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www.macaubusinessdaily.com
Year II
Number 272
Tuesday April 30, 2013
Editor-in-chief Tiago Azevedo
Deputy editor-in-chief
Vitor Quintã
MOP 6.00
April 19, 2013
Gold rush clears shelves before Labour Day
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old sales remain strong in the city as retail customers take advantage of the biggest decline in wholesale gold prices in thirty years. Jewellery retailers reported they were not as busy this weekend as most days last week. But they are facing great pressure on their stock as the previous gold rush depleted supplies they had stored up for the Labour Day holiday. “We have basically sold out in the previous week all the stock stored up for these three days and we had to step up our order,” said Lei Chi Fong, managing director of Seng Fung Jewellery Co Ltd. Mainland consumers are buying gold in Macau and Hong Kong because it’s cheaper and considered better quality than at home. More on page 2
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Tycoon’s illness again delays bribery trial
Hang Seng Index
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he latest trial linked to Ao Man Long’s proven corruption web was postponed for a third time yesterday. Star defendant Joseph Lau Luen Hung failed for a second time to attend court. He claimed to be ill. Lawyers for the Hong Kong billionaire were told he must now be evaluated by Macau physicians. Presiding judge Mário Silvestre warned that the trial would begin on June 17, even in the absence of any or all of the eight defendants. The main prosecutor accused Mr Lau of using chronic illness as an excuse to delay the trial, suggesting the tycoon remains ‘very healthy’ and ‘active in social circles’. Page 3
22610
22590
22570
22550
22530
Studio City minority investors go all in
22510
April 29
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inority investors in the Studio City casino project on Cotai will after all exercise an option to fund to the maximum level the second capital stage of the scheme. The minority partner, New Cotai LLC, had already committed to 40 percent of the US$800 million (6.40 billion patacas) first tranche. A regulatory filing in October last year by Melco Crown Entertainment Ltd, the indirect 60 percent owner of Studio City, described the whole venture as a US$2.9 billion plan, of which US$2.04 billion is for construction. Page 6
HSI - Movers Name
%Day
ESPRIT HOLDINGS
4.78
CHINA RES POWER
1.80
HANG LUNG PROPER
1.50
LENOVO GROUP LTD
1.42
KUNLUN ENERGY CO
1.22
CITIC PACIFIC
-1.79
BELLE INTERNATIO
-2.16
CHINA MERCHANT
-2.61
COSCO PAC LTD
-3.07
CHINA COAL ENE-H
-6.19
Source: Bloomberg
Brought to you by
Milan Station follows the money into Macau Page 3
Carson Yeung says he fears ‘unfair trial’
Bigger role for govt on building management Page 4
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2013-05-01
2013-05-02
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April 30, 2013
Macau
Gold stock vanishes as sales stay strong Labour Day holiday visitors still making most of low worldwide gold prices Stephanie Lai
sw.lai@macaubusinessdaily.com
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old sales remain strong in the city as retail customers take advantage of the biggest decline in wholesale gold prices in thirty years. Jewellery retailers reported they were not as busy this weekend as on weekdays last week. But they are facing great pressure on their stock as the previous gold rush depleted supplies they had stored up for the Labour Day holiday. “We have basically sold out in the previous week all the stock stored up for these three days and we had to step up our order,” said Lei Chi Fong, managing director of Seng Fung Jewellery Co Ltd. “Meanwhile we had have to tell clients that they have to wait a couple more days to get their order, as factories are already operating until midnight to catch up with demand,” he said. Stocks of wedding bracelets and gold necklaces have been most depleted Mr Lei told Business Daily. “We have yet to get the products [we] ordered in the peak sales days of April 16 to 18, and the customers have had to wait,” said Alan Leong Wai Lun. “This is pretty much what all the jewelleries are experiencing now,” the deputy general manager of Fu Yun Jewellery Ltd, which operates four branches in the Horta e Costa
district, told Business Daily. Chow Tai Fook Jewellery Group Ltd, the world’s biggest jeweller, also told media they got their manufacturing base in Guangdong province operating round-theclock to speed up the supply of gold products. Daily customer numbers in jewellers in the downtown district and in Horta e Costa were lower yesterday and at the weekend than compared to a week ago.
Sales boom Mainland consumers are buying gold in Macau and Hong Kong because the retail price is cheaper and they have more confidence in the quality of the products than at home, retailers said. “One gram [0.04 ounces] of gold here is about 30 yuan [US$4] cheaper than in the mainland, considering the added-value tax there and the exchange rate [between the yuan and the pataca],” said Leong Pui Teng. “Even some local clients were asked by mainland relatives to do a big purchase,” the sales manager of jewellery O’Che 1867 explained. Mr Leong added that the jewellery sector is bullish on sales during the Labour Day vacation. “We expect the sales volume for these three days to be 80 percent
business as usual
Gini escapes
Jewellers yet to get all gold products ordered after last week’s customer rush (Photo: Manuel Cardoso)
higher than the same period last year,” he said. The decline in gold price, more than the holidays, contributes to the recent strong sales, said Fu Yun’s Mr Leong. “Labour Day is not a particular sales booster for districts in Avenida
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Horta e Costa,” he said. “But the previous gold price decline has greatly stimulated our sales,” he added. “In that week [of April 15 to 21] alone our revenue and order volume more than doubled from the previous year.”
TO THE MAJ OR 201 BUS 3 INES prog Busine s r S AW a s Awa sect m for ARD r ors. d p s r ofes of t S IN bus Par h s i
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t n i e THE acti esses, icipatio onals a Year i REG vitie n in nd b sM or o ION a s in an i t t u c h h s a e e i u’ n r n M ! a com dividua acau o relevan wards ess of a s prem ier r is op l or t org ll siz n pan a ec a co p y. e e mpa erman anisatio n to al s and f ognitio We e l r n n n o n i n s y, o invi r no t basis. that c dividua m all te y a m Y l r s o ou t ry inat o be e yo u can e on the and Nom u i ir p t i h r n a s e at rt o elf, Jun or y r nomi f it! e, 2 ions op nate o 0th, ur e 201 n until 3.
José Carlos Matias Journalist
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recent study by the Macau Economic Society sounds the alarm over income disparity. It shows the city’s wealth gap is widening rapidly. The city’s Gini coefficient – a commonly used gauge of income inequality – has reached almost 0.4, an internationally recognised criteria for substantial income inequality. It has climbed from 0.33 in 2007 to 0.39 in 2011. In those four years, the gaming revolution gained steam with the opening of mammoth casino-resorts, while property prices skyrocketed thanks to huge inflows of speculative funds and cheap loans at near zero percent interest rates. The economy has reached full employment and pay has risen steadily in several industries, but the purchasing power of many residents and migrant workers has deteriorated in the face of stubbornly high inflation fuelled by skyrocketing housing and food prices. To counter the side-effects of such unbalanced growth, the government has taken piecemeal welfare measures, paying one-off subsidies such as the well-known wealth-sharing scheme, and indulging in plenty of short-termism, with limited and disappointing results. It is fair to say that the government cannot pull a rabbit out of the hat to solve the problem. But the “laissez-faire et laissez-passer” rationale cannot be an excuse, as it has been, for failure to uproot deeply entrenched vested interests. Wealth sharing cannot be a one-size-fits-all, ad hoc scheme. It must be a long-term commitment and must entail social justice. Chief Executive Fernando Chui Sai On’s address to members of the Legislative Assembly at this year’s first question-and-answer session was another wasted opportunity. Paying lip service to a “people-oriented” approach without “walking the walk” paves the way for an ever-increasing wealth gap and growing discontent. The government’s legitimacy is at stake as the Macau dream turns into a “neon-realist” nightmare for many.
For m plea ore in form se v ww w.aw isit our ation, or c ards webs o inqu ntact u macau ite at .com iries s @aw ards mac au.c om
ORGANISED BY:
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April 30, 2013
Macau
HK tycoon’s ailment puts back La Scala trial anew Macau doctors will check on Joseph Lau’s fitness to stand trial for alleged bribery Tony Lai
tony.lai@macaubusinessdaily.com
Jorge Neto Valente, counsel for Steven Lo, said the postponement was ‘no big problem’ (Photo: Manuel Cardoso)
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he court hearing the latest case arising from the web of corruption woven by former s e c r e t a r y Ao M a n L o n g a g a i n postponed the opening of the trial of Hong Kong billionaire Joseph Lau Luen Hung when the accused failed to appear yesterday.
Mr Lau’s lawyer said he was too ill to appear in court. The prosecution disputed this. The Court of First Instance decided to send Macau doctors to Hong Kong to make their own evaluation of Mr Lau’s fitness to stand trial. Presiding judge Mário Silvestre
said this was the last time he would accept illness as an excuse for Mr Lau’s failure to appear. The court postponed the opening of Mr Lau’s trial until June 17. The trial had been due to begin last September, but the opening was put back twice, first by the illness of the original presiding judge, Alice Costa, and then by the illness of Mr Lau. Mr Lau, the boss of property developer Chinese Estates Holdings Ltd, is one of eight accused. He and another Hong Kong businessman, Steven Lo Kit Sing, chairman of entertainment firm BMA Investment Group Ltd, are charged with bribing Mr Ao, then secretary for transport and public works, with HK$20 million (US$2.5 million) in exchange for the grant of a plot of land near Macau airport. Chinese Estates was building an upmarket housing development called La Scala on the plot until the government took back the land last year. Mr Lo and Fong Chun Yau, managing director of ATAL Engineering Ltd, were the only accused to appear yesterday. Mr Fong is charged with bribing Mr Ao to get sewage treatment contracts for his company. Assistant Prosecutor-General Paulo Martins Chan criticised the evidence of Mr Lau’s medical
condition supplied by defence counsel. Mr Chan remarked that the evidence failed to say when Mr Lau might be well enough to come to Macau. Mr Lau suffers from chronic diabetes. “The illness mentioned is common to people living in urban areas, particularly those furnished with more nutrients,” Mr Chan said sarcastically. He said reports in the news media indicated that Mr Lau had been “very healthy” and “active in social circles” in January, when the accused last gave illness as an excuse for his failure to appear in court. Mr Lau’s counsel, Leong Weng Pun, said Mr Lau had been “very willing” to appear yesterday. “But the doctor did not approve,” Mr Leong told the court. Judge Silvestre said: “If Mr Lau Luen Hung really wants to come to court to defend himself, a chance should be given to him, based on the spirit of the law.” Judge Silvestre said the court would have Macau doctors visit Mr Lau to determine whether he was fit to stand trial. The law says a trial may proceed in the absence of the accused if the accused has been duly notified. The court would notify Mr Lau of the hearing set for June 17, judge Silvestre said. Mr Leong told reporters after yesterday’s hearing Mr Lau would accept the trial going ahead without him. Mr Lo’s counsel, Jorge Neto Valente, told reporters that his client felt the postponement was “no big problem”. Mr Lo himself did not speak to the media. Counsel for another of the accused, Luc Vriens, said his client had agreed to the trial going ahead in his absence. Mr Vriens, the chief executive of Waterleau Group NV, faces corruption charges arising from the award of contracts to run the sewage treatment plants on Coloane and in the Zhuhai-Macau Cross-Border Industrial Park.
