Macau business daily, Aug 1st

(Re)-exports cheer the middlemen Exports grew year-on-year five months straight, but that was solely based on a 12.1 percent jump in re-exports, to 451 million patacas (US$56.5 million). First-half re-exports were worth almost 2.8 billion patacas, more than twice the value of domestic exports. As Macau’s industry declines, the city is increasingly playing the role of fixer in commerce.

Page 4

Typhoon working – rules needed A legislator is asking the government to publish clear guidelines on whether employees are obliged to go to work when typhoon signal No 8 or above is hoisted. Civil servants are excused workplace attendance. But casinos are required by their contracts to stay open 24 hours per day even during extreme weather.

Page 5

Retail palaces soar in value R

etail space in prime city areas is now commanding prices on par with some first-tier shopping locations in Hong Kong such as Mongkok and Central. Gaming revenues may be slowing, but visitors’ appetite for shopping in Macau still seems strong. The government’s second quarter retail sales numbers won’t be available for another three weeks, but in the first quarter, sales of watches and jewellery grew eight percent year-on-year to four billion patacas (US$500 million).

High-street shops saw their values appreciate nearly 60 percent in the first half of this year, with rents also going up by 45.5 percent during the same period, Jones Lang LaSalle’s mid-year property market report reveals. A retail property in the Senado area was sold to a Hong Kong investor for HK$168 million (US$21 million).

Gregory Ku, managing director for JLL Macau, said the property’s price per square metre was around HK$200,000.

Offices also did well, with three whole-floor purchases recorded in the NAPE area, worth a total of around HK$240 million.

The unit price ranged from HK$2,700-3,500 per square foot according to the company.

Offices saw their market value appreciate by 16.5 percent in the first half, with residential also seeing gains that could amount to five percent year-on-year by the end of 2012.

More on page 3

The fourth edition of the Guangdong and Macau Branded Product Fair held in the city could help it become ‘a regional business service platform’, says the Trade and Investment Promotion Institute. More than 160 booths will be taken up by Guangdong companies keen on entering markets abroad – particularly the Portuguesespeaking countries.

Page 7 www.macaubusinessdaily.com

HANG SENG INDEX 19810

19760

19710

19660

July 31

HSI - Movers Name

Clouded outlook – typhoon hits July rev

T

Guangdong brands flock to local fair

I SSN 2226-8294

yphoon season can’t be avoided in this part of the world. But the timing of the worst storm in a decade did no favours for a Macau casino industry already experiencing the headwinds of a slowing economy in mainland China and a fall off in VIP gambling.

Bullish analysts are predicting only one to two percent growth in Macau casino revenues year-on-year for July. The more cautious are forecasting standstill or even contraction. Investors will find out who’s right when the official numbers from the Gaming Inspection and Coordination Bureau are published – in likelihood today.

Behind the gloomy headlines that are certain to accompany any contraction, are a number of positives for investors. Some Macau gaming stocks are now cheaper than they have been all year. And the medium- to long-term prospects for Macau and its gaming industry are still very strong say analysts, even if investors may not currently be in the mood to hear about them.

%Day

HANG LUNG PROPER

3.76

CHINA COAL ENE-H

3.47

CHINA CONST BA-H

3.35

BELLE INTERNATIO

3.31

IND & COMM BK-H

3.01

AIA GROUP LTD

-0.73

SANDS CHINA LTD

-0.86

CHINA RES ENTERP

-0.92

CATHAY PAC AIR

-1.08

CHINA UNICOM HON

-2.39

Source: Bloomberg

2012-8-1

2012-8-2

2012-8-3

26˚ 35˚

26˚ 35˚

26˚ 33˚

News where it matters

Page 2

Year I - Number 88 Wednesday August 1, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

2 |

business daily August 1, 2012

macau

Typhoon Vicente ‘flattens’ July casino growth: analysts Once in decade event hit three days of gaming ops Associate Editor

E

ven the most bullish analysts are predicting only one to two percent growth in Macau casino revenues year-onyear for July. The more cautious are forecasting standstill or even contraction. That’s because of the impact last week of Typhoon Vicente – the first Category Nine typhoon to hit the city since 1999.

“Based on our recent channel checks, Macau market-wide is tracking toward 24.2 billion patacas (US$3.03 billion) for July – flat year-on-year,” said Kenneth Fong of J.P. Morgan in Hong Kong in a note to investors. “We base this monthly result on what we believe to be the revenue of MOP22.8 billion patacas generated ‘til July 29,” he stated.

“The typhoon had an unusually long tail as strong winds continued for at least two days after the eye moved on, disrupting both air and sea traffic,” added Ben Lee of IGamiX Management & Consulting Ltd in another note to clients.

The most bearish analysts, mostly based in North America, expect a year-on-year fall in revenues. If the official figures expected today confirm a contraction, it would be the first time since June 2009.

Behind the gloomy headlines that are certain to accompany any contraction however, are a number of positives for investors and also a

number of concerns for the industry in terms of how revenue numbers are released to the market.

On the positive side, some Macau gaming stocks are now cheaper than they have been all year.

Sands China has fallen 30 percent from its HK$33.05 peak in April.

The stock closed at HK$22.95 in Hong Kong yesterday, down 0.86 percent on the day.

“Macau names are certainly better value today than they have been for some time,” Grant Govertsen

KEY POINTS Single digit casino rev. growth y-o-y in July to actual contraction predicted Typhoon Vicente affected three casino trading days Macau gaming stocks currently at attractive prices Disquiet among operators on leaking of daily and weekly rev. numbers

of Union Gaming Research Macau told Business Daily.

Bottoming out “There’s perhaps a question about whether some people will be holding off buying again as they’re not sure whether we’re at the bottom yet,” said Mr Govertsen. “If you look at the long-term story, I think the only way is up. In any other industry in any other part of the world, investors would be overjoyed at the double digit revenue growth already seen in the first half of the year.”

Kenneth Fong of J.P. Morgan in Hong Kong adds in his note: “We continue to see Wynn Macau as offering good value; as a company with a strong and conservative management team, undemanding valuation (13 times price to earnings ratio estimated for 2012 based on J.P. Morgan estimates on earnings per share) robust growth (capacity to double in three-and-ahalf years when Wynn Cotai opens) and a dividend yield of six percent to seven percent.”

Mr Govertsen accepts however that investors might not currently be in the mood to see the positive side of the Macau story.

“A lot of the news we’ve had recently out of Macau – the slowdown in VIP, reports of physical violence, rumours on visa restrictions – has been bad news. In the current

macroeconomic climate, if you give investors extra reasons to pull out, they’ll surely take you up on that,” he suggests.

Positive mass Another positive however on market fundamentals is that on the most recent detailed breakdown available – the revenue figures for June – there’s no sign of a slowdown in mass-market revenue growth.

It’s only the disproportionate role of the VIP trade – high stakes baccarat accounting for 70 percent of total gross gaming revenue in the second quarter – that means the VIP slowdown has such a major impact on the top line of the operators’ balance sheet. Sands China’s emphasis – relative to its market peers – on providing mass market gaming capacity is currently helping it outperform the market suggest several analysts.

“While LVS’s Q2 earnings missed expectations at most levels, its July market share held constant from the prior two weeks at 21 percent, up 300 basis points from June,” said a note from Cameron McKnight of Wells Fargo in New York. He adds that based on the first 29 days of July, Macau gross gaming revenue growth for July is trending down – possibly to one percent expansion or even standstill year-on-year.

Numbers race leaves casino ops frustrated Industry concern that weekly revenue figures add more heat than light

S

omething that does rile the Macau operators says a casino insider, is a recent trend for the leaking of daily and weekly revenue figures, because of the extra volatility it creates in their stock prices in an already nervous market.

“I think their concern is that the more granular the data gets, the less susceptible it is to analysis.

It’s very hard for example to make any meaningful analysis of just one week’s revenue performance.

Even if you had the data available from 2011 for a year-on-year comparison, it wouldn’t necessarily provide you with an effective analysis tool,” explains the insider.

At the bearish end of the opinion spectrum, two analysts in New York are suggesting July’s figures will

show a contraction year-on-year.

Carlo Santarelli of Deutsche Bank said Macau gaming revenue for the first 29 days of July is flat, and year-on-year is likely be negative for the month. John Kempf of Royal Bank of Canada went even further, suggesting a contraction of six percent to seven percent year-onyear for July. He added that without the negative effect of the typhoon, it

could have been up two percent to three percent year-on-year.

Mr Fong of J.P. Morgan suggests the market share figures up to July 29 were: Sociedade de Jogos de Macau 27.1 percent; Sands China 21.3 percent; Wynn Macau 11.3 percent; MPEL 13.3 percent; Galaxy Entertainment Group 13.3 percent and MGM China 8 percent.

A.E.

August 1, 2012 business daily | 3

MACAU

Investors set sights on shops, offices Faced with fewer residential releases, real estate investors have ploughed big money into stockpiling commercial and office properties Xi Chen

xi@macaubusinessdaily.com

Photo by Manuel Cardoso

growth might take the heat from the market.

Jones Lang LaSalle’s head of research for the Pearl River Delta region, Marcos Chan, said: “There are some warning signs in the Macau economy, with total retail sales already falling on a year-onyear basis in recent months.”

Shops hoarded

First tenants of the Fortune Business Centre expected to move in as soon as December

T

he value of premises in prime shopping areas appreciated by nearly 60 percent in the first half of the year and rents rose by 45.5 percent, according to estate agency Jones Lang LaSalle’s midyear report on the property market.

The company said yesterday a shop close to Senado Square had recently been sold to a Hong Kong investor for HK$168 million (US$21 million).

Jones Lang LaSalle’s managing director in Macau, Gregory Ku, said the price per square metre for the property was around HK$200,000 –

comparable to prices for retail space in prime shopping areas in Hong Kong such as Mong Kok or Central.

The report said the value of office premises appreciated by 16.5 percent in the first half.

The average vacancy rate for offices was 15 percent, three percentage points less than a year before.

Mr Ku said the first tenants of the new Fortune Business Centre, which has 400,000 square feet of space, were expected to move in as soon as December.

However, he said slower economic

Mr Chan said if May’s sharp deceleration in tourist arrivals growth persisted, retail sales would be further affected in the second half of the year.

Mr Ku said the retailing industry was already feeling the pinch from the slowing of the mainland economy.

“In February, the number of visitor arrivals recorded a negative growth for the first time since July 2009, while the growth of retail sales also saw a slowdown in the first half this year,” he said.

Despite an uncertain economic climate, Jones Lang LaSalle expects the value of shops and the rents they can command to “remain on the uptrend”, particularly with the opening of the final stretch of the new Guangzhou-Zhuhai railway in the fourth quarter.

Mr Ku said investors were hoarding retailing space and were willing to sell only for high prices because they expected the market to flourish.

The annual rate of growth of the city’s economy was 18.4 percent in the first quarter of the year and retail sales rose by 28 percent.

But these rates of growth were much lower than last year’s averages.

The government now forecasts that the economy will grow at a “high single-digit” rate this year, as growth in the gaming industry slows.

KEY POINTS Value of high-street shops up nearly 60 percent in first half Rents increase by 45.5 percent in the six months through June Retail rents and capital value to ‘remain on the uptrend’ – Jones Lang LaSalle Market value of luxury homes up 10.5 percent City faces shortage of midrange housing supply

A different story for flats Limited supply in the residential market is driving prices up, with most new homes meant for the wealthy Photo by Manuel Cardoso

Xi Chen

xi@macaubusinessdaily.com

T

he market for residential property continued to rise in the first six months of the year and prices are expected to increase by another 5 percent in the second half, according to estate agency Jones Lang LaSalle’s head of residential property in Macau, Jeff Wong.

