Casino op screens staff as bird ‘flu precaution
Year II Number 257 MOP 6.00 Tuesday April 9, 2013 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: Vitor Quintã www.macaubusinessdaily.com
At least one casino operator is checking the body temperature of employees arriving at work, Business Daily has learned. It’s understood to be in direct response to the deadly H7N9 bird ‘flu outbreak in mainland China. The move is described as “purely precautionary” and not because there is any particular risk associated with that company or its staff, said an industry source.
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Gas supplier pleads for price hike after losses
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he city’s only natural gas importer hopes to reach a deal with the government allowing it to put up prices by mid-year. It’s necessary to improve its trading position says Sinosky Energy (Holdings) Co Ltd. The firm stated in its annual report published yesterday that it recorded losses of 28.63 million patacas (US$3.58 million) last year, taking its accumulated losses to 119.5 million patacas. The company reported no income in 2012 because of a temporary closure of the supply pipe via Hengqin Island. Despite the expected resumption of supplies later this year the firm is looking at bigger losses. It says it is paying 4.6 patacas per cubic metre of natural gas but only receiving 2.74 patacas from the government. More on page 3 I SSN 2226-8294
Border hours extension ‘good’ for tourism
Right time for higher sales: watch retailer
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Fitch ups 2013 estimates for gaming Page 6
Brought to you by Page 7
Viva Macau loans went to the right place: govt The government loans granted to now defunct low-cost carrier Viva Macau – Sociedade de Aviação Ltda were to improve its operations, the administration stressed. Legislator José Pereira Coutinho has accused the board of the Industrial and Commercial Development Fund of negligence and of wasting government money. Five government loans worth a total of 212 million patacas (US$26.6 million) were granted to Viva Macau between 2008 and 2009. Page 2
2013-04-09
2013-04-10
2013-04-11
18˚ 23˚
16˚ 20˚
15˚ 19˚
HANG SENG INDEX 21770
21746
21722
21698
21674
Turbocharged start for banking profits Macau banks have for the first time taken just two months to exceed one billion patacas (US$125 million) in profits, official data show. The Lunar New Year period was good for the banking industry here. Profits rebounded in February after a disappointing start to the year. The combined profit of local banks was 541.3 million patacas (US$67.7 million) in February, up by 86 percent from a year before. Page 5
21650
April 8
HSI - MOVERS Name
%Day
BELLE INTERNATIONAL
4.30
CATHAY PAC AIR
4.07
WHARF HLDG
2.10
CHINA MERCHANT
1.89
CHINA RES ENTERP
1.89
NEW WORLD DEV
-1.25
CHINA RES POWER
-1.29
PING AN INSURA-H
-1.30
CHINA SHENHUA-H
-2.01
WANT WANT CHINA
-2.94
Source: Bloomberg
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business daily April 9, 2013
macau
Govt defends its lending to failing budget airline The government denies that it was irresponsible to let Viva Macau borrow money Tony Lai
tony.lai@macaubusinessdaily.com
T
he government is insisting that money it lent to Viva Macau – Sociedade de Aviação Ltda was used to improve the now-defunct low-cost airline’s services. The government said so in a written reply last week to an inquiry in February by Legislative Assembly member José Pereira Coutinho, who accused officials of negligence and of wasting government money. The head of the Economic Services Bureau, Sou Tim Peng, who presides over the Industrial and Commercial Development Fund, retorted that the fund had “strictly fulfilled its responsibilities according to the law and prudently utilised its resources”. Mr Coutinho had accused the fund of failing to supervise five government loans to Viva Macau, together amounting to 212 million patacas (US$26.6 million), made in 2008 and 2009.
The government grounded Viva Macau in March 2010 because it had repeatedly cancelled flights. The airline declared bankruptcy the following September. Viva Macau did not pay back all the money it borrowed. Mr Sou said the fund “had closely followed Viva Macau’s capital execution and its operations” after each loan had been approved. He said that, according to reports Viva Macau had submitted in 2008 and 2009, the airline had used the money it borrowed to improve its operations. But the Economic Services Bureau failed to say why the government made the last three loans when the airline was already behind in servicing the first two. The bureau also failed to say why the government gave the airline more time to pay back the last three loans than the first two. Mr Sou said only that the loans
were “in line with the social and economic interests of Macau”. He mentioned examples of governments in Europe and the United States bailing out airlines. He said the government had
lent the money to “maintain the sustainable development of the Macau aviation industry during an economic slowdown”. The Economic Services Bureau said it had taken legal action to get the money back from the guarantor of the loans, Hong Kong’s Eagle Airways Holdings Ltd, the major shareholder in Viva Macau. The authorities are going ahead with an auction of the 99.9 percent of Viva Macau stock held by Eagle Airways, which has a face value of almost 25 million patacas. The reserve price is 70 percent of that figure, or about 17.5 million patacas. But the sale is unlikely to be successful. A report in September 2010 by the court-appointed administrator of Viva Macau estimated the airline’s debts at US$38 million and identified no assets.
The government lent Viva Macau 212 million patacas in 2008 and 2009
business as usual
Better than nothing James Chu Artist and designer
T
he Civic and Municipal Affairs Bureau has announced that it is going to build this year nine dog parks, seven on the peninsula and two on Taipa. This is good news for pet owners. The first dog park, near Bai Yun Garden and the sewage works, is under construction and is meant to be finished this month. But the park, covering 1,800 square metres, is in the middle of a very busy traffic intersection. The only entrance is over a flyover between the coast and the reservoir. If you drive by slowly enough, you may be able to find this secret garden. The pollution caused by the traffic is very serious. I imagine the only suitable time to bring your dog there will be on a Sunday morning or late at night, when there is less traffic. Will these dog parks really be in the right places? Or will they just be put on the leftover scraps of land that nobody can think of any other use for? A very nice dog park in Hong Kong, Penfold Park at the Sha Tin Racecourse, is widely known. The park was the venue for the equestrian events of the Beijing Olympic Games in 2008. It has a green area of over 40,000 square metres for dogs to run around in. Macau should follow the example set by Penfold Park, and ask the Jockey Club and the Canidrome to release the area in the middle of their circuits for better facilities for dogs. These could be the most suitable places for animal rights groups to build shelters – which might stop the government from killing more than 2,000 dogs and cats every year. Apart from creating dog parks, the government should really consider designing smaller, lighter and better-looking licence tags for our furry friends. I really cannot imagine how ridiculous the present big, ugly pieces of metal might look hanging from a Chihuahua’s or poodle’s collar. We have many good designers in Macau, but first the authorities have to learn good taste.
April 9, 2013 business daily | 3
MACAU
Gas importer eyes summer price rise Sinosky Energy stayed in the red last year, as the supply of natural gas was still suspended Tony Lai
tony.lai@macaubusinessdaily.com
T
he city’s sole importer of natural gas, Sinosky Energy (Holdings) Co Ltd, hopes the government will agree by the middle of this year to an increase in the price of the gas it supplies, and so help turn its troubled business around. Sinosky Energy’s annual report, published yesterday, says it made a loss of 28.63 million patacas (US$3.58 million) last year. The company reported no revenue because the supply of gas remained suspended for the entire year. Macau has imported no natural gas since the middle of 2011, to allow for construction work on Hengqin Island and the laying of a new gas pipeline in Zhuhai. But Sinosky Energy was financially troubled even before the suspension of the supply, as it was selling gas here below cost price. Sinosky Energy made a loss of 43.48 million patacas in 2011, bringing to 119.5 million patacas its accumulated losses between 2008, when it began importing gas, and the beginning of last year. The company’s 15-year contract to supply gas, signed in 2006, caps the price of the gas it sells at 2.74 patacas per cubic metre, but says the cap can be reviewed every three years. Sinosky Energy’s annual report says the price of natural gas in the international market has been rising since 2010, but that the government has approved no increase in the selling price here. “The company is now actively cooperating with the government over its requirements and negotiating in the hope of reaching a win-win
Macau has imported no natural gas since 2011, but the supply could resume this year
situation with the government by mid-year,” it says. The report does not say how big an increase in price the company is aiming for.
Nothing for nothing The head of the Office for the Development of the Energy Sector, Arnaldo Santos, said in June that Sinosky Energy wished for an increase of 60 percent. Last month Mr Santos declined to comment on the progress of the negotiations. “We do not rule out the possibility of an increase in the future, but there
is no information at the current stage about a new natural gas price,” he said. Business Daily asked Mr Santos’s office and Sinosky Energy about the progress of the negotiations, but neither had replied by the time we went to press. Sinosky Energy’s chairman and executive director, Michael Tong Seak Kan, had previously said his company might take its case for an increase to court. The company’s annual report says: “Currently the company has to subsidise sales of natural gas by 1.8673 patacas per cubic metre and this situation has led to heavy losses for Sinosky Energy.”
The annual report says the import price of natural gas from mainland China is now 4.60 patacas per cubic metre, and that the company’s monthly loss could reach 36 million patacas once the supply is restored to its previous volume of 65,000 cubic metres per day. The annual report says Sinosky Energy hopes the supply of gas imported though permanent pipelines will be fully restored this year. But it also says the company could begin supplying gas to the public housing in Seac Pai Van through temporary pipelines. Mr Santos said last month that he hoped the supply could be fully restored by the middle of the year.
Visitor arrivals up in Ching Ming Temporary border opening extension seems to have helped casinos, says Ambrose So Tony Lai
tony.lai@macaubusinessdaily.com
T
he number of visitors coming to Macau topped 457,000 during the four-day Ching Ming holidays, up by 4 percent from
Chief Executive Chui Sai On is hoping for ‘good news’ on border crossings
the same period of last year, the Public Security Police said yesterday. The first three days of the tombsweeping celebration – from April 4
to 6 – also marked the first trial of a temporary two-hour extension in the opening hours of the Gongbei border. Official data shows over 811,000 people used the border terminal in those three days. The police did not provide figures for year-on-year comparison. Over 18,800 people crossed the Gongbei border in the extended time slots, accounting for 2.3 percent of the total users during those three days. The border opened at 6 am instead of 7 am and closed at 1 am rather than at midnight. Asked yesterday if the opening hours of Gongbei border would be extended again during next month’s Labour Day Golden Week, Chief Executive Fernando Chui Sai On declined to reply. He told media on the sidelines of the Boao Forum for Asia in Hainan
province that he hopes for “good news” on the border crossing. The government will strive to eventually have the border open around the clock, said Mr Chui. However this depends on the arrangement of human resources in mainland China, he added. Ambrose So Shu Fai, chief executive of SJM Holdings Ltd, said longer opening hours in the border was “good” for the gaming industry. He told reporters in a media luncheon yesterday that he noticed an increase in the number of people visiting casinos and of chips purchased during the Ching Ming holidays. But he quickly added that figures for only a few days “cannot reflect a trend” on whether longer opening border hours would boost casino revenue.