Milan Station eyes Macau expansion Second-hand handbag retailer in talks over casino VIP sales counters Vítor Quintã
vitorquinta@macaubusinessdaily.com
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ilan Station Holdings Ltd’s only shop in Macau was its most profitable last year, even as the luxury handbag retailer tumbled to a loss. The company told the Hong Kong Stock Exchange it “will study the feasibility of further expanding its business in Macau”. Milan Station plans to open “specialty counters in the VIP lounge of the premier casinos in Macau,” according to its 2012 annual report. “Negotiations with the relevant co-operating parties are in progress,” the firm added, without disclosing the names of those parties. Business Daily tried to ask Milan Station for more information but was unable to get in touch with the company before press time. The company’s shop near the Senado Square saw its sales increase by 1 percent last year to HK$48.4 million (US$6.3 million) “on the back of a stable performance,” the April 26 filing says.
The outlet benefited from “the steady development of the local gaming and tourism sectors” and the growing purchasing power of visitors, Milan Station said. And with sales in Hong Kong and mainland China “affected by weaker consumer sentiment” the Macau store accounted for 7.2 percent of the firm’s revenue, up from 5.5 percent a year earlier. The opening of five-star hotels and large shopping centres and casinos “successfully attracted more international renowned brands,” thus further expanding the luxury goods market, the retailer said. The Macau shop’s gross profit decreased by 4.5 percent to HK$14.7 million as selling expenses and finance costs increased, Milan Station said. The outlet was still the company’s most profitable, operating at a 30.4 percent profit margin. Milan Station recorded a loss of HK$13.9 million last year, after posting a profit of HK$48 million in 2011.
Milan Station’s only shop in Macau was also its most profitable last year (Photo: Manuel Cardoso)
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April 30, 2013
Macau Civil servants get May salary hike The city’s 28,000 civil servants will get a bigger check next month, as the 6.06 percent hike in the standardised civil service pay index was published in the Official Gazette yesterday. The index raise, to 70 patacas (US$8.75) from 66 patacas, will come into effect tomorrow. This means, for instance, that the monthly earnings of a civil servant rated at 240 on the index will rise from 15,840 patacas to 16,800 patacas. The government will spend a further 633 million patacas this year to cover the wage hike.
Carson Yeung denies money-laundering charges Owner of English football club seeks to halt Hong Kong trial Vítor Quintã
vitorquinta@macaubusinessdaily.com
Mr Yeung has made several attempts to have the case struck out
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arson Yeung Ka Sing, a Hong Kong resident with Macau business interests, pleaded not guilty to money-laundering charges in a Hong Kong court yesterday, while trying anew to halt the trial at the start of the much-delayed proceedings. The former hairdresser who now owns Birmingham City Football Club, which plays in the second tier of the English professional leagues, was arrested and charged in June 2011 with five counts of “dealing with property known or believed to represent proceeds of an indictable offence”. The long-awaited trial technically started at a district court yesterday after Mr Yeung pleaded not guilty to all charges. But his defence team made a fresh bid to halt the trial with a permanent stay application, claiming that records of his wealth from stock trading can’t be obtained. “No fair trial was possible,” because documents crucial to the defence aren’t available, Mr Yeung’s lawyer Graham Harris told District Court Judge Douglas Yau yesterday. The lawyer said Mr Yeung would be unable to prove his innocence as official papers that could trace the stockbroking activities are normally kept for only seven years in Hong Kong. Mr Harris insisted the former hairdresser made “a significant portion” of his fortune through “lawful and legitimate stock trading” through a large number of stock brokers before 2001. Prosecutor John Reading disagreed, saying there was “no suggestion” Mr Yeung would be subject to an unfair trial, as the missing papers only related to part of the transactions. Prosecutors say their investigations show that around HK$720 million
(US$93 million) passed through accounts connected to the 53-yearold businessman, who has been on bail since he was charged.
Macau ties The exact nature of the allegations against the businessman remains unknown so far.
“What this case is concerned with is where did the money come from in the first place,” Mr Reading told the court. “Very little money has passed through the securities accounts,” he said. Judge Yau adjourned the hearing until Friday, when he will rule on the application for a permanent stay. Mr Yeung, last month lost a bid to transfer the case to a higher court, with judge Alan Wright ruling it an attempt to disrupt the trial held yesterday. Mr Yeung’s stake in Birmingham City is held through his Hong Kong-listed company Birmingham International Holdings Ltd (BIHL). The firm has been suspended from trading in Hong Kong since June 2011, after police charged Mr Yeung. BIHL recorded a net loss of HK$74.18 million in the second half of last year due to a “decrease on profit on sales of players”. In its 2009 annual results filed with the Hong Kong Stock Exchange, BIHL said 73.3 percent of its consolidated turnover came from Macau. It didn’t specify the nature
Corporate
SJM donates MOP3 mln for earthquake victims Casino concessionaire Sociedade de Jogos de Macau SA donated three million patacas (US$375,000) for victims of the 7.0-magnitude earthquake that struck a week ago in Ya’an, Sichuan province on the mainland. Ambrose So Shu Fai and Angela Leong On Kei, directors of SJM, presented a cheque at the Liaison Office of the Central People’s Government in the Macau SAR. Deputy Director Gao Yan (second right) and DirectorGeneral of the Economic Affairs Department Wang Xindong (right) received it. “On behalf of Dr Stanley Ho and all of us at SJM, we wish to express our deepest sympathy and warmest feelings for the victims of the Ya’an earthquake,” Mr So said in a statement, referring to SJM’s now-retired founder Stanley Ho Hung Sun. “…we are confident that under the leadership of the central government and with the combined efforts from people in the mainland, Hong Kong and Macau, the people in the affected areas will overcome the tragedy,” he added. Galaxy Entertainment Group Ltd and Sands China Ltd have also donated two million patacas each to help the earthquake victims.
of the company’s Macau business. BIHL bought Birmingham City in October 2009 for 81.5 million pounds (1 billion patacas) from David Sullivan and Ralph and David Gold. He raised the money via a share issue underwritten by Kingston Securities Ltd, a unit of Hong Konglisted Kingston Financial Group Ltd. The latter was previously called Golden Resorts Group Ltd. Kingston Financial Group, controlled by billionaire Pollyanna Chu Yuet Wah, bought Casa Real casino hotel from the family of Macau businessman Ngan In Leng in 2005. The property operates on a gaming licence from Sociedade de Jogos de Macau SA, a company founded by Stanley Ho Hung Sun. With AFP/Bloomberg News
HK$720 million Amount of money involved in court case
Reforms ‘timid’ – survey
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he majority of respondents to a Business Daily survey believe the political reforms last year were not bold enough. The government-backed reforms added four seats to the Legislative Assembly, two directly elected and two indirectly elected. The results of the regular survey on Business Daily’s website show 71 percent of respondents consider the reforms “too timid”. The proportion that think the reforms were “just right” was 11 percent. Another 11 percent of respondents think “there was no need” for political reform at all. The other 7 percent feel that the reforms were “too bold”. The reforms come into effect in September, when voters go to the polls to elect a new Legislative Assembly which will have four more members than the present assembly. The next Business Daily survey will be about the donations collected here for reconstruction in the province of Sichuan after the earthquake there in 2008. In view of a further appeal for money since the more recent earthquake in Sichuan, the survey will ask how well you think the original donations were spent. The new survey will appear on our website, www. macaubusinessdaily.com, shortly.
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April 30, 2013
Macau
Govt eyes intervention in managing buildings Flat owners may be required to decide how residential buildings are managed Tony Lai
tony.lai@macaubusinessdaily.com
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he government is proposing to give the Housing Bureau power to arrange how residential buildings are managed and so avert disputes. Proposals announced yesterday by the Law Reform and International Law Bureau would give the Housing Bureau the power to require each company that manages a residential building to convene a meeting of the owners of the flats in the building to set up a body to administer it. The administrative body would then choose whether to allow the company to continue managing the building; to get another company to mange it; or to take over the management of the building itself. Any building management
company that failed to convene a meeting of flat owners would face a penalty. Where more than one company claims the right to manage a building, only one would be allowed to convene the meeting. “Disputes over private building management have aroused social attention,” the deputy director of the law reform bureau, Chou Kam Chon, told a press conference. “We have received various opinions stressing this requires the intervention of the public authorities,” Mr Chou said. The head of the Housing Bureau’s building management affairs department, Ieong Kam Wa, said the bureau knew of 13 such disputes since 2006. Mr Ieong said disputes
arose when more than one company claimed the right to manage a building or when the company that managed a building and the administrative body formed by flat owners disagreed. The proposals would not require the owners of flats in buildings that have no management company – in particular, old, low-rise buildings – to meet to set up an administrative body. Mr Chou said: “We and the Housing Bureau will carry out promotional activities to make everyone – every flat owner in every building – aware of their obligations in managing their own building.” But he added: “If the building does not have an administrative body, we cannot penalise them for not having one as everyone is free
The government is not proposing to require old residential buildings to have an administrative body (Photo: Manuel Cardoso)
to do as they wish.” The proposals would require a newly established administrative body immediately to set up a fund, made up of contributions from every flat owner, to pay for building maintenance. Mr Chou said an administrative body would be able to sue flat owners
that did not pay up. He said tenants would neither have the right to join an administrative body nor the obligation to pay management fees unless their leases said otherwise. The government will consult the public about its proposals from today to July 31.
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Macau Studio City minority investors go all in U.S. hedge funds exercise option to back fully the second capital phase of Cotai project
IGT quarterly revenues rise 11 percent
Michael Grimes
Michael Grimes
michael.grimes@macaubusinessdaily.com
michael.grimes@macaubusinessdaily.com
Mr Davis said at the time: “The first 800 [million U.S. dollars] will go in pro rata at our ownership stake currently at 60 [MCE] to 40 [others]. The remainder will go in 100 percent funded by MCE, subject to the option for our minority shareholder to put in their 40 percent of that amount, but we’ll know that in about six months.”
New Cotai
Mid-2015 opening expected for Studio City
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inority investors in the Studio City casino project on Cotai will after all exercise an option to fund to the maximum level the second capital stage of the scheme. The minority partner, New Cotai LLC, had already committed to 40 percent of the US$800 million (6.40 billion patacas) first tranche for Studio City. A regulatory filing in October last year by Melco Crown Entertainment Ltd, the indirect 60 percent owner of Studio City, described the whole venture as a US$2.9 billion plan, of which US$2.04 billion is for construction. “The company announces that SCI [Studio City International Holdings Ltd] has received a notice
dated April 19, 2013 from New Cotai regarding the exercise of the New Cotai Equity Option,” said Melco Crown in a U.S. filing on April 25. “It is expected that upon the closing of the exercise of the New Cotai Equity Option, MCE Cotai’s interest in SCI will remain at 60 percent, the same shareholding percentage as at the date of the original shareholders’ agreement dated July 27, 2011,” added the filing. Geoffrey Davis, Melco Crown’s chief financial officer, had hinted during the firm’s third quarter earnings call in November last year that New Cotai might not wish to exercise its full 40 percent equity option beyond the first US$800 million.
