstquarter profit that exceeded analysts’ estimates, driven by record sales in China. Net income fell 15 percent to 2.09 trillion won (US$1.9 billion), compared with 2.45 trillion won a year earlier, the Seoul-based company said in a statement yesterday. Sales in the world’s biggest auto market jumped 41 percent, closing in on Nissan Motor Co. in the country. Chinese deliveries helped offset dimming prospects at Hyundai, which is struggling with the won’s 25 percent gain against the yen in the past year.

Indian FM to visit China India’s Foreign Minister Salman Khurshid said yesterday he would visit China on May 9 amid high tensions between the neighbours due to a flare-up at their disputed border. “I believe we have a mutual interest and we should not destroy years of contribution we have put together,” he told reporters on the sidelines of a business event. “I think it is a good thing that we are having a dialogue.” It was unclear if the trip was part of scheduled preparations for a visit by the newly installed Chinese Premier Li Keqiang to India next month, but it comes at a time of rising friction between the neighbours.

Seoul has taken various measures to try to spur growth

outh Korea’s economy expanded in the first quarter at its fastest pace in two years, but the central bank report failed to brighten the prospects for the rest of the year as both consumers and exporters struggle for confidence. The data showed yesterday the economy grew a seasonally adjusted 0.9 percent from a weak fourth quarter of 2012. But compared with a year earlier, it grew just 1.5 percent, a pace unchanged from the fourth quarter, which was a three-year low. The consumer downturn and concern over exports – the twin engines of the Korean economy – prompted the new government of President Park Geun-hye to produce a US$15.5 billion extra budget and stimulus package earlier this month. The package aims to revive an economy that more typically grew at rates of 4 percent or higher before the global financial crisis. A slump in the yen has added to Korean exporters’

caution as they fear losing out to their Japanese rivals. “I think it’s hard to say that the economy is turning around as export growth completely halted. Companies are still panicking about poor exports,” said Jun Min-kyoo, economist at Korea Investment and Securities Co Ltd. Corporate investment in plant and other production equipment rose 3 percent, the most in a year, but it was still more than 11 percent lower than year-earlier levels, its sharpest decline in nearly four years on that basis. Exports appeared more promising, rising 3.2 percent from the fourth quarter and 3.6 percent from a year earlier, the volume-based GDP figures showed. But customs figures, which measure the value of exports, paint a less rosy picture, showing they increased just 0.5 percent from a year earlier. The latest customs figures show the trend worsened in the first 20

South Korea warned of undefined reprisals unless North Korea agrees to talks aimed at re-opening a jointly-run industrial park that has been shuttered for more than two weeks. President Park Geun-hye’s government “will be forced to take serious measures” if the North refuses negotiations on the Gaeseong industrial zone, Unification Ministry spokesman Kim Hyung Suk told reporters yesterday in Seoul. He called on North Korea to respond by today, while declining to elaborate on what steps might be taken. Pyongyang on April 8 recalled its workers from Gaeseong, the last point of inter-Korean exchange and a source of hard currency for its impoverished nation. The complex, about 10 kilometres north of the demilitarised zone between the two countries, employs more than 53,000 North Koreans for 123 South Korean companies.

days of April, when exports dropped 3 percent from a year earlier as data from the United States, China and Europe raise fresh concerns about prospects for the global economy. The GDP figures showed private consumption fell for the first time in five quarters as Koreans keep a tight hold on their wallets to deal with heavy household debt in the face of a slide in property prices and sluggish exports. Caution over Korea’s outlook was reflected in comments by Kim Youngbae, chief of the Bank of Korea’s economic statistics department. “The existing forecasts that both upside and downside risks exist in the coming quarters still hold,” he told reporters. Reuters

Kawasaki Heavy eyes merger Kawasaki Heavy Industries Ltd, Japan’s third-biggest shipbuilder, would consider merging to thin out the number of Japanese companies operating in a crowded field. “In the future, a merger is one option to consider given that there are too many companies in this industry” Senior Executive Vice President Mitsutoshi Takao told reporters in Tokyo yesterday after the company reported that net income may rise 10 percent this fiscal year, lagging analysts’ estimates. The comments follow a report April 22 in the Nikkei newspaper that said Kawasaki Heavy and Mitsui Engineering & Shipbuilding Co. are in talks to combine. Kawasaki Heavy hasn’t entered into talks with Mitsui Engineering and a merger wasn’t discussed at the company’s board meeting, Mr Takao said.

Indonesia relaxes import rules

ndonesia has eased restrictions on some agricultural imports after the United States complained to the World Trade Organisation over Jakarta’s “opaque and complex” rules, the trade ministry said. The U.S. first raised the issue with the trade body in January, citing Indonesia’s “broad use of import licensing measures that

restrict imports” on a range of agricultural products. It criticised the licensing system, which came into force last year, as “opaque and complex”, saying it was inconsistent with Indonesia’s WTO obligations and was having an impact on U.S. exports to the country. Last month Indonesia rejected a U.S. request for the creation of a WTO panel to settle the dispute but late Wednesday the trade ministry said it had eased the restrictions. The number of horticultural products regulated has been reduced by 18, the trade ministry said in a statement, adding that the new rules came into force on Monday. It made no mention of the WTO dispute.