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business daily April 9, 2013
macau
Casino firm screening staff as H7N9 precaution Arriving workers advised to go to doctor if have high temperature Michael Grimes
michael.grimes@macaubusinessdaily.com
A
t least one casino operator is checking the body temperature of employees arriving at work, Business Daily has learned. It’s understood to be in direct response to the deadly H7N9 bird ‘flu outbreak in mainland China. The move is described as “purely precautionary” and not because there is any particular risk associated with that company or its staff, said an industry source. In another development yesterday, Ambrose So Shu Fai, chief executive of SJM Holdings Ltd, said his own firm would consider “strengthening preventive measures in the casinos” against the H7N9 virus – possibly via body temperature checks on visitors as they enter its venues. He added
the company was “still studying” the options. The casino industry in general would increase messages to visitors about the importance of maintaining personal hygiene, Mr So told reporters at a lunch for media representatives yesterday. There are no reports so far of human-to-human infection from H7N9. But with millions of Chinese people having spent the past few days travelling to and from ancestral home regions during the Ching Ming festival, the potential for anyone already unknowingly infected with the illness to present themselves in another part of the country for treatment has risen. The Macau casino operator
checking its own staff was also said to be constantly vigilant about public health issues. “That operator is always conscious of the risk of epidemics – partly due to the density of population here,” stated a source. “Are they more on alert today than they were a month ago? Probably not because they always have a high level of attention to these issues,” said the person. They are checking staff to make sure their temperature is right. If for any reason they have a high temperature they tell them to make sure they go to a doctor. I think all the operators will be doing that. It’s pretty standard procedure,” added the source. Another source told Business Daily that the Health Bureau circulates to the tourism operators a regular bulletin on public health issues. “[Casino] operators talk to the Health Bureau constantly – not just during times of an outbreak of illness on the mainland,” said the second source. “The Bureau provides regular updates about the region concerning public health. There’s usually a monthly bulletin [from the Health Bureau] and then other updates if it’s necessary.” The person added: “It’s called ‘Macau Public Health Emergency Response Monthly’. This bulletin mentions whether there are any public health issues that should be taken into consideration. It’s sent to
Health Bureau in Shanghai for bird ‘flu talks Authorities also met mainland and Hong Kong officials in Zhuhai to step up inspections of live poultry Tony Lai
tony.lai@macaubusinessdaily.com
H
ealth Bureau staff flew to Shanghai yesterday for urgent consultations with mainland officials about the outbreak among humans of the deadly bird ‘flu virus known as H7N9. As Business Daily went to press, the eastern city province had the largest number of confirmed cases. The team sent to Shanghai composed four medical professionals including its deputy director Chan Wai Sin, said the bureau. Macau’s Chief Executive Fernando Chui Sai On said in comments at another event on the mainland that the bureau’s trip to Shanghai was to “understand more about the preventive
measures and treatments”. This could be “beneficial to our planning” for the disease in a later stage, Mr Chui said yesterday on the sidelines of the Boao Forum for Asia in Hainan province. Mr Chui also added: “We have the ability to carry out the testing [on H7N9] now as well as having enough medical reserves [medicines] and personal protection equipment.” He stated the administration was liaising not only with the mainland but also neighbouring jurisdictions and the World Health Organization. Chan Tai Ip, vice dean of Kiang Wu Hospital, said in an unrelated press conference here yesterday the facility would “remain in close
contact with the Health Bureau” on the development of measures against the disease. By the time this newspaper went to press yesterday, China confirmed three new cases – one fatality in Shanghai and two patients in critical conditions in Jiangsu city. It brought to 24 the number of reported H7N9 cases since the first recorded in the eastern region of the mainland on March 31. Seven patients had died as of last night.
Rising toll Liang Wannian, director of the H7N9 influenza prevention and control office under the National
clinics and hotels in Macau as well as the gaming operators.” “They also talk in the bulletin about what is the government’s position regarding risk management, and what they are telling Macau residents when residents travel outside the city. “Recently they’ve obviously been mentioning H7N9, the risk assessment and whether it’s going to affect the travel trade and whether it’s going to spread internationally. The answer on both those was ‘not yet’. At this point the industry doesn’t really see something major [happening] with this outbreak,” added the second person. With Tony Lai
Outbreak not yet threat: Union Gaming The H7N9 bird ‘flu outbreak on the mainland “does not yet” pose an economic threat to Macau’s tourism industry said Union Gaming Research Macau in a note to clients. “At the moment all H7N9 cases are contained in the Yangtze River Delta provinces, which are relatively far away from Macau, and we believe it does not yet pose a threat to Macau’s public health and is not having any impact on visitation,” said the research house. “Chinese Center for Disease Control and Prevention said there was not yet any evidence of human-to-human transmission, therefore the risk to public health appears to be low at the moment,” added the note to the investment community. “…it’s not possible to make any conclusions at this stage about its mortality rate because many mild cases may go undetected. Please note that the strain that was responsible for the bird ‘flu outbreak across Asia in 2003 was caused by a more virulent H5N1 strain which had a mortality rate of about 60 percent,” stated Union Gaming.
Health and Family Planning Commission, said at a press conference yesterday morning that ten of the reported cases were in Shanghai, six in Jiangsu province, two in Anhui province and three in Zhejiang province. WHO’s representative Michael O’Leary stated at a press briefing in Beijing on Monday the United Nations body did not think it necessary at present to introduce screening measures at ports of entry or adopt any restrictive measures affecting tourism and trade on the mainland. Macau’s Civic and Municipal Affairs Bureau held a meeting in Zhuhai on Sunday with mainland and Hong Kong officials to discuss how to deal with imports of live poultry. The bureau’s food safety team said in a press statement yesterday that the mainland authorities would carry out testing for the H7 ‘family’ of viruses among every piece of live poultry from Guangdong and Hainan. The two provinces supply most of the poultry imported by the two Special Administrative Regions. Normally only batches of the animals are tested. Civic and Municipal Affairs officials pledged there would also be increased exchanges of information and technology between the three jurisdictions. With Xinhua
April 9, 2013 business daily | 5
MACAU
Profits from banking rebound in February The banks lent more money to outsiders, even though deposits by outsiders shrank Vítor Quintã
vitorquinta@macaubusinessdaily.com
T
he Lunar New Year was a good one for the banks, the industry’s profits having rebounded in February after a disappointing start to the year. Data released by the Monetary Authority of Macau show the banks made combined profits of 541.3 million patacas (US$67.7 million) in February, 86 percent more than in February last year. After growing in each of the last five months of last year, bank profits were 1.2 percent lower in January than a year before. Year-on-year comparisons are skewed by the Lunar New Year holidays falling this year in February, having fallen last year in January. In the first two months of this year bank profits were almost one-third higher than a year before, at 1.03 billion patacas – more than the banks made in all of 2003. This is the first time since the
Monetary Authority of Macau began publishing monthly data in 1990 that bank profits have topped 1 billion pataca within the first two months of any year. The industry’s performance in February was boosted by lending – most of it lending to non-residents – increasing faster than deposits. Bank lending was 442.1 billion patacas, 2.1 percent more than in January. Deposits amounted to 568.7 billion patacas, just 0.5 percent more than in January. Lending to non-residents increased by 3.2 percent to 234.9 billion patacas. Banks can pay low rates of interest on deposits obtained here – the six-month benchmark rate was 0.56 percent at the end of February – and lend the money abroad, especially to gaming-related businesses, at much higher rates. Outsiders can get loans of more of than 1.7 times what they put in
The banks needed just two months to top 1 billion patacas in combined profits this year (Photo: Manuel Cardoso)
the bank here. Deposits by non-residents fell by 0.8 percent in February to 133.7 billion patacas. The combined loans of the banks amounted in February to the equivalent of just 77.7 percent of their combined deposits, 2.4 percentage points more than in December.
This means loans as a proportion of deposits here are above the ceiling of 75 percent set for commercial banks in mainland China. High loan-to-deposit ratios have caused problems for many international lenders. However, if the ratio is too low, banks may not earn as much as they could.
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business daily April 9, 2013
macau
Omega store here helps watch retailer
Former Brazilian president Luiz Inácio Lula da Silva
Hengdeli’s profits grew last year thanks to growing tourism shopping Vítor Quintã
vitorquinta@macaubusinessdaily.com
W
ith visitors spending more money in luxury goods in Macau, watch retailer Hengdeli Holdings Ltd saw its revenue and profit grow last year. The seller of Omega, Cartier and Rolex watches in Greater China recorded sales of 12.1 billion yuan (15.6 billion patacas), up by 6.6 percent from 2011. Profits rose by 3 percent yearon-year to 945.5 million yuan even “amid the volatile global economy with increasingly gloomy outlook,” chairman Zhang Yuping said in a filing. The low single-digit increase was a let-down after the company had posted a profit increase of more than a quarter (26 percent) in the first half of last year. There was a downturn in the high-end retail market, said Mr Zhang, partially offset by “a pleasant growth” of 22.2 percent in the sales of middle-end watches. Hengdeli has 452 outlets in Greater China, including one Omega store in Macau, the Chinese
partner of Swatch Group AG told the Hong Kong Stock Exchange. Thanks to “the heating-up tourism in Macau, the Omega boutique in Macau again achieved positive sales,” the Hong Kong-based company said. In the last quarter of 2012 each visitor to Macau spent an average of 190 patacas (US$23.8) in jewellery and watches, up by 8 percent from a year earlier, official data show. And the Hong Kong-based group is also expecting a good performance for its only store here this year, “given the changing economic conditions and improved economic status of Macau”. “The group’s businesses in Hong Kong and Macau will definitely complement well with each other, which will further consolidate the group’s leading position in the region,” Mr Zhang wrote. Hengdeli will “cautiously expand its middle-to-high-end watch retail” in mainland China. No plans for more stores in Macau were mentioned in the firm’s annual report.