PwC stepping down as LVS auditor Accountant issued ‘going concern’ warning on casino firm in 2008 Michael Grimes
michael.grimes@macaubusinessdaily.com
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ricewaterhouseCoopers LLP is stepping down as independent auditor for Las Vegas Sands Corp. once it has completed the firm’s first quarter 2013 review. The news was given in an LVS regulatory filing in the United States. The firm’s audit committee is currently in the process of selecting a replacement. It was PricewaterhouseCoopers that in November 2008 issued a warning that LVS faced a “substantial doubt about the
company’s ability to continue as a going concern,” because of its then strongly leveraged position during the developing global financial crisis. Later that same month the audit firm lifted its “going concern” warning after LVS raised US$2.1 billion (16.79 billion patacas) by selling common shares and preferred stock. Business Daily understands from sources that Sheldon Adelson, chairman and chief executive of LVS, has had a business relationship with a predecessor company to PwC since
According to the September 25 filing, New Cotai LLC is a Delaware limited liability company “ultimately controlled by funds managed by Silver Point Capital, L.P. and Oaktree Capital Management, L.P.” Oaktree, a major U.S.-based hedge fund, had US$78.8 billion in assets under management as of March 31 this year according to its website. Silver Point, founded in 2002 and based in Greenwich, Connecticut, is a privately owned hedge fund sponsor specialising in distressed firms. The two funds had stuck with the project when other backers had pulled out following the 2008 financial crisis. The pull out is what precipitated MCE – which had previously planned only a licensing and gaming management role in Studio City – to take a majority equity position. Lawrence Ho Yau Lung, cochairman of Melco Crown, said in the firm’s 2012 annual report filed last month that Studio City’s construction “continues to move closer to realisation, with the majority of foundation and piling work now complete,” and was “on track to open in the middle of 2015”.
the late 1980s. PwC was formed in 1998 by a merger between Coopers & Lybrand and Price Waterhouse. Three years earlier Mr Adelson’s privately held Interface Group sold his Comdex computer trade show business to Japanese firm Softbank Corp. for US$800 million, signalling the start of his ambitions as a casino resort developer. PwC received slightly more than US$5.9 million from LVS in 2012 as fees for audit and tax work and other professional services, according to an LVS proxy filing on April 23 U.S. time. LVS said in the 8K filing in New York, regarding its auditor, that “there have been no disagreements with PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure,” during the fiscal years ended December 31, 2011 and 2012, nor through to the filing date of April 23, 2013. LVS is currently under U.S. federal investigation in relation to its Macau operations for possible breaches of the U.S. Foreign Corrupt Practices Act.
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GT – a supplier of electronic gaming equipment in Macau and other Asian regional casino markets – has reported its fiscal second quarter 2013 earnings. Revenues increased 10.9 percent year-on-year to US$600.0 million (4.8 billion patacas) in the quarter. The company said year-on-year growth was primarily driven by higher product sales and strong performance from interactive businesses. Nevada-based IGT sold 3,200 product units internationally and 11,100 units domestically. Global revenues include gaming operations. In some markets – excluding Macau – IGT is able to participate directly in gaming business rather than just supplying equipment. On pure equipment sales, revenue for the quarter reached US$279.0 million – about six percent above analyst consensus.
Margins down Union Gaming Research in Las Vegas noted that while sales revenue grew, margins were down 300 basis points to 52 percent, “due to increased marketing, and game mix”. Headline earnings per share for the quarter were 36 U.S. cents, seven cents above analyst consensus. On a generally accepted accounting principles basis using United States methodology (U.S. GAAP) earnings per share would have come in at 29 U.S. cents. IGT began as a private company in the early 1950s. It was one of the first developers of video poker gaming machines in the late 1970s. In 1981 the firm went public, and in 1984 acquired a business called Electronic Data Technologies. The latter helped IGT to pioneer technology allowing the computerised tracking of slot game players and later the creation of player rewards programmes.
April 19, 2013
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April April 30, 19, 2013 2013
Greater China Taiwan Q1 growth seen slowing Taiwan’s economic growth has likely eased to 3 percent in the first quarter on soft demand from China, the U.S. and other major markets, according to the median forecast of the 11 analysts surveyed by Reuters. That contrasts with a 3.72 percent growth in the prior three months. Orders for Taiwan’s exports unexpectedly contracted 6.6 percent in March from a year earlier, shrinking for the second straight month. Taiwan’s export orders are a leading indicator of demand for Asia’s exports and for hi-tech gadgets such as smartphones, and typically lead actual exports by two to three months.
Talk on yuan reform masks policy quandary
Regulator to raise stock investment levels
Government balancing liberalisation versus stability Pete Sweeney and Lu Jianxin
Stocks fund defined as holding more than 80 pct of its assets in equities
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intervention in a transparent manner. As the People’s Bank of China (PBOC) was intervening, central bankers suggested China remained firmly on the path of reform. Deputy governor Yi Gang told an International Monetary Fund forum in Washington that the time had come to widen the yuan’s trading band again. A day later, he said conditions were ripe to further open up China’s capital account. Another quandary for Beijing is that liberalisation of the yuan, while economically beneficial in the long run, could impede in the near term the promotion of the usage of the currency in international trade. Getting trading partners to invoice transactions in yuan would reduce exchange rate risk for Chinese firms and reduce the need to continue accumulating foreign currency reserves, which were equivalent to about 40 percent of China’s GDP in 2012. “It’s good to maintain at least a stable currency with some small appreciation,” said Patrick Wu, head of yuan trading at JPMorgan. “Today the renminbi obviously is outperforming. The reason is they want to show a good gesture to corporates saying, ‘Come here, use our currency for settlement’.” This is not the same as liberalisation, he said, but for the time being it is necessary.
hina’s securities regulator plans to raise the minimum proportion equity funds should have in shares, a move that may drive investments into the worst-performing major Asian stock market in the past year. A stocks fund will be defined as one that holds more than 80 percent of its assets in equities, according to revised industry rules posted on the China Securities Regulatory Commission website. That compares with 60 percent now. The CSRC also plans to amend its rules so that a fund’s total assets can’t exceed 140 percent of its net assets. “It will definitely be positive for the stock market” in the long run, said Daphne Roth, Singaporebased head of Asia equity research at ABN Amro Private Bank, which oversees about US$207 billion. “But this is a multi-year project and it’s still in its early days. I am still cautious on China stocks, as we may see downgrades in some company earnings.” China’s benchmark Shanghai Composite Index has tumbled more than 10 percent from its 2013 high on February 6 amid signs that the economy’s recovery is stalling. The nation’s industrial profits growth fell in March from the first two months, as banks from Goldman Sachs Group Inc. to JPMorgan Chase & Co. cut their estimates for full-year expansion. Historically, stocks funds invest 80-90 percent of their holdings in equities, and currently 13.5 percent of the funds invest less than 80 percent, the Securities Times reported on Saturday, citing an unidentified CSRC spokesman. The South China Morning Post said the change of rule could theoretically inject 200 billion yuan (US$32 billion) into the market, without citing anyone. China’s domestic stock market is valued at US$3.06 trillion, making it the world’s fifth largest, according to data compiled by Bloomberg. The CSRC is soliciting comments and suggestions on the proposed changes until May 26. Separately, a CSRC spokesman said in a press conference on Friday that overseas strategic investors, or Qualified Foreign Institutional Investors, aren’t selling shares on a large scale, even as they downgraded their view of the Chinese economy and market, according to the Securities Times.
Reuters
Bloomberg News
KEY POINTS Yuan under strong upward pressure Chinese regulators voice commitment to reform Foreign currency reserves at US$128 bln in Q1
PBOC still increasing market intervention
C
hina’s central bank has been talking tough on currency r ef or m wh ile it has also intensified market intervention, highlighting the fine line it must walk in trying to liberalise the yuan. Critics, including the United States, see the intervention as another sign that Beijing is dragging its feet in letting market forces determine the yuan’s exchange rate. But the wall of money being printed by China’s trading partners under their super-loose monetary policies is flooding emerging markets with speculative cash, which has put the yuan under strong upward pressure this year. “It’s difficult to make the currency manipulation argument,” said Zhang Zhiwei, chief China economist for Nomura Securities Co. in Hong Kong. “There are a lot of things that central bankers are doing nowadays that are not really regarded as best practice; we are in uncharted waters these days and everything is relative.” The yuan is a closely managed currency that is allowed to trade 1 percent either side of a midpoint set by the central bank each day. However, Beijing is steadily relaxing its tight grip on the currency as it tries to restructure the world’s second-biggest economy away from a reliance on exports and towards greater domestic consumption. Critics argue that Beijing is not opening its markets quickly
enough and some suggest moves to date have lacked any real substance. For its part, China fears that opening up too fast will destabilise the economy. Many dealers thought the central bank was signalling a loosening of its control of the market in the fourth quarter of 2012 when it largely abstained from its traditional role of buying up foreign exchange. Even when companies refused to exchange dollars for yuan within the daily permitted trading band, prompting a collapse in trading volumes, the regulator stayed on the sidelines.
More intervention But 2013 has seen the return of a nanny central bank as the amount of dollars entering the economy picked up. China’s foreign currency reserves, already the world’s largest by far, swelled by US$128 billion in the first quarter, the biggest quarterly increase since the second quarter of 2011. “Recent resumption of intervention on a large scale is troubling,” the U.S. Treasury said in a semi-annual currency report issued earlier this month. The report argued that China was once again keeping the yuan at an artificially low level by buying up foreign currency. It also criticised China’s unwillingness to disclose its
99
April April 30, 19, 2013 2013
Greater China
Baidu valuation cut in half Profit growth slows as ad revenue dwindles Ye Xie
B
aidu Inc. is trading more than 50 percent below its average valuation over the past five years as the Chinese Internet company struggles to diversify while maintaining profit growth amid a slowdown in advertising. American depositary receipts of Baidu, owner of China’s most-used search engine, sank 7.9 percent last Friday to trade at 15 times estimated earnings. That compares with an average multiple of 36 since 2008, data compiled by Bloomberg show. The slump drove a 1.4 percent drop in the Bloomberg China-US Equity Index of the mosttraded Chinese stocks in the U.S. Baidu tumbled the most since February in New York after reporting net income rose 8.5 percent in the first three months of 2013. Profit growth has slowed from an average 64 percent in the previous five quarters as revenue from advertising dwindled. The Beijing-based company, which most recently acquired online video firm iQiyi.com, wants to buy up mobile applications as consumers shift to smartphones from personal computers, chief executive Robin Li said last week. “Baidu is spending a lot of money to maintain its market position and search for new growth engines,” Echo He, an
The investment doesn’t necessarily translate into revenue growth. The profit margin will continue to be under pressure Echo He, Maxim Group LLC
Baidu had a profit of US$331 mln in the first three months
analyst at Maxim Group LLC in New York who rates the stock sell, said in a phone interview. “The investment doesn’t necessarily translate into revenue growth. The profit margin will continue to be under pressure.”
