Macau Business Daily, April 4, 2013 by Business Daily

Coloane luxury homes await land use change

Year II Number 254 MOP 6.00 Thursday April 4, 2013 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: Vitor Quintã www.macaubusinessdaily.com

political heavyweight who wants to build a 100-metre tower on Coloane will be allowed to build six luxury houses on an nearby plot – although it’s currently zoned for industrial use. Sio Tak Hong, a Macau delegate to the Chinese People’s Political Consultative Conference, has controlled the land since 1988. In theory the government is supposed to take back and re-auction undeveloped plots.

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Gongbei border opens longer for Ching Ming T

he Gongbei border will have a two-hour extension in its opening hours – but only for the three days during the Ching Ming Festival starting today. Whether such longer hours would expand to other holidays and normal days depend on the human resources on the mainland side, said the government’s spokesperson, Alexis Tam Chong Weng. “The Zhuhai side wants [longer opening hours in Gongbei] and we want it to happen too,” Mr Tam told a press conference yesterday. During the Lunar New Year there were scuffles and some panic as waiting travellers packed the Gongbei border trying to get home. More on page 2 I SSN 2226-8294

Taiwan proposes gaming tax one-third of Macau’s

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aiwan’s cabinet has recommended a 13 percent tax on gross gaming revenue for any casinos built on outlying islands according to a media report. If the 13 percent gaming tax proposal is passed by parliament, it would significantly undercut the near 40 percent effective tax on gross gambling stakes levied in Macau. Some gaming industry sources think gaming tax rates can influence where VIP gamblers play.

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Louis XIII’s casino licence Dock strike could make provider a secret – for now frozen meat pricier

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tephen Hung, chairman of the firm planning to build a boutique casino on the ColoaneCotai border, said “it is not convenient to reveal at the moment” which Macau casino concessionaire would supply the gaming licence. Shareholders voted yesterday to rename Paul Y Engineering Group Ltd as Louis XIII Holdings Ltd. The project is still awaiting Macau government approval for 66 gaming tables according to Chinese media reports.

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HSI - MOVERS Name

%Day

CHINA RES ENTERP

1.72

LENOVO GROUP LTD

1.46

WANT WANT CHINA

1.19

HANG LUNG PROPER

1.17

POWER ASSETS HOL

1.15

KUNLUN ENERGY CO

-1.33

CHINA COAL ENE-H

-1.76

CATHAY PAC AIR

-1.99

BELLE INTERNATIO

-2.04

TINGYI HLDG CO

-2.41

Source: Bloomberg

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business daily April 4, 2013

macau

Gongbei border opens longer for Ching Ming Another crossing, to Hengqin Island, may have regular extended hours by fourth quarter Tony Lai

tony.lai@macaubusinessdaily.com

government’s spokesperson, Alexis Tam Chong Weng. “The Zhuhai side wants [longer opening hours in Gongbei] and we want it to happen too,” Mr Tam told a press conference yesterday. “But other [mainland] government departments like the customs, the public security bureau… do not have

Border crossing opens longer but only for three days

business as usual

Who cares about spending? Paulo A. Azevedo pazevedo@macaubusinessdaily.com

t is absolutely amazing how important infrastructure can be built without complete disclosure or even acknowledgement of its costs. As Macau – against all common sense – does not invest much in infrastructure, let us take the example of the Light Rapid Transit (LRT) railway, which is making very, very slow progress. The head of the Infrastructure Development Bureau, Chan Hon Kit, has admitted that the cost of the interchanges of the LRT with other forms of transport were not included in the budget for the first phase. That means we will see more cost increases which, of course, will raise more eyebrows. But, once again, it will all be to no avail. In Macau, it seems, we are all far too well mannered to suspect any wrongdoing or incompetence. At least Mr Chan agreed that the project needs to have a budget and to use “more realistic” estimates, in order to follow the recommendations of the Audit Commission, which has strongly criticised the project’s budget overruns. Good. We may all now have a restful sleep.

enough staff right now.” He added the Zhuhai administration would have to arrange staff from other cities for this temporary measure. The Gongbei border, said to be China’s biggest single inland crossing point, has a shortage of border officers relative to the rapidly rising number of travellers – in particular for peak hours from 10 am to 7 pm, Lao Ngai Leong, Gongbei customs post supervisor, told Business Daily on Tuesday. The National Office of Port Administration of the mainland customs approved the measure for the border to open at 6 am instead of 7 am. During the Ching Ming festival, the Gongbei crossing will close at 1 am, Mr Tam said. Currently the border closes at midnight. This measure will only apply to the Gongbei border but not to the crossing to Hengqin Island, Mr Tam added. However, the Hengqin border may actually open for two extra hours

permanently by the fourth quarter of this year, said Mr Tam. “From the initial plan [the mainland authorities] told us the closing hour would extend for two hours from 8 pm to 10 pm,” he said. The opening hour will remain 9 am for that border. There will be no change as “not many people use” that border due to the ongoing development on the island. The government’s spokesperson said authorities here would continue to strive for the central government’s approval for the borders to open around the clock. They are also trying to introduce simpler clearance measures, he added. The demand for longer border opening hours has been rising in recent weeks after the chaos and the overcrowding scenes that took place in the Gongbei border during the Lunar New Year holidays in February.

Other [mainland] government departments like the customs, the public security bureau… do not have enough staff right now Alexis Tam, Macau government’s spokesperson

April 4, 2013 business daily | 3

MACAU

Govt mulls land-use switch for luxury homes The government says Capital Estate’s Ka Ho plot was assigned for industrial use 25 years ago Tony Lai

tony.lai@macaubusinessdaily.com

No one is to blame for the fact that land has been sitting idle for more than 20 years, Mr Carion says

acant land in Coloane where a political heavyweight wants to build six luxury homes is still zoned for industrial use, the Land, Public Works and Transport Bureau confirmed yesterday. Bureau director Jaime Carion told reporters the re-zoning of the land “has not yet completed” but would be considered. The 9,553-square-metre block next to Estrada de Nossa Senhora de Ka Ho was granted to a subsidiary of Hong Kong-listed Capital Estate Ltd for industrial development in 1988. Capital Estate chairman Sio Tak Hong is a delegate to

the Chinese People’s Political Consultative Conference. His company owns the Hotel Fortuna and had planned to build 46 houses on the Coloane site. In an interim report to the Hong Kong Stock Exchange last month, Capital Estate said it had revised its application to the government at the end of last year and wants to build six luxury homes on the land. “The developer had first applied to the Portuguese administration for changing the land usage and the government said ‘okay’,” Mr Carion said. “After that, they had to submit

a development proposal which the government has to review… and draft a new contract. But this whole administrative process has not been completed.” Mr Carion spoke to reporters after yesterday’s session at the Legislative Assembly. “This land is still technically only up for industrial usage, based on the conditions of the current contract,” he said. Mr Carion did not clarify if the bureau would approve the company’s request or hold hearings to gather the public’s feedback. The block of land came to the media’s attention last month when Mr Sio said he would push ahead with plans to build a 100-metre-high housing tower on another Coloane block, adjacent to an 80-year-old Portuguese-era military bunker. The public’s reaction has been largely negative, with concerns that one of the city’s last green areas will be damaged. Mr Sio said last month he would not be deterred and would build the tower. Capital Estate did not respond to requests for comment.

Time’s up The land at Ka Ho has sat idle and the 25-year lease is due to expire this year. Mr Carion said the two-year development period for the land “had already expired” and the bureau was

investigating. He would not comment on the government’s next move, whether it would apply penalties or if it would consider taking back the land. Capital Estate had revised its development proposal “many times” to meet the government’s requirements as infrastructure was built in Ka Ho, he said. “There are many reasons on which the government can take back the idle land plots in accordance with the contract. But if the developer explains clearly that it [the delay] was not of their responsibility, there are examples in the past and the present where the government extends the development period,” Mr Carion said. He did not say if Capital Estate has been granted an extension to develop the land. The government took back several idle land plots in Coloane last year to make room for the tunnel connecting Ka Ho to the Cotai Strip. When asked if the government had offered preferential treatment to the developer, Mr Carion said: “Can we still blame the private developer for land squatting if it has cooperated with the administration for the public infrastructures in Ka Ho?” “We will not blame anybody. We only blame the reality.” Secretary for Transport and Public Works Lau Si Io said yesterday the government “would handle any land plot in accordance with the Land Law”.

Draft bill could invite new land grant abuses Legislative Assembly tells the government land grants to non-profit organisations and religious groups may spur graft Tony Lai

tony.lai@macaubusinessdaily.com

on-profit and religious groups could abuse a proposed change to the Land Law that exempts them from bidding for land and premiums, Legislative Assembly member Kwan Tsui Hang said yesterday. Ms Kwan, the chairman of the assembly’s first standing committee, said lawmakers expressed their concerns to government officials at a meeting behind closed doors to discuss the Land Law amendment bill. The proposal would allow the government to grant land without ordering an open bid or charging a land premium. Ms Kwan told reporters after the meeting that public bodies, non-profit organisations and religious groups would qualify for an exemption. “We are worried the applications for direct land grants could be abused as the current standards for non-profit organisations are lax,”

she said. Ms Kwan said the proposal would allow groups to claim they were notfor-profit organisations, if they were involved in public welfare activities. There are “quite many associations like this in Macau,” she said. Some members of the Legislative Assembly were also concerned about the criteria used to distinguish religious groups. “But the government said today that there were many cases in the past where such associations applied for a direct land grant without having to pay and they had done their job in denying most requests,” she said. “The government said the land grants in the future will be mostly based on public tenders and an exemption of bidding is only a special case.” “After going through the entire [exemption] process, the government will then look at the identity of the

applicants to see which can be exempted from paying.” The draft bill exempts from public tender any land grants

for non-profit projects linked to education, culture, health and public utilities or projects considered to tie in with government policies.

The government will be able to directly grant land in some special cases under proposed changes to the Land Law

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macau Donation lawsuit versus Wynn can proceed An investment fund for police retirees in Louisiana, United States, can proceed with a revised Macau-linked lawsuit against Wynn Resorts Ltd, says a U.S. District Judge. It alleges that a US$135 million (1.07 billion patacas) donation to the University of Macau made by Wynn chairman Steve Wynn and other directors was improper and potentially illegal, said the judge in Las Vegas. He added the case must be filed by Monday. Wynn Resorts earlier described the suit as “an attempt to recycle a complaint that was previously dismissed by a federal judge. We will defend vigorously.”

Taiwan proposes gaming tax one-third of Macau’s Island jurisdiction suggesting 13pct levy on casino gross compared to Macau’s effective 40pct Michael Grimes

michael.grimes@macaubusinessdaily.com

The Matsu islands – one possible location for Taiwan casinos

aiwan’s cabinet has recommended a 13 percent tax on gross gaming revenue for any casinos built on outlying islands according to the Commercial Times, a local Chinese-language newspaper. There was no mention of whether there would be a sales tax on top, as occurs in some jurisdictions. If the 13 percent gaming tax proposal is passed by parliament, it would significantly undercut the near 40 percent effective tax on gross gambling stakes levied in Macau, and would be – in theory at least – strongly competitive with the 15 percent and 27 percent charged respectively on VIP gambling and mass-market play in the Philippines. Singapore – which has two casino resorts – has an effective tax rate of 12 percent on the VIP gross (five percent gaming tax plus seven percent Goods and Services Tax) and 22 percent on the mass (15 percent gaming tax plus seven percent GST). Some gaming industry sources think gaming tax rates can influence where VIP gamblers play. The lower the gaming tax, the more money the house has available to share with player agents and high roller players

runs the argument. That can include rebates on player losses or perks such as hotel suites.