Macau firm tangled in Brazil ex-president probe Supplier of Portugal Telecom here mentioned in corruption scandal Vítor Quintã
vitorquinta@macaubusinessdaily.com
B
Hengdeli expects to profit from the ‘improved economic status’ of Macau
razil has opened a probe into claims linking popular expresident Luiz Inácio Lula da Silva to a corruption scandal, which could involve a Macau company. The Public Ministry there ordered police on Friday to investigate an alleged payoff by telecommunications operator Portugal Telecom SGPS SA to the ruling Workers’ Party during Mr Lula’s first term in office. Businessman Marcos Valério Fernandes de Souza has said the former president and ex-finance minister Antonio Palocci negotiated a US$7 million (56 million patacas) payoff in 2005 with the one-time president of Portugal Telecom. The transfer was made through a bank account of a Portugal Telecom supplier in Macau to an account of Brazilian campaign advisers working for the Workers’ Party, Mr Fernandes de Souza said in his testimony in September, Brazilian newspaper Estado de São Paulo reported in December. The supplier was not identified. Portugal Telecom is still one of the major shareholders of Macau’s biggest telecommunications operator, Companhia de
Telecomunicações de Macau, SARL (CTM), with a 28 percent stake. But the firm has already agreed to sell its shares to Citic Telecom International Holdings Ltd, a unit of Chinese state-owned conglomerate Citic Group, for US$411.6 million. Mr Fernandes de Souza received a 40-year sentence last year after he was found to have run much of the scheme that channelled cash to the ruling party. In December, the high court concluded what was one of the biggest and furthest reaching corruption trials, convicting 25 of 38 people who were accused of corruption including senior ruling party members. The scandal nearly cost Mr Lula his re-election in 2006. But the 67-year-old founder and leader of the leftist PT was cleared and he has always maintained he was unaware of the scheme. He was not put on trial. Mr Lula, who had soaring popular approval ratings while in office, handed over power to president Dilma Rousseff at the end of his second consecutive four-year term in 2010 as required by the constitution. With AFP
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April 9, 2013 business daily | 7
MACAU
Fitch ups 2013 estimates for Macau gaming rev Says rebound seen despite partial smoking ban in city’s casinos Michael Grimes
michael.grimes@macaubusinessdaily.com
Market sentiment – more bullish over Macau
F
ollowing a near 15 percent rise year-on-year in Macau’s gross gaming revenues for the first quarter, Fitch Ratings has revised its market outlook for the whole year to “over 11 percent” growth from its previous estimate of more than eight percent expansion. “Based on VIP growth of four to five percent and mass market growth of 20 percent to 25 percent, we are increasing our 2013 forecast for
total Macau gaming revenue growth to over 11 percent up from over 8 percent,” said the ratings firm in a statement. Fitch added: “…the rebound in Macau VIP growth picked up in Q412 and continued in 1Q13 despite the partial smoking ban in the market that was implemented at the beginning of this year.” Between January 1 – when the partial smoking ban was imposed
in Macau casinos – and March 29, a total of 10,812 people had been prosecuted for smoking in prohibited areas said the Health Bureau. The government has not yet officially published the split between VIP revenue and massmarket revenue for the entire first quarter. Many analysts use unofficial sources to arrive at an estimate. They believe any double digit percentage increase in VIP revenue in the first three months of 2013 combined with healthy mass-market expansion in the same period, could indicate a return to more robust growth for 2013. In the fourth quarter of 2012, the VIP baccarat market expanded by three percent year on year according to the Gaming Inspection and Coordination Bureau. In the same period the mass market grew 28 percent. In a note on April 3, Kenneth Fong of J.P. Morgan Securities (Asia Pacific) Ltd in Hong Kong reiterated his belief that first quarter growth in VIP could be the strongest in five quarters. “Given that the mass market is steadily growing at more than 30
percent and it contributes 30 percent of the top line, a 25 percent headline revenue growth would imply that VIP revenue is growing at around 20 percent, the strongest since 1Q12,” he wrote. March had five full weekends – i.e., five Friday to Sunday periods. That could have been a factor in boosting March numbers and thus helping the first quarter’s total numbers. Analysts say weekends usually generate more revenue – especially in the mass segment – than weekdays.
11 % plus growth Fitch Ratings’ Macau revenue estimate 2013
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business daily April 9, 2013
GREATER CHINA Patek Philippe clock sells for HK$18.04 mln A Patek Philippe clock made of diamonds, rubies, sapphires and gold sold for HK$18.04 million (US$2.32 million) at Sotheby’s, setting an auction record for any timepiece sold by the New York-based auction house. “The Magpie’s Treasure Nest Clock” garnered 35 bids from five different people before an online bidder won the lot, which carried a pre-sale estimate of HK$3 million to HK$5 million, Sotheby’s said yesterday. The 52-centimetre (20.5 inch) high clock weighs 15.1 kilograms (33.2 pounds), with 24.95 carats of diamonds, 6.02 carats of sapphires, rubies weighing 13.17 carats and one oval tanzanite weighing 104.75 carats, according to the Sotheby’s catalogue.
Yuan-Aussie direct tr to start April 10: Gilla
Westpac, ANZ secure deal to directly trade the Fion Li and Jason Scott
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hina will start direct trading between the yuan and Australia’s dollar from April 10, according to Australian Prime Minister Julia Gillard. Australia & New Zealand Banking Group Ltd and Westpac Banking Corp. have been approved by the People’s Bank of China (PBOC) as market makers for the direct trading of the currencies, Ms Gillard said at a press conference in Shanghai yesterday. “This will be a huge advantage for Australia, not only for our big businesses, but also for our small and medium enterprises that want to do business here,” Ms Gillard said. A formal announcement of the plan, which will see Australia’s dollar become the third major currency allowed to have direct trading links with the yuan, will be made today, she said. China remained Australia’s top trading partner in February, with transactions at A$9.7 billion (US$10.1 billion), according to the bureau of statistics. Asia’s largest economy took about a third of the nation’s exports that month and is the major customer for iron ore and coal. The PBOC announces a daily reference rate for the yuan against the Australian dollar at around 9.15
China unlikely to sustain ‘ultra-high speed growth’ But Xi Jinping says economy remains ‘in good shape’
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hina’s President Xi Jinping said yesterday the days of “ultra-high speed” growth in the world’s second-largest economy – which many hope can spur a global recovery – are probably over.
“I don’t think we will be able to sustain an ultra-high speed of economic growth and it is not what we want either,” Mr Xi told about two dozen foreign business figures on the southern island of Hainan.
“Still it is possible for us to sustain a relatively high speed of economic growth,” he added. “The Chinese economy is in good shape.” China has recorded annual average growth of 9.9 percent since the country began opening up its economy, he said, describing the feat as “rarely seen in the history of world economic development”. Mr Xi was speaking at a meeting held as part of the Boao Forum for Asia, an annual gathering of political and economic leaders. He said factors such as urbanisation, continuing industrialisation and the modernisation of agriculture were cause for optimism regarding the future “upward trajectory” of the economy. But he did not elaborate on what his terms meant in exact figures.
am in Shanghai on each trading day, based on market-maker prices. Direct trading means the fixing will be computed without involving a cross rate with the dollar.
Lower costs Direct trading will lower customers’ costs by “a few basis points,” ANZ chief executive Mike Smith, said at the press conference in Shanghai. “The effect is the convenience of being able to do this,” he said. “For example, in a trade document, rather than going through the U.S. dollar and having the movement of the currency over time, you can immediately lock in the exchange rate.” The yuan gained 0.08 percent to 6.4379 per Australian dollar in Hong Kong, according to data compiled by Bloomberg. It touched 6.4228 earlier, the strongest level since March 14. The central bank raised the yuan’s reference rate against the Australian dollar by 0.78 percent yesterday to 6.4984, the biggest gain since February 21. The Australian dollar follows the greenback and the yen in being able to be directly traded with the yuan. “Direct trading is likely to lead
China’s economy grew at its slowest pace in 13 years in 2012, with gross domestic product expanding 7.8 percent in the face of weakness at home and in key overseas markets. Mr Xi said the figure was lower than in previous years, “partly due to our efforts to control the speed of economic growth and speed up the transformation of the growth model”. “We will shift the focus of economic development to quality and efficiency,” he added. China’s leaders have repeatedly vowed to retool the economic model to emphasise consumer demand as the key growth driver rather than investment and exports. The country last month announced its economic growth target for 2013 is 7.5 percent, the same as last year. AFP
April 9, 2013 business daily | 9
GREATER CHINA HK airbridge collapse rips off plane door Hong Kong authorities said yesterday they had launched an investigation after an airbridge collapsed at the city’s airport, ripping the door off a Cathay Pacific Airways Ltd plane and injuring a technician. The boarding bridge for a Cathay flight bound for Nagoya in Japan on Sunday evening suddenly collapsed after all of the 262 passengers had boarded the aircraft, according to the Hong Kong Airport Authority and Cathay. The rear bridge then smashed into the head bridge, which was connected to the first class cabin, ripping a door off the A330 aircraft. “We are investigating the cause of the incident,” a spokesman from the Hong Kong Airport Authority told AFP.
rading ard
e two currencies
to narrower bid-ask spreads and lower costs for customers,” said Dariusz Kowalczyk, a Hong Kongbased strategist at Credit Agricole CIB. “We do not expect a lot of foreign-exchange trading volumes as most flows are still settled in the U.S. dollar, but the announcement represents an important move in collaboration between the two countries and in the development of offshore markets.” Chinese Premier Li Keqiang took office last month and retained Zhou Xiaochuan as central bank governor, a vote of confidence in policies that include promoting the usage of yuan in global trade and finance. Mr Zhou is seeking to reduce reliance on the dollar, as China has accumulated US$3.3 trillion of foreign-exchange reserves, the world’s largest stockpile. The yuan climbed to a 19year high 6.1986 against the greenback on April 2, prices from the China Foreign Exchange Trade System show. It was the 14th most-used currency in global payments in February, according to the Society for Worldwide Interbank Financial Telecommunication, surpassing the Russian ruble the previous month. It had a 0.6 percent
Cashed Chinese banks hunt Asia loans
This will be a huge advantage for Australia, not only for our big businesses, but also for As more acquisitions, private our small and medium transactions emanate from China enterprises that want hina’s banks, led by Industrial 68th in arranging loans in Asia with to do business here [in & Commercial Bank of China 0.3 percent, falling from 39th in 2012, China] Ltd with ten times more cash when it took 0.6 percent.
C
Julia Gillard, Australian Prime Minister
share, figures from the financial messaging platform show. Taiwanese banks started accepting yuan deposits in February, while authorities in Beijing appointed Industrial & Commercial Bank of China Ltd as the yuan clearing bank in Singapore. Bank of England said it has the inside edge to be the first Group of Seven nation to sign a currency-swap agreement with China after a meeting in February. The yuan-Aussie direct trading is “an important step in the process of internationalising the renmimbi,” Neville Power, chief executive of Perth-based Fortescue Metals Group Ltd, said in an interview on Bloomberg TV yesterday. “Going forward I see more opportunities to do direct trading in the renmimbi,” he said. Bloomberg News
than JPMorgan Chase & Co., are lifting lending in Asia as they undercut rivals to help the nation’s companies expand overseas. The country’s lenders have participated in 12.8 percent of syndicated loans in the Asia-Pacific region this year, up from 10.6 percent in all of 2012 and 7 percent in 2011, according to data compiled by Bloomberg. Interest margins on U.S. dollar- denominated loans signed in China since December 31 average 266 basis points compared with 291 basis points elsewhere in the region, the data show. Cheaper financing is helping companies in the world’s secondbiggest economy venture overseas for access to natural resources and to expand export markets. Cnooc Ltd in February turned to 20 banks, including ICBC, for a US$6 billion loan to acquire Canada’s Nexen Inc. that paid a starting margin of 80 basis points more than the London interbank offered rate. SapuraKencana Petroleum Bhd. is paying 175 basis points for a US$1.85 billion facility arranged by Malaysian lenders, people familiar with the matter said. “Chinese companies are stepping out onto the world stage,” said Boey Yin Chong, the Singapore-based managing director of syndicated finance at DBS Group Holdings Ltd, Southeast Asia’s largest bank. The expanded lending comes as more acquisitions and private transactions emanate from China, he added.