Mr Wong said yesterday the value of upmarket homes rose on average by 10.5 percent in the first half, and rents grew by 15.5 percent.

The value of mass-market flats rose even faster than that of upmarket homes, their prices increasing by nearly 20 percent.

Rents for mid-market homes also rose faster, by 15 percent.

Jones Lang LaSalle’s mid-year report on the real estate market says the housing market is driven mainly by limited supply.

The number of homes sold has dropped considerably since the introduction of the special stamp duty last year.

But prices have continued to rise

because fewer homes are available.

Government data published yesterday show that the average price per square metre of residential space increased to 58,976 patacas (US$7,384) in June from 53,083 patacas in May. The figure for June is about 50

MOP58,976 Average transaction price per square metre of residential units in June

percent higher than a year before.

Just before the special stamp duty was imposed, the price was just 39,174 patacas.

Jones Lang LaSalle’s data indicate that the city faces a shortage of midmarket housing in the next few years.

Between now and 2014, 6,521 new homes will be put on the market and 3,816 will be for the top end.

Jones Lang LaSalle said rising incomes could support the top end of the market, which was

defined not by how much the homes cost, but by how big they were, where they were and what amenities they had.

But developers are also redirecting their focus to mid-market housing.

Jones Lang LaSalle believes the government should act to increase supply and so satisfy rising demand, by auctioning more land, speeding up the procedure for approving the construction of new homes and getting started on urban renewal.

4 |

business daily August 1, 2012

macau Brought to you by

HOSPITALITY Airport traffic rising The first half’s data for the transport sector of the economy has been published.

This analysis extracts two trends relating to commercial flights.

Re-exports value double that of domestic exports The latest trade figures show that the city’s transformation into an entrepot is relentless Vítor Quintã

vitorquinta@macaubusinessdaily.com

Commercial flights, by origin 2012 H1 3500 3000

All others

Philippines

Malaysia

Thailand

Taiwan

China

2500 2000 1500 1000 500 0

The number of flights from Macau’s most dominant source markets is increasing.

The top five source markets – the mainland, Taiwan, Thailand, Malaysia and the Philippines – represented about 90 percent of all flights.

That was a slight increase in cumulative share of about two percentage points compared to two years ago.

The chart is dominated by two main countries, China and Taiwan, which account for twothirds of incoming traffic – three times as much as the next three put together.

If we take the monthly averages from the last two years for comparison with the first semester figures, the trends are clear.

F

Commercial flights, top 5 origins, Monthly average 600 500 China Taiwan

400 300

Thailand Philippines

200 100

Malaysia

0

2010

2011

A steadily declining proportion of exports are made in Macau

2012H1

The chart is dominated by the mainland and Taiwan. The first is rising as fast as the second is dropping.

On average, flights from the mainland rose by about 40 percent, whereas flights from Taiwan decrease by almost a quarter.

Thailand, the third in our list, closely matched increases in mainland flights.

The growth winner, however, is South Korea which, from an admittedly low level, rose by more than 50 percent.

The fastest decrease is in the residual category, which drops by more than 70 percent, from an average of 29 flights per month to 8.3 flights.

Note, however, that compared to last year, this result represents an improvement.

Between 2010 and last year, the number of flights from all other origins dropped from 348 to just 64.

Overall, the transportation data for this year’s first half suggest a pick-up in the number of commercial flights at the airport.

J.I.D.

or the first time, the value of re-exports was more than twice the value of domestic exports in the first half of this year.

Data released by the Statistics and Census Service yesterday show that first-half re-exports were worth almost 2.8 billion patacas (US$350.6 million), nearly 25 percent more than a year before, while domestic exports were worth less than 1.2 billion patacas, just 1.2 percent more.

Furthermore, exports to growing markets were mainly re-exports while sales to shrinking markets were mainly domestic exports.

This is the first time since the Statistics and Census Service began collecting data in 1998 that the value of re-exports has been more than twice that of domestic exports.

Only three years ago domestic exports were almost 50 percent higher than re-exports.

Economist Albano Martins believes the change is irreversible.

Mr Martins told Business Daily it was a sign that the economy was focussing on services.

“It is also happening in Hong Kong.

It’s the normal process,” he said.

He said Macau was becoming a middleman, buying goods in the mainland and “adding a bit of value-added” before shipping them to other markets.

Mr Martins said that although it might seem the city was worse off because of this, Macau would not

be able to produce itself as many goods as it was now selling on.

“The economic benefit depends on the value of the original product and the quantity that goes through the city. In the end the value-added might be higher than Macau’s domestic production capacity,” he said.

Economic fabric In June, exports of all origins were worth 650.5 million patacas, 4.5

MOP2.8 billion Value of re-exports in the first half

percent more than a year before, rising for the fifth consecutive month.

But the growth was due solely to a jump of 12.1 percent in the value of re-exports to 451 million patacas.

The value of domestic exports fell by 9.5 percent to 199 million patacas.

The figures failed to surprise Mr Martins. He blames the steady decline in domestic exports on the abolition in 2005 of the international system of quotas for trade in textiles and clothing.

Mr Martins said the system had allowed the city’s textiles industry to find a niche even without being competitive.

The textiles industry’s exports tumbled to just 552.3 million patacas in the first half of this year from 5.4 billion patacas seven years before.

In June, the industry’s sales were almost 30 percent lower than a year before.

First-half exports to Hong Kong rose by 38.4 percent from a year before to almost 2 billion patacas.

Exports to the mainland grew by 8.1 percent to 629 million patacas.

In contrast, exports to the United States fell by 14.2 percent to 260 million patacas. Exports to the European Union dropped by 15.2 percent to 175 million patacas.

First-half imports grew by 25.4 percent from a year before to almost 34.8 billion patacas, meaning the trade deficit widened to 30.8 billion patacas, a record.

August 1, 2012 business daily | 5

MACAU

Better typhoon work rules now, says Kwan Legislator wants to extend civil servant’s rules to all workers in typhoon conditions Tony Lai

tony.lai@macaubusinessdaily.com

L

egislator Kwan Tsui Hang wants the government to draft better laws to protect workers during severe weather.

In a written inquiry, Ms Kwan told the government the city lacked clear rules for workers when the typhoon signal No 8 is hoisted. The sole exception were civil servants, she said.

The city was on high alert last week as wind and rain from typhoon Vicente saw the No 9 warning signal raised.

Hundreds of employees in the private sector – particularly in the city’s casinos – are forced to work during extreme bad weather. No matter the weather, the city’s casinos must be open around the clock.

Police were called to Sands Cotai Central last week after more than 200 canteen staff clashed with management over their working arrangements.

She says weather exemptions offered to civil servants should be extended to all workers.

They are permitted to take a half day’s leave if the warning signal No

8 or higher is raised before 9am. If conditions have not improved, they are given the afternoon off.

If the signal No 3 is raised, they have 90 minutes to get to work.

There are similar rules in place for workers in in Hong Kong.

“The controversial issue of working in severe weather should be regulated by law,” Ms Kwan said.

Ms Kwan said the Standing Committee for the Coordination of Social Affairs agreed in May last year that injuries sustained on the way to work during extreme bad weather should be treated as a work-related accident.

No proposal has been brought forward by the government and she urged it to set new rules as soon as possible.

Govt, unions discuss higher tax threshold Chief Executive Fernando Chui Sai On has discussed raising the salary tax threshold with the Macau Federation of Trade Unions.

The government said Mr Chui had met representatives of the federation on Monday and discussed raising the annual threshold which currently stands at 144,000 patacas (US$18,000).

The proposal is for employers to withhold tax from employees whose daily wage is more than 640 patacas or whose monthly salary exceeds 16,000 patacas.

For instance, an employee earning 20,000 patacas a month would be liable for salary tax of 224 patacas. However, as the government has approved a waiver of 25 percent of salary tax, the employee’s tax bill actually drops to 168 patacas a month.

Mr Chui and the trade unionists also discussed the government’s cash handout scheme.

The federation is asking for a second handout this year to help the people cope with inflation, which slowed to an annual rate of 6.19 percent in June.

The Financial Services Bureau said last week that this year’s cash handout had been completed by July 6.

The government has spent almost 41 billion patacas on the scheme so far and about 12.2 percent of the cheques it has written have yet to be cashed.

V.Q.

6 |

business daily August 1, 2012

macau

Personal data watchdog sniffing around Sands

Brought to you by

Unhealthy food mark-up Macau’s residents are often told how mainland food prices affect their grocery bills. It is already understood that the relationship between mainland imports and the food bill is weaker than many assume. Food prices seem to follow the ups but not the downs experienced over the border. The just-released Monthly Bulletin of Statistics provides some up-to-date data to bring to the argument.

This analysis looks at the import, wholesale and retail prices of common food from the mainland.

For simplicity, we took five widely consumed items: white cabbage, potato, chicken, eggs and rice. We only consider here rice imported from the mainland.

The dismissal of Steve Jacobs creates another headache for management at Sands China

Food average prices changes, select products, 2009-may 2012 % 35 30 25

Sands China says it has done no wrong but officials claim transferring the contents of Steve Jacobs’ office computer without clearance breaks the law

20 15 10 5

Vítor Quintã

vitorquinta@macaubusinessdaily.com

0 -5 -10 -15 White cabbage"

Potato

Chicken

Egg

-20

Rice

The first graph shows the percentage change in average prices from 2009 to May. While that is a limited period, these are goods whose price changes would be keenly felt. The first impression is, clearly, that the picture is more complex than just “mainland prices are rising”. Only egg prices have risen neatly above the inflation rate. But, from another angle, how are prices set from raw import to wholesaler and through to the supermarket shelf? It is a more complex equation but in the following chart, the analysis includes data from the last period available, May. The pattern is similar going back to 2009. The first column shows the wholesale price mark-up over the import price. The second shows the retail price mark-up over the wholesale price.

Price increases in each phase of commercialisation % 200

150

100

50

0

White cabbage"

Potato

Chicken

Egg

Rice

What the chart suggests strongly is that the price rises are mostly generated internally. The average mark-up added by wholesalers was 93 percent, which means almost doubling the price just by crossing the border.

Retail margins are also significant, averaging about 62.5 percent for this basket of goods. Whenever alternative supply sources or substitute goods are available the mark-ups are lower.

J.I.D.

T

he Office for Personal Data Protection is investigating Sands China Ltd’s transfer of documents in 2010 to the United States, on suspicion that they were transferred without official clearance.

The ProPublica.org website reported this week that Sands China and its parent company, Las Vegas Sands Corp, had moved documents stored on the office computer of Sands China’s former chief executive, Steve Jacobs.

The documents were moved to Las Vegas a few days after Mr Jacobs

was dismissed in July 2010.

Las Vegas Sands is using them to contest a wrongful dismissal suit brought by Mr Jacobs.

A lawyer for Las Vegas Sands told a US court in June that the transfer had been done in error and that the Macau government had approved it only in May this year.

The Office for Personal Data Protection acknowledged that it had had a meeting with representatives of Sands China subsidiary Venetian Macau Ltd in March but said it had not authorised the transfer of any files.

The office said it had begun an inquiry to find out if the company had broken the personal data protection law, which says any transfer may only take place with its approval. The penalty for breaking the law is a fine of up to 80,000 patacas (US$10,000).