Rising competition Baidu’s first-quarter gross margin, a measure of profitability, was 65
percent, down from 71 percent a year earlier. The company’s net income of 2.04 billion yuan (US$331 million) in the first three months was 6.8 percent below the median of eight analysts’ estimates compiled by Bloomberg. Revenue per online advertising customer fell 6.5 percent from the fourth quarter, according to the earnings statement. The ADRs, which slid to an almost
three-week-low of US$85.02 on Friday, have retreated 36 percent over the past 12 months as Baidu grapples with rising competition from companies such as Qihoo 360 Technology Co., a software developer that debuted a search engine in August. Qihoo, also based in Beijing, said last month that its operating margin will “see the bottom” in the first quarter due to costs associated with expanding into mobile Internet. Baidu – which accounted for 82.3 percent of Chinese search-engine queries in the fourth quarter, according to Bloomberg Industries – wants to extend its dominance of China’s search market to mobile devices and favours acquisitions over building the company, CEO Li said on a conference call. The iQiyi.com purchase was still “burning money,” he said. Bloomberg News
10
April 30, 2013
Asia
Packer’s Sri Lanka casino to open in 2016: report ANA to resume 787 flights on June 1 ANA Holdings Inc., the biggest operator of Boeing Co. 787s, aims to resume scheduled flights of the jet on June 1, chief executive Shinichiro Ito said in Tokyo. Mr Ito, who flew on the airline’s initial test flight on Sunday with Boeing Commercial Airplanes president Ray Conner after completion of a fix to the battery system, said Tokyo-based ANA won’t change plans for introducing the Dreamliner to its fleet. The airline expects to receive 10 more planes in the year to March and will assign the next delivery to expanding domestic routes, he told reporters after the flight. ANA faces a challenge in luring back customers to an aircraft grounded for more than three months after lithium-ion batteries on two planes overheated and melted. A 787 test flight by Ethiopian Airlines Enterprise was the first since the January 16 grounding, the longest for a large commercial plane by U.S. and Japanese regulators since jet airliners began flying in the 1950s. “It’s going to be difficult to get passengers to fly,” said Ryota Himeno, an analyst at Barclays Securities Japan Ltd. “A month isn’t long enough to convince passengers. ANA needs to invest a lot of time in flying the planes before customers come back.” U.S. air safety authorities haven’t determined what caused the battery faults that sparked a January 7 fire on a JAL 787 in Boston and forced an emergency landing by an ANA jet in Japan nine days later. Japan’s government last week approved resumption of 787 flights by ANA, which operates 17 Dreamliners, and Japan Airlines Co., the world’s second-largest operator, with seven.
US$350 mln Crown Colombo to have local partner experienced in gaming Michael Grimes
michael.grimes@macaubusinessdaiuly.com
M
acau gaming investor James Packer has been given permission to build a US$350 million casino hotel in Sri Lanka’s capital Colombo, according to the country’s Business Times newspaper. Mr Packer’s Australia-listed gaming company Crown Ltd was linked a week ago with the deal, but the company has declined to comment on the reports. The property is likely to be called Crown Colombo and will have a 36-storey hotel tower, states Business Times. It reports the project will have a local business partner, Ravi Wijeratne. “The ministries of Finance and Economic Development have given the nod to Mr Packer to start Sri Lanka’s single largest gaming venture following talks with Minister Basil Rajapaksa and Treasury Secretary
Dr P.B. Jayasundera, a senior government official who wished to be anonymous told the Business Times,” the newspaper stated. “The [US]$350 million venture will open in 2016,” it added. Mr Rajapaksa, Cabinet Minister of Economic Development, is a brother of the country’s current president Mahendra Rajapaksa. According to a March 25 filing with the Colombo Stock Exchange, Mr Wijeratne “is one of the two licence holders for gaming operations in Colombo and successfully operated Sri Lanka’s largest casino for 18 years”. The filing adds he is also chairman and managing director of Rank Holdings and the Rank Group of Companies, with interests ranging from property, logistics, hydropower, and wind energy, solid waste management and entertainment. According to a report in
the c o u n t r y ’ s S u n d a y L e a d e r n e w s p a p e r in April 2007, the 1.26-hectare (3.1-acre) plot now earmarked for the new casino project was released to Mr Wijeratne by the national government without a tender process. At that time it was designated for use as a multi storey car park. But Lakshman R. Watawala, then chairman and director general of the Board of Investment of Sri Lanka, confirmed to the newspaper it might be possible for a future developer to build on top of the car park podium as “they do that in places like Singapore”. The site was later approved for tourism related activities, as part of the Colombo City Development Programme according to local reports. Sri Lanka passed a Casino Regulatory Bill in November 2010
IMF warns over capital inflows in Asia Fund flags risks of asset bubbles, middle income trap Kevin Lim
SMBC eyes TPG’s bank stake Japan’s Sumitomo Mitsui Banking Corp is in advanced talks to buy a US$1.3 billion stake in BTPN, an Indonesian lender backed by TPG Capital, people familiar with the matter told Reuters, lifting BTPN’s shares 9 percent yesterday. SMBC’s pursuit of Indonesia’s seventh-largest bank by market value is another example of a Japanese company seeking to grow in that country’s fast growing financial services market. A sale by TPG would also provide another case of a U.S. private equity investor raking in a massive profit from an early investment in an Asian financial institution. In 2008, TPG Capital Management LP acquired a 71.6 percent stake in the Indonesian pensioners’ savings bank, named Bank Tabungan Pensiunan Nasional Tbk PT (BTPN), for US$195 million. The private equity firm’s stake dropped to 58.5 percent after a rights offering in 2010. SMBC, a unit of Japan’s third-largest lender by assets Sumitomo Mitsui Financial Group Inc, is currently negotiating to buy 40 percent of TPG’s stake, allowing it to abide by Indonesia’s new foreign ownership limits for banks, the people added. TPG executives were in Tokyo last week for another round of talks, one person with knowledge of the matter said. It was not immediately clear what TPG plans to do with its remaining 18.5 percent stake, although the buyout firm may sell the shares in the open market, people familiar with the matter said. Established in 1958, BTPN now operates as a full-fledged commercial bank with a market value of US$3 billion and has more than 19,000 employees and over 10,000 branches. Reuters
Risk of financial imbalances growing in some parts of Asia, says Anoop Singh
S
trong capital inflows into Asia have increased the risks stemming from rapid credit growth and rising asset prices, the International Monetary Fund said yesterday. Asia needs to guard against asset bubbles and its emerging economies must improve government institutions and liberalise rigid labour and product markets if they
wish to reach the level of developed countries, the fund added. “Emerging Asia is potentially susceptible to the ‘middle-income trap,’ a phenomenon whereby economies risk stagnation at middle-income levels and fail to graduate into the ranks of advanced economies,” the IMF said in its latest Regional Economic Outlook for Asia and the Pacific.
“MIEs [middle-income economies] in Asia are less exposed to the risk of a sustained growth slowdown than MIEs in other regions. However, their relative performance is weaker on institutions,” the international funding agency said. IMF’s warning about the emerging risks faced by Asian countries come at time when the
11
April 30, 2013
Asia
India’s central bank expected to cut rates As banks struggle to woo deposits and resist passing on interest-rate reductions
G
Economic development minister, Basil Rajapaksa (left), approved casino for James Packer, say reports
following the conclusion in May 2009 of the country’s 26-year civil war with ethnic Tamil militants. Sri Lanka’s government said at that time it wanted to generate US$2 billion annually in tourism receipts and attract 2.5 million tourists per
year by 2016. Mr Packer’s Crown Ltd has a 33.4 percent stake in Melco Crown Entertainment Ltd, a joint venture with Hong Kong listed Melco International Development in the Macau casino industry.
region looks set to lead a global economic recovery as risks from a meltdown in Europe recede. “While the external risk of severe economic fallout from an acute euro area crisis has diminished, regional risks are coming into clearer focus. These include some ongoing buildup of financial imbalances and rising asset prices,” the IMF said.
bureaucratic capability, fewer conflicts and less corruption. For many developing Asian economies, there remains ample room for easing stringent regulations in product and, in some cases, labour markets, the fund added. The IMF also said various statistical approaches indicate that trend growth rates have slowed in both China and India. For China, trend growth appears to have peaked at around 11 percent in 2006-07, while India’s trend growth is now around 6-7 percent compared with about 8 percent prior to the financial crisis. “By contrast, trend growth for most ASEAN countries seems to have remained stable or to have increased somewhat, with the notable exception of Vietnam,” the fund said. Turning to Japan, Mr Singh said the IMF “welcomed” Japanese efforts to stimulate its economy, and said quantitative easing was just part of a package of measures that included cutting debt and embarking of structural reforms such as increasing female participation in the workforce.