The import of only 39 products would now be regulated, the ministry said. For those that are still regulated, the process to apply for import permits had been simplified and could now be done online. “We want the permit process to be simpler and administration of imports to be more orderly so that a higher degree of business certainty can be achieved,” said ministry official Bachrul Chairi. The case has put Indonesia under the spotlight at a time that former trade minister Mari Pangestu is in the running to lead the WTO, and as the country gears up to host the trade body’s ministerial meeting later this year. AFP

April 26, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AIA GROUP LTD

33.8

1.654135

22146762

CHINA UNICOM HON

10.8

-0.1848429

15724936

ALUMINUM CORP-H

2.95

2.076125

16640880

CITIC PACIFIC

9.52

1.818182

9034936

SANDS CHINA LTD

BANK OF CHINA-H

3.53

0.5698006

574269347

BANK OF COMMUN-H

6.03

2.030457

50795597

BANK EAST ASIA

31.05

1.305057

2754570

BELLE INTERNATIO

12.68

-1.399689

-0.3831418

CATHAY PAC AIR

13.22

-0.4518072

2083000

HANG SENG BK

128

CHEUNG KONG

117.3

-0.677392

3057903

HENDERSON LAND D

56.6

CHINA COAL ENE-H

6.4

1.265823

45010886

77.65

0.1289491

2784290

CHINA CONST BA-H

6.33

0.9569378

238078370

23.2

-0.2150538

7627336

CHINA LIFE INS-H

20.6

0.7334963

34807074

132.5

2.395672

5372564

CHINA MERCHANT

24.55

0.8213552

3271387

82.8

1.037218

14591639

CHINA MOBILE

83.95

1.205546

17292028

HUTCHISON WHAMPO

83.05

0.1205546

5890143

23.5

1.293103

17732100

IND & COMM BK-H

5.37

1.704545

281252240

LI & FUNG LTD

10.06

1.105528

18823153

-0.1602564

1861716

BOC HONG KONG HO

CHINA OVERSEAS

NAME

CLP HLDGS LTD

PRICE

DAY %

0.6802721

1452913

42.05

3.699137

10114389

SINO LAND CO

13.3

0.6051437

8113335

SUN HUNG KAI PRO

114

0.2638522

4255712

97.4

0.3089598

1316100

POWER ASSETS HOL

VOLUME

67.8

0.7429421

2091139

CNOOC LTD

14.44

2.849003

69678539

COSCO PAC LTD

10.62

0.5681818

4136866

SWIRE PACIFIC-A

22960000

ESPRIT HLDGS

10.04

-0.3968254

4217496

TENCENT HOLDINGS

255.6

0.4716981

3474780

10352030

HANG LUNG PROPER

30.3

2144500

TINGYI HLDG CO

20.55

2.493766

7367040

0.4709576

1349693

WANT WANT CHINA

12.02

-0.166113

13438250

-0.7887818

4991536

WHARF HLDG

69.6

-0.4291845

3443548

HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC

CHINA PETROLEU-H

8.53

2.033493

102485137

CHINA RES ENTERP

25.85

0.1937984

3580313

MTR CORP

31.15

23.1

0.4347826

7564734

NEW WORLD DEV

13.68

11519789

CHINA RES POWER

24.55

0.408998

7497707

PETROCHINA CO-H

9.69

1.359833

62138137

CHINA SHENHUA-H

26.85

3.868472

29739466

PING AN INSURA-H

59.6

11131970

CHINA RES LAND

NAME

MOVERS

2 22470

INDEX 22401.24 HIGH

22465.29

LOW

21768.11

52W (H) 23944.74 21760

(L) 18056.4 23-April

25-April

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.63

1.966292

241676736

AIR CHINA LTD-H

6.17

-0.9630819

7870082

ALUMINUM CORP-H

2.95

2.076125

ANHUI CONCH-H

27.75

BANK OF CHINA-H

3.53

BANK OF COMMUN-H BYD CO LTD-H CHINA CITIC BK-H

PRICE

DAY %

VOLUME

CHINA PACIFIC-H

27.6

1.284404

13147000

CHINA PETROLEU-H

8.53

2.033493

102485137

16640880

CHINA RAIL CN-H

7.66

1.322751

-2.116402

23974000

CHINA RAIL GR-H

3.9

0.5698006

574269347

CHINA SHENHUA-H

26.85

6.03

2.030457

50795597

CHINA TELECOM-H

25.1

-4.380952

3475501

DONGFENG MOTOR-H

4.21

1.937046

45999163

GUANGZHOU AUTO-H

6.52

1.399689

6887492

CHINA COAL ENE-H

6.4

1.265823

45010886

HUANENG POWER-H

8.62

-2.045455

29298596

CHINA COM CONS-H

7.65

0.3937008

16906311

IND & COMM BK-H

5.37

1.704545

281252240

CHINA CONST BA-H

6.33

0.9569378

238078370

JIANGXI COPPER-H

15.76

4.370861

33334918

CHINA COSCO HO-H

3.38

10976450

PETROCHINA CO-H

9.69

1.359833

62138137

CHINA LIFE INS-H

20.6

0.7334963

34807074

PICC PROPERTY &

9.64

1.260504

17127950

CHINA LONGYUAN-H

7.19

10558000

PING AN INSURA-H

59.6

11131970

CHINA MERCH BK-H

15.98

2.435897

26278585

SHANDONG WEIG-H

7.6

2.288022

15206000

CHINA MINSHENG-H

9.82

4.802561

96161604

SINOPHARM-H

23.5

-1.878914

9608229

CHINA NATL BDG-H

9.71

-1.019368

50979000

TSINGTAO BREW-H

54.05

2.659069

2760811

15.58

0.1285347

6630878