Higher rankings
The economy grew at its slowest pace in 13 years in 2012
JPMorgan, the largest bank in the U.S. by assets, had US$53.72 billion in cash and near cash items as of the end of 2012, according to Bloombergcompiled data. ICBC had 9.5 times that amount with the equivalent of US$510.9 billion at current exchange rates, according to the data. China’s four biggest banks – ICBC, China Construction Bank Corp., Agricultural Bank of China Ltd and Bank of China Ltd – held a combined 10.25 trillion yuan (US$1.65 trillion) of cash and near cash items as of the end of 2012, according to data compiled by Bloomberg. That’s more than seven times the US$222.78 billion held by the biggest four lenders in the U.S., the data show. ICBC, the world’s largest bank by assets, has drawn closer to BOC as it moved to 14th-biggest arranger from 30th for the same period last year, according to the data. JPMorgan ranks
Growing pie BOC, which was also among the lenders on the Cnooc deal, has helped to arrange 5.8 percent of syndicated loans this year, ranking it second after State Bank of India, Bloomberg data show. The Beijing-based lender ranked third in all of 2012 with a market share of 5 percent and ninth five years ago when it helped to organise 2.8 percent of transactions. “Chinese banks’ pie in the AsiaPacific syndicated loans market will grow larger this year and next year as they take over more of the existing market share from their Western competitors,” Stanley Li, an analyst at Mirae Asset Securities (HK) Ltd, said. “As their domestic clients seek to expand outside China, the Chinese lenders will offer the products required such as syndicated loans.” Calls to the Beijing press offices of the top four Chinese banks went unanswered on April 5, which was a public holiday in the country. Hong Kong units of the four lenders didn’t immediately reply to e-mailed requests for comments on the financing. Melco Crown Entertainment Ltd, the Hong Kong-listed casino developer with business in Macau, included ICBC and Bank of China among its eight bookrunning lenders when it borrowed US$1.4 billion in January, the data show. China Citic Bank Corp. also lent funds. The casino venture of Australian billionaire James Packer and the son of gambling tycoon Stanley Ho Hung Sun had only one Chinese bank on the syndicate arranging a HK$9.4 billion facility (US$1.2 billion) in 2011, according to the data. Bloomberg News
US$1.65 trillion
China’s four biggest banks held of cash and near cash items by the end of 2012
10 |
business daily April 9, 2013
ASIA ANA advances after Boeing 787 test ANA Holdings Inc., the biggest Boeing Co. 787 operator, rose in Tokyo trading after test flights of the grounded aircraft were completed, bringing the jet closer to returning to service. ANA advanced 1.6 percent to 194 yen (US$1.97) at the close of trading in Tokyo yesterday. GS Yuasa Corp., the Japanese maker of batteries that overheated and led to the grounding of the planes, known as Dreamliners, rose 1.1 percent. Boeing completed the test on April 5 and said it will analyse flight data and submit the required materials to the U.S. Federal Aviation Administration “in the coming days”. The FAA must decide whether the redesigned lithium-ion batteries are safe after electrical failures on a Japan Airlines Co. plane in Boston and during an ANA flight in Japan. “The company most sensitive to news about Boeing’s 787 is the biggest operator of the planes, ANA,” said Ryota Himeno, an analyst at Barclays Securities Japan Ltd. “The completion of the test flight is being taken as a good sign and leading to buying of the stock.” ANA, whose All Nippon Airways Co. unit has 17 Dreamliners, said in January the groundings would cut that month’s sales by 1.4 billion yen (US$14 million). The carrier has cancelled a total of 3,601 flights through May 31 because of the grounding. The Tokyo-based company is targeting a restart of flights in June, President Shinichiro Ito told reporters last week.
MUFJ to buy US$3.7b of loans from Deutsche Bank Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, agreed to acquire about US$3.7 billion of U.S. real-estate loan assets from Deutsche Bank AG. Mitsubishi UFJ’s UnionBanCal Corp. unit will acquire a commercial real estate lending portfolio from PB Capital Corp., a unit of the German bank, it said in a statement yesterday. The transaction is expected to be completed in the second quarter. The Tokyo-based bank, which had 218.8 trillion yen (US$2.2 trillion) in total assets at the end of March, is expanding its overseas lending to counter anaemic demand at home as European rivals scale back to comply with tighter capital rules. The deal follows the 3.8 billion-pound acquisition of Royal Bank of Scotland Group Plc’s project financing assets in Europe, the Middle East and Africa in 2010. “Given MUFG’s assets, the deal would be very small,” said Shinichiro Nakamura, a Tokyo-based analyst at SMBC Nikko Securities Inc. “Although the debt crisis has eased some, there is still a trend that European banks are cutting overseas assets. MUFG is looking for targets, but they’re struggling to find good, big ones.”
Supermax sees bird ‘flu boosting profit Supermax Corp., Malaysia’s third- largest medical glove-maker by market value, rose to a seven-month high in Kuala Lumpur as its managing director said a bird ‘flu outbreak in China will bolster earnings. The Kuala Lumpurbased manufacturer has been “flooded” with enquiries from new China clients and additional orders from existing ones, especially for its latex examination gloves, Group managing director Stanley Thai said in an e-mailed interview yesterday. “Any sudden surge in demand would certainly allow us a short-term exceptional rise in profits,” he said. “The unfortunate outbreak of H7N9 in China augurs well in our growth strategies and helps to accelerate our market penetration into the Chinese market.” China tried yesterday to ease concerns that a new strain of bird influenza will start an epidemic as authorities reported three more infections, raising the total number of cases to 21. The H7N9 virus has killed six people since March. Supermax surged 5.45 percent to 2.13 ringgit (US$0.69) in Kuala Lumpur trading, its highest close since September 4, with trading volume more than six times its three-month daily average. Top Glove Corp., Malaysia’s biggest rubber-glove maker, jumped 4.2 percent.
Japan rebounds to current-account surplus Weaker yen, fuel imports weigh on current account
The yen fell yesterday to the lowest level against the dollar
J
apan rebounded to a currentaccount surplus in February as a depreciating yen and record monetary stimulus boost the outlook for a revival in the world’s thirdbiggest economy. The surplus, the first in four months, was 637.4 billion yen (US$6.5 billion), the Ministry of Finance said in Tokyo yesterday. That is more than the 466.3 billion yen expected by economists in a
Reuters poll. The surplus was still down 47 percent from a year earlier, but it followed three consecutive deficits, the longest such sequence on record. The trade balance remained in deficit as the yen’s decline has pushed up costs of imported fuels immediately while its impact on exports will take some time to be fully seen. “The yen’s weakness is expected to support exports during the summer,
but it is hard to forecast at the moment when it would significantly boost exports,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance. “The pace of export recovery is slow and it has not been clearly felt in the economy because of sluggish recovery in China’s economy and higher imports on energy.” Separate data showed Japan’s service sector sentiment index rose for a fifth straight month in March to hit
Malaysia’s Najib unveils manifesto similar to Anwar’s Election Commission to set a date for polls this week
M
alaysian Prime Minister Najib Razak pledged to fight corruption, bring down living costs and build a panBorneo expressway if his coalition retains power in elections due in a matter of weeks. These were all policies mooted by opposition leader Anwar Ibrahim in his manifesto released six weeks earlier than the one Mr Najib’s governing National Front unveiled at a weekend rally in Kuala Lumpur. The Election Commission meets this week to set a date for polls after the prime minister dissolved parliament on April 3. “They had the benefit of time to study our manifesto over the past month and incorporate some elements,” Ong Kian Ming, a political analyst at Kuala Lumpur’s UCSI University and an opposition election strategist, said. “Unlike us, there’s nothing in there about electoral reform. That’s something a lot of people are concerned about.” In the lead-up to the polls, Mr
Najib has boosted government spending, distributed a second round of cash handouts to the poor, and raised salaries of civil servants, police and the military. He also delayed implementing a goods-and-services tax and froze plans to wind back state subsidies on essential items. The manifesto offers increased handouts for the poor, and lowered car costs and broadband fees. “My sincere apologies to all Malaysians if we have done anything wrong,” the prime minister said in a speech at the rally, broadcast live on national television. “At the end of the day, we are ordinary humans. If we are given a strong mandate, I can assure you that we will do better in the next five years.” Mr Najib promised more specialist graft courts and greater public disclosure of government contracts if the National Front is allowed to extend its 55 years of unbroken rule. Among the pledges are more affordable housing,
and improved health care and transportation, including a highspeed rail link between Kuala Lumpur and Singapore. “A lot of the ideas have already been mooted by the opposition, like lowering car prices, cheaper Internet and a pan-Borneo highway,” James Chin, professor of political science at the Malaysian campus of Australia’s Monash University, said. “Najib talked mostly about things that are popular with the people. He didn’t give details on macro-economic issues like implementing GST and cutting state subsidies.” To stay in power, Mr Najib, 59, must see off a resurgent opposition led by Mr Anwar, a former deputy prime minister. Brokerages including Bank of America Merrill Lynch and Citigroup Inc. expect an even closer election result than in 2008, when the National Front retained power by its narrowest margin since Malaysia’s independence from Britain in 1957. Bloomberg News
April 9, 2013 business daily | 11
ASIA unveiled massive monetary stimulus measures to end a long phase of economic stagnation.
Nikkei hits highest closing level in nearly five years The Nikkei share average climbed to a near 5-year closing high yesterday, as investors gave the thumbs-up to the Bank of Japan’s rapid move to immediately begin buying longer-dated bonds to whip deflation. The Nikkei ended 2.8 percent higher at 13,192.59, its highest closing level since August 2008. Trading was relatively active, with 3.14 billion shares changing hands, down from Friday’s 4.77 billion but up from Thursday’s 3.09 billion when the BOJ unveiled the sweeping stimulus. But Japanese government bond prices were mixed, with the longer maturities underperforming, after the central bank conducted its first government bond buying operations. The BOJ offered to buy 1 trillion yen (US$10.3 billion) of JGBs with maturities of between five and 10 years, and 200 billion yen of bonds with maturities exceeding 10 years.