No advantage Most industry analysts spoken to by Business Daily dismiss the notion that gaming tax rates confer significant competitive advantages or disadvantages relative to other casino jurisdictions. They point out that the ability of players or player agents to move money into a jurisdiction, the ease with which players can secure credit, and the convenience of access are generally better predictors of player attendance than tax rates – even in the high roller segment. But former Las Vegas Sands executive vice president Bradley Stone, now president of Global Gaming Asset Management, a firm that has an equity investment in and management contract for the new US$1.2 billion (9.59 billion patacas) Solaire Resort & Casino at Manila Bay in the Philippines, told Business Daily that gaming tax rates “absolutely do make a difference” when it comes to offering gaming

jurisdictions a competitive edge. “We do have the advantage of a lower [gaming] tax rate,” he said, referring to the Philippines. “We’ll use that in terms of our [junket] commissions but it’s not necessarily [in order] to go right at Macau. It’s to encourage people and give them more reasons to come to the Philippines once in a while and try out our resort,” stated Mr Stone. His company has proposed building a casino resort on Taiwan’s Matsu chain of islands off the mainland Chinese coast of Fujian. The 13 percent gaming tax for Taiwan’s possible casinos was reportedly agreed during a meeting th a t i n cl u d ed r ep r e s e n t a t i v e s from the Ministry of Finance, and the Ministry of Transportation and Communications. Last July the latter was put in charge of coordinating government agencies over implementation of the casinos plan. Industry sources have told Business Daily that other commercial terms have also now been spelled out to would-be investors in the global gaming industry but have so far not been released to the media.

An important point for wouldbe investors in Taiwan that has not been resolved – at least in public – is whether any Taiwan casinos will be subject to corporate tax on profits. In Macau, corporate tax is normally levied at 12 percent on company profits above 300,000 patacas according to a report in January from KPMG International. But that tax has so far been waived for Macau’s casino operators. In Singapore, corporate tax does apply to the two casino operators. The corporate tax rate in 2013 is 17 percent according to KPMG. In Nevada there’s a maximum gaming tax of 6.75 percent but there’s no state corporate tax. Las Vegas casinos do however pay federal corporate tax. According to KPMG the headline rate for U.S. federal corporate tax is 40 percent. A note from Al Chang, partner, international tax services at financial services firm Deloitte’s Taipei office, says any firm based outside Taiwan is subject to profits tax “only on its Taiwan-sourced income, but at the same rate as applies to domestic companies”. In Taiwan the headline corporate rate is 17 percent. Direct tax from gambling at 35 percent of the gross is the main source of the Macau government’s income, bringing in 83 percent of the 129.50 billion patacas (US$16.2 billion) in public revenue recorded in the provisional figures for last year.

Charity Levy Macau also has a levy of up to two percent of the gross paid to Macao Foundation and then redistributed to local charities and associations. A further levy of up to three percent of the gambling gross goes on city development, tourism promotion, and social security. In Taiwan’s case the proposal is to split the 13 percent tax on the gross four ways. Five percentage points would go to the central government and seven percentage points to the local government. A fund fighting gambling addiction would receive 0.5 of a percentage point, with the remaining 0.5 percentage point used to finance various public welfare operations. Taiwan’s proposed 13 percent tax on the gross might not be the only tax liability for players. The Ministry of Finance has proposed a 20 percent tax on winnings above a certain threshold.

April 4, 2013 business daily | 5

MACAU

News cameras to be allowed in Adelson-Suen case HK businessman claims Las Vegas Sands failed to pay him for help getting Macau casino licence Michael Grimes

michael.grimes@macaubusinessdaily.com

either closed doors testimony by Las Vegas Sands Corp.’s global head of security nor evidence from Harvard Law School professor Alan Dershowitz were enough to persuade a Nevada judge that cameras should be barred from court when LVS chairman Sheldon Adelson gives evidence this week. Mr Adelson is expected in court on Thursday United States time to defend a lawsuit from Hong Kong businessman Richard Suen. The latter claims in current filings to the Clark County District Court he was central to LVS winning a Macau gaming licence by arranging a meeting in 2001 with Chinese vice premier Qian Qichen. Mr Suen said he was promised a reward for his help, but that LVS reneged on the deal. In an earlier filing in 2004, Mr Suen and his firm Round Square Company Ltd claimed a success fee of US$5 million (40 million

patacas) and two percent of the net profit from LVS’s Macau casino operations for allegedly helping it get a gaming licence in Macau. Those facts were repeated in LVS’s 2012 annual report. The same filings show that last year Macau – where LVS now has four casino resorts – accounted for 53 percent of the company’s US$3.79 billion global adjusted property earnings before interest, taxation, depreciation and amortisation. At an earlier trial on the same ‘success fee’ issue a Nevada jury in 2008 ruled for Mr Suen and against LVS, awarding him US$43.8 million (350 million patacas) in damages, plus interest. The Nevada Supreme Court three years ago – due to what it deemed errors by trial judge Michelle Leavitt – overturned that judgment. Las Vegas Sands contends Mr Suen did nothing to earn the money,

and that the gaming company arranged its licence on its own. LVS security boss Brian Nagel said in court papers filed about the latest trial, that the presence of stills and video cameras at the public hearings would threaten Mr Adelson’s safety. He didn’t specify what those threats were, but said talking about them publicly could jeopardise the company’s sources and information gathering methods.

Media access

Under the camera – Sheldon Adelson

The Las Vegas Review-Journal newspaper, six local television channels, the New York Times and the Public Broadcasting Service were among a number of media outlets that submitted requests to cover the case. Media representatives and attorneys for Mr Suen argued that Mr Adelson had been in front of cameras so often – including during the 2012

U.S. presidential campaign – that television coverage of the trial would not pose any extra threat to him. Trial judge Rob Bare ruled cameras would be allowed. In a written ruling quoted by the Review-Journal he said: “What better way to demonstrate to the public that its courts are fair and just than to say the public, ‘Come and view the proceedings yourself and judge for yourself’?”

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business daily April 4, 2013

macau

‘Not convenient’ to say who’s supplying casino’s licence S tephen Hung, chairman of the firm planning to build a bout ique c asino on th e Coloane-Cotai border, told the Chinese-language media in Hong Kong yesterday “it is not convenient to reveal at the moment” which Macau casino concessionaire would supply the gaming licence. He was speaking after an

extraordinary general meeting where shareholders voted to rename the firm Louis XIII Holdings Ltd from its original name Paul Y Engineering Group Ltd. The renaming is still in the registration process, the group told the media. The firm added that casino construction preparations would begin in mid-April, with foundation

work likely to commence in July. The hotel is expected to be opened by the end of 2015 or the beginning of 2016, the company added. The hotel will consist of 230 rooms, with the suites occupying a size of 2,000 to 20,000 square feet. Louis XIII Holdings Ltd will focus on the premium mass business and the hotel operation, Mr Hung said.

The project is still awaiting Macau government approval for 66 gaming tables according to the Chinese media reports. The tables will need to be drawn from the table quota of whichever operator supplies the gaming licence. Mr Hung said the group was inclined at the moment to position the property’s tables for minimum bets of HK$5,000 (US$644). The chairman said in response to questions about whether an anti-corruption drive in mainland China would have a negative effect on the Louis XIII’s prospects: “On the contrary, central government’s promoting [of] anti-corruption can reinforce investors’ confidence.” Stephanie Lai with M.G.

Urban planning: legislators urge details on committee makeup Draft law may have to be amended as debate drags Tony Lai

tony.lai@macaubusinessdaily.com

egislative Assembly members want to know exactly who will sit on the committee supposed to help the government draw up policy on urban planning. “Many of us want a more concrete composition of the urban planning committee laid down in the bill rather than just simply saying it will be decided by the relevant administrative regulations,” said Chan Chak Mo, who heads the assembly’s second standing committee.

The assembly held a closeddoor discussion with public officials yesterday on the city’s first urban planning law. The bill mentions there will be a master plan, containing the overall strategy for Macau’s urban development, and detailed plans guiding development for specific areas. “Some suggest that the law may not need to state the exact number of the members in the committee but it should include how many in terms of percentage come from the

government, professionals and other sectors,” Mr Chan told reporters after the meeting. The second standing committee also asked the government to list in the bill the academic and professional qualifications required from those who will sit in the urban planning committee. Yesterday’s meeting also focused on whether legislators will have a say in the actual urban plans. According to the bill, the content would only be decided by subsidiary legislation, which does not require the assembly’s approval. The administration said a

fortnight ago that other jurisdictions also did not seek their legislature’s approval on the urban plans. But the assembly’s legal advisor yesterday said there are other examples that could be followed. The mainland Chinese government had asked opinions from the National People’s Congress when drafting such plans, the advisor said. “Some legislators said they are not professionals and they don’t know how to review these plans… while some said it is good to follow [the example of] the mainland,” said Mr Chan. The administration “was open for opinions,” he concluded.

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Traditional medicine on slow climb towards global respect Manufacturers of traditional medicine must settle on global standards, academic says Stephanie Lai

sw.lai@macaubusinessdaily.com

lack of comprehensive standards for traditional Chinese medicine and its administration have been a major barrier to its global development, according to Zhou Li Gao, the director of the Cross-Strait Scientific Collaboration Centre for Chinese Medicine. “Unlike western medicine,

Chinese compound medicine is full of active ingredients that make it hard to be assessed and standardised,” said Mr Zhou. “And without a clear standard, it is hard for Chinese medicine to compete worldwide. Even within [mainland] China, the therapeutic effect of Chinese medicine can vary a lot depending on its

manufacturing origin.” The centre launched an online news site yesterday that helps monitor the latest Chinese medicine regulations in China. In May 2011, the European Union acted to restrict traditional Chinese herbal medicines being sold as supplements. It was only last year that the

first traditional medicine was approved for commercialisation within the European Union as a therapeutic medicine. Chengdu Di’ao Pharmaceutical Group Co Ltd received its marketing authorisation from the Medicines Evaluation Board of the Netherlands, the China Daily newspaper reported. The company developed a herbal capsule used to relieve headaches and muscle pain named Di’ao Xin Xue Kang. “By 2014, the World Health Organisation will roll out a set of standards for Chinese medicines’ quality and ingredients,” Mr Zhou said. “This WHO’s instruction may then serve as a guideline for the Chinese medicine sold here.” “So far, in Taiwan, Hong Kong or Macau, each place is just administering its own rules governing traditional Chinese medicine prescription.”

April 4, 2013 business daily | 7

MACAU

Dock strike could push up frozen meat prices HK industrial action pushing some import transhipments off the water and onto longer land route Stephanie Lai

sw.lai@macaubusinessdaily.com

dockers’ strike in Hong Kong could push up the cost of frozen meat in Macau, said the Macau Shippers’ Association. Normally foodstuffs landed in Hong Kong are moved by sea to Macau’s smaller port facilities. But industrial action at Kwai Tsing container terminal means loads are being landed elsewhere in Guangdong then transported to Macau by road. “Due to the strike, some of the frozen meat cargoes have been arranged to be discharged at Shenzhen and transported to Macau, instead of in Hong Kong,” said the association chairperson Frank Tang Kuan Fong. “In that case, the transport cost will be pushed up and the imports have to take one to two days more before arriving Macau,” Mr Tang added. “The hike in transport cost may eventually be passed on to consumers,” Mr Tang added. “The local importers are really concerned whether the Kwai Tsing terminal strike will incite a series of support actions from the other dock workers as well,” said Mr Tang.