The Office for Personal Data Protection is also investigating another casino operator, Wynn Macau Ltd, after the company publicly disclosed personal information about hotel guests in a report it made on a former director, Kazuo Okada.

Melco chases HK$10m gambler’s debt C

asino operator Melco Crown Gaming (Macau) SA will continue to chase a HK$10 million (US$1.3 million) gambling debt even though the Court of Second Instance has ruled that the debt was not incurred fraudulently.

In July 2010 Melco Crown gave an unnamed man a HK$10 million line of credit in exchange for a signed cheque for the same amount.

The following month the man

gambled and lost the full amount at the City of Dreams resort, and then left.

He did not repay his debt and Melco Crown tried to cash the cheque in February last year.

The cheque bounced and the company made a criminal complaint, accusing the man of fraud and issuing a bad cheque.

The Lower Court dismissed the charges, saying the man was liable only in the civil courts, for

breach of contract.

Melco Crown appealed, and on July 5 the Court of Second Instance ruled that the Lower Court should try the man on the charge of issuing a bad cheque. It upheld the dismissal of the fraud charge, saying there was no evidence the man had intentionally written a bad cheque to get credit.

The Court of Second Instance promulgated its ruling on Monday.

V.Q.

Weather Beijing 24/19o C Changchun 24/16o C

Harbin 25/16o C

Xian 30/23o C Shanghai 34/27o C Chengdu 28/23o C Kunming 26/18o C Haikou 33/25o C Sanya 30/24o C

Guangzhou 36/24o C

MACAU (30 July-4 August) Day

Temperature

Humidity

07/30

25/33o C

45/90 %

07/31

26/33o C

40/85 %

08/01

26/35o C

40/90 %

08/02

26/35o C

40/90 %

08/03

26/33o C

50/90%

08/04

26/32o C

70/90 %

Shenzhen 33/26o C

ASIA (today)

Hong Kong 33/26o C

Manila

TOKYO

Jakarta

28/25o C

32/26o C

30/25o C

33/23o C

Macau 35/26o C

Bangkok

SEOUL

K. lumpur

31/25o C

SINGAPORE

35/26o C

33/24o C

taipei

27/25o C

August 1, 2012 business daily | 7

MACAU

Expect cross-border trade bump, say fair organisers Annual branded product fair to promote hundreds of companies from Guangdong and Macau Tony Lai

tony.lai@macaubusinessdaily.com

O

rganisers of the fourth edition of Macau’s branded product fair say they have created an ideal setting to promote economic exchanges with Guangdong and open new international markets.

“We hope the Guangdong and Macau Branded Product Fair … will assist in the development of Macau in becoming a world-class travel and leisure centre and a regional business service platform,” Macau Trade and Investment Promotion Institute executive director Irene Lau told a press conference yesterday.

Across an area of 6,000 square

metres at Macau Fisherman’s Wharf, the fair has attracted 214 firms and 247 booths. The majority of companies are from Guangdong, while 85 hail from Macau.

Guangdong’s Department of Foreign Trade and Economic Cooperation deputy director general Zhong Jianhui said booths cover three zones: food, necessities, and gifts and souvenirs. Vendors had previously been allocated space according to their origin.

He said a showroom would be set up to display the best three products from every exhibitor,

Door ajar for changes to elections after 2013

T

he government has made it clear that a revision of the way the Legislative Assembly is elected is still negotiable after next year’s vote, legislator Chan Chak Mo said yesterday.

The head of the assembly’s second standing committee said the government had submitted revised versions of two draft laws to amend the number of seats in the chamber and increase the size of the committee to elect the chief executive.

He told reporters that the new bills were “clearer” and “better”.

Some legislators were concerned that the original versions of the bills were unclear on the possibility of future revisions to the city’s electoral system.

A new version of the bill to add four seats to the Legislative Assembly explicitly states that the number

of directly and indirectly elected legislators may be adjusted after next year’s election, as long as any change is made “in accordance with the legal procedures”.

If the bill is approved, there will be two more directly- and indirectly- elected seats in Macau’s fifth assembly.

The other bill alters the size of the committee to elect the chief executive from 300 to 400 people.

Legislators have also proposed the chief executive cuts the budget permitted for each campaign for a seat in the assembly to less than the current limit of 0.02 percent of the government’s budget.

Mr Chan said the committee will complete their review of the bills by August 20 and a vote would take place before the summer recess.

T.L.

enabling customers to quickly gather information.

Seminars will also be held to help companies understand more about marketing strategies.

Ms Lau said 170 business matching sessions had been organised for exhibitors and buyers, a 22-percent increase from last year’s fair.

She is confident the fair can help Guangdong exporters break new international markets, particularly the Portuguese-speaking countries.

Meanwhile, Ms Lau hopes that a bigger emphasis on digital products and entertainment will draw a

younger audience to this year’s fair.

A live show featuring Hong Kongbased pop singers, including GEM and Mr, is being put on and there have been Facebook-based marketing initiatives to sell the fair.

Ms Lau did not give a target for this year’s attendance but she is hopeful that last year’s 110,000 visitors will be eclipsed.

The Macau Trade and Investment Promotion Institute and the Department of Foreign Trade and Economic Cooperation of Guangdong jointly organise the fair, which was first held in 2009.

8 |

business daily August 1, 2012

Greater china

Taiwan slashes growth forecast Economy unexpectedly shrinks as slowdown hurts exports

T

aiwan’s economy unexpectedly contracted in the second quarter amid a faltering global recovery, prompting the government to cut its growth forecast.

Gross domestic product fell 0.16 percent in the three months through June from a year earlier after expanding 0.39 percent in the previous quarter, according to preliminary data released by the statistics bureau in Taipei yesterday. The median estimate in a Bloomberg News survey of 13 economists was for growth of 0.5 percent. The economy last contracted in 2009.

The impact of Europe’s debt crisis on global expansion has increased pressure on Asian economies to support growth, with the Philippines unexpectedly cutting interest rates last week and central bank officials in Japan and Thailand indicating they are ready to ease policy if necessary. Taiwan’s exports have fallen for the past four months even as accelerating inflation crimps scope for lowering borrowing costs, prompting the government to consider stimulus measures.

“Today’s GDP disappointment will add pressure on the central bank to cut rates, but with CPI still trending up and monetary conditions accommodative, we think fiscal policy would be more effective for sustaining growth,” said Donna Kwok, a Hong Kong-based economist at HSBC Holdings Plc. While chances of a rate cut have risen, “more government fiscal support will likely come first,” she said.

“Ultimately, given how weak Western markets remain, Beijing’s loosening must start to lift mainland

demand soon if Taiwan is to achieve a meaningful recovery in 2H 2012.

Taiwan stocks reversed early losses and closed at a three-week high yesterday. The benchmark TAIEX stock index jumped 1.56 percent to 7,270.49, while the Taiwan dollar was up by T$0.055 to trade at T$30.025.

Downside risks The International Monetary Fund said last week China, the island’s largest trading partner, faces significant downside risks as policy makers attempt to stem a sixquarter growth slowdown.

Taiwan yesterday cut its fullyear growth forecast for a seventh straight time to 2.08 percent from 3.03 percent, putting it on course for its slowest full year growth rate since 2009. The statistics office first

Taiwan wants to diversify the kinds of products it sells overseas

KEY POINTS Taiwan’s GDP falls 0.16 percent in second quarter Full-year growth estimate slashed to 2.08 percent Govt drastically cuts exports forecast to 0.07 percent Inflation for the year expected to reach 1.9 percent

projection last August was for a 4.58 percent growth in 2012.

Taiwan’s central bank kept its benchmark interest rate unchanged at 1.875 percent for the fourth straight meeting in June and imposed selective credit controls on luxury housing. The monetary authority said then it will intervene to maintain stability in the foreign exchange market.

“The central bank is still waiting to see if there are any actions taken by the Federal Reserve this week and Europe’s central banks in the near future,” said Rick Lo, senior

Beijing boosts railway plan Second increase in July as private investment encouraged

economist at Fubon Financial Holding Co. Ltd in Taipei. “It’s now too early to say Taiwan’s central bank will cut interest rates because of the Q2 GDP data.”

Premier Sean Chen last month asked the central bank to closely monitor domestic and global economic and financial conditions, and adopt appropriate monetary policies.

“The central bank seems to remain concerned about inflation and property bubbles on a pre-emptive basis,” Raymond Yeung, a Hong Kong-based economist at Australia & New Zealand Banking Group

July 10 comments that promoting investment growth is the key now to stabilising an expansion that decelerated to 7.6 percent last quarter, a three-year low. At the same time, Chinese officials are signalling the slowdown isn’t deep enough to warrant a return to the 700 billion-yuan level of railwayconstruction funds in 2010.

“China is selectively upscaling the stimulus,” said Lu Zhengwei, chief economist with Industrial Bank Co. in Shanghai. “Premier Wen Jiabao said China will do something to boost confidence, and this is fresh evidence.”

Economic growth hit bottom in the second quarter and will probably rebound to 7.8 percent in the third quarter, Mr Lu said.

Private investors

Rail construction gets second boost in July

C

hina will hike railway spending by 64 billion yuan (US$10 billion) to 580 billion yuan in 2012, the Ministry of Railways said, updating an investment plan published earlier this month.

The 12.4 percent increase from an initial 516 billion yuan of planned spending will see about 470 billion yuan spent on infrastructure, according to a bond prospectus issued on Monday. That’s the

second increase in July, making a combined gain of about 14 percent from the previous figure.

The new target exceeds last year’s 461 billion yuan in spending and follows Premier Wen Jiabao’s

China’s State Council, or Cabinet, said it will publish a list of projects in industries including railways, utilities, telecommunications and healthcare for private investors to join. The Cabinet reiterated that downward pressure on the economy is intensifying, according to a statement published after a meeting at which Mr Wen presided.

Separately, 28 cities in China are building 2,500 kilometres of subway lines from 2010 to 2015, China Daily reported yesterday.

August 1, 2012 business daily | 9

greater china

Suntech probes potential fraud Company failed to verify the existence of bonds it accepted as loan guarantee

S

untech Power Holdings Co.’s admission that it may have failed to verify the existence of German bonds it accepted as loan collateral adds to growing concerns about Chinese business practices that are sparking a wave of lawsuits and regulatory probes.

It’s the third time in a week that internal controls at Chinese companies have been found lacking.

The U.S. Securities and Exchange Commission froze assets of traders it accused of insider trading ahead of Cnooc Ltd’s US$15.1 billion deal to acquire Nexen Inc. And fund manager Peter Siris and his Guerrilla Capital Management agreed on Monday to pay more than US$1.1 million to settle SEC allegations of “wide-ranging misconduct” related to a Chinese reverse-merger firm.

As Chinese investment in North America and Europe rises and corporate governance standards remain at odds with Western practice, more such allegations and investigations are likely, said Andrew Karolyi, a professor of finance at Cornell University.

Ltd, wrote in a note last week. “As inflation has not trended down in considering the recent rebound of crude and increasing weather risks, our baseline is that the central bank is inclined to hold.”

Inflationary risks The consumer-price index climbed 1.77 percent in June from a year earlier, after rising 1.74 percent the previous month, with damage to crops from rainstorms and electricity tariff increases in the second half posing inflationary risks.

Construction will cost at least 1 trillion yuan, and experts are concerned that the projects may strain local resources and boost debt, the newspaper said. Cities may also be failing to account for longterm operating and maintenance costs, China Daily said.