Overheating risk IMF is monitoring credit ratios and output levels in Asia closely as conditions can worsen very quickly, the fund’s director for Asia and Pacific region, Anoop Singh, told reporters at a briefing in Singapore. He said regional authorities needed to respond early and decisively to potential overheating. IMF, which recently cut its 2013 and 2014 growth forecasts for Greater China, India, South Korea and Singapore but raised its outlook for Malaysia and the Philippines, nevertheless sounded generally positive about near-term prospects, saying it expects Asia to lead a “global three-speed recovery”. “Growth in Asia is likely pick up gradually in the course of 2013, to about 5.75 percent, on strengthening external demand and continued robust domestic demand,” it said. The IMF said India, the Philippines, China and Indonesia needed to improve their economic institutions while India, the Philippines and Thailand were also exposed to a larger risk of growth slowdown stemming from sub-par infrastructure. Malaysia and China were the highest-ranked developing Asian countries in an IMF chart measuring institutional strength while Indonesia, India and the Philippines were at the bottom. IMF defined institutional strength as demonstrating higher political stability, better
Reuters
KEY POINTS Reforms needed to avoid ‘middle income trap’ Overheating risks have risen in Asia Growth set to pick up gradually during the year Inflation to stay within central banks’ comfort zones
overnor of the Reserve Bank of India Duvvuri Subbarao will lower the repurchase rate for a third time this year to 7.25 percent from 7.5 percent on Friday, according to 22 of 26 analysts in a Bloomberg News survey. One predicts 7 percent and the rest no change. Five of 24 in another survey expect a cashreserve-ratio cut to 3.75 percent from 4 percent, with the rest forecasting no change. Lenders from State Bank of India to ICICI Bank Ltd, facing close to the weakest deposit growth in a decade, have lowered borrowing costs as little as 0.25 percentage point since April last year. The central bank cut the policy benchmark a full point from 8.5 percent in the same period, and JPMorgan Chase & Co. said wider steps may be needed to spur cheaper credit. “If the Reserve Bank of India is serious about more broad-based monetary transmission, it will need to cut lenders’ reserve requirements or pick up the pace of bond purchases to inject liquidity,” said Sajjid Chinoy, an economist at JPMorgan Chase in Mumbai. “Barring this, rate cuts will continue to be symbolic.” The yield on the government note maturing June 2022 has slid to 7.73 percent from 7.90 percent since the last rate cut on March 19, on bets another reduction is probable to fight the weakest economic growth since 2003. The rupee has strengthened 1.1 percent versus the dollar this year, while the BSE India Sensitive Index has dropped 0.4 percent. India’s deposit growth averaged 13.8 percent this year, Reserve Bank figures show, near December’s 11 percent that was the least since 2003, according to Bank of America
S. Korea to boost corporate investments S
outh Korea’s government will unveil policies within days to remove “unreasonable” regulations that deter companies from making investments, Finance Minister Hyun Oh Seok said. The government is also preparing measures, including loan and marketing support, to help smaller exporters grappling with the sliding yen, the Finance Ministry said in a separate statement. South Korea’s President Park Geun-hye announced a US$15 billion extra budget and property stimulus package this month and the central bank pared its growth forecast for this year as a decline in the yen hurt exporters and record household debt restrains consumption. Mr Hyun said
Merrill Lynch. Consumer-price inflation exceeding 10 percent is driving savers to gold and real estate instead, said Rupe Rege Nitsure, chief economist at Bank of Baroda. Another measure of inflation, based on wholesale prices, eased to a 40-month low of 5.96 percent in March. Food inflation remains high, driving a wedge between the two gauges and adding to the challenge of monetary management, the central bank said in March’s policy statement. The scope for further easing is “quite limited,” the Reserve Bank said, citing risks including a record current-account deficit of 6.7 percent of gross domestic product in the quarter ended December 31. Bloomberg News
The Reserve Bank of India will need to cut lenders’ reserve requirements or pick up the pace of bond purchases to inject liquidity Sajjid Chinoy, economist, JPMorgan Chase
last week the government is planning policy support for services industries to boost job creation. “Weak private consumption and inventory drawdown suggest a still slower recovery in private demand, which makes the coordination of policy stimulus all the more important,” Kwon Goohoon, a Seoulbased economist with Goldman Sachs Group Inc., wrote in a report after first-quarter economic growth rose the most in two years, driven by front-loading of fiscal spending by the government and higher exports. “We’re trying to do a major easing of rules to revitalise investment,” Mr Hyun said during a weekend meeting with heads of small and mediumsized manufacturers. The measures will target increasing “facility investments” by smaller firms through financial incentives, he said. Bank of Korea Governor Kim Choong-soo said last week that weakness in the Japanese currency has only just begun and will hit South Korea’s electronics, automobile and steel makers who compete against companies from Asia’s secondlargest economy. The yen has dropped about 20 percent against the U.S. dollar in the past six months and about 18 percent against the won. Reuters
12
April 30, 2013
Markets Hang Seng Index NAME
PRICE
DAY %
VOLUME
34.15
-0.2919708
20601043
ALUMINUM CORP-H
2.88
0.3484321
6830480
BANK OF CHINA-H
3.59
0.2793296
239411933
AIA GROUP LTD
BANK OF COMMUN-H
6.1
0.3289474
25075579
BANK EAST ASIA
31.3
0
1001737
BELLE INTERNATIO
12.7
-2.157165
19395970
NAME
PRICE
DAY %
VOLUME
11.04
-0.3610108
32749893
CITIC PACIFIC
9.34
-1.787592
CLP HLDGS LTD
68.2
CHINA UNICOM HON
PRICE
DAY %
VOLUME
POWER ASSETS HOL
75.1
0.8053691
1544611
7267332
SANDS CHINA LTD
42.3
-0.8206331
6193252
0.07336757
1809908
SINO LAND CO
12.76
-1.54321
8736878 3349549
CNOOC LTD
14.34
-0.4166667
36977137
SUN HUNG KAI PRO
112.6
-1.141352
COSCO PAC LTD
10.12
-3.065134
10808000
SWIRE PACIFIC-A
98.65
0.254065
807800
ESPRIT HLDGS
10.52
4.780876
17041750
TENCENT HOLDINGS
262
1.158301
3418731
TINGYI HLDG CO
21.25
0.2358491
6165492
WANT WANT CHINA
12.24
-1.130856
6355000
70
-0.2138275
3298835
26.6
0.7575758
8150981
HANG LUNG PROPER
30.55
1.495017
8011650
CATHAY PAC AIR
13.34
0.3007519
2272456
HANG SENG BK
128.9
0.1554002
762488
CHEUNG KONG
HENDERSON LAND D
55.65
-0.9786477
4362420
77.8
-0.5750799
2721395
BOC HONG KONG HO
116.5
-0.5123826
2557670
CHINA COAL ENE-H
5.91
-6.190476
88431060
CHINA CONST BA-H
6.45
1.097179
268635527
NAME
HENGAN INTL HONG KG CHINA GS
23.35
0
5317068
HONG KONG EXCHNG
129.3
-0.5384615
2595545
HSBC HLDGS PLC
84.05
0.7793765
11315511
HUTCHISON WHAMPO
83.65
0.7831325
4709542
5.42
0.1848429
207352839
10.12
-0.3937008
12416823
CHINA LIFE INS-H
20.95
0.2392344
22621663
CHINA MERCHANT
24.3
-2.60521
2529000
CHINA MOBILE
84.15
0.05945303
8035614
CHINA OVERSEAS
23.55
0.4264392
10977104
IND & COMM BK-H
CHINA PETROLEU-H
8.4
-0.8264463
78207037
LI & FUNG LTD
CHINA RES ENTERP
26.15
0.1915709
1692000
MTR CORP
31.7
0.955414
2120251
CHINA RES LAND
23.5
1.075269
4465700
NEW WORLD DEV
13.42
-0.8862629
12126502
CHINA RES POWER
25.4
1.803607
3857459
PETROCHINA CO-H
9.83
-0.5060729
56452944
CHINA SHENHUA-H
26.85
-0.7393715
19667909
PING AN INSURA-H
59.9
-0.4156276
7939382
PRICE
DAY %
VOLUME
27.75
-0.5376344
4451110
8.4
-0.8264463
WHARF HLDG
MOVERS
25
23
2 22680
INDEX 22580.77 HIGH
22673.52
LOW
22229.78
52W (H) 23944.74 22220
(L) 18056.4 25-April
29-April
Hang Seng China Enterprise Index NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.64
-1.355014
150493442
AIR CHINA LTD-H
6.23
0.3220612
5780000
CHINA PETROLEU-H
ALUMINUM CORP-H
2.88
0.3484321
6830480
CHINA RAIL CN-H
7.58
ANHUI CONCH-H
27.8
0
6121100
CHINA RAIL GR-H
BANK OF CHINA-H
3.59
0.2793296
239411933
NAME
PRICE
DAY %
VOLUME
YANZHOU COAL-H
8.07
-4.383886
46162600
78207037
ZIJIN MINING-H
2.26
-3.418803
45482000
-4.050633
13163650
ZOOMLION HEAVY-H
7.66
-5.080545
21595974
3.88
-1.772152
31740660
ZTE CORP-H
12.86
3.709677
6564997
CHINA SHENHUA-H
26.85
-0.7393715
19667909
CHINA PACIFIC-H
6.1
0.3289474
25075579
CHINA TELECOM-H
3.87
-1.023018
50779443
27.85
-1.065719
4789300
DONGFENG MOTOR-H
11.5
-1.541096
13626260
CHINA CITIC BK-H
4.28
0.9433962
29167758
GUANGZHOU AUTO-H
6.27
-1.569859
4079909
CHINA COAL ENE-H
5.91
-6.190476
88431060
HUANENG POWER-H
8.87
1.836969
16186955
CHINA COM CONS-H
7.24
-3.466667
32842941
IND & COMM BK-H
5.42
0.1848429
207352839
CHINA CONST BA-H
6.45
1.097179
268635527
JIANGXI COPPER-H
14.92
-4.2362
29963930
CHINA COSCO HO-H
3.27
-4.105572
11546500
PETROCHINA CO-H
9.83
-0.5060729
56452944
20.95
0.2392344
22621663
PICC PROPERTY &
9.73
0.1028807
7353847
7.2
0.1390821
7261477
PING AN INSURA-H
59.9
-0.4156276
7939382
CHINA MERCH BK-H
16.16
0.1239157
10362455
SHANDONG WEIG-H
7.43
0.4054054
8084467
CHINA MINSHENG-H
9.79
-2.002002
30543130
SINOPHARM-H
CHINA NATL BDG-H
9.31
-3.423237
46382000
TSINGTAO BREW-H
15.22
-2.310655
4651000
WEICHAI POWER-H
BANK OF COMMUN-H BYD CO LTD-H
CHINA LIFE INS-H CHINA LONGYUAN-H
CHINA OILFIELD-H
22.9
0.2188184
3213421
52.95
0.1892148
643338
26.6
-5.840708
NAME
MOVERS
16
23
1 10930
INDEX 10785.58 HIGH
10928.88
LOW
10670.07
52W (H) 12354.22 10660
(L) 8987.76 25-April
4191880
29-April
Shanghai Shenzhen CSI 300 NAME
NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.69
-0.7380074
98526496
AIR CHINA LTD-A
5.23
-1.506591
5166291
CITIC SECURITI-A
CHONGQING WATE-A
PRICE
DAY %
VOLUME
PRICE
DAY %
6.2
-2.053712
6571968
QINGHAI SALT-A
24.35