the highest level in survey history, as a softer yen and higher share prices buoyed the mood among consumers. The index matched the level seen in the same month in 2006 when Japan’s economy was growing. Since being voted into power in an election in December, Prime Minister Shinzo Abe has aggressively pursued expansionary economic policies, driving the yen lower and share prices higher. But the Bank of Japan out did all expectations last week, when it
Weaker currency Yesterday, the Japanese yen extended its drop against the dollar, weakening through 99 for the first time since May 8 2009, after the central bank began the latest round of its stimulus programme. It was 1.3 percent lower at 98.92 late yesterday, after depreciating to 99.01. The Japanese currency dropped 1.4 percent to 128.50 per euro. Investors said the central bank’s plan to buy assets worth trillions of yen, which has government backing, would continue to weaken the currency. As a result, the yen may break through the 100 mark against the dollar as early as this week. “This has really shaken up many people’s attitudes toward the Bank of Japan and the new government,” said Andrew Wilkinson, chief economic strategist at Miller Tabak and Co in New York. “It feels like it’s gathered a whole new momentum behind it, as the doubters have joined the bandwagon and it’s becoming a selffulfilling prophecy.” That should ensure that borrowing costs will remain low. Longer-term, however, trade deficits and shrinking current account surpluses could threaten Japan’s ability to finance a debt pile that is twice the size of its economy, the highest ratio in the developed world. Data last month showed Japan posted an eighth straight monthly trade deficit in February. “The trade deficit will probably continue to be covered by income made from investment overseas, but the current account balance will likely swing between surplus and deficit,” Mr Kodama said. Japan accumulated solid current account surpluses for decades, but last year’s surplus of 4.7 trillion yen was less than half of 2011’s and the smallest on record. Reuters
S. Korea urges Pyongyang to lift Kaesong access ban More firms expected to shut down this week
S
outh Korea yesterday issued another appeal for North Korea to lift an access ban on the Kaesong joint industrial park, which has already forced a dozen South Korean firms to halt operations. “We urge the North again to immediately lift the ban ... and to change its course to help resume normal operations in Kaesong,” Unification Ministry spokesman Kim Hyung-suk told reporters. Th e l a s t r em a i n in g s y m b o l of inter-Korean cooperation, Kaesong has become a pawn in an increasingly dangerous game of brinkmanship among Pyongyang, Seoul and Washington. The North has banned South Korean managers and personnel from crossing the border to enter the complex – 10 kilometres (six miles) inside North Korea – since Wednesday last week. Pyongyang yesterday said it will pull all workers out of Kaesong. So far 13 of the 123 South Korean firms operating there have been forced to halt production due to fuel and raw material shortages. With no additional staff, fuel or other materials allowed into the estate, dozens of other firms are expected to shut down this week, said Ok Sung-
NO
MIN
Suk, a spokesman for the South Korean firms. “Things couldn’t be more miserable for us, being unable to visit our plants only five minutes away,” Mr Ok told reporters at the border crossing. Food and fuel supplies are “nearly bottoming out”, Mr Ok said, adding that shipment delays were resulting in order cancellations by worried clients. North Korea has not prevented anyone leaving Kaesong, and 40 South Koreans were set to cross back into the South Monday, leaving 514 still in the complex. About 53,000 North Korean workers produce goods ranging from shoes to watches at factories in Kaesong, which was built in 2004 as a rare symbol of cross-border economic cooperation. Neither side has allowed previous crises to significantly affect the complex, a crucial hard currency source for the impoverished North and seen as a bellwether for stability on the Korean peninsula. Tensions have been running high after a recent series of apocalyptic threats from the North in response to fresh UN sanctions imposed after it staged a long-range rocket launch and a third nuclear test. AFP
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Mr Najib promises more affordable housing and improved health care and transportation
ORGANISED BY:
12 |
business daily April 9, 2013
MARKETS Hang SENG INDEX NAME
NAME
PRICE
DAY %
VOLUME
10.04
0.9045226
28485000
CITIC PACIFIC
9.42
-0.5279831
7521611
SANDS CHINA LTD
CLP HLDGS LTD
67.1
0.2240478
2331626
CNOOC LTD
14.22
-0.9749304
40975753
COSCO PAC LTD
10.72
0.3745318
5976065
9.51
1.49413
12672529
PRICE
DAY %
VOLUME
AIA GROUP LTD
32.7
-0.7587253
31312405
CHINA UNICOM HON
ALUMINUM CORP-H
2.83
1.433692
12758681
BANK OF CHINA-H
3.46
-0.2881844
275735691
BANK OF COMMUN-H
5.65
-0.7029877
19100765
BANK EAST ASIA
30.05
0
2076854
BELLE INTERNATIO
12.62
4.297521
36278446
ESPRIT HLDGS
NAME
PRICE
DAY %
VOLUME
73.2
-0.204499
1873328
38
1.198402
7932949
SINO LAND CO
12.62
-0.9419152
11279147
SUN HUNG KAI PRO
103.4
-0.481232
8045827
97.1
0.1030928
1637852
241.2
1.686341
4383506
POWER ASSETS HOL
SWIRE PACIFIC-A TENCENT HOLDINGS
BOC HONG KONG HO
25.15
-0.984252
12202703
HANG LUNG PROPER
28.85
-0.5172414
3720195
TINGYI HLDG CO
20.45
1.741294
2327595
CATHAY PAC AIR
12.78
4.071661
18094400
HANG SENG BK
122.5
-0.8097166
1221391
WANT WANT CHINA
11.24
-2.936097
9015920
CHEUNG KONG
111.5
-1.152482
4232269
WHARF HLDG
68.15
2.097378
6726863
6.35
-1.244168
19159506
CHINA COAL ENE-H CHINA CONST BA-H
6.12
0.8237232
175455350
CHINA LIFE INS-H
19.26
-0.5165289
33114538
CHINA MERCHANT
24.25
1.890756
2796919
CHINA MOBILE CHINA OVERSEAS CHINA PETROLEU-H
HENDERSON LAND D
52.5
-1.036758
6673474
HENGAN INTL
75.1
-0.595632
7315348
HONG KG CHINA GS
22.65
1.116071
7635076
HONG KONG EXCHNG
127.5
-0.2347418
3447639
HSBC HLDGS PLC
81.25
-0.1229256
6237036
82.1
0.1219512
10439022
HUTCHISON WHAMPO
80.1
0.6913891
5940210
20.65
-0.7211538
15975087
IND & COMM BK-H
5.17
-0.5769231
272037359
8.77
0.2285714
53442755
LI & FUNG LTD
10.22
0.7889546
13215465
-0.1650165
1837041
CHINA RES ENTERP
24.25
1.890756
5122238
MTR CORP
30.25
CHINA RES LAND
20.85
-0.7142857
4309053
NEW WORLD DEV
12.66
-1.24805
22099779
CHINA RES POWER
22.9
-1.293103
6025358
PETROCHINA CO-H
9.89
0.4060914
50549352
CHINA SHENHUA-H
26.8
-2.010969
36956502
PING AN INSURA-H
57.15
-1.295337
14862820
PRICE
DAY %
VOLUME
24.95
-0.7952286
8053148
MOVERS
22
27
1 22530
INDEX 21718.05 HIGH
22527.12
LOW
21664.89
52W (H) 23944.74 21600
(L) 18056.4 4-April
8-April
Hang SENG CHINA ENTErPRISE INDEX NAME
NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.52
0.2849003
91554103
CHINA PACIFIC-H
AIR CHINA LTD-H
6.32
4.46281
22992644
CHINA PETROLEU-H
8.77
0.2285714
ALUMINUM CORP-H
2.83
1.433692
12758681
CHINA RAIL CN-H
6.81
26
0.3861004
14700972
CHINA RAIL GR-H
3.46
-0.2881844
275735691
CHINA SHENHUA-H CHINA TELECOM-H
ANHUI CONCH-H BANK OF CHINA-H
PRICE
DAY %
VOLUME
YANZHOU COAL-H
9.33
-3.615702
39139779
53442755
ZIJIN MINING-H
2.46
2.074689
26032016
1.793722
11021197
ZOOMLION HEAVY-H
7.94
-1.975309
20207055
3.68
2.222222
19528600
ZTE CORP-H
12.04
-0.4958678
2618191
26.8
-2.010969
36956502
5.65
-0.7029877
19100765
3.81
-0.2617801
47944737
22.65
4.618938
4086500
DONGFENG MOTOR-H
10.68
-1.657459
10177945
CHINA CITIC BK-H
4.21
1.937046
42081825
GUANGZHOU AUTO-H
5.96
0.3367003
4708221
CHINA COAL ENE-H
6.35
-1.244168
19159506
HUANENG POWER-H
8.29
1.097561
17706704
CHINA COM CONS-H
7.17
2.136752
27971554
IND & COMM BK-H
5.17
-0.5769231
272037359
CHINA CONST BA-H
6.12
0.8237232
175455350
JIANGXI COPPER-H
16.3
0.7416564
7070913
BANK OF COMMUN-H BYD CO LTD-H
3.38
-0.8797654
9051750
PETROCHINA CO-H
9.89
0.4060914
50549352
19.26
-0.5165289
33114538
PICC PROPERTY &
9.14
-0.7600434
14604434
CHINA LONGYUAN-H
6.98
4.804805
13390504
PING AN INSURA-H
57.15
-1.295337
14862820
CHINA MERCH BK-H
15.32
0.130719
22953826
SHANDONG WEIG-H
7
-0.7092199
5546760
CHINA COSCO HO-H CHINA LIFE INS-H
CHINA MINSHENG-H
9.15
0.5494505
34948906
SINOPHARM-H
24.45
-1.012146
4790116
CHINA NATL BDG-H
8.96
-0.6651885
89819169
TSINGTAO BREW-H
48.75
2.956705
1186761
15.76
2.072539
5219468
WEICHAI POWER-H
25.6
3.643725
3321695
CHINA OILFIELD-H
NAME
MOVERS
21
18
1 10890
INDEX 10429.76 HIGH
10869.14
LOW
10421.79
52W (H) 12354.22 (L) 8987.76
10410
4-April
8-April
Shanghai Shenzhen CSI 300 PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.71
-0.7326007
100115775
CHONGQING CHAN-A
9.37
2.741228
20534935
SAIC MOTOR-A
14.73
0.2040816
22880935
AIR CHINA LTD-A
5.15
-3.377111
31213028
CHONGQING WATE-A
6.47
3.52
11058281
SANY HEAVY INDUS
10.02
-2.052786
26991129
ALUMINUM CORP-A
4.08
-0.729927
13357878
CITIC SECURITI-A
11.9
-1.815182
101330206
SHANDONG DONG-A
47.31
-4.616935
25172134
ANHUI CONCH-A
18.29
1.780746
27491786
CSR CORP LTD -A
3.98
0
35781253
SHANDONG GOLD-MI
32.13
0
4503942
BANK OF BEIJIN-A
8.64
-1.594533
26940132
DAQIN RAILWAY -A
7.35
-1.076716
24526609
SHANG PHARM -A
13.6
4.134763
54696853
BANK OF CHINA-A
2.91
-1.020408
32589528
DATANG INTL PO-A
4.35
0.6944444
5471280
SHANG PUDONG-A
9.92
-1.39165
89499064
BANK OF COMMUN-A
4.68
-1.057082
69217272
EVERBRIG SEC -A
12.86
-0.6949807
11559188
SHANGHAI ELECT-A
3.84
-1.538462
4817260
BANK OF NINGBO-A
10.75
0.9389671
11822858
GD MIDEA HOLDI-A
13.44
9.983633
241413449
SHANXI LU'AN -A
16.8
-2.268761
15515378
BAOSHAN IRON & S
4.84
-0.2061856
39930549
GD POWER DEVEL-A
NAME
NAME
NAME
2.96
0
44330078
SHANXI XISHAN-A
11.23
-2.601908
12456777
13.11
-1.797753
21314942
SHENZEN OVERSE-A
5.75
-2.044293
36759455
61.93
1.325262