The railways ministry, based in Beijing, will sell 22 billion yuan in 10-year bonds and 5 billion yuan in 15-year bonds, according to the prospectus posted to the Chinese government’s bond clearinghouse website.

The 470 billion yuan figure yesterday was 4.8 percent higher than a ministry figure cited in a July 6 statement by the Anhui provincial economic planning agency, which indicated a 9 percent increase from a previous number.

China may also allow the heavilyindebted ministry to sell land alongside railways to ease cash flows, according a report on Tuesday in the Economic Information Daily, run by China’s official Xinhua news agency, that quoted National Development and Reform Commission officials.

Growth gauge Railway infrastructure spending is a gauge of the Chinese government’s determination in stimulating growth.

Authorities, in implementing the 4 trillion yuan stimulus package

Taiwan yesterday raised the inflation forecast for the year to 1.9 percent from 1.84 percent and cut the export growth estimate to 0.07 percent from 2.69 percent.

“We’re seeing the chance of inflation rising above 2 percent in the third quarter,” said Michelle Tsai, a Taipei-based analyst at Jih Sun Securities Co. “That’s going to make it more difficult for the central bank. I don’t think there’ll be room to cut the benchmark rate for the rest of the year. Instead, it will adjust liquidity.”

Bloomberg/Reuters

470 billion yuan China plans to invest in railway infrastructure announced in 2008 during the global financial crisis, directed 601 billion yuan toward railway infrastructure investment in 2009. That compares with 338 billion yuan in 2008 and 2007’s 177 billion yuan, according to ministry data.

Relying on investment to support growth may exacerbate excess capacity and increase government debt, said Ding Shuang, a Hong Kong-based senior China economist with Citigroup Inc. At the same time, recent government initiatives have not “gone beyond the policy mix set at the beginning of the year” and instead represent “full utilisation of the current budget and monetary growth target,” Mr Ding said.

Bloomberg/Reuters

“One of the big concerns is that we cannot impose the typical scrutiny that we would like, in terms of the audit function, for a lot of these companies,” said Mr Karolyi, who researches cross-border capital flows and international companies that cross-list their shares on Western exchanges.

Fraud victim?

Suntech, the world’s largest solar manufacturer, discovered potential irregularities as it sought to sell its stake in Global Solar Fund S.C.A.,

Suntech accepted US$687 million of German bonds as collateral when it guaranteed a loan in 2010

Sicar, an investment company managed by a former Suntech sales representative, Javier Romero.

Suntech accepted 560 million euros (US$687 million) of German bonds as collateral when it guaranteed a 554.2 million euro loan in May 2010 provided by the state-owned lender China Development Bank Corp. for a company that backed Global Solar Fund.

Suntech said yesterday the bonds “may not have existed and Suntech may have been the victim of fraud”.

The incident raises questions about reporting practices at Suntech and other Chinese companies, said Ben Kallo, an analyst at Robert W. Baird & Co. in San Francisco.

Some report costs that don’t include depreciation or shipping, for example, or recognise revenue for power-generating assets before they’re sold.

“It’s not always apples to apples,” Mr Kallo said. “It gives you the impression they’re hiding something even if they’re not.”

The company has filed claims “against relevant parties in multiple jurisdictions” to assert control of Mr Romero’s company and its assets, which include solar projects with 145 megawatts of capacity in Italy, the solar company said.

Bloomberg

10 |

business daily August 1, 2012

asia

InBrief Panasonic reaps profit gain Panasonic Corp., the Japanese consumer-electronics maker trying to recover from a record annual loss, posted its first profit in six quarters.

Net income totalled 12.81 billion yen (US$164 million) in the three months ended June 30, compared with a 30.4 billion-yen net loss a year earlier, it said in a statement yesterday. The company is trying to turn around its unprofitable TV, electronic component and battery operations this fiscal year after closing plants and eliminating 36,000 jobs amid falling prices and a surging yen.

The deficient monsoon and a slowdown in global trade are among the threats to India’s growth, the RBI said

India forgoes rate cut Central bank cuts growth forecast, lifts inflation outlook Suvashree Dey Choudhury and Tony Munroe

KDB cancels HSBC deal KDB Financial Group Inc., South Korea’s largest state-owned banking group, ended talks to buy HSBC Holdings Plc’s retail operations in the nation, setting back its plans to add to its deposit base. The Korean company failed to reach a final agreement with London-based HSBC over conditions related to employment, according to an e-mailed statement sent by KDB. Discussions between the two banks were inconclusive, HSBC said in an e-mailed response to questions.

Renesas secures US$633m support Japanese chipmaker Renesas Electronics Corp yesterday secured a combined 49.5 billion yen (US$633 million) in financial support from three major shareholders as it fights to survive against tough overseas rivals, sending its shares up 16 percent. Renesas is the world’s No. 1 maker of microcontroller chips used in cars. Mitsubishi Electric Corp. said it would provide Renesas with 14.5 billion yen in loans, while Hitachi Ltd said it would supply loans worth 17.5 billion yen. NEC Corp. said it would provide 17.5 billion yen in financial support in the form of guarantees.

I

ndia’s central bank left interest rates unchanged yesterday for the second straight review, showing that bringing down stubbornly high inflation is its top priority even as economic conditions deteriorate.

Underlining its policy dilemma as it faces pressure to reduce rates, the Reserve Bank of India (RBI) cut its economic growth forecast for the fiscal year to March 2013, while at the same time raising its inflation forecast.

The RBI left its policy repo rate at 8 percent and cash reserve ratio for banks at 4.75 percent. The CRR is the share of deposits banks must keep with the RBI. “In the current circumstances, lowering policy rates will only aggravate inflationary impulses without necessarily stimulating growth,” Governor Duvvuri Subbarao wrote in the monetary policy review. The RBI’s

primary focus remains inflation control, he added.

Price pressures in Asia’s thirdlargest economy have been stoked by insufficient electricity generation and inadequacies in the road and rail networks that impose higher costs on Indian goods and services.

With a declining currency and weak monsoon rains further fuelling the highest inflation rate among the so-called BRIC nations, the RBI has had little scope to help lift the nation’s growth from the weakest pace in nine years.

The central bank’s hard line on rates sits in contrast to many other central banks that are easing credit conditions to try to bolster economies feeling the impact of the eurozone debt crisis.

The stance maintains pressure on Prime Minister Manmohan Singh’s

government to rein-in populist subsidy spending and take other steps to bolster an economy growing at its weakest pace in almost a decade.

KEY POINTS RBI leaves policy repo rate unchanged at 8 percent Cuts GDP growth forecast for fiscal year to 6.5 percent Raises inflation outlook for fiscal year to 7 percent Cuts minimum bond holding requirement for banks

Philippines auctions sea blocks Gets four bids for disputed South China Sea oil, gas blocks

Mizuho’s quarterly net income rises Mizuho Financial Group Inc., Japan’s third-biggest bank by market value, said first-quarter profit almost doubled as bond-trading income rose offsetting declines in lending. Net income jumped to 183.9 billion yen (US$2.4 billion) in the three months ended June 30, from 96.4 billion yen a year earlier, the company said in a statement to the Tokyo Stock Exchange yesterday.

Mizuho is merging corporate and retail operations to boost profitability and snapping up assets abroad from downsizing European banks to counter anaemic loan demand in Japan.

The Philippines has been building up its defence capabilities in the South China Sea

T

he Philippines accepted yesterday four bids for three oil and gas exploration blocks in the South China Sea, including two prospects in waters claimed

by China, a weak turnout for the last phase of the country’s biggest petroleum exploration tender.

Only six firms showed up for the bidding out of the 38 domestic and foreign firms prequalified early this year. In all, 20 firms, most of them domestic, participated in the auction of rights to explore 15 sites around the Southeast Asian country.

Energy officials were quick to

play down the South China Sea territorial dispute as a reason for the poor turnout.

“We don’t think the tension in the West Philippine Sea area had a negative impact on our efforts,” Energy Undersecretary Jose Layug told reporters.

August 1, 2012 business daily | 11

asia Many economists expected the central bank to resume cutting rates only in the second half of the fiscal year.

“Given the inflationary risks and pressures, which I don’t see going away, we will continue to see high inflation in the rest of the year,” said Abheek Barua, chief economist at HDFC Bank in New Delhi. “In the foreseeable policy horizon, I do not see RBI cutting rates,” he said.

Market doubts Growth in Asia’s third-largest economy slowed to a nine-year low of 5.3 percent in the March quarter.

The central bank also cut its economic growth outlook for the fiscal year that ends in March to 6.5 percent, from the 7.3 percent assumption made in April, putting its outlook closer to that of many private-sector economists.

It also raised its headline inflation projection for March 2013 to 7 percent from 6.5 percent in its April review, further denting market hopes for policy easing in the near term.

The central bank unexpectedly cut the minimum requirement for banks’ government bond holdings to 23 percent of deposits from 24 percent, a move to free up liquidity. However, some bankers said the cut was unlikely to spur more lending given worries about deteriorating credit quality in the slowing economy.

The 10-year benchmark bond yield was up 8 basis points at 8.23 percent from its previous close, after rising to as much as 8.28 percent. The 5-year OIS rate rose 10 bps to 7.10 percent, while the 1-year rate rose 4 bps to 7.68 percent.

India’s main stock index gave up brief gains and was down 0.4 percent on worries the RBI will not cut rates anytime soon.

“The Reserve Bank of India struck a hawkish stance in its monetary policy statement,” said Anubhuti Sahay, an economist at Standard Chartered Bank in Mumbai.

“Overall it affirms our view that any

Foreign exploration firms that were prequalified, including Nido Petroleum Ltd of Australia, Spanish energy company Repsol SA, French gas and power firm GDF Suez SA, Italy’s Eni S.p.A, and Shell Philippines Exploration BV did not show up.

“As to the reason why the big players did not submit a bid, we are not aware of that. Presumably, among other factors, it’s perhaps their own appreciation of the data that is available,” Mr Layug said.

“Depending on their own assessment of the data, that’s when they consider submitting a bid. We’re very happy with the turnout,” he said.

The Department of Energy auctioned rights to explore on areas 3, 4 and 5, with the first two near the Reed Bank in the South China Sea. The contracts are for the last of 15 sites it tendered this year.

It accepted the sole bid for area 3 from unlisted domestic firm Helios Petroleum and Gas Corp.

“The number of prequalification is not meaningful.

Most prequalifiers register to get data from the Department of Energy for future reference,” Vincent Perez, a former Philippine energy minister, told Reuters.

Helios also submitted a bid for area 4 along with a consortium composed of state-owned PNOC Exploration Corp, Philex Petroleum Corp and PetroEnergy Resources Corp.

S.Korea output falls in June As Europe caps export demand Cynthia Kim

New power outage hits Indian cities

S

A massive power breakdown has hit northern and eastern India for a second day running leaving hundreds of millions of people in the dark, officials say. Officials said there was a total blackout in New Delhi. All Metro services had been halted and staff was trying to evacuate passengers, a Delhi Metro spokesman said. Power ministry officials said the eastern grid had also collapsed. A massive power failure caused severe disruption and travel chaos across northern India on Monday. “It’s highly embarrassing that it again shows we can’t provide basic services to our citizens,” said Mohan Guruswamy, chairman of the Centre for Policy Alternatives in New Delhi and a former finance ministry adviser. “It tells you a lot about the quality of management and their focus on maintenance.”

rate cut from the RBI is unlikely in rest of 2012.”