WEICHAI POWER-H

27.5

-1.785714

3294000

CHINA OILFIELD-H

NAME

PRICE

DAY %

VOLUME

3.211009

41520615

ZIJIN MINING-H

2.38

4.845815

73788507

19275606

ZOOMLION HEAVY-H

8.19

-0.8474576

18646660

0.7751938

25348207

ZTE CORP-H

12.46

-1.735016

4766314

3.868472

29739466

3.91

1.033592

42437996

11.88

-0.5025126

8252705

YANZHOU COAL-H

MOVERS

2 10830

INDEX 10772.76 HIGH

10823.02

LOW

10379.69

52W (H) 12354.22 10370

(L) 8987.76 23-April

25-April

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.71

-1.094891

116132266

AIR CHINA LTD-A

5.31

-1.48423

7487076

CITIC SECURITI-A

CHONGQING WATE-A

PRICE

DAY %

VOLUME

PRICE

DAY %

6.33

-1.860465

8685876

QINGHAI SALT-A

24.54

-1.3269

5721809

12.51

-0.7930214

95556613

SAIC MOTOR-A

14.88

-1.129568

29510508

NAME

VOLUME

4.03

-1.466993

13204176

CSR CORP LTD -A

4.02

-0.248139

26084493

SANY HEAVY INDUS

9.94

-1.972387

29695135

ANHUI CONCH-A

17.62

-3.768433

52724673

DAQIN RAILWAY -A

7.22

0.5571031

23729649

SHANDONG GOLD-MI

32.13

4503942

BANK OF BEIJIN-A

8.61

0.2328289

20991640

DATANG INTL PO-A

4.3

-1.826484

5751794

SHANG PHARM -A

12.15

-1.699029

9410317

BANK OF CHINA-A

2.9

20722553

EVERBRIG SEC -A

13.78

-1.218638

22315145

SHANG PUDONG-A

9.91

-1.196411

74320334

ALUMINUM CORP-A

BANK OF COMMUN-A

4.65

56877765

GD MIDEA HOLDI-A

13.65

-0.9433962

16064573

SHANGHAI ELECT-A

3.8

-1.554404

3181742

BANK OF NINGBO-A

10.2

-2.205177

12707266

GD POWER DEVEL-A

2.8

0.3584229

37201219

SHANXI LU'AN -A

16.08

-2.070646

13905292

BAOSHAN IRON & S

4.79

15934772

GEMDALE CORP-A

6.89

-3.094233

60196982

SHANXI XISHAN-A

10.61

-0.9337068

9502660

BEIJING TONGRE-A

22.8

-1.213172

13428669

GF SECURITIES-A

13.28

-0.8955224

23079086

SHENZEN OVERSE-A

5.75

-1.372213

45420023

26.1

19512089

SICHUAN KELUN-A

63.22

0.5887033

1209340

18.84

-1.05042

16569893

SUNING COMMERC-A

5.94

-1.328904

50352229

BYD CO LTD -A CHINA AVIC AVI-A

23.82

-2.296965

8854062

GREE ELECTRIC

22.6

-2.670112

3195938

GUANGHUI ENERG-A

4.3

-0.6928406

28297042

HAINAN AIRLINE-A

4.96

-1.587302

36701375

TASLY PHARMAC-A

72.38

-1.322427

3504167

CHINA CNR CORP-A

4.04

-0.7371007

19475995

HAITONG SECURI-A

10.66

0.4712535

110371469

TSINGTAO BREW-A

37.81

-0.9950249

2801192

CHINA COAL ENE-A

6.89

0.1453488

6033479

HANGZHOU HIKVI-A

36.88

-5.918367

12284282

WEICHAI POWER-A

23.08

-1.071582

5819319

CHINA CONST BA-A

4.68

0.6451613

19359720

-0.990099

2766588

WULIANGYE YIBIN

-0.7220217

15618301

CHINA CITIC BK-A

HENAN SHUAN-A

CHINA COSCO HO-A

3.44

-0.8645533

8295311

HONG YUAN SEC-A

21.59

-2.616148

50269607

YANGQUAN COAL -A

12.84

-1.230769

8371755

CHINA EAST AIR-A

3.12

-2.803738

11277800

HUATAI SECURIT-A

9.72

-1.718908

41935355

YANTAI WANHUA-A

18.9

-2.677652

15097704

CHINA EVERBRIG-A

-1.315789

63822094

HUAXIA BANK CO

10.19

-1.830443

22562431

YANZHOU COAL-A

15.63

-1.698113

3864885

4.08

-0.4878049

43272265

YUNNAN BAIYAO-A

86.07

0.9618768

1512642 16744428

CHINA LIFE INS-A

16.76

-1.70088

17955077

IND & COMM BK-A

CHINA MERCH BK-A

12.22

-0.6504065

49654384

INDUSTRIAL BAN-A

18.23

-1.989247

78849251

ZHONGJIN GOLD

12.41

0.8123477

CHINA MERCHANT-A

12.24

-0.08163265

40583388

INNER MONG BAO-A

27.49

-1.257184

18007066

ZIJIN MINING-A

3.12

-0.3194888

36958829

CHINA MERCHANT-A

25.12

-6.962963

24024403

INNER MONG YIL-A

30.45

1.297405

14236571

ZOOMLION HEAVY-A

7.72

-0.1293661

32911503

CHINA MINSHENG-A

9.93

-1.974334

137881691

INNER MONGOLIA-A

4.75

-1.859504

29811424

ZTE CORP-A

11.57

-2.197802

26748734

39419345

JIANGSU HENGRU-A

30.04

-3.065505

13636664

JIANGSU YANGHE-A

CHINA NATIONAL-A

9.49

-2.265705

CHINA OILFIELD-A

15.65

1.360104

6188017

61.8

-1.498247

3121588

CHINA PACIFIC-A

19.01

-1.807851

29226954

JIANGXI COPPER-A

20.96

0.6240999

9528498

6.78

0.5934718

28122815

JINDUICHENG -A

10.58

1.926782

16334466

17.53

1.505501

23464260

176.7

1.046492

2535969

CHINA PETROLEU-A CHINA RAILWAY-A

5.12

0.3921569

15357604

KANGMEI PHARMA-A

CHINA RAILWAY-A

2.8

-0.3558719

27107102

KWEICHOW MOUTA-A

CHINA SHENHUA-A

20.69

-0.5288462

12391479

LUZHOU LAOJIAO-A

24.7

-1.081298

6298929

4.4

-0.4524887