1175412
6.11
-1.292407
35538605
BYD CO LTD -A
21.37
-1.656696
5956922
GF SECURITIES-A
CHINA AVIC AVI-A
22.67
0.1767565
3105025
GREE ELECTRIC
28.95
0.8710801
15189941
SICHUAN KELUN-A
CHINA CITIC BK-A
4.29
-1.830664
50565555
GUANGHUI ENERG-A
20.01
0
29473178
SUNING COMMERC-A
3.9
-0.7633588
30625996
HAITONG SECURI-A
9.93
-1.683168
81439104
TASLY PHARMAC-A
67.63
2.859316
4211145
HANGZHOU HIKVI-A
39.4
6.056528
4668867
TSINGTAO BREW-A
37.49
2.627977
2943063
CHINA CNR CORP-A CHINA COAL ENE-A
6.98
-1.828411
8017713
CHINA CONST BA-A
4.67
0
42712356
HENAN SHUAN-A
75.15
3.512397
2892899
WEICHAI POWER-A
21.12
1.052632
5097864
CHINA COSCO HO-A
3.59
2.279202
30178647
HONG YUAN SEC-A
17.86
1.650541
9410322
WULIANGYE YIBIN
21.76
-0.8656036
20142420
CHINA EAST AIR-A
3
-3.225806
47815254
HUATAI SECURIT-A
9.46
-1.560874
25304803
YANGQUAN COAL -A
13
-4.270987
12436102
CHINA EVERBRIG-A
3.11
-0.6389776
64683431
HUAXIA BANK CO
10.26
-1.346154
18271556
YANTAI WANHUA-A
17.91
-0.4446915
11034880
CHINA INTL MAR-A
12.42
-1.428571
6781638
IND & COMM BK-A
4.07
-0.4889976
65522853
YANZHOU COAL-A
16.42
-2.551929
5594422
CHINA LIFE INS-A
17.15
-1.549943
13221894
INDUSTRIAL BAN-A
17.26
0.6413994
79410437
YUNNAN BAIYAO-A
82.8
2.437214
1837783
CHINA MERCH BK-A
12.61
-1.407349
51753967
INNER MONG BAO-A
28.04
-3.276992
25407972
ZHONGJIN GOLD
14.13
2.614379
19976184
CHINA MERCHANT-A
12.03
-2.035831
23806590
INNER MONG YIL-A
30.86
2.253148
10302890
ZIJIN MINING-A
3.44
1.176471
61735813
8243968
INNER MONGOLIA-A
5.17
-0.3853565
73700983
ZOOMLION HEAVY-A
8.18
-0.7281553
33098640
31.9
3.269667
17723665
ZTE CORP-A
11.28
1.621622
20257597
CHINA MERCHANT-A
24.78
-1.2749
CHINA MINSHENG-A
9.59
-0.9297521
142609332
JIANGSU HENGRU-A
CHINA NATIONAL-A
8.98
1.354402
30201408
JIANGSU YANGHE-A
61.51
0.7534808
4004937 7792185
CHINA OILFIELD-A CHINA PACIFIC-A
16
-3.556359
7119792
JIANGXI COPPER-A
22.02
-0.4520796
18.53
-0.5901288
20172727
JINDUICHENG -A
11.14
-1.676964
6383856
17.1
1.423488
17273661
164.32
0.2868477
3773276
CHINA PETROLEU-A
7.2
-0.5524862
32179364
KANGMEI PHARMA-A
CHINA RAILWAY-A
4.88
-1.414141
20283396
KWEICHOW MOUTA-A
CHINA RAILWAY-A
2.73
-2.150538
32222518
LUZHOU LAOJIAO-A
26.04
0.618238
9935808
2.03
-0.4901961
17517669
MOVERS
99
CHINA RESOURCE-A
31.4
5.19263
4381806
CHINA SHENHUA-A
21.58
-1.235698
13160145
NINGBO PORT CO-A
2.5
1.626016
27041487
8.61
-1.261468
16355555
HIGH
2520.92
19.93
-2.542787
40771477
LOW
2434.91
4.8
-3.614458
48034521
CHINA SOUTHERN-A
3.44
-2.549575
33009412
PING AN BANK-A
CHINA STATE -A
3.38
-0.2949853
59656698
PING AN INSURA-A
40
-1.864573
46340966
CHINA UNITED-A
3.61
-1.36612
96848488
POLY REAL ESTA-A
11.59
-2.111486
54213997
CHINA VANKE CO-A
10.98
-1.964286
66456864
QINGDAO HAIER-A
12.98
0.2316602
15103715
CHINA YANGTZE-A
7.28
-0.6821282
17221023
QINGHAI SALT-A
28.82
-1.671784
6369366
PRICE DAY %
Volume
PRICE DAY %
Volume
CHINA SHIPBUIL-A
20 2530
INDEX 2472.299
METALLURGICAL-A PETROCHINA CO-A
181
52W (H) 2791.303 (L) 2102.135
2430
2-April
8-April
FTSE TAIWAN 50 INDEX NAME
NAME
ACER INC
24.5
-5.222437
18019670
FORMOSA PLASTIC
70
-1.547117
10095634
ADVANCED SEMICON
24.1
-1.832994
18307310
FOXCONN TECHNOLO
79.9
-2.560976
8674281
ASIA CEMENT CORP
35.9
-1.643836
3525351
FUBON FINANCIAL
39.9
-2.444988
ASUSTEK COMPUTER
339.5
AU OPTRONICS COR
12.85
-2.86123
5608081
HON HAI PRECISIO
80.8
-2.651515
102433193
HOTAI MOTOR CO
239.5
146
1.388889
17640714
HTC CORP
241
-2.231237
11124707
CATHAY FINANCIAL
38.95
-2.988792
36765079
HUA NAN FINANCIA
16.85
-2.601156
CHANG HWA BANK
17.05
-2.011494
18198208
LARGAN PRECISION
766
CHENG SHIN RUBBE
89.6
-3.448276
9622716
LITE-ON TECHNOLO
50.1
CHIMEI INNOLUX C CHINA DEVELOPMEN
18.2
-3.448276
74614752
MEDIATEK INC
8.17
-4.556075
66748075
MEGA FINANCIAL H
CHINA STEEL CORP
25.6
-1.915709
22515947
NAN YA PLASTICS
CHINATRUST FINAN
18.2 -0.8174387
83751626
PRESIDENT CHAIN
CHUNGHWA TELECOM
92.3 -0.8592911
COMPAL ELECTRON
20.1
-5.188679
CATCHER TECH
DELTA ELECT INC
TAIWAN MOBILE CO
PRICE DAY %
Volume
101.5 -0.4901961
2615493
TPK HOLDING CO L
611
0.3284072
3851010
29250762
TSMC
98.5
-1.99005
54009917
-2.76775
47929394
UNI-PRESIDENT
-3.036437
319746
55.2
-3.157895
16384901
11.05
-2.212389
50278043
WISTRON CORP
31.1
-6.184012
17481173
11774939
YUANTA FINANCIAL
14.5
-3.654485
16936538
-1.542416
1086276
YULON MOTOR CO
51
-3.409091
4838226
-1.764706
7754952
350
-1.685393
10156508
23.25
-3.726708
32040321
51.6
-2.272727
5735032
167
-1.474926
1370739
6671767
QUANTA COMPUTER
62
-3.875969
12787629
18877592
SILICONWARE PREC
33.35
-1.911765
7656071
128
-1.915709
5556400
SINOPAC FINANCIA
14.05
-4.421769
58881623
FAR EASTERN NEW
30.15
-2.269044
10020519
SYNNEX TECH INTL
52.1
-3.159851
5868200
FAR EASTONE TELE
69.3
1.911765
7047539
TAIWAN CEMENT
37.5
-2.34375
7518154
TAIWAN COOPERATI
FIRST FINANCIAL
NAME
18.05
-3.217158
17568386
16.7
-1.764706
12721205
FORMOSA CHEM & F
67.1
-2.47093
6551550
TAIWAN FERTILIZE
71
-1.388889
5208019
FORMOSA PETROCHE
77.2
-1.905972
1567602
TAIWAN GLASS IND
27
-4.59364
1066156
UNITED MICROELEC
MOVERS
3
47
0 5520
INDEX 5390.21 HIGH
5514.41
LOW
5390.21
52W (H) 5639.93 5380
(L) 4719.96 2-April
8-April
April 9, 2013 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange)
Max 30.75
average 30.483
Min 30.35
Last 30.45
30.80
56.8
16.20
30.65
56.6
16.15
30.50
56.4
16.10
30.35
56.2
16.05
30.20
Max 56.7
average 56.366
Min 56.1
56.0
Last 56.5
38.2 38.0
Max 16.2
average 16.116
Min 16
Last 16.1
16.00
19.4
20.4
19.1
20.2
18.8
20.0
37.8 37.6
Max 38.15
average 37.879
Min 37.4
37.4
Last 38
Max 19.34
average 18.922
Commodities PRICE
DAY %
YTD %
(H) 52W
(L) 52W
WTI CRUDE FUTURE May13
93.37
0.722761597
0.225418635
106.0899963
81
BRENT CRUDE FUTR May13
105.07
0.912408759
-3.134507237
117.4300003
91.54999542
GASOLINE RBOB FUT May13
288.94
0.900963822
-0.158949551
330.369997
237.7199888
GAS OIL FUT (ICE) May13
887.25
0.396039604
-3.112203112
1000.75
801.25
4.162
0.896969697
20.53286997
4.180000305
3.072000027
NATURAL GAS FUTR May13 HEATING OIL FUTR May13 METALS
293.41
0.835108942
-2.966466036
327.1399975
258.5000038
Gold Spot $/Oz
1579.01
-0.1417
-5.1338
1796.08
1527.21
Silver Spot $/Oz
27.3375
0.0366
-9.2079
35.365
26.1513
Platinum Spot $/Oz
1539.7
0.1268
1.4462
1742.8
1379.05
Palladium Spot $/Oz
732.33
0.5879
4.6694
786.5
553.75
LME ALUMINUM 3MO ($)
1886.5
0.079575597
-8.996623251
2200.199951
1827.25
LME COPPER 3MO ($)
7407
-0.456927832
-6.606985248
8496.75
7219.5
LME ZINC
1884
-0.317460317
-9.423076923
2230
1745 15236
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) May13 CORN FUTURE
Last 18.96
18.5
Max 20.35
average 20.235
Min 20
Last 20.25
15950
-0.931677019
-6.506447831
18920
15.365
-0.838980316
-0.774943494
16.95000076
14.5
635
0.953895072
-9.318100678
838
520.25
May13
WHEAT FUTURE(CBT) May13 SOYBEAN FUTURE May13 COFFEE 'C' FUTURE May13
704
0.715307582
-10.63154554
938
659.75
1373.75
0.88121902
-1.82240486
1639.5
1218.75
140.7
0.392436675
-4.08997955
200.3000031
132.0500031
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 %
1.0377 1.5314 0.935 1.3003 98.85 7.9962 7.7634 6.2038 54.5612 29.26 1.2415 30.01 41.303 9751 102.576 1.21582 0.84912 8.0739 10.3975 128.53 1.03
-0.0578 -0.1435 -0.0642 0.0924 -1.2949 0.0138 0.0219 0.0355 0.4606 -0.0342 -0.1128 -0.2066 -0.2978 0.0205 -1.2498 -0.1226 -0.2202 -0.7035 -0.6213 -1.3538 -0.0097
YTD %
(H) 52W
-0.0096 -5.3289 -2.0963 -1.4177 -12.8983 -0.1626 -0.1649 0.432 0.7951 4.5113 -1.619 -3.2556 -0.7215 0.4307 -12.9163 -0.686 -3.9688 1.7786 1.2782 -11.6393 -0.0097
(L) 52W
1.0625 1.6381 0.9972 1.3711 99.01 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 102.854 1.25692 0.88151 8.4957 10.9254 128.84 1.0314
0.9582 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1974 51.06 29.08 1.2152 28.913 40.54 9113 74.482 1.20037 0.77553 7.7018 9.6245 94.12 1.029
MACAU RELATED STOCKS NAME
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
3.79
2.98913
20.31746
3.94
2.29
4930472
CROWN LTD
12.78
1.428571
19.77507
12.85
8.06
1541877
ARISTOCRAT LEISU
VOLUME CRNCY
SUGAR #11 (WORLD) May13
17.84
1.076487252
-8.979591837
24.56999969
17.46999931
AMAX HOLDINGS LT
0.045
0
#N/A N/A
#N/A N/A
#N/A N/A
13645500
COTTON NO.2 FUTR May13
86.74
-0.057610324
14.34220933
93.93000031
68.18999481
BOC HONG KONG HO
25.15
-0.984252
4.356845
27.1
20.85
12202703
CENTURY LEGEND
0.285
-1.724138
7.547176
0.42
0.215
32500
5.62
-0.7067138
-6.176958
6.74
2.8
236000
CHINA OVERSEAS
20.65
-0.7211538
-10.60606
25.6
14.624
15975087
CHINESE ESTATES
13.16
0.4580153
8.496546
13.32
7.697
406584
CHOW TAI FOOK JE
10.22
0.1960784
-17.84566
13.4
8.4
2175200
EMPEROR ENTERTAI
2.14
-0.4651163
13.22751
2.49
1.1
855000
2.2
-3.0837
80.32786
2.75
0.65
6978000
CHEUK NANG HLDGS
World Stock MarketS - Indices NAME
COUNTRY
PRICE
DAY %
YTD %
DOW JONES INDUS. AVG
US
14565.25
-0.2797459
NASDAQ COMPOSITE INDEX
US
3203.859
-0.6550112
FTSE 100 INDEX
GB
6287.08
DAX INDEX
GE
7695.86
(H) 52W
(L) 52W
11.14999
14684.49
12035.08984
6.105129
3270.296875
2726.68
0.596821
6.600246
6533.99
5229.76
HOPEWELL HLDGS
30.25
0.4845438
1.096498
8074.47
5914.43
HSBC HLDGS PLC
81.25
FUTURE BRIGHT GALAXY ENTERTAIN
30.45
-1.136364
0.329488
35.7
16.94
6647500
HANG SENG BK
122.5
-0.8097166
3.201351
131.5
99.2
1221391
-1.785714
-9.022556
35.3
19.049
11785 00
-0.1229256 -0.06150437
88.45
59.8
6237036 1138930
HUTCHISON TELE H
3.71
-0.2688172
4.213485
4.05
2.98
LUK FOOK HLDGS I
22.65
1.569507
-7.17213
30.05
14.7
1821003
MELCO INTL DEVEL
12.7
-1.244168
40.95449
13.96
5.12
3542780 1750400
NIKKEI 225
JN
13192.59
2.796946
26.91065
13225.62
8238.96
HANG SENG INDEX
HK
21718.05
-0.04073292
-4.143852
23944.74
18056.4
CSI 300 INDEX
CH
2472.299
-0.4529006
-2.007681
2791.303
2102.135
MGM CHINA HOLDIN
16.1
-1.105651
21.25065
18.449
9.509
TAIWAN TAIEX INDEX
TA
7752.79
-2.386699
0.6921234
8089.21
6857.35
MIDLAND HOLDINGS
3.39