The RBI cut rates by a steeperthan-expected 50 basis points in April but has kept a hawkish stance since, even in the face of widespread expectations in June it would cut rates again.

“Headline inflation has persisted even as demand has moderated and the pricing power of corporates weakened,” Mr Subbarao wrote.”Non-food manufactured products inflation has also not declined to the extent warranted by the growth moderation. This reflects severe supply constraints and entrenchment of inflation expectations.”

Also accepted was the sole bid for Area 5 off the southwestern Palawan province from the group of The Philodrill Corp and Pitkin Petroleum Ltd, which is partly owned by Philex Petroleum.

Rival claims China claims almost the entire South China Sea while the Philippines, Vietnam, Taiwan, Brunei and Malaysia also claim parts of it.

Mr Layug said the three areas were the “most prospective” of the 15 exploration blocks offered this year to investors.

The three sites off the southwestern island province of Palawan are near the Malampaya and Sampaguita natural gas discoveries. Malampaya is the country’s biggest source of natural gas.

Owned by a consortium led by Shell Philippines Exploration B.V., a unit of Royal Dutch Shell Plc, Malampaya produces more than 2,700 megawatts, or 30 percent of the power requirements of the main Luzon island.

On the other hand, Sampaguita, a discovery of London-listed Forum Energy Plc and majority owned by Philex Petroleum, was at the scene of an incident last year in which Chinese navy ships threatened to ram a Philex survey ship, sparking renewed tension between the Philippines and China.

Reuters

outh Korea’s industrial production fell for the first time in three months in June as Europe’s debt crisis and China’s slowing economy curtailed export demand.

Output fell 0.4 percent in June from May when it climbed a revised 1.3 percent, Statistics Korea said yesterday. The median estimate of 12 economists in a Bloomberg News survey was for a 0.1 percent gain.

Production rose 1.6 percent from a year earlier.

South Korean manufacturers’ confidence dropped to a threeyear low for August, the central bank said on Monday, after Asia’s fourth-largest economy grew at the slowest pace in almost three years last quarter. Bank of Korea Governor Kim Choong Soo warned last week the economy is losing steam, fuelling speculation policy makers will follow a surprise rate cut on July 12 with further easing.

“The lower-than-expected output figure once again shows that the European crisis is hurting South Korean companies and consumer sentiment more than what economists had thought,” said Lee Sung Kwon, an economist

Industrial output shrank by 0.4 percent in June from May

at Shinhan Investment Corp.

“Although the industrial output data may not be enough for the Bank of Korea to cut rates again this month, they may have to in September or October.”

The won gained 0.1 percent to 1,137.60 per dollar at the close in Seoul yesterday, according to data compiled by Bloomberg. It touched 1,132.45 earlier, the strongest since May 4, on speculation Europe’s policy makers will act to resolve the region’s debt crisis. The benchmark Kospi Index rose 0.8 percent.

‘Difficult’ situation South Korea’s economy is in a “difficult” situation, Finance Minister Bahk Jae Wan said yesterday, adding that he will do “everything I can to find a solution for the sluggish domestic economy”. Mr Bahk ruled out additional fiscal stimulus in a July 16 interview, saying it would do more harm than good while the global economy is weak.

The South Korean index for manufacturers’ confidence in August was at 70 after 81 for July, the central bank said. South Korea’s consumer confidence fell to a five-month low in July, the BOK said on July 25.

Economic confidence in the euro area fell more than economists forecast to the lowest in almost three years in July, the European Commission in Brussels said yesterday. European governments are trying to contain the debt turmoil, which last month forced Spain and Cyprus to seek external aid.

“The Bank of Korea might continue to cut rates as Europe’s debt crisis persists,” said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. “The Korean economy is likely to remain sluggish as domestic consumption weakens and exports fall.”

Bloomberg

Nomura faces regulatory penalties

N

omura Holdings Inc.’s domestic securities unit should be penalised after its employees leaked information about clients’ share sales, Japan’s financial watchdog said.

The Securities and Exchange Surveillance Commission recommended the Financial Services Agency take unspecified disciplinary action against the country’s biggest brokerage, the SESC said in a statement in Tokyo yesterday.

The announcement comes less than a week after Nomura chief executive Kenichi Watanabe and his top lieutenant resigned following the company’s acknowledgement that staff leaked information on at least three share sales in 2010.

The scandal cost Nomura business managing bond and equity sales, adding pressure on the bank after profit tumbled last quarter.

Nomura Securities Co., whose head will become the CEO of the parent firm today, solicited clients by offering them privileged information on companies, the

Nomura chief executive Kenichi Watanabe stepped down yesterday

SESC said. The brokerage failed to prevent inappropriate trading before public offerings, it said.

Mr Watanabe and chief operating officer Takumi Shibata stepped down yesterday, as the bank said on July 26. Koji Nagai, head of Nomura’s domestic brokerage, takes over as CEO today and chief of U.S. operations Atsushi Yoshikawa becomes COO. Bloomberg