26660859

METALLURGICAL-A

2.03

-0.4901961

18127839

3.52

-1.949861

15788231

NINGBO PORT CO-A

2.45

-0.8097166

11019099

8.52

0.1175088

13210382

CHINA SHIPBUIL-A CHINA SOUTHERN-A CHINA STATE -A

3.46

-1.142857

86386675

PETROCHINA CO-A

CHINA UNITED-A

3.64

102091703

PING AN BANK-A

18.83

-2.938144

44685588

CHINA VANKE CO-A

10.98

-2.831858

102690866

PING AN INSURA-A

40.14

-0.5943536

22794997

CHINA YANGTZE-A

7.14

1.420455

18011687

POLY REAL ESTA-A

11.58

-3.258145

61929364

10.61

-6.35481

41716507

QINGDAO HAIER-A

12.94

-1.447068

9859114

PRICE DAY %

Volume

NAME

CHONGQING CHAN-A

MOVERS

227

13 2540

INDEX 2467.875 HIGH

2532.2

LOW

2449.47

52W (H) 2791.303 (L) 2102.135

2440

23-April

25-April

FTSE Taiwan 50 Index NAME ACER INC

PRICE DAY %

Volume

FORMOSA PLASTIC

72.2 -0.1383126

10847608

FOXCONN TECHNOLO

78.2

24.2

0.4149378

7055973

ADVANCED SEMICON

26.15

16452081

ASIA CEMENT CORP

37.45

0.807537

3322043

FUBON FINANCIAL

335

ASUSTEK COMPUTER

26287666

59.2

7200060

11.3

-0.877193

31985467

218409

CATCHER TECH

146.5

1.034483

8082190

CATHAY FINANCIAL

38.55

-0.516129

11145657

HUA NAN FINANCIA

CHANG HWA BANK

16.95 -0.2941176

7047915

LARGAN PRECISION

688

LITE-ON TECHNOLO

52.2

282

1.256732

17161422

WISTRON CORP

29.15

-0.681431

19986990

17 -0.5847953

4788944

YUANTA FINANCIAL

14.95

17136443

-2.549575

2746938

YULON MOTOR CO

-0.390625

1724344

1.55642

6487998

100

6124399

18.15

-1.891892

64785013

MEDIATEK INC

8.4 -0.4739336

37292340

MEGA FINANCIAL H

0.7707129

12477712

NAN YA PLASTICS

59.4

1.712329

14546718

CHINATRUST FINAN

17.7 -0.8403361

34881813

PRESIDENT CHAIN

185

1147290

CHUNGHWA TELECOM

93.8

4381791

QUANTA COMPUTER

58.8

-1.342282

6745599

COMPAL ELECTRON

18.8

-0.265252

16863149

SILICONWARE PREC

34.2 -0.7256894

16060042

DELTA ELECT INC

139

2.583026

7210100

SINOPAC FINANCIA

14.65 -0.6779661

18190088

FAR EASTERN NEW

31.6 -0.7849294

7114769

SYNNEX TECH INTL

FAR EASTONE TELE

71.8

2003887

TAIWAN CEMENT

17.85 -0.5571031

8354627

0.9433962

UNITED MICROELEC

23202024

254.5 -0.5859375

FIRST FINANCIAL

1418989

UNI-PRESIDENT

77.4 -0.8962868

HOTAI MOTOR CO

1.126761

-3.728814

107

HON HAI PRECISIO

26.15

568

TSMC

2163756

CHINA STEEL CORP

TPK HOLDING CO L

13222554

77575246

CHINA DEVELOPMEN

42 -0.4739336

0.4497751

CHIMEI INNOLUX C

Volume

104

3723803

13.35 -0.7434944

CHENG SHIN RUBBE

PRICE DAY %

TAIWAN MOBILE CO

-1.262626

AU OPTRONICS COR

HTC CORP

NAME

362 -0.8219178

4839160

23.25 -0.4282655

25359130

48.5

-1.422764

4099998

39 -0.7633588

4284671

9207799

TAIWAN COOPERATI

16.85

0.297619

4939312

FORMOSA CHEM & F

69.8

0.2873563

5540090

TAIWAN FERTILIZE

70.9

0.4249292

2144015

FORMOSA PETROCHE

77.5

-0.128866

889507

TAIWAN GLASS IND

28.5

0.1757469

967415

MOVERS

8 5590

INDEX 5587.2 HIGH

5587.2

LOW

5501.45

52W (H) 5639.93 5500

(L) 4719.96 23-April

25-April

April 26, 2013

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

Max 34.05

average 33.772

Min 33.3

Last 33.9

34.1

63.1

18.2

33.9

62.5

18.1

33.7

61.9

18.0

33.5

61.3

17.9

33.3

Max 63

average 61.212

Min 60.75

60.7

Last 61.2

Max 18.1

average 18.037

Min 17.8

17.8

Last 18.1

19.5

42.2 41.8

23.4 23.1

19.3

41.4

22.8 19.1

41.0

Max 42.1

average 41.795

Min 40.8

Last 42.05

40.6

Max 18.96

average 19.310

Commodities

METALS

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Jun13

91.55

0.131247949

-2.075088245

105.6800003

81.34999847

BRENT CRUDE FUTR Jun13

101.62

-0.108129362

-5.855104688

116.6699982

90.91999817

GASOLINE RBOB FUT May13

275.88

0.414937759

-4.671734623

330.369997

237.7199888

GAS OIL FUT (ICE) Jun13

854.5

0.44078754

-6.304824561

992.75

799.25

NATURAL GAS FUTR May13

4.187

0.504080653

21.25687808

4.429000378

3.150000095

HEATING OIL FUTR May13

285.1

0.341393024

-5.714663668

327.1399975

258.5000038

Gold Spot $/Oz

1444.87

1.5619

-13.1929

1796.08

1322.06

Silver Spot $/Oz

23.29

1.5837

-22.6503

35.365

22.0713

Platinum Spot $/Oz

1445.97

1.6964

-4.7294

1742.8

1374.55

Palladium Spot $/Oz

675.4

0.2077

-3.4674

786.5

553.75

LME ALUMINUM 3MO ($)

1911

0.791139241

-7.814761216

2200.199951

1818

LME COPPER 3MO ($)