-0.7742461
3860060
12.42
-0.7194245
66198652
SAIC MOTOR-A
14.9
0.1344086
20767841
NAME
VOLUME
3.98
-1.240695
15985511
CSR CORP LTD -A
3.98
-0.9950249
16381021
SANY HEAVY INDUS
9.76
-1.810865
19382466
ANHUI CONCH-A
17.61
-0.05675369
17964870
DAQIN RAILWAY -A
7.05
-2.354571
32120187
SHANDONG GOLD-MI
32.13
0
4503942
BANK OF BEIJIN-A
8.79
2.090592
43843654
DATANG INTL PO-A
4.35
1.162791
6565666
SHANG PHARM -A
11.99
-1.316872
6520537
BANK OF CHINA-A
2.87
-1.034483
34709644
EVERBRIG SEC -A
13.4
-2.75762
16616151
SHANG PUDONG-A
9.88
-0.3027245
52806428
ALUMINUM CORP-A
BANK OF COMMUN-A BANK OF NINGBO-A
4.63
-0.4301075
41941465
GD MIDEA HOLDI-A
13.96
2.271062
22844017
SHANGHAI ELECT-A
3.73
-1.842105
3581817
10.18
-0.1960784
11593667
GD POWER DEVEL-A
2.81
0.3571429
51309572
SHANXI LU'AN -A
15.96
-0.7462687
11209252
4.8
0.2087683
37907083
GEMDALE CORP-A
6.99
1.451379
41422129
SHANXI XISHAN-A
10.53
-0.7540057
7912841
BEIJING TONGRE-A
22.44
-1.578947
9744682
GF SECURITIES-A
13.15
-0.9789157
14805509
SHENZEN OVERSE-A
5.76
0.173913
30445184
BYD CO LTD -A
24.55
3.064652
7882916
GREE ELECTRIC
26
-0.3831418
11212283
SICHUAN KELUN-A
61.6
-2.56248
674648
21.8
-3.539823
3057671
GUANGHUI ENERG-A
18.38
-2.441614
18997699
SUNING COMMERC-A
5.88
-1.010101
32095456 4097690
BAOSHAN IRON & S
CHINA AVIC AVI-A CHINA CITIC BK-A
4.27
-0.6976744
20002122
HAINAN AIRLINE-A
4.71
-5.040323
43069901
TASLY PHARMAC-A
74.51
2.942802
CHINA CNR CORP-A
4.03
-0.2475248
13007525
HAITONG SECURI-A
10.71
0.4690432
88582416
TSINGTAO BREW-A
37.78
-0.07934409
2264961
CHINA COAL ENE-A
6.81
-1.161103
4342980
HANGZHOU HIKVI-A
36.22
-1.789588
5865052
WEICHAI POWER-A
21.96
-4.852686
9699258 13457108
CHINA CONST BA-A
4.65
-0.6410256
22742004
HENAN SHUAN-A
78.58
-1.775
1822880
WULIANGYE YIBIN
21.95
-0.2272727
CHINA COSCO HO-A
3.37
-2.034884
10597179
HONG YUAN SEC-A
21.45
-0.6484484
33896820
YANGQUAN COAL -A
12.59
-1.94704
6101510
CHINA EAST AIR-A
3.06
-1.923077
7822324
HUATAI SECURIT-A
9.64
-0.8230453
22112830
YANTAI WANHUA-A
18.59
-1.640212
10502752
CHINA EVERBRIG-A
3
0
55031877
HUAXIA BANK CO
10.47
2.747792
50156004
YANZHOU COAL-A
15.17
-2.943058
5920172
4.05
-0.7352941
48236100
YUNNAN BAIYAO-A
85.2
-1.010805
1077459
CHINA LIFE INS-A
16.76
0
15846304
IND & COMM BK-A
CHINA MERCH BK-A
12.15
-0.5728314
33018250
INDUSTRIAL BAN-A
18.16
-0.3839824
71264377
ZHONGJIN GOLD
12.59
1.450443
22206329
CHINA MERCHANT-A
12.13
-0.8986928
22898539
INNER MONG BAO-A
27.59
0.3637686
18292792
ZIJIN MINING-A
3.13
0.3205128
35605034
CHINA MERCHANT-A
25.42
1.194268
8856678
INNER MONG YIL-A
29.24
-3.973727
12315564
ZOOMLION HEAVY-A
7.57
-1.943005
23257399
CHINA MINSHENG-A
9.82
-1.107754
95530352
INNER MONGOLIA-A
4.71
-0.8421053
23635522
ZTE CORP-A
11.34
-1.9879
15877196
CHINA NATIONAL-A
9.02
-4.952582
48291907
JIANGSU HENGRU-A
30.48
1.464714
5679411
CHINA OILFIELD-A
15.53
-0.7667732
2799720
CHINA PACIFIC-A
18.76
-1.315097
19668526
6.73
-0.7374631
18534969
CHINA PETROLEU-A
JIANGSU YANGHE-A
58.38
-5.533981
7205043
JIANGXI COPPER-A
20.84
-0.5725191
11617515
JINDUICHENG -A
10.32
-2.457467
5964602
17.38
-0.855676
21824148
173.99
-1.533673
1630764
CHINA RAILWAY-A
5.14
0.390625
14650663
KANGMEI PHARMA-A
CHINA RAILWAY-A
2.79
-0.3571429
16720948
KWEICHOW MOUTA-A
CHINA SHENHUA-A
20.49
-0.9666506
9284215
LUZHOU LAOJIAO-A
24.43
-1.093117
5857758
CHINA SHIPBUIL-A
4.19
-4.772727
57783237
METALLURGICAL-A
2.04
0.4926108
14175798
CHINA SOUTHERN-A
3.45
-1.988636
15793098
NINGBO PORT CO-A
2.46
0.4081633
9104940
8.48
-0.4694836
14074849
18.7
-0.6903877
33673898
CHINA STATE -A
3.44
-0.5780347
48979379
PETROCHINA CO-A
CHINA UNITED-A
3.57
-1.923077
117328713
PING AN BANK-A
CHINA VANKE CO-A
11.03
0.4553734
48444343
PING AN INSURA-A
39.81
-0.8221226
18863711
CHINA YANGTZE-A
7.13
-0.140056
16584791
POLY REAL ESTA-A
11.63
0.4317789
28203451
10.51
-0.9425071
37170943
QINGDAO HAIER-A
12.82
-0.927357
6614424
PRICE DAY %
Volume
NAME
PRICE DAY %
Volume
CHONGQING CHAN-A
MOVERS
50
243
7 2510
INDEX 2447.306 HIGH
2505.24
LOW
2447.08
52W (H) 2791.303 (L) 2102.135
2440
24-April
26-April
FTSE Taiwan 50 Index NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP
23.85
-1.037344
4721981
25.4
-1.740812
50390065
37.35
0.4032258
FORMOSA PLASTIC
71
TAIWAN MOBILE CO
FOXCONN TECHNOLO
77.1 -0.3875969
2578989
2268113
FUBON FINANCIAL
41.9 -0.9456265
ASUSTEK COMPUTER
331.5
2
2255668
HON HAI PRECISIO
75.5 -0.9186352
13.65
3.409091
118332977
HOTAI MOTOR CO
260
2.403846
TPK HOLDING CO L
588
1.37931
2559464
11190871
TSMC
108 -0.4608295
21092377
47866312
UNI-PRESIDENT
0.5802708
291002
290
4.504505
23578490
17.05
0.5899705
2938241
YUANTA FINANCIAL YULON MOTOR CO
146
1.388889
5501116
CATHAY FINANCIAL
38.9
0.7772021
11827492
HUA NAN FINANCIA
CHANG HWA BANK
16.8
0
6780348
LARGAN PRECISION
787
6.929348
6029834
CHENG SHIN RUBBE
97.8
1.768991
6577249
LITE-ON TECHNOLO
52.6
-0.754717
3691694
CHIMEI INNOLUX C
18.05
1.404494
44248603
MEDIATEK INC
361.5
1.830986
4393230
8.16
-1.923077
47376676
MEGA FINANCIAL H
22.7 -0.8733624
38386627
CHINA STEEL CORP
26.15
0.1915709
10273191
NAN YA PLASTICS
59.8
0.3355705
10442437
CHINATRUST FINAN
17.8
0.5649718
27250230
PRESIDENT CHAIN
182 -0.5464481
823318
HTC CORP
94.5
0.4250797
4661852
QUANTA COMPUTER
60.5
1.001669
4711022
COMPAL ELECTRON
18.85
-1.049869
18736111
SILICONWARE PREC
35.45
0.5673759
22611819
DELTA ELECT INC
141.5 -0.3521127
3912813
SINOPAC FINANCIA
14.8
1.369863
25026970
FAR EASTERN NEW
31.8
0.952381
4924097
SYNNEX TECH INTL
49.15
1.340206
3714799
FAR EASTONE TELE
72.4 -0.6858711
5580097
TAIWAN CEMENT
38.7 -0.5141388
2968865
FIRST FINANCIAL
0.5602241
7458560
TAIWAN COOPERATI
FORMOSA CHEM & F
17.95
69.2 -0.4316547
3990212
TAIWAN FERTILIZE
FORMOSA PETROCHE
78.7 -0.1269036
1125999
TAIWAN GLASS IND
16.85
-0.295858
5458472
70.2 -0.5665722
1262602
29.25
0.6884682
Volume
106.5
CATCHER TECH
CHUNGHWA TELECOM
PRICE DAY %
4810142
AU OPTRONICS COR
CHINA DEVELOPMEN
NAME
-1.66205
1504981
UNITED MICROELEC WISTRON CORP
MOVERS
58 -0.8547009
6204970
11.1 -0.8928571
30661656
29.65
0.8503401
8501536
14.6 -0.3412969
13523045
51
27
22
3813357
1.190476
1416165
1 5630
INDEX 5596.44 HIGH
5624.13
LOW
5563.96
52W (H) 5639.93 5560
(L) 4719.96 25-April
29-April
13
April 30, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
Max 34.95
average 34.581
Max 42.65
average 42.233
Min 34.25
Min 41.95
Last 34.95
35.0
63.20
18.2
34.8
62.95
18.1
34.6
62.70
18.0
34.4
62.45
17.9
34.2
average 62.502
PRICE
Min 17.84
Last 18.2
19.8
23.3
42.3
19.6
23.2
42.1
19.4
23.1
Max 19.96
average 19.54
DAY %
YTD %
(H) 52W
Min 19.32
Last 19.6
(L) 52W
0.204301075
-0.320889935
105.6800003
81.34999847
BRENT CRUDE FUTR Jun13
103.09
-0.067855758
-4.493236984
116.6699982
90.91999817
GASOLINE RBOB FUT May13
282.93
-0.197537832
-2.235659986
330.369997
237.7199888
GAS OIL FUT (ICE) Jun13
860.5
-0.231884058
-5.646929825
992.75
799.25
NATURAL GAS FUTR Jun13
4.255
0.75775515
21.29418472
4.457000256
3.203999996
HEATING OIL FUTR May13
288.86
-0.434303047
-4.471195185
327.1399975
258.5000038
Gold Spot $/Oz
1473.5
0.7921
-11.4728
1796.08
1322.06
Silver Spot $/Oz
24.3713
1.5365
-19.0591
35.365
22.0713
Platinum Spot $/Oz
1495.05
1.1878
-1.4956
1742.8
1374.55
Palladium Spot $/Oz
684.3
0.4846
-2.1954
786.5
553.75
LME ALUMINUM 3MO ($)
1878
-3.245749614
-9.406657019
2200.199951
1818 6762.25
LME COPPER 3MO ($)
7030
-2.08913649
-11.36048418
8496.75
LME ZINC
1897
-2.01446281
-8.798076923
2230
1745
15205
-1.362309439
-10.87338804
18920
15075
15.115
0.298606503
-4.001270245
17.07500076
14.79500103
632.25
2.016942315
-9.322337755
824
527
WHEAT FUTURE(CBT) Jul13
700.75
1.19133574
-11.71653543
900
664.75
SOYBEAN FUTURE Jul13
1384.25
0.235336713
-0.788389178
1605.75
1217.75
COFFEE 'C' FUTURE Jul13
134.15
0.149309444
-10.29755934
202.1999969
133.0500031
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Jul13 Jul13
SUGAR #11 (WORLD) Jul13
17.38
COTTON NO.2 FUTR Jul13
19.2
84.9
-0.229621125
-11.95542047
0.771513353
10.44620788
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 23.35
average 23.160
Min 23
Last 23.35
23.0
World Stock Markets - Indices
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
1.0338 1.5537 0.9398 1.3085 97.72 7.9958 7.763 6.165 54.255 29.31 1.2341 29.517 41.14 9720 101.023 1.2297 0.84221 8.0702 10.4616 127.87 1.03
0.6033 0.4136 0.3299 0.4221 0.3377 0.0025 0.0039 0.0016 0.2212 -0.2388 0.1864 0.4133 0.3038 0.0206 -0.2514 -0.17 -0.038 -0.3965 -0.6003 -0.1095 0
-0.3854 -3.9503 -2.5963 -0.7961 -11.8911 -0.1576 -0.1597 1.0641 1.3639 4.333 -1.0291 -1.6397 -0.3281 0.751 -11.5776 -1.8069 -3.1809 1.8252 0.6576 -11.1832 -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 6.1594 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 NAME ARISTOCRAT LEISU CROWN LTD
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
3.8
-0.2624672
20.63492
3.94
2.29
VOLUME CRNCY 942883
12.91
0.859375
20.99344
12.98
8.06
974825
AMAX HOLDINGS LT
0.82
-2.380952
-41.42857
1.9
0.75
261325
BOC HONG KONG HO
26.6
0.7575758
10.37344
27.1
20.85
8150981
0.315
6.779661
18.86793
0.42
0.215
0
6.17
0
3.005012
6.74
2.8
0
CHINA OVERSEAS
23.55
0.4264392
1.94805
25.6
14.624
10977104
CHINESE ESTATES
13.58
0
11.9592
13.8
7.697
2288000
CHOW TAI FOOK JE
10.46
0
-15.9164
13.4
8.4
1959200
EMPEROR ENTERTAI
2.36
2.164502
24.86773
2.49
1.1
340000
FUTURE BRIGHT
2.56
3.643725
109.8361
2.75
0.77
11107200 13282217
CENTURY LEGEND CHEUK NANG HLDGS
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
14712.55
0.07992762
12.27406
14887.51
12035.08984
NASDAQ COMPOSITE INDEX
US
3279.263
-0.3259284
8.602355
3306.95
2726.68
GALAXY ENTERTAIN
34.95
2.043796
15.15651
35.7
16.94
FTSE 100 INDEX
GB
6431.3
0.07593652
9.045557
6533.99
5229.76
HANG SENG BK
128.9
0.1554002
8.593095
131.5
99.2
762488
DAX INDEX
GE
7862.18
0.6068005
3.281362
8074.47
5914.43
HOPEWELL HLDGS
29.95
1.182432
-9.924812
35.3
19.049
1787300
NIKKEI 225
JN
13884.13
-0.3012334
33.56316
13983.87
8238.96
HSBC HLDGS PLC
HANG SENG INDEX
HK
22580.77
0.1466224
-0.3361021
23944.74
18056.4
CSI 300 INDEX
CH
2447.306
-0.8334701
-2.998313
2791.303
2102.135
TAIWAN TAIEX INDEX