12 |

business daily August 1, 2012

MARKETS Hang SENG INDEX NAME AIA GROUP LTD ALUMINUM CORP-H BANK OF CHINA-H BANK OF COMMUN-H BANK EAST ASIA

PRICE

Day %

VOLUME

PRICE

Day %

VOLUME

27.25

-0.7285974

19110526

NAME CHINA UNICOM HON

11.44

-2.389078

35119323

3.2

1.910828

19000702

CITIC PACIFIC

11.24

1.99637

3617859

2.97

1.712329

313398558

67

0.1494768

3254723

5.15

0.9803922

28180446

27.05

0.1851852

1531384

CLP HLDGS LTD

NAME

PRICE

Day %

VOLUME

61

0.08203445

3380546

SANDS CHINA LTD

22.95

-0.8639309

9451937

SINO LAND CO

13.28

1.529052

7329570

POWER ASSETS HOL

CNOOC LTD

15.72

1.419355

50022172

SUN HUNG KAI PRO

96.95

0.7272727

6136463

COSCO PAC LTD

10.72

0.3745318

3886964

SWIRE PACIFIC-A

93.05

0.1614639

1943276

TENCENT HOLDINGS

231.8

0.6076389

3332187

TINGYI HLDG CO

19.24

0.6276151

3631774

9.42

0.6410256

11795349

45

1.010101

5861543

BELLE INTERNATIO

14.36

3.309353

15591137

ESPRIT HLDGS

9.43

-0.1059322

8342303

BOC HONG KONG HO

23.85

0.6329114

13839591

HANG LUNG PROPER

27.6

3.759398

11739997

CATHAY PAC AIR

12.84

-1.078582

3734358

107.9

0.2788104

1522556

WANT WANT CHINA

CHEUNG KONG

102.1

-0.1955034

3914209

WHARF HLDG

7.15

3.473227

55157400

CHINA COAL ENE-H

5.24

3.353057

409177597

CHINA LIFE INS-H

CHINA CONST BA-H

21.45

1.41844

36001965

CHINA MERCHANT

24.15

0.625

2867712

HANG SENG BK HENDERSON LAND D

45.2

2.378256

3250663

HENGAN INTL

73.6

0.752909

1902882

HONG KG CHINA GS

17.96

1.126126

9889626

HONG KONG EXCHNG

104.2

-0.3824092

3962579

HSBC HLDGS PLC

65.65

0.6130268

17412610

CHINA MOBILE

90.95

1.055556

19909367

HUTCHISON WHAMPO

69.9

0.5755396

7074976

CHINA OVERSEAS

18.34

1.775805

23764889

IND & COMM BK-H

4.45

3.009259

425807177

MOVERS

40

15.32

2.133333

17527673

HIGH

19809.97

27.1

0.3703704

2495578

LOW

19165.03

11344000

NEW WORLD DEV

9.93

1.741803

13858406

2.634881

9154666

52W (H) 22808.33

PETROCHINA CO-H

9.72

1.780105

76227255

-0.1715266

24716865

PING AN INSURA-H

60.85

0.1646091

6800198

(L) 16170.35

7.04

1.294964

83955082

CHINA RES ENTERP

21.5

-0.921659

5359790

CHINA RES LAND

15.74

2.607562

CHINA RES POWER

16.36

CHINA SHENHUA-H

29.1

LI & FUNG LTD

0 19810

INDEX 19796.81

MTR CORP

CHINA PETROLEU-H

9

19160

27-Jul

31-Jul

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

24.65

-1.004016

9430992

CHINA PETROLEU-H

7.04

1.294964

83955082

19000702

CHINA RAIL CN-H

6.79

1.343284

-0.7281553

7675446

CHINA RAIL GR-H

3.4

2.97

1.712329

313398558

CHINA SHENHUA-H

29.1

CHINA TELECOM-H

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.16

0.9584665

157707882

AIR CHINA LTD-H

5.49

-0.1818182

16311645

3.2

1.910828

ANHUI CONCH-H

20.45

BANK OF CHINA-H

ALUMINUM CORP-H

NAME CHINA PACIFIC-H

PRICE

DAY %

VOLUME

11.54

1.050788

12450097

ZIJIN MINING-H

2.49

2.04918

35918970

20288332

ZOOMLION HEAVY-H

8.68

-2.47191

23387280

2.102102

31188599

ZTE CORP-H

10.34

0.7797271

7031748

-0.1715266

24716865

5.15

0.9803922

28180446

4.04

0

76594268

13.24

1.223242

1761200

DONGFENG MOTOR-H

10.82

2.656546

23488351

CHINA CITIC BK-H

3.92

3.157895

46105265

GUANGZHOU AUTO-H

5.82

-0.1715266

3953392

CHINA COAL ENE-H

7.15

3.473227

55157400

HUANENG POWER-H

5.65

1.98556

18062835

CHINA COM CONS-H

6.83

1.788376

17997225

IND & COMM BK-H

4.45

3.009259

425807177

CHINA CONST BA-H

5.24

3.353057

409177597

JIANGXI COPPER-H

17.12

0.4694836

7361719

BANK OF COMMUN-H BYD CO LTD-H

CHINA COSCO HO-H CHINA LIFE INS-H CHINA LONGYUAN-H CHINA MERCH BK-H

3.22

1.577287

14603144

PETROCHINA CO-H

9.72

1.780105

76227255

21.45

1.41844

36001965

PICC PROPERTY &

8.69

1.400233

12579289

5

4.60251

9540789

PING AN INSURA-H

60.85

0.1646091

6800198

14.32

1.416431

13861663

SHANDONG WEIG-H

8.65

2.488152

3284000

CHINA MINSHENG-H

7.21

2.414773

34354416

SINOPHARM-H

22.8

3.167421

10186590

CHINA NATL BDG-H

7.59

1.606426

31287318

TSINGTAO BREW-H

45.5

0.7751938

1992000

11.98

0.8417508

4634223

WEICHAI POWER-H

23.55

-0.8421053

4031410

CHINA OILFIELD-H

NAME YANZHOU COAL-H

MOVERS

32

7

1 9680

INDEX 9674.27 HIGH

9674.78

LOW

9351.11

52W (H) 12639.66016 (L) 8058.58

9350

27-Jul

31-Jul

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.52

1.204819

41806791

DAQIN RAILWAY -A

5.92

-0.1686341

31071878

AIR CHINA LTD-A

6.05

0.1655629

6593118

DATANG INTL PO-A

5

2.249489

3676872

ALUMINUM CORP-A

5.82

-2.512563

9593074

DONGFANG ELECT-A

15.23

-2.931804

14.45

-0.138217

9008009

EVERBRIG SEC -A

13.45

ANHUI CONCH-A

NAME

NAME

PRICE

DAY %

VOLUME

12.8

-0.6982157

11011033

SANY HEAVY INDUS

11.91

-0.5012531

17337961

7202657

SHANDONG GOLD-MI

33.5

1.422949

8539460

0

7842587

SHANG PHARM -A

10.61

-0.6554307

6783735

SAIC MOTOR-A

BANK OF BEIJIN-A

7.55

0.9358289

13155427

GD MIDEA HOLDING

9.19

0.3275109

14911080

SHANG PUDONG-A

7.66

1.322751

70118950

BANK OF CHINA-A

2.73

0.3676471

12443861

GD POWER DEVEL-A

2.62

-0.3802281

17242138

SHANGHAI ELECT-A

4.18

-2.107728

3304593

BANK OF COMMUN-A

4.38

1.860465

40098543

GF SECURITIES-A

13.62

0.1470588

15719086

SHANXI LU'AN -A

20.17

-2.888782

7990956

BANK OF NINGBO-A

10.16

0.5940594

22988115

GREE ELECTRIC

21.74

2.498821

9366036

SHANXI XINGHUA-A

34.53

-1.371037

3478567

BAOSHAN IRON & S

4.2

-0.4739336

13666991

GUANGHUI ENERG-A

12.3

-5.602456

21387380

SHANXI XISHAN-A

14.44

-1.701838

8516814 15313469

BYD CO LTD -A

14.2

0

5547797

GUIZHOU PANJIA-A

16.61

-2.637749

6940744

SHENZ DVLP BK-A

15.1

1.683502

CHINA CITIC BK-A

3.93

1.813472

22891196

HAITONG SECURI-A

9.57

2.025586

28806590

SHENZEN OVERSE-A

6.19

3.338898

37953022

CHINA CNR CORP-A

3.67

0

23382430

HANGZHOU HIKVI-A

26.98

1.048689

2404457

SUNING APPLIAN-A

6.41

0.9448819

43866652

CHINA COAL ENE-A

7.48

-0.6640106

8120806

1449397

HEBEI IRON-A

2.59

-0.7662835

18023891

TSINGTAO BREW-A

36.28

1.030354

HENAN SHUAN-A

62.18

1.352893

983924

WEICHAI POWER-A

23.16

0.7394519

4180640

13078459

WULIANGYE YIBIN

35

-2.588366

21165867 10301513

CHINA CONST BA-A

3.97

1.017812

15021483

CHINA COSCO HO-A

4.16

-0.952381

7075864

HONG YUAN SEC-A

17.95

0.2793296

CHINA CSSC HOL-A

20.7

-4.564315

4964103

HUATAI SECURIT-A

9.38

0.8602151

11787765

YANGQUAN COAL -A

15.03

-2.402597

CHINA EAST AIR-A

4.11

-0.2427184

6191748

HUAXIA BANK CO

8.8

3.286385

57124782

YANTAI CHANGYU-A

61.1

-0.8116883

592514

CHINA EVERBRIG-A

2.78

1.090909

36241821

IND & COMM BK-A

3.75

1.078167

23317649

YANTAI WANHUA-A

13.1

0.1529052

3600322

18.75

1.957586

9678406

INDUSTRIAL BAN-A

12.48

1.134522

43019367

YANZHOU COAL-A

18.26

-2.196036

2296584

CHINA MERCH BK-A

9.92

1.121305

41597059

INNER MONG BAO-A

35.55

-3.970827

30810257

YUNNAN BAIYAO-A

59.2

0.1522585

1525996

CHINA MERCHANT-A

10.85

-0.6410256

8476040

INNER MONG YIL-A

18.8

-2.942695

11133093

ZHONGJIN GOLD

21.56

1.554404

8937267

CHINA MERCHANT-A

23.36

1.213172

7638167

INNER MONGOLIA-A

5

1.832994

41240387

ZIJIN MINING-A

3.67

0.273224

25259182

CHINA MINSHENG-A

6.01

1.864407

114718993

JIANGSU HENGRU-A

28.65

0.0349162

1394191

ZOOMLION HEAVY-A

9.6

0.1042753

35911557

CHINA NATIONAL-A

5.84

0.6896552

25140539

JIANGSU YANGHE-A

141.6

0.7112376

1156946

ZTE CORP-A

11.41

0.1755926

10501016

CHINA OILFIELD-A

16.55

0.6079027

4991159

JIANGXI COPPER-A

20.04

-2.6712

10270262

CHINA PACIFIC-A

CHINA LIFE INS-A

21.69

1.640112

17942745

JINDUICHENG -A

CHINA PETROLEU-A

6.05

-0.8196721

12348588

JIZHONG ENERGY-A

11.9

-1.571547

4466531

14.08

-3.627652

13125035

CHINA RAILWAY-A

4.68

2.857143

28311465

CHINA RAILWAY-A

2.53

0.7968127

23446697

KANGMEI PHARMA-A

14.97

0.3351206

10447008

KWEICHOW MOUTA-A

246.44

-1.360871

1946572

CHINA SHENHUA-A

22.17

0.8644222

8198207

LUZHOU LAOJIAO-A

39.8

-0.4502251

4636141

2.3

0.4366812

13801971

MOVERS

101

190

9 2365

INDEX 2332.922

CHINA SHIPBUIL-A

4.63

-1.068376

27094115

METALLURGICAL-A

CHINA SOUTHERN-A

4.21

-1.405152

13582687

NINGBO PORT CO-A

2.5

-0.3984064

8819372

CHINA STATE -A

3.12

0.3215434

41444073

PANGANG GROUP -A

3.68

-0.2710027

41941539

HIGH

2363.43

CHINA UNITED-A

3.56

-2.465753

60516760

PETROCHINA CO-A

8.86

0.1129944

12135906

LOW

2331.3

CHINA VANKE CO-A

9.23

2.555556

35851541

PING AN INSURA-A

44.24

1.444623

20982901

CHINA YANGTZE-A

6.58

0.6116208

8789089

POLY REAL ESTA-A

11.4

3.636364

37974260

CITIC SECURITI-A

12.22

1.3267

33108293

QINGDAO HAIER-A

11.18

3.041475

9012464

CSR CORP LTD -A

4.17

-0.2392344

13529545

QINGHAI SALT-A

33

-7.563025

13429256

52W (H) 2995.974 (L) 2254.567

2330

27-Jul

31-Jul

FTSE TAIWAN 50 INDEX NAME ACER INC

PRICE DAY %

Volume

NAME

27.6

6.563707

29904236

FORMOSA PLASTIC

ADVANCED SEMICON

23.35

1.301518

31780820

FOXCONN TECHNOLO

ASIA CEMENT CORP

38.05

1.602136

6433414

ASUSTEK COMPUTER

278.5 -0.1792115

PRICE DAY %

Volume

NAME

PRICE DAY %

83

1.965602

9556325

TAIWAN MOBILE CO

106.5

0.9478673

11098656

TPK HOLDING CO L

FUBON FINANCIAL

31.5

1.123596

17868889

TSMC

Volume

99

1.226994

335

1.055807

9174820 4323268

81

2.531646

67727506

3504287

HON HAI PRECISIO

84.6

2.173913

29937283

UNI-PRESIDENT

50.4

0.8

10512531

9.29

4.147982

117365674

HOTAI MOTOR CO

201

3.608247

1925159

UNITED MICROELEC

12.6

0.8

38164188

CATCHER TECH

145

-6.752412

10992869

HTC CORP

292

2.636204

6760182

WISTRON CORP

32.35

0.622084

10433087

CATHAY FINANCIAL

29.7

2.061856

23410412

HUA NAN FINANCIA

17

0.591716

9086594

YUANTA FINANCIAL

14

1.083032

14467633

CHANG HWA BANK

16.3

1.242236

12345870

LARGAN PRECISION

615

0.1628664

1064631

YULON MOTOR CO

52.6

3.952569

7982075

CHENG SHIN RUBBE

79.8

1.656051

11886248

LITE-ON TECHNOLO

37.75

0.2656042

3988446

CHIMEI INNOLUX C

9.55

6.703911

63730728

MEDIATEK INC

255

3.238866

21488614

CHINA DEVELOPMEN

7.04

0.8595989

55941682

MEGA FINANCIAL H

24.35

2.742616

47384318

26.65

2.10728

23524510

NAN YA PLASTICS

58.5

4.092527

9039679

CHINATRUST FINAN

18

0.8403361

35662377

PRESIDENT CHAIN

157

1.290323

1374173

CHUNGHWA TELECOM

90

1.809955

11377550

QUANTA COMPUTER

78.4

3.022339

26273551

AU OPTRONICS COR

CHINA STEEL CORP

COMPAL ELECTRON

28.2

1.621622

13357876

SILICONWARE PREC

33.4

4.538341

23133078

DELTA ELECT INC

101.5

2.941176

8047379

SINOPAC FINANCIA

12.95

3.187251

39171476

FAR EASTERN NEW

33.65

2.435312

9131151

SYNNEX TECH INTL

65.5

-0.304414

4866090

FAR EASTONE TELE

75.6

6.930693

14383022

TAIWAN CEMENT

34.9 -0.5698006

6521071

FIRST FINANCIAL

18.3

1.385042

22250379

TAIWAN COOPERATI

18.25

0.5509642

14482909

FORMOSA CHEM & F

79.4

1.27551

6591150

TAIWAN FERTILIZE

71.2

2.15208

9810770

FORMOSA PETROCHE

87

2.473498

2851973

TAIWAN GLASS IND

28.5

2.888087

2597713

MOVERS

46

4

0 4990

INDEX 4986.18 HIGH

4986.18

LOW

4801.77

52W (H) 5902.58 (L) 4643.05

4800

27-Jul

31-Jul

August 1, 2012 business daily | 13

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

MElco crowN ENtErtAINMENt

MGM cHINA HolDINGS 27.1

18.9

11.0

27.0 26.9

18.8

10.9

26.8 26.7

18.7

10.8

26.6 26.5

Max 18.86

Average 18.740

Min 18.66

18.6

last 18.7

SANDS cHINA ltD

Max 27

Average 26.541

Min 26.5

26.4

last 27

Max 10.96

SJM HolDINGS ltD

Average 10.822

Min 10.72

last 10.78

wyNN MAcAu ltD 14.0

23.4

16.7

13.9

23.2

13.8 23

Average 23.052

Max 23.35

Min 22.85

last 22.95

22.8

13.6 Max 13.92

Average 13.790

Min 13.64

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Sep12

90.14

0.011095085

-8.829776474

110.8699951

77.69999695

BRENT CRUDE FUTR Sep12

106.25

-0.206630976

1.267632482

124.1999969

88.90999603

GASOLINE RBOB FUT Aug12

290.4

0.560980677

8.075921102

326.7099857

243.0099964

GAS OIL FUT (ICE) Sep12

911.5

0.137324911

1.418636996

1046.5

798.5

NATURAL GAS FUTR Sep12

3.067

1.724709784

-6.579348157

4.64800024

2.221999884

287.81

-0.394531926

1.209691599

332.949996

250.8399963

Gold Spot $/Oz

HEATING OIL FUTR Aug12

1618.28

-0.3031

3.4104

1921.18

1522.75

Silver Spot $/Oz

27.6638

-0.3063

-0.6151

44.2175

26.085

Platinum Spot $/Oz

1407.5

-0.2268

0.9322

1915.75

1339.25

Palladium Spot $/Oz

574.75

-0.6911

-12.0505

848.37

537.54

LME ALUMINUM 3MO ($)