The transport cost will be pushed up and the imports have to take one to two days more before arriving Macau Frank Tang, chairperson, Macau Shippers’ Association

The dock strike entered its seventh day yesterday

“‘If the dockworkers’ strike is to persist, the impact on logistics to Macau will be expanded,” he suggested. Hong Kong is the major transit port for Macau’s imports of frozen meat and of fruit from America and Southeast Asia.

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“Some chemical material and consumer products from U.S., like cosmetics, also have to go via the Hong Kong docks before coming here,” said Frank Tang. Yesterday marked the seventh day for the Kwai Tsing dockworkers’ strike, called by 450 to 500 workers

seeking more pay. Hong Kong International Terminals, a subsidiary of Hutchison Whampoa Ltd, runs the Kwai Tsing terminal. The Hong Kong media reports the strike has cost the operator losses of HK$5 million (US$644,000) per day.

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business daily April 4, 2013

GREATER CHINA the most bullish in the market. China’s services industry has weathered the global slowdown much better than its factory sector, in part because it does not rely on exports for growth unlike manufacturers, who have been battered by crumbling foreign demand. Twin PMI surveys for China’s manufacturers published on Monday showed factory production quickened last month on firmer domestic demand, though the speed of the pick-up was not as brisk as some expected. Indeed, the pair of services PMIs also showed that though firms expanded last month, business is not surging. Overall new orders in the services sector nudged up just 0.2 index points to 52.0 in March from February, the official PMI showed. The services sector, which overtook factories as the biggest employer in China in 2011, accounted for 46 percent of the Chinese economy last year, as big as the manufacturing industry.

Construction of about US$150 billion worth of infrastructure was brought forward last year

Well-distributed recovery

Service industries expand at faster pace March services PMIs hit multi-month highs

rowth in China’s services sectors rose to multimonth highs in March as a construction boom and firmer demand lifted business and confidence, auguring well for a modest recovery in the world’s second largest economy. The non-manufacturing Purchasing Managers’ Index rose to 55.6 from 54.5 in February, the Beijing-based National Bureau of Statistics and China Federation of

Logistics and Purchasing said in a statement yesterday. A separate services gauge from HSBC Holdings Plc and Markit Economics rose to 54.3, matching the highest since May, from 52.1. Readings above 50 signal expansion. Analysts welcomed the data as an encouraging sign that China’s moderate economic revival is extending beyond its factories into an increasingly-important services industry.

“China is on track to beat the government’s growth target for 2013,” said Dariusz Kowalczyk, an economist at Credit Agricole CIB in Hong Kong, referring to Beijing’s goal of expanding gross domestic product (GDP) by 7.5 percent this year. “Services account for a larger share of GDP than manufacturing so improvement of sentiment here bodes well for the entire economy,” said Mr Kowalczyk, whose 8.5 percent GDP forecast for China in 2013 is among

The National Bureau of Statistics, which publishes the official PMI, said the rise in new orders was evident across multiple sectors. Firms in the information and communications sector and in the industries of retail, hotel and real estate all enjoyed more new orders in March compared to February. But growth was strongest in the construction sector, where companies have thrived on big government infrastructure spending. The sector sub-index jumped 4.5 points from February to 62.5 in March. Beijing had brought forward construction of about US$150 billion worth of infrastructure last year as part of an effort to nudge the economy out of its worst slowdown in 13 years when annual growth sank to 7.8 percent. That the rebound in activity extended across businesses in March indicates that China’s economic recovery is well entrenched, said Qu Hongbin, a HSBC economist. “Notably, the ongoing recovery has translated into a continuous

ICBC seeks Sinopac buy In China’s first bid for Taiwanese bank

ndustrial & Commercial Bank of China Ltd plans to buy 20 percent of Bank Sinopac in the first mainland investment in a Taiwan lender, pushing the parent company’s share price up the most in more than three years. Sinopac Financial Holdings Co. Ltd jumped as much as 7 percent in Taipei, the biggest gain since August 2009, before closing at NT$14.7 (US$0.47), a gain of 2.8 percent. The sale is valued at about NT$20 billion (US$670 million), the publicly traded company’s chief financial officer Michael Chang said at a press conference in the island’s capital yesterday. Sinopac and other banks stand to benefit from partnerships with mainland lenders such as ICBC, the world’s largest bank by market value, as they seek to expand outside Taiwan’s saturated market. Chinese President Xi Jinping has pledged to promote cross-strait ties, continuing efforts of the previous administration. “The deal is positive for Sinopac as there are too many banks in

such a small market as Taiwan,” Michael On, president of Beyond Asset Management Co., said after the announcement. “Banks in Taiwan can expand in the China market through mutual investment with Chinese banks. There will be more deals like this.” Taiwan’s Financial Supervisory Commission said April 1 mainland China banks will be allowed to take a 10 percent stake in listed financial institutions, 15 percent in unlisted firms and as much as 20 percent of banking units of financial holding companies, compared with a previous 5 percent across-the-board cap. The announcement followed a meeting between China Banking Regulatory Commission Chairman Shang Fulin and FSC Minister Chen Yuh-chang. Regulatory changes allowing for the higher limits will take effect as soon as possible pending final approval by the Cabinet, Kuei HsienNung, director general of the FSC’s banking bureau, said yesterday. ICBC said in yesterday’s statement the deal will “deepen financial

ICBC plans to acquire a 20 percent stake in Sinopac

cooperation and promote economic and trade exchanges across the strait.” The purchase price will be between NT$18.7 billion and

NT$23.5 billion, and either party can cancel the agreement after a year, according to the statement. Bloomberg News

April 4, 2013 business daily | 9

GREATER CHINA Services account for a larger share of GDP than manufacturing so improvement of sentiment here bodes well for the entire economy

HK port may lose customers As ships diverted on dockworkers strike Jasmine Wang

Dariusz Kowalczyk, Credit Agricole CIB

improvement of labour market conditions, which are supportive of consumer spending growth in coming quarters,” Mr Qu said. The HSBC PMI showed staffing levels in services firms rose last month, albeit modestly, in the 49th consecutive month of gains as companies hired more workers to meet growing demand. Yet busier activity did not fan inflation. Input prices rose more slowly in March compared with February. Moderate production inflation capped final prices, which barely rose last month from February. Muted inflation should comfort investors worried that rising prices may lead China to tighten monetary policy too early and imperil its modest economic revival. The central bank had raised money supply and cut interest rates twice last year by a total of 50 basis points to engineer a recovery in the economy. Most analysts expect China’s economy to enjoy a steady but gentle recovery this year, with infrastructure investment and household consumption helping compensate for softening demand for Chinese exports. Reuters

Time needed to berth a vessel has lengthened to 60 hours

illionaire Li Ka Shing’s Hongkong International Terminals Ltd is losing customers as a strike by dockworkers causes a 20-fold increase in vessel berthing times at the world’s thirdbiggest container port. Evergreen Marine Corp Taiwan Ltd has diverted at least three ships after more than 10 vessels faced delays, the company said in an e-mailed statement. The time needed to berth a vessel has lengthened to 60 hours from three, the South China Morning Post reported on Tuesday citing an unidentified spokeswoman. The strike entered its seventh day, threatening to damage Hong Kong’s reputation as a trade hub for China at a time when competition with mainland ports is intensifying. Dockers are demanding a 25 percent pay increase as rising living costs and record home prices spur discontent in the former British colony. “Hong Kong’s port is well known for its efficiency and the high frequency of scheduled services,” Geoffrey Cheng,

analysis

PMI no guarantee of higher commodity imports

Clyde Russell Reuters market analyst

t would be logical to assume that the rise in China’s official Purchasing Managers’ Index to an 11-month high would signal stronger commodity demand, but this isn’t guaranteed. What the increase in the PMI to 50.9 in March from February’s 50.1 does show is that the modest expansion in China’s economy remains on track. At these levels gross domestic product growth should easily achieve the government’s 7.5

percent target for 2013, and is more likely to be closer to 8 percent. This does point to rising demand for imports of major commodities such as crude oil, iron ore and coal, but only really in trend terms. In other words, a growing economy will suck in more commodity imports over time, but trying to establish a direct link between a specific growth rate in industrial production and a specific rate in imports of various commodities is

an analyst at Bank of Communications Co. who has covered the industry since 1994, said yesterday. “The strike is definitely a blow to the business in the short term. Workers may run out of patience as their compensation has failed to catch up with economic growth in recent years.” Hongkong International Terminals is a unit of Mr Li’s Hutchison Port Holdings Trust, and with its partner controls more than half the city’s port capacity. Hutchison Port Holdings fell 1.7 percent to 85 Singapore cents.

Losing money The company has lost about HK$5 million (US$644,000) a day, and may face claims from shipping companies, Gerry Yim, managing director of Hongkong International Terminals, said yesterday. About 450 protesters, including students and labour activists, remained on the street outside the entrance of the port in the Kwai

much harder. Consider crude oil imports since the aftermath of the 2008 global recession. Imports gained 13.9 percent yearon-year in 2009, 17.4 percent in 2010, 5.5 percent in 2011 and 7.3 percent last year. In January 2009 the PMI stood at 45.3, well below the 50mark that delineates expansion from contraction on a monthly basis, but it jumped to 55.6 by December of that year. So far so good, in that there appears a link between the strong gain in the PMI in 2009 and the jump in crude imports. But in 2010, when crude imports rose even more than they did the prior year, the PMI ambled along in positive territory and stood at 53.9 in December of that year. In 2011, the PMI again slowed, dropped below 50 to 49 by November, which seemingly fits with the slowdown in crude import growth. However, in 2012, the PMI struggled to stay above 50 and spent two months below, bottoming at 49.2 in August, even as crude imports accelerated. Throw iron ore and coal imports into the mix and the picture becomes even more cloudy. Iron ore imports jumped almost 42 percent in 2009, fell 1.5 percent in 2010, grew 11 percent in 2011 and

Tsing district, Ho Wai Hong, a representative of the Union of Hong Kong Dockers, said yesterday. Dock workers say they are getting paid less than in 1997, according to Mr Ho. The labourers received pay increases of as much as 20 percent in 2011, Hongkong International Terminals said in an e-mailed response to questions. The dock workers, who are employed by contractors, are demanding that hourly wages rise by HK$12.50 from about HK$50, the union said. Strikers won’t accept an offer of a 5 percent pay increase, Radio Television Hong Kong reported on its website yesterday, citing Lee Cheuk Yan, a lawmaker from Hong Kong’s Labour Party. The Hong Kong Shippers’ Council, which represents the city’s exporters, importers, traders and manufacturers, said members should seek alternatives because of the strike. The strike “is going to ruin Hong Kong’s reputation,” said Willy Lin, chairman of the Hong Kong Shippers’ Council. “A lot of brands, clothes, watches, camera, even iPhone, iPad, they use Hong Kong as their regional distribution centre. We do need very efficient port operations.” The city was the world’s thirdlargest container port by volume last year, behind Shanghai and Singapore. Hongkong International Terminals and its partner Cosco Pacific Ltd control about 55 percent of capacity in the city, according to UOB-Kay Hian Holdings Ltd. Hongkong International Terminals operates 12 berths at four terminals in the Chinese city and two through a venture with Cosco Pacific. Hong Kong has nine terminals.

then 8.5 percent last year. Coal imports surged 210 percent in 2009, then by 31 percent in 2010, before easing to growth of 10.2 percent in 2011 and accelerating to 28 percent last year.