TA
8029.74
0.09573601
4.289113
8089.21
6857.35
KOSPI INDEX
SK
1940.7
-0.1985025
-2.821667
2042.48
1758.99
S&P/ASX 200 INDEX
AU
5125.806
0.555134
10.25728
5163.5
3985
ID
4993.658
0.3043282
15.68266
5026.919
3635.283
FTSE Bursa Malaysia KLCI
MA
1707.46
-0.2238078
1.095948
1718.08
1526.6
NZX ALL INDEX
NZ
976.526
0.7164965
10.71058
978.105
755.149
PHILIPPINES ALL SHARE IX
PH
4391.88
0.1687771
18.73219
4422.22
3238.77
JAKARTA COMPOSITE INDEX
17.8
42.5
93.19
NAME
average 18.046
23.4
WTI CRUDE FUTURE Jun13
CORN FUTURE
Max 18.2
Currency Exchange Rates
NAME
METALS
62.20
Last 63.15
20.0
Commodities ENERGY
Min 62.25
42.7
41.9
Last 42.3
Max 63.2
84.05
0.7793765
3.38253
88.45
59.8
11315511
HUTCHISON TELE H
3.97
0
11.51686
4.05
2.98
1172200
LUK FOOK HLDGS I
22.25
0.9070295
-8.811474
30.05
14.7
1993000
MELCO INTL DEVEL
15.44
0.2597403
71.36515
15.58
5.12
4449300
MGM CHINA HOLDIN
18.2
0
37.06595
18.449
9.509
6140961
MIDLAND HOLDINGS
3.48
-1.416431
-5.945947
5
3.249
964000
NEPTUNE GROUP
0.168
9.090909
10.52632
0.226
0.084
62230071
NEW WORLD DEV
13.42
-0.8862629
11.64725
15.12
7.95
12126502
SANDS CHINA LTD
42.3
-0.8206331
24.59499
43.7
20.65
6193252
SHUN HO RESOURCE
1.51
0
7.857145
1.67
1.03
0
SHUN TAK HOLDING
4.13
0.9779951
-1.431982
4.65
2.56
2682278 7393511
19.6
-0.8097166
8.888889
22.15
12.34
SMARTONE TELECOM
SJM HOLDINGS LTD
13.44
0.1490313
-4.545454
17.38
12.5
565300
WYNN MACAU LTD
23.35
-0.4264392
11.45584
25.5
14.62
5754734
HSBC Dragon 300 Index Singapor
SI
651.89
0.47
4.96
NA
NA
STOCK EXCH OF THAI INDEX
TH
1576.87
-0.3828344
13.28658
1601.34
1099.15
HO CHI MINH STOCK INDEX
VN
474.51
-0.4364338
14.69074
518.46
372.39
ASIA ENTERTAINME
4.44
0.2257336
45.09804
5.83
2.4
255541
BALLY TECHNOLOGI
54.66
0.7186291
22.25453
54.83
41.74
886004
Laos Composite Index
LO
1340.86
0
10.37974
1455.82
980.83
BOC HONG KONG HO
3.43
4.573171
11.72639
3.59
2.7
43320
GALAXY ENTERTAIN
4.41
0.6849315
11.08312
4.93
2.25
4700
16.96
-1.965318
19.68948
17.53
10.92
7896830
JONES LANG LASAL
96.5
-0.5462228
14.96307
100.91
61.39
266015
LAS VEGAS SANDS
56.17
-1.628722
21.68544
57.11
32.6127
4991219
MELCO CROWN-ADR
24.27
-0.3285421
44.12114
24.46
9.13
3701107
MGM CHINA HOLDIN
2.1
0
13.51351
2.44
1.36
10000
MGM RESORTS INTE
13.52
-0.07390983
16.1512
13.78
8.83
13146768
SHFL ENTERTAINME
15.47
-2.704403
6.689655
18.23
11.75
221208
SJM HOLDINGS LTD
2.57
1.581028
11.25541
2.85
1.65
1100
WYNN RESORTS LTD
135.5
0.4373286
20.45515
136.274
84.4902
1900651
INTL GAME TECH
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
AUD HKD
USD
14
April 30, 2013
Opinion
Northeast Asia on the brink Yuriko Koike
Japan’s former defence minister and national security adviser
C
hina’s refusal to attend this year’s summit with Japan and South Korea as scheduled comes at a trying moment for all three countries. Although Asia is the world’s most dynamic region, it has a paucity of institutional mechanisms for resolving – or at least mitigating – international disputes of the type that are racketing up tension across the region. Because the now-annual trilateral summits offer real hope for creating an institutionalised dialogue among Northeast Asia’s “Big Three,” China’s unwillingness to participate this year does not bode well. Of course, international summits are usually an occasion for countries to sign agreements, not for the hard bargaining that can begin to improve their relations with one another. But with China, Japan, and South Korea due to meet at a time of growing tension among all three countries, the three leaders could have seized the moment to enhance strategic stability across Northeast Asia. Instead, tensions are now likely to continue to fester. The first step in putting relations on a more stable footing is for each leader to acknowledge – and emphasise for their citizens – the everincreasing interdependence of the three economies. Trade, investment, and production chains now link China, Japan, and South Korea in ways that no one could have imagined 20 years ago. As European history since 1945 has demonstrated, shared economic interests can provide a solid foundation for building both regional security, and ushering in historic reconciliations. Moreover, the region’s greatest threat – North Korea’s nuclear arsenal – endangers all three countries. While the threat may not affect them equally, none can afford a misstep. So even security interests can serve to foster greater cooperation, if the countries’ leaders discuss and develop a common approach.
Diplomatic ties The sad paradox, however, is that, as economic integration among China, Japan, and South Korea has deepened, and even as their security
Crisis management is no way to sustain relationships that are economically close but riddled by rival claims and bitterly contested historical narratives
China’s Xi Jinping, Japanese PM Shinzo Abe and South Korea’s Park Geun-hye
risks have sometimes merged, their diplomatic ties have deteriorated. Of course, none can fully entrust their security to the word of the others – Japan’s alliance with the United States is perhaps the only time in history when a great power has ever done that. Each will undoubtedly pursue – and find the means to secure – its own interests. But that does not mean that clashes are inevitable. In today’s Asia, it is impossible to manage rival ambitions through hegemony, given the size of the countries involved and the structure of their alliances. So all three countries must learn to live together amicably. Here the first step is relatively straightforward: all three countries must give greater weight to factoring into their diplomatic calculations the others’ national-security fears. They also need to recognise that rhetoric and actions aimed at domestic audiences, no less than actual policies, can inflame suspicions. Unfortunately, key groups in all three countries claim that the contest for regional mastery now underway means that talk about cooperation is
not only naïve, but obsolete. Some Japanese and Korean strategic thinkers believe that China is intent not only on displacing the U.S. as Asia’s leading power, but also on economic domination of the region. They see a China seeking to re-establish itself as “The Middle Kingdom,” with its neighbours reduced to vassal and tributary states. While China’s military capacities are no match for America’s, its current military build-up is viewed as posing unacceptable risks nonetheless, because China also is seeking technological means to negate America’s military advantages. Should China succeed, its neighbours – which are increasingly tied to its economy – might adjust their policies to appease Chinese preferences. A Sino-centric Asia could emerge without a shot being fired. But the region looks very different through Chinese eyes. From this perspective, a declining U.S. is doing everything that it can to thwart China’s rise. America might speak the language of cooperation, but its real game is containment. So any sustained
cooperation with the U.S. and its regional allies – Japan and South Korea – would only help America to shackle China. Instead, China should openly confront those neighbours with which it has disputed claims.
Seeking cooperation Given these disparate visions of what Asia looks like, is there any point in seeking cooperation among Northeast Asia’s Big Three? A China that balks at participating in a trilateral summit seems to think there is not. If challenged, all three would undoubtedly do what they must to preserve their security. But to adopt confrontation as their preferred strategy would be a serious mistake. Any conflict among them would leave them all significantly worse off. And, when peace was restored, they would find themselves back at square one, still needing to build a regional order in which the others would play a big part. The current situation in Northeast Asia does not require any of the three countries to abandon cherished national claims. But their leaders must distinguish between those that
are aspirations and those that are realisable, and they must begin to explain to their citizens this distinction. None should reduce their diplomatic and security relations to a zero-sum game over claims to this or that island, for example. Nor should China’s continued rise, Korea’s eventual reunification, or Japan’s renaissance be regarded by the others as a strategic threat. Crisis management is no way to sustain relationships that are economically close but riddled by rival claims and bitterly contested historical narratives. As long as China, Japan, and South Korea regard every encounter with one another as an opportunity to settle scores or gain some strategic advantage, brinkmanship will remain Northeast Asia’s fate. Indeed, the main beneficiary of the current tensions among the Big Three is the region’s most reckless actor – North Korea. That outcome is as frustrating as it is ironic. None of the Big Three can be seriously threatened without triggering direct resistance and the security guarantees of allies. For this reason, the leaders should find a way to meet soon and commit themselves to seeking genuine cooperation, as well as to building mechanisms that will enable them to reconcile their visions and interests with those of the others. © 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 30, 2013
Opinion Business
wires
Leading reports from Asia’s best business newspapers
Wall Street Journal Malaysia has banned all imported chicken from China and is urging its own poultry farmers to beware of bird flu after Taiwan reported a case of the deadly strain, the first outside mainland China. Malaysia will only resume imports of China’s poultry when China is able to contain the new avian flu subtype and is declared free from the strain, Nazahiyah Sulaiman, spokeswoman at Malaysia’s Department of Veterinary Services (DVS) said. Malaysia joins Vietnam and Indonesia, which banned all poultry products from Asia’s largest economy earlier this month.