0.5934718
-8.37838
5
3.249
2562000
NEPTUNE GROUP
0.143
5.147059
-5.92105
0.226
0.084
12110000
NEW WORLD DEV
12.66
-1.24805
5.324455
15.12
7.95
22099779
38
1.198402
11.92931
41.05
20.65
7932949
SHUN HO RESOURCE
1.44
0
2.857145
1.67
1.03
0
SHUN TAK HOLDING
3.88
-4.433498
-7.398569
4.65
2.56
7311750 5374037
KOSPI INDEX
SK
1918.69
-0.443123
-3.923793
2042.48
1758.99
S&P/ASX 200 INDEX
AU
4905.486
0.2874622
5.518141
5163.5
3985
ID
4897.521
-0.5795088
13.45555
4985.852
3635.283
FTSE Bursa Malaysia KLCI
MA
1687.99
-0.03908448
-0.05683774
1700.55
1526.6
NZX ALL INDEX
NZ
937.771
-0.8319251
6.316856
946.292
755.149
SJM HOLDINGS LTD
18.96
0.7438895
5.333333
22.15
12.34
PHILIPPINES ALL SHARE IX
PH
4205.48
0.2268849
13.69296
4290.5
3238.77
SMARTONE TELECOM
12.74
-1.697531
-9.517045
17.38
12.5
885111
WYNN MACAU LTD
20.25
1.25
-3.341292
25.5
14.62
5124549
JAKARTA COMPOSITE INDEX
19.8
CURRENCY EXCHANGE RATES
NAME ENERGY
Min 18.58
HSBC Dragon 300 Index Singapor
SI
641.79
-0.06
3.33
NA
NA
STOCK EXCH OF THAI INDEX
TH
1489.53
-2.547008
7.011845
1601.34
1099.15
HO CHI MINH STOCK INDEX
VN
506.66
0.8118111
22.46151
514.1
372.39
Laos Composite Index
LO
1377.47
-0.5867494
13.39348
1455.82
980.83
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
SANDS CHINA LTD
ASIA ENTERTAINME
4.47
3.712297
46.07843
6.25
2.4
135245
BALLY TECHNOLOGI
50.01
-0.8721506
11.85417
52.7
41.74
195207
BOC HONG KONG HO
3.34
1.212121
8.794791
3.59
2.7
3500
GALAXY ENTERTAIN
4.1275
0
3.967254
4.57
2.25
600
INTL GAME TECH
16.11
-0.8615385
13.6909
17.49
10.92
3097377
JONES LANG LASAL
94.34
-1.142198
12.3898
100.86
61.39
347584
LAS VEGAS SANDS
52.72
-1.439521
14.21144
58.3216
32.6127
7549007
MELCO CROWN-ADR
21.81
-2.372426
29.51306
23.39
9.13
8547636
MGM CHINA HOLDIN
2.17
0
17.2973
2.44
1.36
100
MGM RESORTS INTE
11.99
-2.281989
3.00687
14.11
8.83
13619268
SHFL ENTERTAINME
15.07
-1.696021
3.931034
18.37
11.75
293734
SJM HOLDINGS LTD
2.5
0
8.225111
2.85
1.65
100
118.04
-0.6397306
4.933774
129.6589
84.4902
2383506
WYNN RESORTS LTD
AUD HKD
USD
14 |
business daily April 9, 2013
Opinion
Europe’s perpetual crisis Yannos Papantoniou
T
Former economy and finance minister of Greece (1994-2001), is President of the Centre for Progressive Policy Research
he Cyprus bailout deal is a watershed in the unfolding euro zone crisis, because responsibility for resolving banks’ problems has been shifted from taxpayers to private investors and depositors. But imposing major losses on Cypriot banks’ depositors violates the deposit-insurance guarantee that forms part of the proposed European banking union, while the imposition of capital controls further erodes the monetary union’s foundations. So, is Europe chasing its tail? Germany and the other countries of the euro zone core are signalling that debt mutualisation within the monetary union is out of the question, and that bailouts of countries or financial institutions will be balanced by “bail-ins” of their creditors. Increased uncertainty concerning the safety of deposits will push up interest rates and deepen Europe’s recession, and may also trigger capital outflows from the euro zone’s weaker peripheral economies to the core. The implications of this shift may be far-reaching. The German model for resolving the debt crisis and returning to internal or external balance relies on fiscal consolidation
and structural reforms for the deficit countries. But, if all countries simultaneously attempt to improve their fiscal or external balances by cutting spending and raising taxes, all will fail, because each country’s austerity implies less demand for other countries’ output, in turn perpetuating both domestic and external imbalances. “Bailing in” creditors will exacerbate these trends. Moreover, a deep and prolonged recession implies vanishing support for reforms, as governments fail to convince citizens that current sacrifice will ensure a better future. Privatisation, market liberalisation, the opening of closed professions, and government downsizing involve conflicts with powerful vested interests, such as businesses in protected industries, public-sector unions, or influential lobbies. Resolving such conflicts requires social alliances, which are invariably undermined by discontent, civil disorder, and political instability.
Lifting demand The recent Italian election has shown how toxic the association of austerity policies with the pursuit of
reform has become. Anti-austerity anger swept away the reform agenda of Mario Monti’s previous technocratic government, leaving Italy, its future uncertain, to continue muddling through. The same scenario seems to be emerging in Greece, where the depth of the austerity-induced recession,
Civil unrest and political destabilisation could erupt into financial and social crises that ultimately threaten the monetary union’s survival
with output down by 25 percent over five years and unemployment at 27 percent, is paralysing a reform-minded centre-right government. The gaps in the strategy are clear. First, the euro zone authorities misread the real causes of the debt crisis, which stemmed mainly from a growing competitiveness gap between the core and periphery countries. The resulting private-sector imbalances culminated in banking problems that were eventually transferred to sovereigns. Greece’s fiscal profligacy was the exception rather than the rule. Indeed, in contrast to the United States, euro zone authorities were slow to consolidate the banking system after the global financial crisis erupted in 2008, and failed to sever the ties between sovereigns’ and banks’ balance sheets. Nor did they push strongly for structural reforms. Instead, they emphasised harsh austerity, which was to be pursued everywhere. Second, the effects of austerity were exacerbated by the choice to pursue nominal, rather than structural, fiscaldeficit targets. Countries with a stronger fiscal position (that is, smaller structural deficits) should be encouraged to adopt more expansionary policies in order to contribute to lifting overall demand. Moreover, the European Investment Bank’s lending capacity could be increased substantially, and European Union structural funds mobilized, to finance investment projects in the peripheral economies. Third, the European Central Bank’s announcement last August of its “outright monetary transactions” programme – through which it guarantees euro zone members’ sovereign debt, subject to policy conditionality – has contributed significantly to subduing financial turbulence in the euro zone. But the OMT scheme has not been reinforced by a reduction in key interest rates, which would boost inflation in core countries with external surpluses and thus help to close the competitiveness gap with the periphery. Crucially, monetary-policy measures do not address the
underlying problem of lack of demand.
Bleak prospects Last, but not least, the euro zone authorities misread the confidence factor. In theory, simultaneous fiscal consolidation and supply-side reform facilitates economic recovery, because it increases confidence among consumers and investors, thereby inducing higher spending and production. But this does not necessarily work in an imperfectly functioning monetary union, such as the euro zone, where the continual appearance of systemic flaws erodes confidence; in such circumstances, the result may be hoarding and capital outflows, rather than increased spending. The euro zone’s flaws reflect its conceptual distance from the U.S., which is the only model of a well-functioning monetary union. Europe’s history rules out emulating the U.S. model. But, to make the euro zone work, monetary unification should extend to the fiscal and financial fields, thereby creating an integrated economic union. The longer that European authorities postpone the introduction of Eurobonds, an effective banking and fiscal union, and lender-oflast-resort status for the ECB, the longer the crisis will last. By effectively defaulting on a deposit-insurance guarantee through its actions in Cyprus, the euro zone backtracked on the planned banking union. Pursuing a strategy that simultaneously deepens recession and weakens confidence will not resolve the debt crisis. As funding problems recur in the recession-hit economies, governments may resist “bailing in” and the associated losses. Civil unrest and political destabilisation could erupt into financial and social crises that ultimately threaten the monetary union’s survival. In short, the “solution” to the Cyprus crisis is no solution at all for the euro zone. Unless the authorities embrace a growth strategy – and do so quickly – the euro zone’s prospects will become increasingly bleak. © Project Syndicate
editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
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April 9, 2013 business daily | 15
OPINION
Why rescue fragile banks? wires Outsource them instead Business
Leading reports from Asia’s best business newspapers
China Daily
Joshua Rosner
Managing director at independent research firm Graham Fisher & Co.
China’s private capital will play a major role in the country’s fixed-asset investment over the next eight years, reaching 80 percent among the total figure, a researcher with a government think tank said. “From 2013 to 2020, China’s annual investment growth rate will be around 18 percent, which cannot be completed without private investors,” Bao Yujun, president of the China Private Enterprises Research Association, said at the Boao Forum for Asia Annual Conference. By the end of last year, the number of Chinese private companies reached 10.85 million with a total registered capital of more than 31 trillion yuan (US$5 trillion), according to the association.