Lead indicator What the numbers show is that at best there is a weak link between the PMI and commodity imports, and expansion in the PMI is only a very general indicator of growth in import demand. Does this mean we should stop watching, or caring, about the PMIs when it comes to assessing the state of commodity demand? Definitely not, because the PMI is a good lead indicator of the trend in commodity imports, even if it isn’t of as much use in predicting likely percentage changes. When the PMI started trending downwards from April last year, it was accompanied by slowing growth in imports of crude and iron ore. And when the PMI started a slow recovery from September onwards, imports of both key commodities also started accelerating. But working out the extent of the likely acceleration or deceleration of commodity import growth means looking at a host of other factors. These include seasonality, inventory levels and factors unique

Bloomberg News

to each market, for example. For instance, in the first half of last year crude imports were boosted by the filling of strategic storages, and toward the end of last year iron ore imports surged on the back of re-stocking after inventories were run down during the economic slowdown in the middle of 2012. For now, the ongoing modest recovery in industrial output is enough to ensure that commodity demand is biased higher. Reuters

The ongoing modest recovery in industrial output is enough to ensure that commodity demand is biased higher

10 |

business daily April 4, 2013

ASIA

Singh says economy to revive soon India ‘can get back to 8 percent growth rate,’ says prime minister

ndian Prime Minister Manmohan Singh urged business leaders yesterday to keep faith in his Congress-led government’s efforts to improve a dire investment climate, without giving details of fresh steps to bring about a recovery in the sagging economy. In a rare speech to the nation’s top businessmen, Mr Singh said the downturn that has dragged growth in Asia’s third largest economy to a decade-low of around 5 percent was temporary and the mood among businessmen overly pessimistic. “We must prove the prophets of gloom are wrong,” Mr Singh, a veteran economist, told a meeting of the Confederation of Indian Industry. “I would urge Indian industry to have faith in our determination and avoid getting swamped by a mood of negativism.” Mr Singh launched a series of economic reforms late last year, but the economy is still struggling to grab momentum. And with a national election due next year, the loss of support from a regional party based in the southern state of Tamil Nadu will hamper efforts by his minority government to introduce more measures that might be politically unpopular. Mr Singh acknowledged “bureaucratic inertia” and corruption were problems for investors, but said rates of economic growth above 8 percent were possible if government and industry worked together. The government is hopeful of annual economic growth as high as 6.7 percent this fiscal year. Mr Singh defended his government’s economic track record, but the ruling Congress party has faced much criticism for policy drift during its two terms in office.

Mr Singh said the slowing growth rate was disappointing

Investors have complained that while his government has promised much, India remains one of the hardest countries in the world to do business.

Growth slowdown While industrial output expanded for the first time in three months in January, infrastructure sector output shrank 2.5 percent in February. Manufacturing activity, too, slowed down in March on weak domestic and foreign demand. Growth in India’s services sector also eased last month to its slowest

since October 2011 as order books filled at a slower pace, a business survey showed yesterday. The HSBC services Purchasing Managers’ Index, based on a survey of around 400 companies, fell to a 17-month low of 51.4 in March from 54.2 in February. While the headline PMI fell for the second straight month, it has held above the 50 mark that separates growth from contraction since late 2011. Mr Singh said the government was carrying out a comprehensive review of its policy on foreign direct investment and was committed

to reining in the fiscal deficit and keeping funds flowing to finance a record current account deficit that hit 6.7 percent in the December quarter. The prime minister forecast the current account deficit would be 5 percent for the 2012/13 fiscal year, and would lower further in the current year. However, he said the reduction would be small and India will need to finance a higher than expected deficit “for a few years”. He did not lay out any specific policies, but promised fast action to fix shortages of fuel for power companies, one of the most thorny issues facing Indian businesses.

Won touches six-month low on North Korea threat Pyongyan blocks access to Gaeseong industrial zone Seyoon Kim

he won touched a six-month low as escalating tensions with North Korea curbed global funds’ demand for South Korean assets. Government bonds were steady. The South said its workers were banned yesterday for the first time since 2009 from entering the jointly run Gaeseong industrial zone in the North, a move Unification Ministry spokesman Kim Hyung Suk described as “extremely serious”. North Korea said March 30 that a “state of war” exists with the South and warned it may shut Gaeseong following recent flights over the Korean peninsula by U.S. stealth bombers. The won weakened as much as 0.5 percent to 1,123.34 per dollar, the lowest level since September 20, before closing little changed at 1,117.60, according to data compiled by Bloomberg. The currency slid

0.3 percent on Tuesday after North Korea said it will restart the Yongbyon nuclear site, which was shut down in 2007 as part of an agreement reached in six-nation talks aimed at persuading the country to scrap its atomic weapons program.

Some exporters may look to sell dollars from their income earned overseas Son Eun Jeong, Woori Futures Co.

“Tensions have escalated on the Korean peninsula after North Korea’s threats to resume its nuclear site, damping demand for the won,” said Son Eun Jeong, analyst at Woori Futures Co. in Seoul. “Some exporters may look to sell dollars from their income earned overseas.” The Kospi Index dropped as much as 0.7 percent yesterday as global funds sold more constituent stocks than they bought, as they have on all but two days in the past three weeks, exchange data show. One-month implied volatility in the won, a measure of expected moves in the exchange rate used to price options, gained 15 basis points, or 0.15 percentage point, to 7.99 percent. The Finance Ministry said yesterday it may strengthen existing measures, including limit on banks’ use of currency forwards, to curb volatility. U.S. Secretary of State John Kerry

Workers are being allowed out but cannot get into Gaeseong

said on Tuesday it would be a “serious step” if North Korea violates its obligations by following through on a threat to restart nuclear facilities. Kim Jong Un, the communist state’s leader, said March 31 nuclear weapons development is a priority as the country ratcheted up tensions by repeating threats to attack the U.S. The yield on South Korea’s 2.75 percent bonds due March 2018 was unchanged at 2.56 percent, according to prices from Korea Exchange Inc. The five-year yield reached 2.51 percent last week, the lowest it has been in Bloomberg data going back to 2000.

April 4, 2013 business daily | 11

ASIA

Malaysia PM set for general election

KEY POINTS Growth in service sector activity slowed PM confident the country’s economy will bounce back Mr Singh vows take decisive action to push growth

The speech met with scepticism in Indian financial markets. “These are very big statements, and unfortunately they are not likely to be followed. The government’s intent has been there, but the execution is missing,” said Deven Choksey, managing director of KR Choksey Securities. The government needed to act forcefully to reverse the slump and balance the macro-economy, Mr Singh said, but he also called on industry to do more to revive investment, which is estimated to have hit a five-year-low in 2012/13. “Government is not the prime driver of growth ... the driver of growth is private investment,” he said. The full effect of measures taken since last year to revise fuel subsidies and speed up clearances in infrastructure projects will be felt in the next few months, Mr Singh said. He said the government was also preparing to clear 31 oil blocks for production and exploration in the next two weeks. Red tape and regulatory hurdles are often cited as obstacles to investing in India. The World Bank ranks India 132 in terms of “Ease of Doing Business”. Mixed economic data and weak capital investments offer little hope for a quick economic rebound. Reuters

Prime Minister Najib Razak has dissolved parliament ahead of election

alaysian Prime Minister Najib Razak announced he will dissolve parliament yesterday, paving the way for a long-anticipated general election late this month that could be the closest his ruling coalition has faced in its 56-year rule. Mr Najib’s National Front coalition lost its two-thirds parliamentary majority for the first time in 2008 elections and faces a confident three-party opposition alliance led by former deputy prime minister Anwar Ibrahim. “The king has accepted my request to dissolve parliament effective April 3,” Mr Najib said in a live television address from the administrative capital Putrajaya, adding he hoped his coalition would win a “solid majority”. The election is expected to be held on April 27 following a two-week campaign period. Mr Najib, who took over in 2009 in the wake of the election debacle, will point to brisk economic growth of 5.6 percent as he seeks to regain lost electoral ground. The 59-year-old son of a former premier is aiming to push the developing Southeast Asian nation into high-income status by 2020 through an ambitious US$444 billion economic transformation programme (ETP). He has warned repeatedly that an opposition victory could result in social and economic instability in the Southeast Asian nation of 29 million people that has a history of tensions between majority Malays and

Mr Najib’s ruling coalition lost its majority in the 2008 elections

minority ethnic Chinese and Indians. “Don’t gamble the future of your children and Malaysia, think and contemplate because your vote will determine not only the future of the country but also your grandchildren,” Mr Najib said in his television address. The opposition, which has won control of four out of 13 state governments, aims to tap into a growing desire in Malaysia for faster political and economic reform, arguing it is time for a change. Mr Najib’s coalition is expected to win, but the prime minister is under intense pressure to improve on 2008’s result and restore the twothirds majority. Failure to do so could result in a leadership challenge from within UMNO and raise doubts over his reform plans. Race-based social and economic policies have defined the coalition’s rule as it channelled wealth to ethnic Malays, who make up about half of the population, over the economically dominant Chinese minority since

1969 race riots. A skewed electoral system, deep pockets, and about US$2 billion in government handouts to millions of poorer Malaysians since the start of 2012 will likely help the National Front. Anticipation of a close election that could cause policy uncertainty has frayed investors’ nerves this year and made Kuala Lumpur’s stock market one of the worst performers in Asia. The main KLSE stock index briefly fell more than 3 percent in early trade yesterday following the announcement. It later recovered to trade 1 percent lower. “There has been some pullback, but I think the market will recover soon because funds will look to increase their equity exposure,” said Benny Chew, managing director of equity research at AmInvestment Bank. “Anticipation of the announcement has led to a sell-down, but funds will look for cheap entry after this,” he added. Reuters

Indonesian IPO market picks up with US$450m deals Companies seek stock market launch ahead of 2014 election

North Korea’s rhetoric doesn’t undermine South Korea’s credit fundamentals, according to Moody’s Investors Service. Geopolitical risk hasn’t had “material, adverse effects” on the South’s markets or economy, analysts Thomas J. Byrne and Steffen Dyck wrote in a report. A central bank report yesterday showed South Korea’s foreignexchange reserves totalled US$327.41 billion at the end of March, little changed from US$327.40 billion a month earlier. The Finance Ministry said it will maintain the holdings at an “appropriate” level. Bloomberg News

ndonesia is set to see two rare major listings worth a combined US$450 million over the next few months after the US$1.3 billion share sale of retailer PT Matahari Department Store in March boosted equity demand in Southeast Asia’s biggest economy. Private equity firm PT Saratoga Investama Sedaya, and Indonesia’s biggest taxi operator Blue Bird Group, have picked underwriters to prepare their IPOs as they seek to raise money ahead of a 2014 general election which promises heightened instability in capital markets, sources said. Saratoga and Blue Bird are among several deals expected in Southeast Asia’s largest economy, where demand for local stocks pushed the Jakarta index to a record high this week. “We are seeing a huge pickup in terms of demand from foreign investors compared with last year as they are looking for higher yields,” said Marciano Herman, chief executive of state-owned Danareksa Securities, a leading local brokerage.