Asahi Shimbun Retailers in Japan will have to watch how they word their advertisements if the government has its way. While the government plans to legally ban retailers from offering discount sales aimed at offsetting planned consumption tax hikes, officials are now indicating that exemptions will likely be made for discounts that do not openly address the tax issue. The consumption tax rate will be raised from its current 5 percent to 8 percent in April 2014 and to 10 percent in October 2015.
Inquirer Business TheDepartmentofTransportation and Communications may resort to more “interventionist” measures to decongest Manila’s ports in favour of underutilised facilities in Subic and Batangas, including recommending certain government guarantees for shipping companies. The move represents a significant shift in policy as earlier efforts to let market forces naturally divert shipping traffic away from Manila have failed, Transportation Secretary Joseph Emilio Abaya said. “We are trying to restrain government intervention but we might just have to come into this in a calculated manner,” Mr Abaya said.
Straits Times Unions in Singapore need to adapt to the changing profile of the labour force, said Deputy Prime Minister Teo Chee Hean at the May Day dinner on Sunday. The citizen workforce is ageing rapidly and will start to shrink this decade. It is also becoming better-educated and their needs will be different, Mr Teo said. By 2030, two in three working Singaporeans will be a professional, manager, executive or technician, compared with one in two today, he added.
Japan’s scary lesson on slashing interest rates William Pesek
Bloomberg View columnist
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hristine Lagarde wants her staff at the International Monetary Fund to examine what might happen to the global economy when central banks begin to raise interest rates. She’s wasting their time. If Japan has taught us anything, it’s that slashing rates to zero and beyond is a lot easier than returning them to normalcy. Japan is on its sixth central-bank governor since its bubble burst in 1990, and like his predecessors, Haruhiko Kuroda is doubling down on quantitative easing. Why? Politicians, bankers, investors and businesspeople alike get addicted to free money all too easily and clamour for more. Once central banks start embracing assets such as corporate debt, commercial paper, mortgage-backed securities, exchange-traded funds, real-estate trusts and the like, monetary officials tend to get stuck. That’s especially so in nations carrying large, and growing, debt burdens. “They simply can’t afford any meaningful increase in interest rates,” says Simon GroseHodge, head of investment strategy for South Asia at LGT Group in Singapore. “The Japan experience suggests very low rates are going to be around for a long time.” What Lagarde should ask her staff to do is study how the nature of economics and capitalism will be altered by most Group of Seven nations maintaining zero-rate policies for another decade or more. The “liquidity trap” that deadens the benefits of monetary easing is morphing into a “stimulus trap,” which is much harder to shake.
Lost decades Japan’s two lost decades are worth considering. The nation of 127 million people has been living with zero rates for so long that they seem, well, normal. Under the surface, credit spreads mean little, not when the underlying assets on which they are based are drugged up on monetary stimulants. Bank balance sheets get muddied. So do the government’s books, as it becomes hard to discern where a central bank’s holdings begin and end. Corporate shenanigans are easier to disguise. Oddly, free money has done more to hold Japan back than to revive it. Monetary largesse relieves the pressure on politicians to make industries, from electronics to steel, more competitive and innovative. It concentrates capital in non-productive sectors such as construction, telecommuni cations and
power, and it starves others – like start-up companies – that could fuel job growth. Zero rates also sapped the urgency from Japan Inc. at the very worst moment, just as it needed to keep up with a cast of growth stars in Asia, China included. Even when Japan has churned out growth of, say, 3 percent, it has been more artificial than organic. All that liquidity was meant to support so-called zombie companies and industries that employ millions. It has led to a “zombification” of the broader economy, complicating Prime Minister Shinzo Abe’s revival efforts.
Long-term risks Ultralow rates, for example, have exacerbated Japan’s fiscal woes because the costs of adding to the world’s largest public debt appear negligible. Someday, bond traders will decide that a debt more than twice the size of a US$5.9 trillion economy is too great for a rapidly ageing population. For now, 10-year yields of 0.58 percent warp politicians’ sense of long-term risks.
Oddly, free money has done more to hold Japan back than to revive it
China looks certain to fall into this stimulus trap, too. The yen’s 20 percent drop in the past six months, at a time when the Chinese economy’s prospects are already looking gloomy, has infuriated officials in Beijing. Cutting rates will do little good, as China grapples with its longest streak of sub-8 percent growth rates in at least 20 years. That could mean a yuan devaluation. Lagarde isn’t alone in her optimism. New York University economist Nouriel Roubini, known as Dr Doom, said on April 24 that the Federal Reserve will end its zero-rates policy in two years. Goldman Sachs Group Inc. chief economist Jan Hatzius says rates will start to rise after January 2016. Yet imagine the congressional inquisition that would greet the Fed’s first move to sell the assets it has loaded up on since 2008, never mind to raise the federal funds rate. Think about the bellyaching and lobbying on Wall Street about which holdings the Fed should dump. That would signal that a trade in excess of US$3 trillion is about to roil markets.
Take the Fed’s portfolio of mortgage-backed securities. In an economy as housing-centric as America’s, selling those off could devastate a sector closely tied to consumer confidence.
New panic Similarly, Lagarde should be able to picture the outrage that would follow any step by the European Central Bank to withdraw from euro zone debt markets. Lawmakers would quake. Investors would panic anew. Businesses, used to years of eating at the public trough, might curtail investment and hiring plans. The ECB should expect angry calls from China, which has been stocking up on eurodenominated bonds. Since governments have shown an inability to take bold steps to remake their economies, central bankers have stepped in to fill the void. The trouble is, many are already reaching the point of no return. To understand what the future really holds, the IMF’s researchers only need to look at Japan. Bloomberg View
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April 30, 2013
Closing Abe in Russia for islands talks
Lloyds to sell Spanish retail units
Japanese Prime Minister Shinzo Abe is in Russia for the two nations’ first top-level talks in a decade. Discussions were set to focus on energy deals and a territorial row unresolved since the end of World War II. Ahead of the visit, Mr Abe said he wanted to build “a trusted personal relationship” with President Vladimir Putin. He also said he wanted to revive talks on a post-war peace deal – something so far prevented by the territorial row. “I will work on boosting Japan-Russia relations so that this visit will mark a restart in stalled negotiations over a peace treaty,” Mr Abe said.
Lloyds Banking Group Plc has agreed to sell its Spanish retail banking business to Banco Sabadell in exchange for a 1.8 percent stake in the Spanish bank. Lloyds said that the stake – which it will hold for at least two years – was worth about 84 million euros (US$110 million). The bank is set to issue its results for the first quarter of the year today. Pre-tax profit rose to 864 million pounds (US$1.3 billion) in the first quarter from 288 million pounds a year ago, according to the median estimate of three analysts in a Bloomberg News survey.
HK peg to yuan still ‘many years’ off: Greenwood Exchange-rate mechanism needs ‘fully convertible currency as anchor,’ says peg architect Fion Li
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The existing peg system works well for HK, says John Greenwood
Greek MPs vote through mass job cuts Parliament passes reform law to unlock more rescue loans
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he Greek parliament has passed a bill which will see 15,000 state employees lose their jobs by the end of next year. The bill passed by 168 votes to 123, and had the support of the three parties making up the ruling coalition. Some 2,000 civil servants will lose their jobs by the end of June, another 2,000 by the end of the year, and a
further 11,000 by the end of 2014. The reform law, approved on Sunday, will unlock about 8.8 billion euros (US$11.5 billion) of rescue loans from the European Union and the International Monetary Fund. Following parliament’s approval, senior euro zone officials were due to meet yesterday to approve overdue payment of 2.8 billion euros in rescue loans, finance minister Yannis Stournaras said. Euro zone finance ministers will then meet on May 13 to release a further 6 billion euro instalment, he added. Greece needs that money to pay wages, pensions and bonds held by the European Central Bank that mature on May 20. The law implements an agreement Athens struck with EU/ IMF inspectors earlier this month, which allowed them to state that the country was on track to meet its bailout targets. The legislation makes it easier to fire government employees for disciplinary reasons, extends an
ong Kong’s dollar peg shields the local economy from external shocks and it will be “many years” before a switch to a yuan link can be considered, according to John Greenwood, architect of the city’s exchange-rate system. “At the time being, the renminbi is not fully convertible and therefore it’s not suitable for the Hong Kong dollar to peg to,” Mr Greenwood, chief economist of Invesco Asset Management, said in a speech in Hong Kong yesterday. “The Hong Kong dollar linked exchange-rate mechanism requires a fully convertible currency as anchor currency.” The city’s dollar peg was adopted in 1983 when negotiations between China and the U.K. over returning the city to Chinese control triggered capital outflows and Mr Greenwood suggested a currency board system to stabilise the exchange rate. He has been a member of the currency board operations committee of the Hong Kong Monetary Authority since 1998.
The Hong Kong dollar’s value is kept at around HK$7.8 versus the greenback. In 2005, policy makers committed to limiting the currency’s decline to HK$7.85 and capping gains at HK$7.75. It would be unwise to switch to a peg versus a basket of currencies or to allow to the Hong Kong dollar to float, Mr Greenwood said, adding that the existing system works well. The Hong Kong Monetary Authority injected almost US$14 billion between October and December as the local currency’s move to HK$7.75 obliged it to buy U.S. dollars in the foreign-exchange market. Signs of a pickup in China’s economy and monetary easing in the U.S., Europe and Japan had spurred capital inflows into the city.
Ackman’s bet
unpopular property tax and opens up professions such as accountants and bakers. It is part of continuing moves by the centre-right government to cut costs and ensure more bailout money from international creditors. But it was vociferously opposed by protesters outside parliament. Austerity policies imposed on Athens as part of the deal have saved it from a chaotic bankruptcy and exit from the euro, at the price of causing its deepest recession in decades. The economy is expected to have shrunk by almost a quarter in 20082013. Unemployment has soared to a record of about 27 percent. Greeks’ disposable income has fallen by about a third over the last four years. Mr Stournaras told lawmakers to hold firm, saying Athens has covered most of the distance to fix its finances. “Now is not the time to give up,” said Mr Stournaras, a technocrat appointed by conservative Prime Minister Antonis Samaras.
All but one of the 20 analysts polled by Bloomberg News in November, including Citigroup Inc. and JPMorgan Chase & Co., said they expected the city’s fixed exchange-rate system to last for at least five more years. William Ackman, founder of Pershing Square Capital Management LP, told a conference in September 2011 that the easiest way for Hong Kong to allow an appreciation would be a reset of the peg at HK$6 versus the U.S. currency followed by a switch to a yuan link over three to six years. The hedge-fund manager said in October 2012 that he was keeping the wager. Such a bet has so far been a losing trade as Hong Kong officials repeatedly pledged to keep an exchange-rate system that survived the Asian financial crisis in the late 1990s and the global recession in 2009. K.C. Chan, the city’s secretary for financial services and the treasury, said in January Mr Ackman won’t realise his bet. China ended its currency peg to the dollar in July 2005 after keeping the exchange rate stable for a decade. HSBC Holdings Plc forecast in March the yuan will become fully convertible within five years. Interestrate liberalisation is necessary before capital controls can end and policy makers are making “slow” progress on this front, Mr Greenwood said.
Reuters
Bloomberg News