Economic Times India’s Planning Commission deputy chairman Montek Singh Ahluwalia blamed the high reserve price for the failure of the first two rounds of airwaves sale and suggested a reduction in the base price before next set of spectrum auctions. He has also suggested that spectrum trading be allowed and said this policy change will yield better auction results. Current laws do not allow mobile phone companies to trade spectrum, the bandwidth on which mobile calls travel. “A third failed auction would impact very adversely on the investment climate and our credibility,” Mr Montek said.
Myanmar Times Myanmar and Indonesia have set a target of increasing bilateral trade to US$1 billion by the end of 2016, the head of a visiting Indonesian trade delegation says. The target will be met partly through investments in the mining, agriculture, telecommunications,construction, banking and electric power sectors, Muhammad Hatta Rajasa, Coordinating Minister for Economic Affairs, said at a business forum. The two countries previously agreed to promote bilateral trade of US$500 million by 2015 when President U Thein Sein visited Indonesia in 2011.
Inquirer Business The value of private sectorled construction projects in the Philippines in the fourth quarter of 2012 surged by 53 percent year-on-year to about 67 billion pesos (US$1.6 billion) amid faster-than-expected economic growth, data from the National Statistics Office showed. Based on approved building permits, the value of new residential and nonresidential projects that were approved from October to December was also 4.2 percent higher than the 64.3 billion pesos recorded in the previous quarter.
E
xecutives of the largest U.S. banks warn that efforts to make the financial system safer will harm their global competitiveness. They conjure a world in which foreign institutions, supported by government subsidies, dominate the business of providing banking services to multinational corporations. My response: Great idea. Let’s outsource fragile banking. Large as they are, institutions such as Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) aren’t the primary source of U.S. dominance in the global financial-services industry. The country’s real advantage is in asset management. At the end of 2011, hedge funds, mutual funds and other U.S. institutions managed about US$33 trillion in assets around the world, more than three times the amount commanded by the six largest U.S. banks. The asset managers’ activities support domestic and global growth, distribute risk and reinforce market discipline. The banks differ from the asset managers largely in the risk they pose to the broader economy. The sheer complexity of their operations, and their penchant for using large amounts of debt to fund their business, make them “systemically important” and necessitate taxpayer bailouts when they get into trouble. In other words, they concentrate risk, rather than distribute it, and extract a very high price from taxpayers for whatever role they play in supporting growth.
Low margin It’s worth asking whether the costs of having such systemically risky firms in the U.S. outweigh the benefits. Automakers, for example, cut expenses by sourcing components from countries where producers enjoy taxpayer subsidies or
lower labour costs. Why not outsource the most fragile parts of our financial system to countries whose taxpayers are willing to accept the burden? After all, it’s a very low-margin and low- value-added business: JPMorgan’s return on assets last year, even with the reduced borrowing rates that implicit taxpayer support provides, amounted to less than 1 percent. The bank’s higher return on equity was driven by leverage. Since at least the rise of
The U.S. should lead the world in productivity and not be relegated to competing in a race to zero
the Bank of England in the 17th century, banks were the primary drivers of financial intermediation, aggregating capital – in the form of deposits – and allocating that capital to individuals and corporations. The goal was to earn a return investing in productive businesses with increasing market opportunities. Given the social benefits of investment and the commensurate risks to society when money is misallocated, it made sense for governments – and hence taxpayers – to support the system, ensuring that banks could earn a fair return while operating in a safe and sound manner. This was a worthy trade-off for centuries.
Over the past 50 years, with the development of a privately managed pension system, the deregulation of trading commissions and a move to decimal pricing, assets flowed away from bank deposits to investment accounts controlled by a growing asset- management industry. The shift compressed margins at traditional banks, prompting them to secure the repeal of the Glass-Steagall Act, a change that allowed them to get into the business of securities trading. The result is today’s giant bank and investment-bank amalgamations, which rely on taxpayer subsidies to win business from corporate clients and asset managers, and to boost returns on risky speculative trading. Functionally, they are utilities providing low-margin commodity services. If the U.S. continues to bend markets in an effort to protect such banking juggernauts, it will imperil taxpayers while risking the global dominance of its asset managers and the depth, breadth and transparency that they add to capital markets. This would be like sacrificing the development of the automobile to save manufacturers of horsedrawn carriages. Bankers argue that if
the government reduces its support for big banks – by increasing capital requirements or limiting bank size – it will starve U.S. businesses of the low-cost funding they need to grow. This seems highly unlikely. First, the U.S. has more than 7,000 smaller, systemically riskless banks that are more than able to support the needs of small business and consumers without presenting an economic threat to society. Second, the largest U.S. corporations get most of their funding from capital markets, not from big banks. Finally, European and Asian governments remain committed to backstopping losses at their own too-big-tofail banks. So if U.S. companies are looking for low-margin, taxpayer-subsidised lending, they can still get it. If foreign governments want to support the underpricing of risk and the uneconomic lending that has repeatedly harmed their taxpayers, why not allow our corporations and consumers to benefit? Let other countries’ taxpayers bear the costs. The U.S. should lead the world in productivity and not be relegated to competing in a race to zero. Bloomberg View
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business daily April 9, 2013
CLOSING HTC profit slumps on smartphone delay Ex-U.K. prime minister Thatcher dies HTC Corp. posted its lowest quarterly profit on record after the delay of its newest flagship phone caused revenue to miss the company’s target. First-quarter net income plunged 98 percent to NT$85 million (US$2.8 million), the sixth straight decline, according to data released yesterday. HTC lost early momentum for its HTC One handset in February as a shortage of camera components forced it to delay shipments in key markets by as much as a month. Prospects for revenue to rebound this quarter may be limited as the new device becomes widely available less than a month before Samsung Electronics Co.’s new Galaxy S4.
Sundance scraps Hanlong’s takeover Sundance Resources Ltd terminated an agreement with Sichuan Hanlong Group after the Chinese company failed to secure funding for its A$1.14 billion (US$1.18 billion) bid to buy the rest of the Australian company. Hanlong was also unlikely to meet other required conditions, Perth-based Sundance said in a statement. The company is in talks with other parties about their interest in the MbalamNabeba iron ore project, Sundance said, without naming them. The collapse of the deal, first agreed in October 2011, comes after Hanlong’s billionaire chairman Liu Han, 47, was reported to have been detained last month by police in China. Buying Sundance would have given the Chinese company control of the US$4.7 billion Mbalam iron ore project that straddles the Republic of Congo and Cameroon. “It’s going to take a while for the dust to settle in terms of what are the additional potential bidders out there,” said Matt Fernley, an analyst at GMP Securities Ltd in London. “For certain, the stock is going to be under pressure.” Shares of Sundance last traded on March 19 at 21 Australian cents, 53 percent lower than Hanlong’s revised offer of 45 cents a share, indicating some investors didn’t expect the deal to succeed. The shares will resume trading today, Sundance said. “The board of Sundance believes it is in its shareholders’ best interests to terminate the agreement,” chairman George Jones said in the statement. “Sundance’s Mbalam-Nabeba project is significantly more valuable today than when the Hanlong bid was first made.” The company is in talks with both Chinese and nonChinese other parties, Sundance said.
German output rises in February German industrial output rebounded in February, adding to signs that Europe’s largest economy is stabilising after a contraction in the fourth quarter. Production rose 0.5 percent from January, when it contracted 0.6 percent, the Economy Ministry in Berlin said yesterday. Economists forecast a 0.3 percent gain, according to the median of 41 estimates in a Bloomberg News survey. From a year earlier, production dropped 1.8 percent when adjusted for working days. Germany’s economy probably returned to growth in the first quarter after it shrank 0.6 percent in the final three months of 2012. Still, business sentiment in Germany dropped in March amid renewed concerns about the sovereign debt crisis and its impact on the 17-nation euro economy, which is struggling to emerge from recession. “After a period of deflating in the second half of last year, German industry has stabilised again,” said Carsten Brzeski, senior economist at ING Belgium SA in Brussels. “The stabilisation, however, is not automatically followed by a sharp rebound of industrial activity. The harsh winter weather has not only affected the construction sector but industry as a whole.” The Bundesbank predicts the German economy will expand 0.4 percent this year and 1.9 percent in 2014. Bloomberg News
Margaret Thatcher, the former U.K. prime minister who helped end the Cold War and was known as the “Iron Lady” for her uncompromising style, died yesterday. She was 87. “She had a stroke this morning and died peacefully,” her spokesman, Tim Bell, said. Ms Thatcher was defined by the battles she took on: she waged war against Argentina, clashed with striking miners and forced fellow leaders to cut Britain’s contributions to the forerunner of the EU. “She was, quite simply, one of the most influential political leaders that the U.K., indeed the world, has ever produced,” said Tim Bale, professor of politics at Queen Mary, University of London.
Portugal must stick to agreed targets: EU Government says there will be no further tax hikes
P
ortugal must stick to targets agreed with international lenders if it wants more time to repay bailout loans, the European Commission said in a statement. Portugal’s Constitutional Court on Friday rejected four out of nine contested austerity measures from this year’s budget. The ruling deals a blow to government finances, but is unlikely to derail the bailed-out country’s reforms. “Continued and determined implementation of the programme … is a precondition for a decision on the lengthening of the maturities of the financial assistance to Portugal, which would facilitate Portugal’s return to the financial markets and the attainment of the programme’s
objectives,” it said. Portugal, like Ireland, is seeking an extension of the maturities of the emergency loans it is getting from the European Union beyond 2022 to smooth out its financing needs. EU finance ministers are to decide the details of the extension on Friday. The fiscal measures rejected by the court should deprive the state of some 900 million euros (US$1.17 billion) in net revenues and savings, according to preliminary estimates by economists. The package of austerity measures introduced by the 2013 budget is worth about 5 billion euros and includes the largest tax hikes in living memory, which were mostly upheld. “The European Commission
welcomes that, following the decision of the Portuguese Constitutional Court on the 2013 state budget, the Portuguese Government has confirmed its commitment to the adjustment programme, including its fiscal targets and timeline,” the Commission said.
Spending cuts Portugal’s government will cut spending to meet targets agreed with its lenders, Prime Minister Pedro Passos Coelho said late on Sunday. Mr Passos Coelho said in a televised address Friday’s Constitutional Court ruling posed “serious obstacles and risks” this year and next, but reaffirmed his commitment to the fiscal and economic adjustment programme under an EU/IMF bailout. “The government is committed to all the objectives of the programme,” he said, ruling out further tax hikes but saying it was vital to avoid a second rescue and that he had told ministers to cut spending. The European Union executive arm said that any departure from the programme’s objectives, or their renegotiation, would neutralise the growing investor confidence in Portugal and prolong the difficulties from the adjustment. Mr Passos Coelho acknowledged that the ruling weakened Portugal’s stance at the meeting, but said he told Finance Minister Vítor Gaspar to do all he could to protect the country’s interests there and achieve an extension. The government says the extension is essential for Lisbon’s successful exit from the bailout programme in 2014. Lisbon has to cut the budget deficit to 5.5 percent of gross domestic product this year from 6.4 percent in 2012, when it missed the goal but was still lauded by lenders for its efforts. The lenders have eased Portugal’s deficit goals twice since the rescue was agreed, recognising consolidation efforts. Reuters
Mr Passos Coelho says the country needs to avoid second bailout