“The timing is good this year for big private companies to tap the market, as next year is not a good time given the election.” In late March, London-based CVC Capital Partners and PT Multipolar raised US$1.3 billion by selling part of their stake in Matahari, making it the biggest stock sale in Indonesia since 2008. Indonesia is expected to host several other IPOs this year, including in the vehicle financing and agricultural sectors, which altogether could raise over US$2 billion and challenge Malaysia as the region’s

top equity market. In Malaysia the equity market has been subdued with US$120 million raised in IPOs this year. Bankers still expect companies to raise up to US$3 billion in share sales in the second half of the year, according to IFR estimates. Saratoga has picked UBS AG and Deutsche Bank to lead its initial public offering in the second quarter of this year which aims to raise at least US$200 million, sources said. Saratoga would be the first private equity firm to float on the Jakarta stock exchange. The process is in an advanced stage and it is expected to float in late April or early May, one of the sources said. Blue Bird Group has picked Credit Suisse AG and UBS AG to lead its listing which aims to raise at least US$250 million, sources said. The company wants to sell a stake of between 20 percent and 40 percent around the middle of this year, said one of the sources. Reuters

12 |

business daily April 4, 2013

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

34.4

0.7320644

20416665

CHINA UNICOM HON

ALUMINUM CORP-H

2.95

-0.6734007

15061209

CITIC PACIFIC

BANK OF CHINA-H

3.56

-0.280112

295182414

5.8

0.3460208

26322048

31.15

2177664

BANK OF COMMUN-H BANK EAST ASIA

CLP HLDGS LTD

PRICE

DAY %

VOLUME

10.24

0.3921569

24004653

9.85

-0.8056395

6855961

68.8

0.5113221

3198099

CNOOC LTD

14.94

-0.928382

31282078

COSCO PAC LTD

11.12

-0.8912656

NAME POWER ASSETS HOL SANDS CHINA LTD

PRICE

DAY %

74.55

1.153324

VOLUME 2256827

39.5

-1.002506

11579669 5397716

SINO LAND CO

13.32

-0.5970149

SUN HUNG KAI PRO

105.6

-0.7518797

5129306

4920629

SWIRE PACIFIC-A

98.35

-0.8568548

1126334 4366723

BELLE INTERNATIO

12.5

-2.037618

24044880

9.51

0.955414

5382302

TENCENT HOLDINGS

242.8

BOC HONG KONG HO

25.9

-0.1926782

8082826

HANG LUNG PROPER

30.15

1.174497

6249895

TINGYI HLDG CO

20.25

-2.409639

2278084

CATHAY PAC AIR

12.8

-1.990812

6081294

HANG SENG BK

125.5

0.3197442

1344690

WANT WANT CHINA

11.88

1.192504

7930395

114.6

-0.6932409

2989128

HENDERSON LAND D

54.05

0.371402

3147034

WHARF HLDG

70.3

-0.6360424

6140496

6.69

-1.762115

16785755

0.456621

1206868

CHEUNG KONG CHINA COAL ENE-H CHINA CONST BA-H

6.3

-0.4739336

176445858

CHINA LIFE INS-H

20.05

-0.2487562

32293971

CHINA MERCHANT

25.05

0.804829

ESPRIT HLDGS

HENGAN INTL HONG KG CHINA GS

0.4366812

4616267

HONG KONG EXCHNG

131.7

-0.3028009

2546009

2499943

HSBC HLDGS PLC

82.95 -0.06024096

5417698

8948748

HUTCHISON WHAMPO

CHINA MOBILE

82.7 -0.06042296

CHINA OVERSEAS

21.6

19645036

IND & COMM BK-H

CHINA PETROLEU-H

9.07

-0.4390779

44368855

0.3671971

4715017

5.34

-0.5586592

246566066

LI & FUNG LTD

10.56

-0.5649718

14118324

0.8064516

1745859

CHINA RES ENTERP

23.6

1.724138

3316097

MTR CORP

31.25

CHINA RES LAND

21.9

-0.2277904

3434301

NEW WORLD DEV

13.24

10127513

CHINA RES POWER

23.5

-0.6342495

9418336

PETROCHINA CO-H

10.28

33339720

CHINA SHENHUA-H

28.15

-0.177305

12206269

PING AN INSURA-H

59.75 -0.08361204

7944325

MOVERS

5 22530

INDEX 22337.49 HIGH

22527.12

LOW

22153.89

52W (H) 23944.74 22150

(L) 18056.4 28-March

3-April

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

25.65

0.984252

8776704

CHINA PETROLEU-H

9.07

-0.4390779

15061209

CHINA RAIL CN-H

6.95

1.750973

9226560

CHINA RAIL GR-H

3.56

-0.280112

295182414

CHINA SHENHUA-H CHINA TELECOM-H

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.6

-1.369863

196658116

AIR CHINA LTD-H

6.71

-0.739645

12918000

ALUMINUM CORP-H

2.95

-0.6734007

ANHUI CONCH-H

26.15

BANK OF CHINA-H

NAME CHINA PACIFIC-H

PRICE

DAY %

VOLUME

YANZHOU COAL-H

10.2

-0.5847953

13242353

44368855

ZIJIN MINING-H

2.51

-1.953125

57523023

-0.286944

11949263

ZOOMLION HEAVY-H

8.23

-2.372479

30155711

3.74

-1.058201

18568669

ZTE CORP-H

12.34

-3.139717

9301311

28.15

-0.177305

12206269

5.8

0.3460208

26322048

3.9

33644813

BYD CO LTD-H

23.4

-3.703704

1759174

DONGFENG MOTOR-H

10.92

0.1834862

10778440

CHINA CITIC BK-H

4.22

-3.652968

108594093

GUANGZHOU AUTO-H

6.15

-3.149606

9383178

CHINA COAL ENE-H

6.69

-1.762115

16785755

HUANENG POWER-H

8.4

0.3584229

16118030

CHINA COM CONS-H

7.25

1.11576

37609504

IND & COMM BK-H

5.34

-0.5586592

246566066

CHINA CONST BA-H

6.3

-0.4739336

176445858

JIANGXI COPPER-H

16.62

-1.071429

10295497

CHINA COSCO HO-H

3.51

-0.2840909

14063522

PETROCHINA CO-H

10.28

33339720

20.05

-0.2487562

32293971

PICC PROPERTY &

9.58

-2.244898

26252362

CHINA LONGYUAN-H

6.95

0.1440922

11790805

PING AN INSURA-H

59.75

-0.08361204

7944325

CHINA MERCH BK-H

15.8

-1.741294

39833137

SHANDONG WEIG-H

7.14

0.2808989

7674000

BANK OF COMMUN-H

CHINA LIFE INS-H

CHINA MINSHENG-H

9.28

-2.109705

56474349

SINOPHARM-H

25.05

0.6024096

7454957

CHINA NATL BDG-H

9.5

-1.758014

45476691

TSINGTAO BREW-H

48.3

-2.12766

1040407

16.32

-1.090909

6142347

WEICHAI POWER-H

25.05

-0.1992032

4891372

CHINA OILFIELD-H

NAME

MOVERS

3 10980

INDEX 10758.8 HIGH

10973.38

LOW

10728.6

52W (H) 12354.22 10720

(L) 8987.76 28-March

3-April

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.73

1.486989

129304479

CHONGQING CHAN-A

9.12

-5

35425387

AIR CHINA LTD-A

5.33

-2.380952

14837358

CHONGQING WATE-A

6.25

-1.263823

8323514

ALUMINUM CORP-A

4.11

1.231527

16410036

CITIC SECURITI-A

12.12

-1.383238

ANHUI CONCH-A

17.97

0.05567929

20414462

CSR CORP LTD -A

3.98

BANK OF BEIJIN-A

8.78

0.5727377

12519265

DAQIN RAILWAY -A

7.43

BANK OF CHINA-A

2.94

0.3412969

23831098

DATANG INTL PO-A

BANK OF COMMUN-A

4.73

0.4246285

41895734

EVERBRIG SEC -A

BANK OF NINGBO-A

10.65

0.6616257

9138285

GD MIDEA HOLDI-A

12.22

BAOSHAN IRON & S

4.85

0.4140787

33338202

GD POWER DEVEL-A

NAME

BYD CO LTD -A

21.73

0.1382488

NAME

2024918

GF SECURITIES-A GREE ELECTRIC

NAME

PRICE

DAY %

VOLUME

14.7

0.5471956

16194456

SANY HEAVY INDUS

10.23

0.2941176

18420786

64213558

SHANDONG DONG-A

49.6

-0.7007007

4586254

-0.2506266

32784742

SHANDONG GOLD-MI

32.13

4503942

1.226158

20445373

SHANG PHARM -A

13.06

3.322785

36419665

4.32

-1.818182

5499634

SHANG PUDONG-A

10.06

0.2991027

88765772

12.95

0.3875969

9269024

SHANGHAI ELECT-A

3.9

-0.2557545

2786662

9.990999

3768754

SHANXI LU'AN -A

17.19

0.2917153

11223085

SAIC MOTOR-A

2.96

0.6802721

34283700

SHANXI XISHAN-A

11.53

0.6108202

7962881

13.35

-0.2987304

21551785

SHENZEN OVERSE-A

5.87

-1.011804

29163533

28.7

-0.173913

10300438

SICHUAN KELUN-A

61.12

0.01636393

858950

20.01

-2.722411

29473178

SUNING COMMERC-A

6.19

-0.1612903

25218479 3638694

CHINA AVIC AVI-A

22.63

-0.745614

3247511

CHINA CITIC BK-A

4.37

-2.455357

63815792

GUANGHUI ENERG-A

CHINA CNR CORP-A

3.93

0.7692308

38332434

HAITONG SECURI-A

10.1

-1.463415

69175272

TASLY PHARMAC-A

65.75

-1.836369

HANGZHOU HIKVI-A

37.15

-0.6684492

4188126

TSINGTAO BREW-A

36.53

-2.819899

1575155

72.6

-5.714286

7334419

WEICHAI POWER-A