7030

2.328966521

-11.36048418

8496.75

6762.25

LME ZINC

1919

2.128791911

-7.740384615

2230

1745

15270

0.925313946

-10.49237984

18920

15075 14.79500103

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul13

15.12

-0.165070981

-3.969514131

17.07500076

620.25

0.323493732

-11.04338473

824

527

696

0.578034682

-12.31496063

900

664.75

SOYBEAN FUTURE Jul13

1354.5

0.687604534

-2.920623544

1605.75

1217.75

COFFEE 'C' FUTURE Jul13

139.2

0.578034682

-6.920762287

202.1999969

133.5500031

CORN FUTURE

Last 19.48

Jul13

WHEAT FUTURE(CBT) Jul13

SUGAR #11 (WORLD) Jul13

17.28

COTTON NO.2 FUTR Jul13

83.31

-0.518134715

-12.46200608

0.433996383

8.377780669

23.05999947 94.19999695

17.25 69.94999695

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

Max 23.3

average 23.129

Min 22.25

Last 23.3

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

1.031 1.5404 0.9461 1.3038 99.18 7.9967 7.7639 6.1706 54.1912 29.14 1.2388 29.685 41.265 9721 102.243 1.23349 0.84636 8.048 10.4257 129.31 1.03

0.3504 0.8313 -0.0528 0.1536 0.4134 0.0025 0 0.1215 0.3576 -0.755 0.2018 0.3268 0.0485 -0.0206 0.0694 -0.2011 0.6817 -0.374 -0.1439 0.2629 0

-0.6552 -4.7725 -3.2449 -1.1524 -13.1881 -0.1688 -0.1713 0.9724 1.4833 4.9417 -1.4046 -2.1964 -0.6301 0.7407 -12.6326 -2.1087 -3.6557 2.1061 1.0042 -12.1723 -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 6.1671 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