1895

0.905218317

-6.188118812

2666

1832.25

LME COPPER 3MO ($)

7565

1.271753681

-0.460526316

9905

6635

LME ZINC

1859

2.36784141

0.758807588

2523

1718.5

3MO ($)

LME NICKEL 3MO ($)

15880

0.031496063

-15.12560128

25195

15450

15.735

0.865384615

4.690618762

18

13.95499992

813.5

2.552789159

38.76332623

817.25

499

WHEAT FUTURE(CBT) Sep12

916.25

2.032293987

30.56644104

947.25

606.75

SOYBEAN FUTURE Nov12

1634.5

2.044638676

35.72763131

1691.5

1115.75

COFFEE 'C' FUTURE Sep12

174.7

0.575705239

-25.42155816

288.8500061

AGRICULTURE ROUGH RICE (CBOT) Sep12 CORN FUTURE

16.5

last 13.88

Max 16.54

Average 16.54

last 16.54

Min 16.5

CURRENCY EXCHANGE RATES

NAME

METALS

16.6

13.7

Commodities ENERGY

Dec12

PRICE MAJORS

ASIA PACIFIC

CROSSES

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

DAY %

1.0531 1.569 0.9786 1.2276 78.24 7.9863 7.7537 6.3617 55.5538 31.47 1.2435 29.98 41.755 9467 82.393 1.20135 0.78241 7.8042 9.8031 96.05 1.03

YTD %

0.3239 -0.1082 0.0715 0.0897 -0.0256 0.0213 0.0206 0.2798 0.0562 0.3495 0.2734 0.2468 0.261 0.2641 -0.352 -0.0241 -0.2096 0.2563 -0.0653 -0.1249 0

(H) 52W

3.1541 0.9458 -4.1386 -5.2851 -1.6999 0.1665 0.1767 -1.0485 -4.48 0.2542 4.2702 0.9973 4.9934 -4.2041 -4.8074 1.2852 6.5158 4.2285 5.5992 3.7585 0.0097

(L) 52W

1.1064 1.6618 0.9972 1.4549 84.18 8.0449 7.8113 6.4453 57.3275 32 1.3199 30.716 44.35 9662 88.637 1.24736 0.88861 9.2878 11.6793 114.18 1.0311

0.9388 1.5235 0.7071 1.2043 75.35 7.9823 7.7526 6.2769 44.07 29.68 1.2 28.792 41.57 8458 72.057 1.00749 0.77553 7.7018 9.6245 94.12 1.0288

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

NAME

PRICE 2.36

DAY % YTD % -1.25523

7.272725

3.25

1.88

VOLUME CRNCY 3323038

150.0999908

CROWN LTD

8.45

-0.2361275

4.449936

9.29

7.45

1824442

SUGAR #11 (WORLD) Oct12

22.64

0.53285968

-0.832238283

25.77999878

19.23999977

AMAX HOLDINGS LT

0.061

0

-29.88506

0.119

0.055

0

COTTON NO.2 FUTR Dec12

71.38

-0.097970609

-18.73861566

102.25

64.61000061

BOC HONG KONG HO

23.85

0.6329114

29.61957

24.45

14.24

13839591

CENTURY LEGEND

0.234

0

1.739129

0.35

0.204

0

3

0

7.142859

3.95

2.3

10000 23764889

CHEUK NANG HLDGS

World Stock MarketS - Indices

CHINA OVERSEAS

18.34

1.775805

41.2943

19.16

9.99

CHINESE ESTATES

8.97

-0.2224694

-28.24

13.68

8.3

58500

9

2.622577

-35.34483

15.16

8.4

9096700

EMPEROR ENTERTAI

1.41

1.438849

27.02703

1.83

0.97

1170000

FUTURE BRIGHT

1.06

0.952381

152.381

1.1

0.3

768000

GALAXY ENTERTAIN

18.7

-1.267159

31.32023

24.95

8.69

7482192 1522556

CHOW TAI FOOK JE

NAME

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

US

13073.01

-0.02026666

7.001809

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

US

2945.84

-0.4141186

13.07757

3134.17

2298.89

FTSE 100 INDEX

GB

5681.59

-0.2114644

1.961676

5989.07

4791.01

DAX INDEX

GE

6805.5

0.4641234

15.37972

7282.01

4965.8

NIKKEI 225

JN

8695.06

0.6904107

2.835009

10255.15

8135.79

HANG SENG BK

107.9

0.2788104

17.0917

124.3

84.4

HOPEWELL HLDGS

22.6

2.727273

13.79657

24.903

18.56

1795817

HSBC HLDGS PLC

65.65

0.6130268

11.27119

78.6

56

17412610

HUTCHISON TELE H

3.77

-0.2645503

26.08696

3.86

2.53

1520857

LUK FOOK HLDGS I

18.8

1.402373

-30.62731

46.15

14.7

3616515

MELCO INTL DEVEL

5.87

2.264808

1.733103

10.76

4.3

2550000

MGM CHINA HOLDIN

10.78

0.5597015

12.38352

17.183

7.6

3222558

4.16

1.463415

5.208664

5.217

2.887

3354000

0.163

1.875

46.84684

0.205

0.08

16458000

HANG SENG INDEX

HK

19796.81

1.079427

7.390643

22808.33

16170.35

CSI 300 INDEX

CH

2332.922

-0.1229133

-0.5465147

2995.974

2254.567

TAIWAN TAIEX INDEX

TA

7270.49

1.559043

2.805542

8771.64

6609.11

MIDLAND HOLDINGS

KOSPI INDEX

SK

1881.99

2.071819

3.080942

2173.28

1644.11

NEPTUNE GROUP

S&P/ASX 200 INDEX

AU

4269.153

0.552181

5.240703

4517.4

3765.9

NEW WORLD DEV

9.93

1.741803

58.62619

10.96

6.13

13858406

SANDS CHINA LTD

22.95

-0.8639309

4.555805

33.05

14.9

9451937

SHUN HO RESOURCE

1.13

0

13

1.32

0.82

0

SHUN TAK HOLDING

2.7

0.3717472

5.504676

4.624

2.241

1535501

13.88

1.313869

10.99084

20.711

10.079

3615755

16.4

-1.085645

22.02381

18.5

9.8

1103542

WYNN MACAU LTD

16.54

-0.6009615

-15.17949

27.385

14.62

4721557

ASIA ENTERTAINME

3.06

3.030303

-47.95918

10.8692

2.84

122627

BALLY TECHNOLOGI

44.13

-0.4287004

11.55207

49.32

24.74

432444

BOC HONG KONG HO

3.08

0.9836066

28.4839

3.15

1.81

1103

GALAXY ENTERTAIN

2.45

6.521739

31.01604

3.24

1.08

5000

INTL GAME TECH

11.45

0.8810573

-33.43024

18.97

11.1

4972922

JONES LANG LASAL

66.84

-1.357733

9.10872

87.52

46.01

378595

LAS VEGAS SANDS

37.54

2.107983

-12.14603

62.09

34.72

13844640

MELCO CROWN-ADR

10.25

-0.4854369

6.548858

16.15

7.05

4389012

MGM CHINA HOLDIN

1.47

0

23.3539

2.2131

1.0025

500

MGM RESORTS INTE

9.48

0.4237288

-9.108344

15.74

7.4

6644248

SHUFFLE MASTER

14.8

-1.921803

26.27986

18.77

7.35

352390

SJM HOLDINGS LTD

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business daily August 1, 2012

Opinion Greek banks follow Euripides to help borrowers: mortgages (Part I) Rob Urban and Sharon Smyth Bloomberg journalists

G

reek banks faced with mounting mortgage delinquencies are following the advice of 5th-century BC playwright Euripides: time heals.

Banks restructure loans rather than foreclose, extend terms to as long as 45 years, grant payment holidays of up to a year when borrowers are only required to make interest payments, or add guarantors to loans, often children who will eventually inherit the property.

Lenders see foreclosures as the worst way to collect, and so far Greece has avoided the price declines that result from vacant, bank-owned properties that destroy values of whole communities and flood the market, said Andreas Athanassopoulos, general manager of mortgage and retail banking for the National Bank of Greece, the country’s biggest lender with about 30 percent of all home loans.

While Euripides was known as a tragedian, modern Greek bankers believe borrowers given a chance to remain in their homes will end up making good on their debts.

“There is a lot of stickiness in the market as people tend to buy their home, live there a lifetime and pass it on to their children,” Athanassopoulos said in an interview at his office in Athens.

“The best way to get money from delinquent mortgage holders is to give them time, that’s the only doctrine, to help them pay their loans while minimising the bank’s losses.”

At the moment, banks have little choice. In 2010, after Greece became the first European nation to receive an international bailout, with an initial 110 billion euros (US$135 billion), the government suspended foreclosures on primary residences with outstanding mortgage debt of 200,000 euros or less until June 2011. The measure was subsequently extended twice until the end of 2012 and is likely to be extended again in 2013, according to the National Bank of Greece.

Non-performing mortgages in Greece, in recession for its fifth year with a record unemployment rate of about 23 percent, reached 17.2 percent of the total outstanding in the first quarter, according to the Greek central bank. That’s up from 15 percent in the previous three months.

Also contributing to the rising delinquencies are government pay cuts of public employees’ salaries by as much as 45 percent.

In the U.S., where there were 4.7 million foreclosures between January 2006 and June 2012, according to data seller RealtyTrac Inc., prices have fallen 34 percent.

In Spain, where Tinsa, the country’s largest home appraiser estimates prices are down by a third, there have been about 330,000 foreclosures, according to PAH, a group that supports people who have lost their homes to lenders.

Support people “We have learned a lot from what happened in the U.S. – foreclosures pull down the value of properties in surrounding areas, and prices so far in Greece have not collapsed,“ Athanassopoulos said. “The idea here is to support people repaying and to minimise losses.”

In Athens, prices have only fallen about 20 percent from the peak in the second quarter of 2008, central bank data show. In Thessaloniki, Greece’s second largest city, they’re 18.8 percent lower than the high point that year, according to Bank of Greece data. In other cities, they’re down 11.6 percent.

What’s good for Greek mortgage holders and home prices may not be as beneficial for holders of about 3.5 billion euros of loans packaged inside mortgage bonds, said Dipesh Mehta, a Londonbased analyst at Barclays Plc. The government and banks may be “kicking the can down road” until

Lenders see foreclosures as the worst way to collect, and so far Greece has avoided the price declines that result from vacant, bankowned properties that destroy values of whole communities and flood the market

the suspension of foreclosures is finally lifted, when an “avalanche” of repossessions could flood the housing market, he said.

Investors demand 22 percentage points above interbank rates to buy five-year senior bonds backed by Greek mortgages, according to JPMorgan Chase &

Co. data. Spreads have widened from 10 percentage points a year ago, as investor concern grew that the country would need to leave the euro and return to the drachma. That compares with a 1.2 percentage points spread for U.K. prime residential mortgagebacked securities.

“Investors will be holding extremely long bonds especially as they will not be called,” Mehta said in a telephone interview. “They’ll be concerned over the tail risk especially for holders of junior notes about what will happen if repossessions do start to come through.”

In addition to those suffering hardships such as lost jobs or reduced pay, banks must also deal with delinquent borrowers who could pay yet prefer not to sacrifice their lifestyles, as well as those who have transferred cash out of Greece and filed for personal bankruptcy. Negotiating with those two groups, which represent about 20 percent of those seeking relief, is complicated by the legal prohibition on foreclosures.