20.9

0.1917546

5519787 13639640

CHINA COAL ENE-A

7.11

0.4237288

5634717

CHINA CONST BA-A

4.67

0.6465517

38530656

CHINA COSCO HO-A

3.51

0.862069

24124045

HONG YUAN SEC-A

17.57

-1.458216

8669357

WULIANGYE YIBIN

21.95

-0.3178928

CHINA EAST AIR-A

3.1

-2.208202

23609850

HUATAI SECURIT-A

9.61

-0.4145078

23949469

YANGQUAN COAL -A

13.58

-0.4398827

5506977

CHINA EVERBRIG-A

3.13

50349328

HUAXIA BANK CO

10.4

0.8729389

23497537

YANTAI WANHUA-A

17.99

1.010668

10355505 5094150

HENAN SHUAN-A

12.6

-0.3952569

5133299

IND & COMM BK-A

4.09

0.7389163

49636363

YANZHOU COAL-A

16.85

-1.23095

CHINA LIFE INS-A

17.42

1.515152

14523761

INDUSTRIAL BAN-A

17.15

1.780415

99152211

YUNNAN BAIYAO-A

80.83

-1.426829

2017476

CHINA MERCH BK-A

12.79

1.83121

63290889

INNER MONG BAO-A

28.99

-0.4464286

13498865

ZHONGJIN GOLD

13.77

-1.077586

11145127

CHINA MERCHANT-A

12.28

-1.76

21352477

INNER MONG YIL-A

30.18

-0.5273566

11270966

ZIJIN MINING-A

36541275

10181936

INNER MONGOLIA-A

5.19

-0.7648184

142233487

30.89

-1.655524

6730243

CHINA INTL MAR-A

CHINA MERCHANT-A

25.1

-1.761252

CHINA MINSHENG-A

9.68

0.5192108

135990061

JIANGSU HENGRU-A

CHINA NATIONAL-A

8.86

-3.485839

34247873

JIANGSU YANGHE-A

61.05

-0.245098

2894117

CHINA OILFIELD-A

16.59

-0.1204094

2510860

JIANGXI COPPER-A

22.12

1.189387

8946948

CHINA PACIFIC-A

18.64

2.025178

18570316

JINDUICHENG -A

11.33

0.1768347

4857197

16.86

-0.9400705

18974156

163.85

0.08551707

2199050

CHINA PETROLEU-A

7.24

-0.137931

27229602

KANGMEI PHARMA-A

CHINA RAILWAY-A

4.95

13685747

KWEICHOW MOUTA-A

CHINA RAILWAY-A

2.79

0.7220217

24308391

LUZHOU LAOJIAO-A

25.88

1.490196

11226142

METALLURGICAL-A

2.04

-0.4878049

12303197 11116551

CHINA RESOURCE-A

29.85

-0.8964143

4263664

CHINA SHENHUA-A

21.85

0.6912442

8730223

NINGBO PORT CO-A

2.46

-0.8064516

8.72

-0.1145475

3.4

-0.5847953

ZOOMLION HEAVY-A

8.24

0.4878049

37953545

ZTE CORP-A

11.1

-1.245552

19203422

MOVERS 107

171

22 2530

INDEX 2483.547

CHINA SHIPBUIL-A

4.98

0.2012072

19347894

PETROCHINA CO-A

9345109

HIGH

2520.92

CHINA SOUTHERN-A

3.53

-3.287671

38771793

PING AN BANK-A

20.45

0.04892368

22458964

LOW

2476.97

CHINA STATE -A

3.39

-0.2941176

49982376

PING AN INSURA-A

40.76

0.5674809

20246771

CHINA UNITED-A

3.66

2.234637

184791701

POLY REAL ESTA-A

11.84

-1.251043

34024322

CHINA VANKE CO-A

11.2

53910464

QINGDAO HAIER-A

12.95

-0.7662835

5816462

CHINA YANGTZE-A

7.33

-0.9459459

10399853

QINGHAI SALT-A

29.31

0.9993108

10685941

PRICE DAY %

Volume

PRICE DAY %

Volume

71.1 -0.5594406

2755791

TAIWAN MOBILE CO

102

-1.923077

82 -0.6060606

4162208

TPK HOLDING CO L

609

1.162791

2938290

100.5

26347381

52W (H) 2791.303 (L) 2102.135

2470

1-April

3-April

FTSE TAIWAN 50 INDEX NAME

NAME

ACER INC

25.85

0.5836576

4907457

FORMOSA PLASTIC

ADVANCED SEMICON

24.55

0.2040816

6154521

FOXCONN TECHNOLO

ASIA CEMENT CORP

36.5 -0.4092769

2169546

FUBON FINANCIAL

40.9

ASUSTEK COMPUTER

349.5 -0.1428571

AU OPTRONICS COR CATCHER TECH

13.2

NAME

PRICE DAY %

0.122399

21772481

TSMC UNI-PRESIDENT

1727415

HON HAI PRECISIO

83.1

16366062

0.7633588

34544443

HOTAI MOTOR CO

247

1.229508

231470

UNITED MICROELEC

Volume 3011385

8775565

11.3

0.4444444

31841897

144

2.491103

15452208

HTC CORP

246.5

1.440329

7821108

WISTRON CORP

33.15

0.1510574

6480167

CATHAY FINANCIAL

40.15

0.879397

20209792

HUA NAN FINANCIA

17.3

0.5813953

4777116

YUANTA FINANCIAL

15.05

1.346801

12330618

CHANG HWA BANK

17.4

0.2881844

6482723

LARGAN PRECISION

778

1.965924

830535

YULON MOTOR CO

52.8

1.34357

3907452

CHENG SHIN RUBBE

92.8

3.571429

12490376

LITE-ON TECHNOLO

3.343465

12855541

CHIMEI INNOLUX C

18.85

0.802139

48074435

MEDIATEK INC

356

2.298851

12160599

CHINA DEVELOPMEN

8.56

1.542112

43505757

MEGA FINANCIAL H

24.15

0.8350731

20010072

CHINA STEEL CORP

26.1 -0.1912046

16017020

NAN YA PLASTICS

52.8

-1.675978

3129690

3.089888

93505585

PRESIDENT CHAIN

169.5

0.8928571

922623

CHINATRUST FINAN

18.35

CHUNGHWA TELECOM

93.1

4429687

QUANTA COMPUTER

64.5

-1.225115

8660148

COMPAL ELECTRON

21.2

0.2364066

7592825

SILICONWARE PREC

0.1472754

3101669

DELTA ELECT INC

130.5

4417418

SINOPAC FINANCIA

14.7

2.797203

114631536

FAR EASTERN NEW

30.85 -0.1618123

4129244

SYNNEX TECH INTL

53.8 -0.5545287

4940472

FAR EASTONE TELE

68 -0.8746356

5564175

TAIWAN CEMENT

38.4

1.453104

4703491

FIRST FINANCIAL

18.65

0.2688172

7807238

TAIWAN COOPERATI

0.2949853

4661149

FORMOSA CHEM & F

68.8

-2.272727

3981534

TAIWAN FERTILIZE

0.9817672

1597480

FORMOSA PETROCHE

78.7

-1.130653

1258744

TAIWAN GLASS IND

28.3

1.071429

582385

MOVERS

5 5520

INDEX 5512.96 HIGH

5514.41

LOW

5476.85

52W (H) 5639.93 5470

(L) 4719.96 1-April

3-April

April 4, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 59.3

32.80 32.65

17.20 17.05

59.2

32.50

16.90 59.1

32.35

Max 32.8

average 32.385

Max 40.3

average 39.483

Min 32.25

32.20

Last 32.35

Min 39.2

Max 59.2

average 59.195

PRICE

Max 17.04

average 16.851

Min 16.66

Last 16.66

40.1

19.6

21.0

39.8

19.4

20.8

39.5

19.2

20.6

Max 19.8

average 19.325

DAY %

YTD %

(H) 52W

(L) 52W

96.83

-0.370398227

3.939458995

106.5

BRENT CRUDE FUTR May13

110.36

-0.298129912

1.742417258

117.4300003

91.54999542

GASOLINE RBOB FUT May13

304.24

0.052617732

5.127850726

330.369997

237.7199888

GAS OIL FUT (ICE) May13

930.75

-0.18766756

1.638001638

1000.75

801.25

3.982

0.327538423

15.32001158

4.12100029

3.072000027

308.42

-0.103647082

1.997486606

327.1399975

258.5000038

1571.14

-1.6636

-5.6066

1796.08

1527.21

NATURAL GAS FUTR May13 HEATING OIL FUTR May13 Gold Spot $/Oz Silver Spot $/Oz

27.125

-2.9951

-9.9136

35.365

26.1513

Platinum Spot $/Oz

1566.9

-1.4652

3.2383

1742.8

1379.05

Palladium Spot $/Oz

761.93

-1.623

8.9

786.5

553.75

LME ALUMINUM 3MO ($)

1884

-1.050420168

-9.117221418

2200.199951

1827.25

LME COPPER 3MO ($)

7465

-0.99469496

-5.87567772

8702.75

7219.5

LME ZINC

1854

-2.266736953

-10.86538462

2230

1745 15236

3MO ($)

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

16380

-1.680672269

-3.985932005

18920

15.925

1.014906438

2.841459477

16.95000076

14.5

640

-0.078064012

-8.604069975

838

520.25

May13

676.5

0.857249348

-14.12250079

938

659.75

SOYBEAN FUTURE May13

WHEAT FUTURE(CBT) May13

1388.25

-0.412482066

-0.78613543

1639.5

1218.75

COFFEE 'C' FUTURE May13

136.05

-0.073448402

-7.259713701

204.5999908

132.0500031

Min 19.06

Last 19.46

19.0

Max 21.05

average 20.831

Min 20.45

Last 20.8

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

PRICE

DAY %

1.0465 1.5103 0.95 1.2812 93.52 7.9949 7.7621 6.2014 54.3575 29.35 1.2382 29.858 40.895 9750 97.868 1.21715 0.84833 7.948 10.2439 119.81 1.03

YTD %

-0.0668 -0.5989 -0.3789 -0.1792 -0.2246 0.0063 0.0052 -0.029 -0.1632 0.0681 -0.0485 0.067 -0.0245 -0.1128 -0.1614 -0.2038 -0.422 0.1132 0.1816 -0.0417 0

(H) 52W

0.8383 -6.6333 -3.6421 -2.8658 -7.9341 -0.1463 -0.1482 0.4709 1.1728 4.1908 -1.3568 -2.7631 0.269 0.441 -8.7271 -0.7945 -3.8794 3.3908 2.7968 -5.2082 -0.0097

1.0625 1.6381 0.9972 1.3711 96.71 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 99.978 1.25692 0.88151 8.4957 10.9254 127.71 1.0314

0.9582 1.4832 0.9017 1.2043 77.13 7.9824 7.7498 6.1974 50.865 29.08 1.2152 28.913 40.54 9095 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS NAME