NAME ARISTOCRAT LEISU CROWN LTD

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

3.76

1.347709

19.36508

3.94

2.29

VOLUME CRNCY 932635

12.85

0.390625

20.43111

12.98

8.06

1400763

AMAX HOLDINGS LT

0.83

-2.352941

-40.71428

1.9

0.75

202300

BOC HONG KONG HO

-0.3831418

7.883816

27.1

20.85

10352030 864000

0.295

-7.8125

11.32076

0.42

0.215

CHEUK NANG HLDGS

6.15

-0.8064516

2.671122

6.74

2.8

31240

CHINA OVERSEAS

23.5

1.293103

1.7316

25.6

14.624

17732100

CHINESE ESTATES

13.62

-0.2928258

12.28898

13.8

7.697

1366500

CHOW TAI FOOK JE

10.36

0.1934236

-16.72025

13.4

8.4

5524250

EMPEROR ENTERTAI

2.39

0.8438819

26.45503

2.49

1.1

1795000

FUTURE BRIGHT

2.33

-0.8510638

90.9836

2.75

0.77

7836000

GALAXY ENTERTAIN

33.9

3.039514

11.69687

35.7

16.94

23384415 1349693

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14676.3

-0.2932173

11.99743

14887.51

12035.08984

NASDAQ COMPOSITE INDEX

3269.652

0.009757342

8.284063

3306.95

2726.68

FTSE 100 INDEX

6415.85

-0.2473662

8.7836

6533.99

5229.76

HANG SENG BK

128

0.4709576

7.834881

131.5

99.2

DAX INDEX

7753.26

-0.07436497

1.850531

8074.47

5914.43

HOPEWELL HLDGS

29.45

-1.008403

-11.42857

35.3

19.049

1462801

HSBC HLDGS PLC

82.8

1.037218

1.845015

88.45

59.8

14591639

NIKKEI 225

13926.08

0.5968161

33.96671

13974.26

8238.96

HANG SENG INDEX

22401.24

0.9835888

-1.128484

23944.74

18056.4

CSI 300 INDEX

2467.875

-1.110123

-2.183034

2791.303

2102.135

TAIWAN TAIEX INDEX

8021.75

-0.0244276

4.185337

8089.21

6857.35

MGM CHINA HOLDIN

KOSPI INDEX

1951.6

0.8417256

-2.275861

2042.48

1758.99

MIDLAND HOLDINGS

S&P/ASX 200 INDEX

5102.43

1.718361

9.754459

5163.5

3985

4969.262

-0.8449386

15.1175

5026.919

3635.283

FTSE Bursa Malaysia KLCI

1707.21

-0.008199842

1.081146

1716.47

1526.6

NZX ALL INDEX

967.934

0.4150703

9.736495

970.696

755.149

PHILIPPINES ALL SHARE IX

4364.29

0.3015281

17.98631

4422.22

3238.77

JAKARTA COMPOSITE INDEX

22.2

Macau Related Stocks

CENTURY LEGEND

NAME

18.9

Currency Exchange Rates

NAME ENERGY

Min 18.96

22.5

HSBC Dragon 300 Index Singapor

643.71

3.64

STOCK EXCH OF THAI INDEX

1573.06

1.236284

13.01287

1601.34

1099.15

HO CHI MINH STOCK INDEX

476.59

0.782423

15.19348

518.46

372.39

Laos Composite Index

1330.68

9.541727

1455.82

980.83

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

HUTCHISON TELE H

3.9

2.631579

9.550564

4.05

2.98

7813653

LUK FOOK HLDGS I

22.1

0.6833713

-9.426228

30.05

14.7

3660110

MELCO INTL DEVEL

15.02

1.761518

66.70366

15.18

5.12

8492400

18.1

2.14447

36.31284

18.449

9.509

9134600

3.49

-2.240896

-5.675677

3.249

2198000

NEPTUNE GROUP

0.153

-1.923077

0.657898

0.226

0.084

16637500

NEW WORLD DEV

13.68

13.81031

15.12

7.95

11519789

SANDS CHINA LTD

42.05

3.699137

23.85861

42.2

20.65

10114389

SHUN HO RESOURCE

1.51

1.342282

7.857145

1.67

1.03

2000

SHUN TAK HOLDING

4.05

-1.219512

-3.34129

4.65

2.56

2554600

SJM HOLDINGS LTD

10269100

19.48

2.526316

8.222222

22.15

12.34

SMARTONE TELECOM

13.4

2.603369

-4.829545

17.38

12.5

2435332

WYNN MACAU LTD

23.3

6.150342

11.21718

25.5

14.62

38338150

ASIA ENTERTAINME

4.53

-1.30719

48.03922

2.4

129338

BALLY TECHNOLOGI

49.08

0.3886275

9.774102

52.7

41.74

834628

BOC HONG KONG HO

3.28

6.840393

3.59

2.7

9120

GALAXY ENTERTAIN

4.24

1.435407

6.801007

4.93

2.25

10300

INTL GAME TECH

16.71

-0.05980861

17.92519

17.49

10.92

3526365

JONES LANG LASAL

94.54

0.02115954

12.62806

100.91

61.39

189742

LAS VEGAS SANDS

54.82

1.820208

18.76083

56.83

32.6127

5231138

MELCO CROWN-ADR

23.65

1.415094

40.43943

9.13

4428478

MGM CHINA HOLDIN

2.1

13.51351

2.44

1.36

10000

MGM RESORTS INTE

13.03

2.196078

11.94158

13.89

8.83

10020918

SHFL ENTERTAINME

15.57

1.499348

7.37931

18.37

11.75

312143

SJM HOLDINGS LTD

2.47

0.4065041

6.92641

2.85

1.65

3500

WYNN RESORTS LTD

131.5

1.64644

16.89928

132.04

84.4902

1533818

AUD HKD

USD

April 26, 2013

Opinion

Two policy prescriptions for the global crisis Kaushik Basu

Senior Vice President and Chief Economist of the World Bank and Professor of Economics at Cornell University

ne thing that experts know, and that nonexperts do not, is that they know less than non-experts think they do. This much was evident at the just-completed Spring Meetings of the International Monetary Fund and the World Bank Group – three intense days of talks that brought together finance ministers, central bankers, and other policymakers. Our economic expertise is limited in fundamental ways. Consider monetary and fiscal policies. Despite decades of careful data collection and mathematical and statistical research, on many large questions we have little more than rules of thumb. For example, we know that we should lower interest rates and inject liquidity to fight stagnation, and that we should raise policy rates and banks’ cash-reserve ratios to stifle inflation. Sometimes we rely on our judgment in combining interest-rate action with openmarket operations. But the fact remains that our understanding of these policies’ mechanics is rudimentary. These rules of thumb work (at least tolerably so) as a result of evolution. Over time, the wrong moves are penalised, and their users either learn by watching others or disappear. We get our monetary and fiscal policies right the same way that birds build their nests right. As with all behaviours shaped by evolution, when the environment changes, there is a risk that existing adaptations become dysfunctional. This has been the fate of some of our standard macroeconomic policies. The formation of the euro zone and a half-century of relentless globalisation have altered the global economic landscape, rendering onceproven policies ineffective. When Sweden’s Riksbank was founded in 1668, followed by the Bank of England in 1694, the motivation was that a single economy should have a single central bank. Over the next three centuries, as the benefits of instituting a monopoly over money creation became more widely recognised, a slew of

We have returned to a past from which we tried to escape – a single economy, in this case the world, with multiple money-creating authorities

central banks were established, one for each politically bounded economy.

Policy coordination What was not anticipated was that globalisation would erode these boundaries. As a result, we have returned to a past from which we tried to escape – a single economy, in this case the world, with multiple money-creating authorities. This is clearly maladaptive, and it explains why the massive injections of liquidity by advanced-country central banks are failing to jumpstart economies and create more jobs. After all, in a globalised economy, much of this liquidity spills across political boundaries, giving rise to inflationary pressures in distant lands and precipitating the risk of currency wars, while unemployment at home remains dangerously high, threatening to erode workers’ skills. The long-run damage could be devastating. What was evident at

the World Bank/IMF Spring Meetings was that virtually all policymakers are distressed and no one has a complete answer. Neither do I. But here are two simple ideas that could help to mitigate the crisis. First, in the absence of a single global central-banking authority, a modicum of monetary-policy coordination among major economies is required. We need a group of the major economies – call it “G Major” – that announces monetary policies in a coordinated fashion. To see why, consider the case of Japan. Japanese policymakers have good reason to try to promote some inflation and even correct some of the yen’s secular appreciation over the last six or seven years. But, in today’s unilateral world, other central banks would soon respond by injecting liquidity, prompting the Bank of Japan to act again. These actions are usually justified as policies for boosting domestic demand, but they end up fuelling a surrogate, low-grade currency war. If, however, the G Major

economies issued quarterly announcements of significant upcoming policy changes – for example, a small round of quantitative easing by country X, a larger liquidity injection by countries Y and Z, and so on – markets would be reassured that a currency war was not being fought. Exchange-rate movements would be minimal and only as intended, and volatility would be contained, because tit-for-tat injections would no longer occur and speculation would wane. Moreover, liquidity injections would be likely to have a greater impact on demand, because synchronisation would reduce leakage across national boundaries.

Labour pressure The second recommendation pertains to the mechanics of liquidity injection, much of which takes place nowadays – in Europe, Japan, and elsewhere – through asset purchases. The U.S. Federal Reserve, for example, is currently purchasing assets (many of them mort-

gage-backed) worth US$85 billion each month. Liquidity injections and low interest rates have a microeconomic effect that has received little attention: they lower the cost of capital vis-à-vis the cost of labour, which causes a relative decline in demand for labour. This is very likely exacerbating the unemployment problem; it certainly is not mitigating it. One solution is to channel part of the liquidity injections toward countering this factor-cost asymmetry. Thus, for every US$100 of new liquidity, we could use US$60 to purchase assets and the remainder to give firms a marginal job-creation subsidy, which could be especially effective in economies with flexible labour markets that enable short-term hiring. Even if the employment subsidy were offered only for, say, one year, firms would be tempted to use more labour during this time. And, because the current bout of high unemployment is self-reinforcing, once the equilibrium is broken for a while, the economy could move to a higheremployment equilibrium permanently, without the need for any further government support. This prescription has one problem. Asset purchases have no balance-sheet effect, because assets replace money. Subsidising labour, by contrast, is a pure injection of liquidity. However, for precisely that reason, an employment subsidy is likely to be more effective in boosting demand, which implies that a smaller injection of this kind is likely to boost demand as much as a larger asset purchase would. Among the few certainties in crafting economic policy is the need to adapt to external change. Our challenge is like that of Industrial Revolutionera moths, which adapted to their new soot-laden environment by becoming darker (and thus better able to hide from predators). In a globalised economy, national policymakers should not be left circling light bulbs. © 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.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