(For editorial reasons, this article will be published in two parts.

The second part will appear in tomorrow’s edition.)

Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Newsdesk Vitor Quintã (Chief Reporter) Tony Lai, Xi Chen Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, 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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August 1, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

Business Times (Malaysia) Japanese consumer electronics giant Panasonic Corp. plans to shift some sizeable photovoltaic operations from its production plants in Hungary and Mexico to its new plant in Malaysia. According to news reports from Japan, the operations can be expected to commence as soon as December. Panasonic Malaysia confirmed the report saying it will reduce production of solar modules at Sanyo Hungary, starting from October.

It also said that the production of solar modules at Sanyo Energy (Mexico) will be terminated next month.

Business World The International Civil Aviation Organization (ICAO) will send a team to the Philippines in October to conduct a fresh audit, a civil aviation official said, adding the government has been addressing the group’s concerns. ICAO tagged the Philippines as a “significant safety concern” in December 2009 after the US Federal Aviation Administration downgraded the Philippines to Category 2 from Category 1 the previous year following a safety audit in November 2007. The European Union followed by banning Philippine carriers in March 2010 from mounting flights to that region.

Business Times (Singapore) CapitaMalls Asia Ltd has announced that it has acquired Olinas Mall in Tokyo for 22.8 billion yen (US$291.7 million) from Invesco Global Real Estate Asia Pacific. It also said that it is now developing its first shopping mall in Qingdao, China, after having inked the deal to acquire the site from Qingdao Vanke City Real Estate Co. Ltd and Qingdao Shuangshan Gongmao Co. Ltd. Olinas Mall, completed in 2006, is one of the biggest malls in Kinshicho in the Sumida Ward of Tokyo, with a total gross floor area of about 583,000 square feet (54,160 square metres).

The Middle East after Assad Joschka Fischer

Former Germany’s foreign minister and vice-chancellor and Green Party leader

W

hat will the Middle East look like once the Syrian civil war brings about the fall of President Bashar al-Assad, whose clan has ruled the country with an iron fist for more than 40 years? Given the recent dramatic turn of events that has pushed the battle for Syria to a new stage, this question can no longer be avoided.

The successful bomb attack on Assad’s innermost circle, the spread of the fighting into the capital, Damascus (and to the borders with Turkey and Iraq), and the increasing flow of heavier and more precise arms to the insurgents mark the beginning of the endgame.

But no one should harbour false hopes about the coming change: Assad’s regime will not be supplanted by a rule-of-law democracy. On the contrary, the post-Assad era is likely to be even more chaotic and violent, as the regime’s opponents attempt to settle accounts with its supporters and conflict erupts among various clans and religious communities.

As in other Arab countries, a secular tyranny will be replaced by the Sunni Muslim Brotherhood, which in Syria, no less than in Egypt and Tunisia, represents the majority of the population.

But, unlike in Tunisia and Egypt, regime change will be the outcome of civil war.

Outside influence, moreover, will probably be minimal.

Wide consequences What is clear is that the Assad regime’s demise will have far-reaching consequences for the regional distribution of power between Turkey, Iran, and Saudi Arabia, and also for regional conflicts, particularly those involving Palestine, Hezbollah’s role in Lebanon, and Iran’s nuclear programme. In addition, the Assad regime’s downfall will have broader international consequences, owing to the de facto alliance between Russia and Syria.

Radical opposition to Israel has always been a pillar of the Syrian regime, which helps to explain its close cooperation with Hezbollah, Iran’s closest ally in this part of the Middle East, and with Iran itself. But regime change in Syria will not change the basic parameters of Israel’s conflict with its neighbours, namely the quest for a viable Palestinian state and, underlying this, the more fundamental question of the acceptance of Israel’s existence.

Despite its radicalism, the Assad regime was always predictable for Israel. It knew what the limits were and accepted them. By contrast, today’s uncertainty entails a danger of regional war, particularly in view of Syria’s large stockpiles of chemical weapons.

One thing is certain: Israel will

need to deal more frequently with the Muslim Brotherhood in particular and with (Sunni) political Islam in general, and thus with a significantly strengthened Hamas (the Palestinian Muslim Brothers).

The Arab-Israeli conflict will increasingly be charged by religion, which will hardly facilitate compromise. The impact on Jordan, though still unpredictable, will also be of great importance.

At the same time, developments in Syria entail not just risks, but also opportunities for the region that should be explored (though, again, without harbouring false hopes). After all, regime change in Syria will come at the expense of Iran and its proxy in Lebanon, Hezbollah, and could therefore significantly reduce Iranian influence in the conflict with Israel.

More broadly, Iran is losing its only ally in the Arab world other than post-Saddam Iraq, and would therefore be almost completely isolated.

In its struggle for regional hegemony against the two leading Sunni powers – Turkey and Saudi Arabia – as well as their protector, the United States, Iran stands to suffer a strategic defeat from which it will be difficult to recover.

Iran’s predicament This impending defeat and regional isolation will affect Iran’s position on the nuclear question as well.

In purely rational terms, the regime would be wise to strive seriously for a negotiated solution. But it seems more likely that Iran’s radical conservative forces will embrace the nuclear programme ever more tightly as the country’s strategic position weakens.

Indeed, Iranian leaders’ hope that the Islamic Republic would benefit most from the Arab revolt against proWestern dictatorships is proving to be a great, if foreseeable, error. Instead,

fall might doom from the start President Vladimir Putin’s new foreign-policy course, which aims to restore Russian power and global influence.

Thus, the Syrian civil war’s

Iran’s rulers must face the nearcertainty that the consequences of the Arab awakening will sooner or later catch up with them, too

Iran’s rulers must face the near-certainty that the consequences of the Arab awakening will sooner or later catch up with them, too, either directly or indirectly.

Syria holds a final lesson: an alliance with Russia obviously is no longer enough to ensure a regime’s survival.

The strategic consequences for the Kremlin may also be profound, because Assad’s

outcome will have far-reaching implications not only for the country and its people, but also for regional and global politics, with Iran most seriously affected.

Iran’s leaders have George W. Bush, Dick Cheney, Donald Rumsfeld, and their supporters to thank for their alliance with Iraq. In the end, however, that will not be enough. © Project Syndicate

16 |

business daily August 1, 2012

CLOSING Sands renews ferry operation deal

Tam refutes expo office ‘corruption’ fear

Hong Kong-based Chu Kong High Speed Ferry Co. Ltd will continue operating the CotaiJet ferry service, after renewing their deal with a subsidiary of gambling operator Sands China Ltd until 2017. Sands president Edward Tracy said the company is “very pleased” with a partnership “successful and beneficial to both parties,” according to a statement released yesterday. Chu Kong pledged to “further improve the quality of its customer service, upgrade its information technology base” and build new facilities at the new Taipa Ferry Terminal, slated to open by early 2014.

Secretary for Economy and Finance, Francis Tam Pak Yuen, brushed aside any concern that the gap found in the Macau World Expo Office’s budget management had anything to do with corruption. “I’ve read the report [from the Commission of Audit] … it does not involve corruption,” Mr Tam told reporters yesterday. The audit commission believes that the budget calculation for the Shanghai Expo was “unscientific”. The audit also discovered that there was a 34.4 million patacas (US$4.3 million) discrepancy between the office’s durable and equipment spending and what it recorded as assets during the 2008-2011 periods.

ING plans Asia unit breakup Dutch firm aims to sign sale agreements by the end of August Cathy Chan

I

NG Groep NV may break up its Asian life insurance operations and is holding talks with buyers interested in the business in different countries, two people with knowledge of the process said.

The company is currently in discussions with Manulife Financial Corp. and AIA Group Ltd for the Southeast Asian operations, and with both firms as well as KB Financial Group Inc. for those in South Korea, the people said, asking not to be identified because the talks are private. Two private equity funds have bid for the Japanese operations, they said.

ING, which had preferred to divest the business in a single sale, may generate higher proceeds by breaking up the unit, one person said. The company is seeking to sell the assets for 6 billion euros (US$7.4 billion), with Southeast Asia accounting for about half of the proceeds, the person said. ING is aiming to sign sale agreements by the end of August, the person said.

The Dutch firm is also in talks with a consortium led by Mark Wilson, the former head of AIA. Backed by Blackstone Group LP and Swiss Re Ltd, Mr Wilson bid for the entire Asia business, one person said. Richard Li, son of Hong

ING has to sell the insurance business globally to comply with conditions imposed by the European Union

Kong’s richest man, bid for ING’s operations in Southeast Asia and Japan, the person said.

Apollo Global Management LLC and J.C. Flowers & Co. are in talks for the Japanese business, two other people said. Korea Life Insurance Co., which also bid for the Southeast Asian business, has not been officially engaged for talks yet.

Country valuation ING, led by chief executive Jan Hommen, has to sell the insurance

business globally before the end of 2013 to comply with conditions imposed by the European Union after the firm received state aid in 2008 and 2009.

South Korea and Japan, which accounted for a combined 79 percent of pre-tax profit last year, may fetch 1.95 billion euros and 1.16 billion euros respectively, Nomura Holdings Inc. analysts wrote in a May 2 note to clients. Malaysia, which contributed 17 percent to pretax profit, may result in 851 million euros in proceeds while rest of Asia

may be sold for 1 billion euros, the research report said.

ING’s Asia insurance operations are primarily concentrated in South Korea, Japan and Malaysia, Nomura said. It also has smaller businesses in Hong Kong and Thailand. The current sale doesn’t include joint ventures in China and India, people familiar with the process have said.

The Dutch company is also selling its asset management business in Asia, which may fetch 319 million euros, according to Nomura’s report.

Bloomberg

Unemployment in Europe keeps increasing Germany also shows signs of slowing down, adds to worries

U

nemployment across the recession-hit eurozone was a record 11.2 percent in June, with more jobs lost in the single currency area, official EU data showed yesterday.

Eurostat said the seasonally-adjusted rate was the same as an upwardlyrevised May toll but noted another 123,000 people lost their jobs going into the European summer, bringing the total to nearly 18 million, more than two million up on a year earlier.

Marking a 14th successive monthly rise, analysts noted a cumulative rise of 2.248 million people since that series began in April last year, with London-based Howard Archer of IHS Global Insight warning that the unemployment rate “now looks oddson” to cross 11.5 percent by the end of the year, with “a very real danger” of reaching 12.0 percent next year.

Unemployment in Germany, Europe’s

biggest economy, also went up in July.

The total number of people out of work went up by 66,800 in July from June to stand at 2.88 million, according to the Federal Labour Agency, responsible for compiling the monthly data. The jobless rate rose to 6.8 percent in July from 6.6

percent in June.

Unemployment tends to rise in the summer, but even adjusted for seasonal factors, unemployment is on the rise in Germany, according to data published separately by the German central bank or Bundesbank.

Earlier, other data showed a fall in

The dole lines are not getting shorter anytime soon

retail sales in Germany for the third month in a row in June.

This could prove worrying since it has been largely strong domestic demand – as reflected in robust household spending and historically low unemployment – that has made Europe’s top economy largely immune to the worst of the crisis.

But Economy Minister Philipp Roesler insisted that Germany’s economic outlook is positive.

“The economy is feeling the headwind” from the crisis and “the economic risks are bigger than they were at the start of the year. But our robust domestic economy and excellent competitive position means we continue to see moderate growth for Germany in the second half of the year,” Mr Roesler said.

Eurostat estimates that 25 million men and women are unemployed across the full 27-state EU. Reuters/AFP