(H) 52W

(L) 52W

3.67

0.273224

16.50793

3.94

2.29

4167927

CROWN LTD

12.44

0.8103728

16.58857

12.59

8.06

1534360

ARISTOCRAT LEISU

PRICE

DAY % YTD %

VOLUME CRNCY

SUGAR #11 (WORLD) May13

17.65

0.341102899

-9.948979592

24.56999969

17.5

AMAX HOLDINGS LT

0.045

#N/A N/A

13645500

89.37

0.562619557

17.80912207

93.93000031

68.18999481

BOC HONG KONG HO

25.9

-0.1926782

7.468878

27.1

20.85

8082826 132000

CENTURY LEGEND

World Stock MarketS - Indices

0.275

-5.172414

3.773591

0.42

0.215

CHEUK NANG HLDGS

5.84

0.5163511

-2.50417

6.74

2.8

18000

CHINA OVERSEAS

21.6

-6.493508

25.6

14.624

19645036

CHINESE ESTATES

COUNTRY

PRICE

DAY %

YTD %

DOW JONES INDUS. AVG

14662.01

0.6118227

NASDAQ COMPOSITE INDEX

3254.862

0.484352

FTSE 100 INDEX

6472.66

DAX INDEX

7938.51

-0.1536098

7.177439

13.08

7.697

250000

CHOW TAI FOOK JE

10.6

-1.119403

-14.79099

13.4

8.4

3491200

EMPEROR ENTERTAI

2.3

-1.709402

21.69312

2.49

1.1

380000

FUTURE BRIGHT

2.4

3.896104

96.72131

2.75

0.64

3030000

(H) 52W

(L) 52W

11.88838

14684.49

12035.08984

GALAXY ENTERTAIN

32.35

-0.154321

6.589784

35.7

16.94

4879817

7.794248

3270.296875

2726.68

HANG SENG BK

125.5

0.3197442

5.728731

131.5

99.2

1344690

-0.2773216

9.74684

6533.99

5229.76

HOPEWELL HLDGS

31.75

1.275917

-4.511278

35.3

19.049

1045958

-0.06747341

4.284063

8074.47

5914.43

HSBC HLDGS PLC

82.95

-0.06024096

2.029516

88.45

59.8

5417698

HUTCHISON TELE H

3.81

-0.2617801

7.022474

4.05

2.98

4877000

LUK FOOK HLDGS I

23.4

-4.684318

-4.098359

30.05

14.7

2312382

NIKKEI 225

12362.2

HANG SENG INDEX

22337.49

-0.1355966

-1.409855

23944.74

18056.4

MELCO INTL DEVEL

13.52

2.424242

50.05549

13.96

5.12

10922078

CSI 300 INDEX

2483.547

-0.1143827

-1.561852

2791.303

2102.135

MGM CHINA HOLDIN

16.66

0.1201923

25.46806

18.449

9.509

5424000

TAIWAN TAIEX INDEX

7942.35

0.3686255

3.154102

8089.21

6857.35

MIDLAND HOLDINGS

3.4

-0.2932551

-8.108109

3.249

2578000

NEPTUNE GROUP

0.144

-2.702703

-5.263155

0.226

0.084

9760000

NEW WORLD DEV

13.24

10.14975

15.12

7.95

10127513 11579669

KOSPI INDEX

S&P/ASX 200 INDEX

1983.22

2.988896

-0.1475216

18.92243

-0.6925254

12650.26

2051.8

8238.96

1758.99

4957.68

-0.5582177

6.640854

5163.5

3985

4975.528

0.3686922

15.26265

4985.852

3635.283

FTSE Bursa Malaysia KLCI

1678.84

-0.3655786

-0.5985959

1699.68

JAKARTA COMPOSITE INDEX

20.4

(L) 52W

COTTON NO.2 FUTR May13

NAME

16.60

21.2

WTI CRUDE FUTURE May13

CORN FUTURE

59.0

CURRENCY EXCHANGE RATES

NAME

METALS

Last 59.2

19.8

Commodities ENERGY

Min 59.1

40.4

39.2

Last 39.5

16.75

SANDS CHINA LTD

39.5

-1.002506

16.34757

41.05

20.65

SHUN HO RESOURCE

1.46

-1.351351

4.285716

1.67

1.03

30000

1526.6

SHUN TAK HOLDING

4.11

-1.201923

-1.909309

4.65

2.56

2705750

NZX ALL INDEX

940.139

0.1511633

6.585319

944.123

755.149

SJM HOLDINGS LTD

19.46

0.2059732

8.111111

22.15

12.34

5188523

PHILIPPINES ALL SHARE IX

4233.33

0.8954278

14.44588

4290.5

3238.77

SMARTONE TELECOM

13.36

1.984733

-5.113636

17.38

12.5

1955500

HSBC Dragon 300 Index Singapor

645.68

0.48

3.96

STOCK EXCH OF THAI INDEX

1542.87

-0.4946664

10.84393

1601.34

1099.15

HO CHI MINH STOCK INDEX

505.93

-0.6870424

22.28506

514.1

372.39

BOC HONG KONG HO

Laos Composite Index

1394.78

0.5863051

14.81844

1455.82

973.8

GALAXY ENTERTAIN INTL GAME TECH JONES LANG LASAL

WYNN MACAU LTD

20.8

1.216545

-0.7159941

25.5

14.62

25960609

ASIA ENTERTAINME

4.34

0.9302326

41.83007

6.8

2.4

133082

BALLY TECHNOLOGI

51.73

0.329713

15.70119

52.7

41.74

459370

3.3

7.491859

3.59

2.7

15630

4.23

0.7142857

6.549118

4.57

2.25

350

16.47

0.1215805

16.23147

17.49

10.92

5118342

97.53

-0.3168438

16.19013

100.86

61.39

212636

-0.650289

19.15078

58.3216

32.6127

4893175

MELCO CROWN-ADR

23.01

-0.04344049

36.63895

23.39

9.13

7165598

MGM CHINA HOLDIN

2.19

18.37838

2.44

1.36

500

MGM RESORTS INTE

12.48

-2.652106

7.216492

14.11

8.83

13265697

SHFL ENTERTAINME

15.76

-1.005025

8.689655

18.77

11.75

329433

SJM HOLDINGS LTD

2.54

2.419355

9.956713

2.85

1.65

1500

123.26

0.05682279

9.574186

129.6589

84.4902

1012427

LAS VEGAS SANDS

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

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily April 4, 2013

Opinion

China’s new leader follows Katy Perry’s tune Noah Feldman

Law professor at Harvard University and a Bloomberg View columnist

aty Perry may have been banned from China’s music websites, but her “Teenage Dream” now has its Asian counterpart. Newly confirmed in office, President Xi Jinping, has chosen “Chinese Dream” as his signature phrase to describe the direction of his administration. Although it is early, and the phrase could be altered or abandoned, Xi invoked it both on becoming leader of the Communist Party of China and in his final rhetorical salvo as he assumed the presidency. Certainly, as I saw in my recent travels there, no other phrase has been given comparable attention in the state media, a relatively reliable sign that the dream is here to stay. So what, exactly, is the Chinese dream of which Xi speaks? In a country where policies are expressed obliquely and elaborated cautiously by party elites, this is the US$64,000 question. Its answer should tell us much about the future of China – and thus about the future of global geopolitics. The easy part of interpreting the dream is the individual component. As Xi (who was previously vice president) and other party leaders have repeatedly explained in the past few years, an individual Chinese citizen who works hard should be able to succeed. This resonates closely with the American dream of a car in every garage. (After the recent Huangpu River porcine infestation, wags commented that the Communist Party was a great success: The fields were full of wheat and the river was full of pigs.)

Individual fulfilment The aspect of the Chinese dream that targets individual self-fulfilment should be viewed in the West with aplomb rather than fear. It may be difficult for China to keep up a pace of even 7.5 percent growth, but to the extent it does so, it doesn’t make the West any poorer, and it alleviates local poverty. Allowing every hardworking Chinese to succeed also implies a reduction in corruption. This will be hard

Chinese President Xi Jinping

to accomplish, but is highly desirable for the party, which correctly sees graft as the major threat to its legitimacy. Again, there is every reason for outsiders to hope that China can curb corruption that would threaten stability and take food out of the mouths of ordinary Chinese. But the Chinese dream isn’t merely individual – and that is where things get much more complicated for the West in general and the U.S. in particular. The adjective “Chinese” doesn’t reflect solely on the citizen, but on the nation as a whole. In his closing address to the National People’s Congress last month, Xi said expressly that the dream included the “rejuvenation” of the Chinese nation and its restoration to its historical place in the world. There can be little doubt that this language points toward Chinese nationalism. In a post-Marxist world, the party needs drivers for its legitimacy. Economic growth is one, but as growth slows, Chinese nationalism is increasingly appealing. All mainland Chinese are raised on the narrative of a century of collective humiliation that only began to end with the Communist takeover in 1949. In a sense, the party’s raison d’etre is to end that humiliation by reversing the course of history and putting China where it would have been,

absent internal breakdown and Western imperial domination in the last years of the Qing dynasty.

Asian hegemon So what would a rejuvenated Chinese nation look like to the rest of the world? It need not take on the U.S. in the West; China even at its peak wasn’t a superpower that went in search of faraway wars or non-contiguous colonies. Yet within Asia, China’s historic place (at least as perceived by Chinese) required supremacy within a sphere of influence extending across the strait to Taiwan, to the Korean Peninsula and beyond. Japan was a thorn in the emperors’ sides, by turns recalcitrant to Chinese influence and actively hostile as an occasional invader. Its long-term ideal status, though, was always as a cowed subordinate, capable of keeping its independence but not much else. A China restored to its historic place, then, would be an Asian hegemon. In that character, it would join the U.S. as one of two global superpowers, each with its own sphere of influence. No doubt Xi would like to see this process occur gradually and without confrontation. But almost by definition, it entails U.S. retrenchment from its current position as an Asian hegemon protecting Taiwan, Japan and South Korea.

With such a change, the U.S. might remain a “Pacific power,” as President Barack Obama has described it – but it wouldn’t be the Pacific power par excellence. That mantle would pass to a rejuvenated China. Perhaps the U.S. will accept this process as inevitable. Stranger things have happened, and a country weakened by its failures in Afghanistan and Iraq may want to turn inward and welcome the entrance of China onto

A China restored to its historic place would be an Asian hegemon. In that character, it would join the U.S. as one of two global superpowers, each with its own sphere of influence

the regional security stage in the guise of “responsible stakeholder” – an important phrase coined not by China but by Robert Zoellick when he was deputy secretary of state for President George W. Bush. Don’t count on it, though. Sole global superpowers don’t usually cede power without a fight. Taiwan, Japan and South Korea are vibrant, rich democracies whose continued vitality depends on U.S. protection. In the case of Taiwan, an independenceminded politician elected by young voters could precipitate a crisis, and the U.S. would have to decide whether to send aircraft carriers into the strait. Japan is increasingly toying with the possibility of amending its U.S.-imposed pacifist constitution, and there are signs the U.S. favours a more militarised Japan that could aid in its own defence. As for South Korea, it needs continued U.S.-backing to face down the erratic, nuclear North Korean regime that remains largely a Chinese proxy state. All these potential conflicts mean that Xi’s Chinese dream demands scrutiny in the U.S. as well as in Asia. Dreams are by their nature protean and flexible. Here’s hoping the Chinese dream can be shaped away from nationalism and toward the more innocent pleasures of being young, rich and in possession of a nice car and a hot boyfriend. Bloomberg View

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 4, 2013 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

The global economy on the fly Nouriel Roubini

Professor of Economics at the Stern School of Business, NYU, and Chairman of Roubini Global Economics

Asahi Shimbun Twenty-five of the 26 local governments in Japan that operate hydropower plants plan to continue selling their electricity to major utilities on negotiated contracts in fiscal 2013 and are refusing to open the process to bidding from other electric power companies. After the disaster at the Fukushima nuclear power plant in 2011, many consumers are seeking new utilities that are not engaged in nuclear power generation. However, these new firms are being denied an open bidding process and cannot buy electricity from local governments that are operating hydropower facilities.

Times of India There is little sign of a turnaround in Indian industry, according to official data and a private survey. Official statistics showed that the energy sector dragged down the index of eight core industries by 2.5 percent in February, the first decline in nearly eight years. The development is expected to adversely impact the prospects of industrial growth and GDP in the fourth quarter. The HSBC’s Purchasing Managers’ Index showed that the manufacturing sector witnessed the slowest rate of expansion in 16 months in March as power cuts hampered production and there was a decline in new business orders. India’s PMI stood at 52 in March, down from 54.2 in February.

Inquirer Business American banking giant Citigroup expects Standard & Poor’s to affirm Fitch’s recent Philippine sovereign investment upgrade by likewise raising the country’s credit bar. “We believe S&P may also upgrade soon. We believe two out of three ratings upgrade will represent a strong argument to investors that the country deserves an IG (investment grade) rating,” Citi economist Jun Trinidad said in a recent research note. S&P currently rates the Philippine government at a notch below investment grade, but it was the first to hint of an upgrade when it issued a “positive” outlook on its rating.