April 26, 2013

Opinion Business

wires

Leading reports from Asia’s best business newspapers

Jakarta Globe Indonesia may raise fuel prices next month as policy makers seek to reduce subsidies, Deputy Finance Minister Mahendra Siregar said, predicting confidence in the rupiah will improve as fiscal management is strengthened. The government is studying plans to increase subsidised-fuel prices across all categories or by vehicle type, Mr Siregar said. The new policy may encourage Standard & Poor’s to boost Indonesia’s credit rating to investment grade, he said. “The situation already has created such a condition that it’s no longer sustainable” in terms of management of the budget and confidence in economic stability, he said.

Taipei Times The unexpected declines in the Taiwan’s export orders and in industrial production last month indicated that the economy is cooling down, but remains on course to stage a mild recovery this year, foreign institutes said. Export orders contracted 6.6 percent year-onyear last month and industrial production slipped 3.3 percent from a year earlier. “The data was weaker than expected and highlights how Taiwan’s economic recovery is tracking that of the global economy – a gradual, but bumpy upward trend,” Moody’s Analytics economist Katrina Ell said in a note.

Korea Herald The Securities and Futures Commission said that it reported Daehan Real Estate Trust Co. to the prosecution on charges of fabricating its financial statements. Daehan Real Estate Trust – a financial company fully invested by a quasi-governmental agency under the wing of the Ministry of National Defence – engaged in irregular accounting practice from 2008 to 2010, according to the SFC. Accounting regulators have uncovered that the company inflated profit from a project in Seongnam by 2.3 billion won (US$2 million) in 2008, 3.4 billion won in 2009 and 1.9 billion won in 2010.

Asahi Shimbun Toyota Motor Corp held onto its status as the world’s topselling automaker in the first quarter of this year, although the three-way race with General Motors Co. and Volkswagen AG is proving tight, as its sales fall in China and Japan. Toyota reported on Wednesday it sold 2.43 million vehicles during the JanuaryMarch period, outpacing U.S. automaker General Motors at 2.36 million vehicles and Volkswagen of Germany at 2.27 million vehicles.

How to move China Christopher R. Hill

Former U.S. Assistant Secretary of State for East Asia, is Dean of the Korbel School of International Studies, University of Denver

“I

nsanity,” Albert Einstein is reported to have said, is “doing the same thing over and over again and expecting different results”. For those who have long scoffed at the possibility that China might be willing to deal decisively with its pesky North Korean neighbour, the results of U.S. Secretary of State John Kerry’s recent visit to Beijing will be all too predictable. But, for those who watch China’s ever-changing internal political landscape carefully, there is much happening that more than justifies Kerry’s trip. Indeed, if U.S. President Barack Obama’s administration is to be criticised for its handling of the latest North Korean “crisis,” the main problem has not been too much reliance on China, but too little. Theories about China’s attitude toward North Korea often begin and end with the view that what the country fears, above all, is an inflow of refugees in the event of a North Korean collapse – a spillover that could rend the delicate ethnic quilt of China’s northeast provinces. The problem is that, while some Chinese do worry about refugees, “China” cannot be regarded as a collective noun with a singular view about anything; like any complex modern state, China contains many different views about many different issues. Of course, there are those in Beijing who worry day and night about North Korean refugees; but there are also many in Beijing, Shanghai, and elsewhere who worry about the chronic crisis that North Korea’s periodic outbursts cause in an otherwise stable region of the world. As President Xi Jinping eloquently put it at the annual Boao business forum on Hainan Island earlier this month: “No one should be allowed to throw a region and even the whole world into chaos for selfish gain.”

China, there is, in fact, a raging debate – often taking place below the radar – about the future of China’s political system and its relationship to the economy. And, while North Korea’s communist system and that of China have become profoundly dissimilar, some Chinese worry that a collapse of North Korea’s order could shift the battle lines of that debate. Finally, there are those who would view a North Korean collapse as a boon to U.S. strategic interests and a setback for Chinese interests. Such hardline, zero-sum thinking is not the exclusive preserve of American think tanks. Some Chinese ask what the rules of the game would

Cautious approach Xi is no dictator who can impose his will on China. Indeed, for all the characterisation of China as a despotic state that one hears from the political right in the United States, its president enjoys fewer powers than his American counterpart. Gaining consensus in China is a glacial process that will not be accomplished in a single speech. Xi’s comments obviously extend beyond a concern about refugees. North Korea is, strangely, a domestic issue for China. For starters, it is a historic ally for which many Chinese fought and died, their memory enshrined not only on monuments throughout China (though precious few in North Korea), but also in families. Second, despite a supposed lack of ideology in contemporary

North Korea’s Kim Jung-un, a leader apparently undistinguished by any accomplishment or sign of wisdom, could catalyse a new start in U.S.Chinese relations

be in the event that the Korean peninsula is united under South Korea. Could they expect to see U.S. troops and bases along the Chinese border on the Yalu River, or perhaps a string of listening posts to gather intelligence? Though such deployments would be inconceivable to most thinking Americans (indeed, the real task would be to maintain budget support in Congress and elsewhere for any deployments in a united Korea), Chinese security experts worry about it.