Vietnam News Industrial production is expected to improve in the second quarter of this year as many domestic enterprises step up raw material imports for production, Ministry of Industry and Trade official Nguyen Tien Vy said. In the first quarter, the index of industrial production reached a low level of 4.9 percent, compared with 5.9 percent in the same period last year. Mr Vy said inventories began to increase in March, adding that the rate for manufacturing and processing industries was 16.5 percent higher than for the same period last year.

n the last four weeks, I have travelled to Sofia, Kuala Lumpur, Dubai, London, Milan, Frankfurt, Berlin, Paris, Beijing, Tokyo, Istanbul, and throughout the United States. As a result, the myriad challenges facing the global economy were never far away. In Europe, the tail risk of a euro zone break-up and a loss of market access by Spain and Italy were reduced by last summer’s decision by the European Central Bank to backstop sovereign debt. But the monetary union’s fundamental problems – low potential growth, ongoing recession, loss of competitiveness, and large stocks of private and public debt – have not been resolved. Moreover, the grand bargain between the euro zone core, the ECB, and the periphery – painful austerity and reforms in exchange for large-scale financial support – is now breaking down, as austerity fatigue in the euro zone periphery runs up against bailout fatigue in core countries like Germany and the Netherlands. Austerity fatigue in the periphery is clearly evident from the success of antiestablishment forces in Italy’s recent election; large street demonstrations in Spain, Portugal, and elsewhere; and now the botched bailout of Cypriot banks, which has fuelled massive public anger. Throughout the periphery, populist parties of the left and right are gaining ground. Meanwhile, Germany’s insistence on imposing losses on bank creditors in Cyprus is the latest symptom of bailout fatigue in the core. Other core euro zone members, eager to limit the risks to their taxpayers, have similarly signalled that creditor “bailins” are the way of the future. Outside the euro zone, even the United Kingdom is struggling to restore growth, owing to the damage caused by front-loaded fiscalconsolidation efforts, while anti-austerity sentiment is also mounting in Bulgaria, Romania, and Hungary. In China, the leadership transition has occurred smoothly. But the country’s economic model remains, as former Premier Wen Jiabao famously put it, “unstable, unbalanced, uncoordinated, and unsustainable”.

Vested interests China’s problems are many: regional imbalances between its coastal regions and the interior, and between urban and rural areas; too much savings and fixed investment, and too little private consumption; growing income and wealth inequality; and massive environmental

degradation, with air, water, and soil pollution jeopardising public health and food safety. The country’s new leaders speak earnestly of deepening reforms and rebalancing the economy, but they remain cautious, gradualist, and conservative by inclination. Moreover, the power of vested interests that oppose reform – state-owned enterprises, provincial governments, and the military, for example – has yet to be broken. As a result, the reforms needed to rebalance the economy may not occur fast enough to prevent a hard landing when, by next year, an investment bust materialises. In China – and in Russia (and partly in Brazil and India) – state capitalism has become more entrenched, which does not bode well for growth. Overall, these four countries (the BRICs) have been overhyped, and other emerging economies may do better in the next decade: Malaysia, the Philippines, and Indonesia in Asia; Chile, Colombia, and Peru in Latin America; and Kazakhstan, Azerbaijan, and Poland in Eastern Europe and Central Asia. Farther East, Japan is trying a new economic experiment to stop deflation, boost economic growth, and restore business and consumer confidence. “Abenomics” has several components: aggressive

monetary stimulus by the Bank of Japan; a fiscal stimulus this year to jump start demand, followed by fiscal austerity in 2014 to rein in deficits and debt; a push to increase nominal wages to boost domestic demand; structural reforms to deregulate the economy; and new free-trade agreements – starting with the Trans-Pacific Partnership – to boost trade and productivity. But the challenges are daunting. It is not clear if deflation can be beaten with monetary policy; excessive fiscal stimulus and deferred austerity may make the debt unsustainable; and the structural-reform components of Abenomics are vague. Moreover, tensions with China over territorial claims in the East China Sea may adversely affect trade and foreign direct investment.

Global tide Then there is the Middle East, which remains an arc of instability from the Maghreb to Pakistan. Turkey – with a young population, high potential growth, and a dynamic private sector – seeks to become a major regional power. But Turkey faces many challenges of its own. Its bid to join the European Union is currently stalled, while the euro zone recession dampens its growth.

Its current-account deficit remains large, and monetary policy has been confusing, as the objective of boosting competitiveness and growth clashes with the need to control inflation and avoid excessive credit expansion. Moreover, while rapprochement with Israel has become more likely, Turkey faces severe tensions with Syria and Iran, and its Islamist ruling party must still prove that it can coexist with the country’s secular political tradition. In this fragile global environment, has America become a beacon of hope? The U.S. is experiencing several positive economic trends: housing is recovering; shale gas and oil will reduce energy costs and boost competitiveness; job creation is improving; rising labour costs in Asia and the advent of robotics and automation are underpinning a manufacturing resurgence; and aggressive quantitative easing is helping both the real economy and financial markets. But risks remain. Unemployment and household debt remain stubbornly high. The fiscal drag from rising taxes and spending cuts will hit growth, and the political system is dysfunctional, with partisan polarisation impeding compromise on the fiscal deficit, immigration, energy policy, and other key issues that influence potential growth. In sum, among advanced economies, the U.S. is in the best relative shape, followed by Japan, where Abenomics is boosting confidence. The euro zone and the U.K. remain mired in recessions made worse by tight monetary and fiscal policies. Among emerging economies, China could face a hard landing by late 2014 if critical structural reforms are postponed, and the other BRICs need to turn away from state capitalism. While other emerging markets in Asia and Latin America are showing more dynamism than the BRICs, their strength will not be enough to turn the global tide. © Project Syndicate

China could face a hard landing by late 2014 if critical structural reforms are postponed, and the other BRICs need to turn away from state capitalism

16 |

business daily April 4, 2013

CLOSING Hyundai, Kia recall vehicles in U.S.

Thursby to begin CEO role at NBAD

Hyundai Motor Corp and its Kia Motors affiliate are recalling more than 1.8 million cars and SUVs in the United States to address a potentially faulty switch and a loose headliner, according to U.S. safety regulators. Hyundai is recalling 1,059,824 cars and SUVs and Kia 623,658 vehicles from model years 2007 through 2011 to replace a switch that could increase the risk of a crash, according to documents filed with U.S. National Highway Traffic Safety Administration. In addition, Hyundai is recalling another 186,254 Elantra cars from model years 2011 through 2013 to apply adhesive strips to the headliner.

National Bank of Abu Dhabi named the banker who led Australia and New Zealand Banking Group’s push into Asia as its chief executive yesterday, as it expands abroad from its saturated local market. Alex Thursby (pictured), currently ANZ’s chief executive for international and institutional banking, will take over on July 1 at NBAD, where he will also face the challenge of fighting off pretenders to the bank’s number one domestic position. NBAD, almost 70-percent owned by Abu Dhabi’s government, has the largest market capitalisation and profitability of the 50 local and international banks in the United Arab Emirates.

U.K. banks try to dodge EU bonus cap Lenders want risk-taker definition to be made stricter, sources say

Cyprus agrees ‘challenging’ plan Rescue plan will require great efforts, IMF says

taking, he added. “If you are sitting pretty with a nice fixed income of a million, it’s not so scary to gamble,” he said. “There’s an argument we will have a harder time applying claw-backs and other risk preventing measures because it will be forced onto the fixed part of compensation.” Officials at the EBA declined to comment, as did officials at Barclays Plc, HSBC Holdings Plc, Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc and Standard Chartered Plc, Britain’s five largest lenders by market value. “The worry is, to other parts of the world the EU looks less and less relevant,” said Chris Cummings, chief executive of TheCityUK, a Londonbased lobby group that represents U.K. financial services firms. “Europe can be an entrepreneurial place to do business, but what we have to realize is this is a competitive sport.” As the rules come into effect, international firms may decide not to expand their workforce in London, said Mr Cummings. As well as affecting those in risk-taking roles, other supporting jobs may go, he said.

yprus has agreed to a set of measures that will release a 10 billion-euro (US$12.8 billion) international bailout. The International Monetary Fund (IMF), which is contributing 1 billion euros, says they are “challenging” and will require “great efforts” from its population. They will mean a doubling of taxes on interest income to 30 percent and a rise in corporation tax from 10 percent to 12.5 percent. The plan, designed to stabilise the banking system and government finances, was agreed in principle last week. Cyprus’s new finance minister Harris Georgiades, speaking on his first day in the post, said he was determined to honour the country’s commitments: “The responsibility is great, and the expectations of our citizens greater. Our promise is that we will make every effort for what is best for the nation. Under your guidance I am sure we will succeed.” His appointment followed the resignation of Michalis Sarris on Tuesday. The plans for the two largest banks, Bank of Cyprus and Laiki, are especially controversial in Cyprus, as they will involve heavy losses for depositors with large balances in their accounts. The IMF, which is providing 10 percent of the bailout money, said 95 percent of account holders would be protected. The majority of accounts have less than 100,000 euros in them, which will not be affected. However, depositors with more than 100,000 euros will lose some of their savings. Although the exact amount has still not been decided, reports have said they could lose up to 60 percent. Cyprus agreed last week to shut down Laiki and transfer deposits of under 100,000 euros to Bank of Cyprus. “This is a challenging programme that will require great efforts from the Cypriot population,” the IMF’s managing director, Christine Lagarde, said. She added that its aim was to spread the pain, and “seek to distribute the burden of the adjustment fairly among the various segments of the population and to protect the most vulnerable groups”.

Bloomberg News

AFP

The EU brokered a draft deal in February

.K. lenders are preparing to lobby the European Union’s chief banking regulator to reduce the number of employees hit by rules capping bonuses, two people familiar with the talks said. The European Banking Authority will in the next 12 months decide which employees will be covered by the curbs after the EU said they would apply to risk-takers. Banks are trying to have the rules apply to fewer workers by recommending that the definition of a risk-taker be made stricter, said the people, who declined to be identified because the talks are private. The EU brokered a draft deal in February to outlaw banker bonuses that are more than twice fixed pay, a move lawmakers said would prevent excessive payouts and curb irresponsible risk-taking. U.K. Chancellor of the Exchequer George Osborne opposed the curbs, saying they would harm the competitiveness of the nation’s finance industry. “Compensation alone doesn’t solve risk-taking,” Carl Sjostrom, regional director for reward consulting in Europe at Hay Group in London, said. “There’s always

someone who wants to do something that might not be sensible because they want to gain a promotion, fame or fortune.” The U.K. has 1,300 so-called code staff, who have received Financial Services Authority approval and would be affected by the cap as it stands, Andrew Bailey, Britain’s top bank supervisor, said on March 13. According to “back of the envelope” calculations, employees may get as much as 500 million pounds (US$756 million) more in base pay to offset the limit, he said.

EU pressure Banks are also under pressure from U.K. lawmakers to limit their proprietary trading activities as well as European plans for a financial transactions tax. That tax could add 3.95 billion pounds to the cost of issuing U.K. government debt, according to a report commissioned by the City of London Corporation yesterday. Raising base pay at the expense of bonuses may backfire as firms will still have to pay salaries when revenue declines, Mr Sjostrom said. It may even encourage risk-