New chapter Though the U.S. and China do not lack issues to discuss, the bilateral dialogue in the security field lacks depth and follow-up. The Chinese have never been eager to discuss with their U.S. counterparts what the two countries should do in the event of a North Korean implosion. But, if such talks were held more frequently, and the issue were addressed seriously (and repeatedly), surely progress could be made in overcoming

suspicion on this question. Indeed, Kerry’s main task is to begin an effort to reduce the strategic distrust between the two countries, which is a significant factor underlying China’s reluctance to do more on North Korea. This will require that both sides focus on the issue at hand – a challenge especially for the Americans, whose official discussions with the Chinese inevitably become an effort to plow through a laundry list of issues often advanced by single-issue constituencies. Focus and establishment of priorities should be the watchwords for the U.S. side. Kerry’s first trip to China was a start in this direction, but it must be followed by a regular pattern of telephone calls and additional visits, with a view to ridding the Korean peninsula of nuclear weapons. Paradoxically, North Korea’s Kim Jung-un, a leader apparently undistinguished by any accomplishment or sign of wisdom, could catalyse a new start in U.S.-Chinese relations. © Project Syndicate

April 26, 2013

Closing Spain unemployment hits record high

U.K. avoids triple-dip recession

Spain’s unemployment rate climbed to a new record of 27.16 percent in the first quarter of 2013, official data showed yesterday, as a deep recession sparked by the collapse of a property bubble ravages the euro zone’s fourth-largest economy. The jobless rate jumped from 26.02 percent in the previous quarter. The number of unemployed climbed by 237,400 people to 6.2 million, the National Statistics Institute said. Spain, once the motor of job creation in the 17-nation single currency area, is in a double dip recession, having yet to recover from the collapse in 2008 of a labour-intensive property boom in 2008.

The U.K. economy has avoided falling back into recession. The Office for National Statistics said its preliminary estimates for GDP showed the economy grew by 0.3 percent in the first three months of the year. The figure means the economy avoided two consecutive quarters of contraction – the definition of a recession. The growth figure was better than expected and Chancellor George Osborne said it was an “encouraging sign”. There had been fears the U.K. would enter its third recession in five years, a so-called triple-dip recession. The figures also showed that GDP had risen by 0.6 percent when compared with the first quarter of 2012.

Galaxy Macau phases 3 and 4 focusing on ‘premium mass’ Michael Grimes

michael.grimes@macaubusinessdaily.com

ne of Macau’s gaming concessionaires says it will focus an entire portion of its Cotai land bank on targeting ‘premium mass’ customers. Referring to planning for phases three and four of Galaxy Macau, the Cotai resort of Galaxy Entertainment Group Ltd, the company says in its annual report published yesterday: “The ambitious HK$50 billion [US$6.44 billion] to HK$60 billion project will target premium mass guests, with non-gaming amenities representing approximately 95 percent of the total floor area…” All the Macau concessionaires have talked recently of a new and reportedly more profitable segment of Chinese middle class customer. These are people that gamble, shop

and stay in the casino resorts without expecting the free perks demanded by the numerically small but high in cash turnover VIP visitors. Francis Lui Yiu Tung, vice chairman of GEG, said at a press conference late last month to discuss the 2012 results: “In 2010 there were 50 million in the [Chinese] middle class. In 10 years there will be 400 million…In future that market will be more and more important.” “The planning for Phases 3 and 4 of the development is nearing conclusion. GEG intends to submit planning proposals to the government this year and targets to commence construction by the end of 2013/ early 2014,” states the company in the annual report filed with the Hong Kong Stock Exchange.

Galaxy Macau phase one

HK creates reference rate for offshore yuan markets Moves to improve hedging options, liquidity for yuan investors Pete Sweeney and Anne Marie Roantree

he Hong Kong Monetary Authority (HKMA) said yesterday it would launch an interbank offered rate for the offshore yuan market (CNH) in June, a long-awaited move that will facilitate the creation of more hedging options for those investing or trading in the currency. The decision to create a CNH HIBOR fixing would both support the development of the offshore yuan market and also enhance Hong Kong’s competitiveness as a centre for offshore yuan business, Peter Pang, chairman of the executive board of the Treasury Markets Association in Hong Kong and deputy chief of the HKMA said in a news release. The move will help address a widespread concern about a lack of hedging options that have restrained

enthusiasm for holding offshore yuan. Beijing is trying to encourage increased global usage of yuan in trade to reduce foreign exchange risk and diminish its need to accumulate massive foreign currency reserves. Even as the yuan-denominated debt or “dim sum” market has grown rapidly in recent months in response to growing demand from investors hungry for yuan assets, market players have had to resort to using imperfect derivatives to hedge their interest rate risk such as non-deliverable forwards and currency swaps. Loan bankers said that while banks had previously relied on averaging rates offered by banks, or relied on the Bank of China Ltd Hong Kong’s offered rate, the new fix would likely be more representative and generate more confidence.

“It’s an extremely important step forward,” said Robert Minikin, offshore yuan strategist at Standard Chartered Plc in Hong Kong. “The conditions had been in place for this development for the last couple of years so it’s great that it’s finally being put into place, and obviously it will allow the creation of a whole range of derivative markets.”

Scraps restrictions However, given concerns over rate-rigging scandals with interbank reference rates in other markets, Frances Cheung, forex strategist at Credit Agricole CIB in Hong Kong, questioned how important the new CNH HIBOR fix will ultimately prove to be.

“The issue remains as to whether an interbank rate is the best money market benchmark, especially upon a slew of probes globally into interbank rate quotes,” she wrote in a note to clients. She pointed out that Singapore is considering dropping its interbank offered rate, while China itself has been relying mostly on an unofficial benchmark rate based on the sevenday bond repurchase agreement contract than on its putative interbank offered rate, known as the SHIBOR. In addition to implementing the HIBOR fix, HKMA also said it will eliminate the net open position rule and the 25 percent liquidity New cases may lead to increased scrutiny requirement, putting CNH on the same status as other currencies when it comes to calculating the statutory liquidity ratio for banks. The changes mean that banks can now treat CNH deposits on an equal footing with other kinds of currency deposits, instead of having to hoard additional reserves of CNH in cash. This is expected to release more CNH into the interbank system, improving liquidity. Beijing has stepped up efforts to make the yuan more widely accepted by global investors and companies, aiming to make its currency fully convertible in the coming years and on a par with the dollar. Reuters