Macau Business Daily, August 13, 2012 by Business Daily

Affordable flats easier but not for all A

mong many other measures announced by Chief Executive Fernando Chui Sai On to help the population deal with high inflation was the decision to increase the maximum income ceiling for affordable housing by 13.8 percent. Single residents with a monthly salary below 19,355 patacas

(US$2,422) or couples with a joint income up to 38,710 patacas will soon be able to apply for one of the 9,196 affordable flats the government is planning to complete by the end of the year. Speaking at the Legislative Assembly on Friday, Mr Chui said this would cover about 80 percent of the city’s population but the real

number of eligible people might be much smaller. Even though about 80 percent of the Macau’s 339,000-strong labour force was in fact earning less than 20,000 patacas in March, almost a third of those workers were non-resident workers. Both imported labour and nonpermanent residents – almost

77,300 people at the end of last year – are not eligible to buy public housing. In total the government will spend a further 938.8 million patacas in subsidies, including a one-time cash subsidy to 5,000 low-income families, but there was no word on a possible second cash handout. More on page 2

Chances aplenty in mass market

I SSN 2226-8294

Gambling revenue is slowing but mainland Chinese middle-class visitors will keep growing and Macau must take the chance to expand its market, gaming expert Carlos Siu Lam said in an interview with Business Daily. And the city can deal even with a 20-30 percent drop in gaming revenue, he added.

HANG SENG INDEX 20250

Pages 4 & 5 20200

Spending back in doldrums

20150

As the construction of the riverbed tunnel to the new campus of the University of Macau on Hengqin Island was halted after a cave-in on July 19, so did public investment. After a spike in June, public spending caved in last month, making it even more difficult for the government to reach its ambitious target of spending 65.9 billion patacas (US$8.2 billion) this year. Page 3

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HSI - Movers

Going north for bargain flats

Name

With Zhuhai banning dual licence plates for Macau homebuyers and ongoing discussions over 24-hour border crossing, property agents in Zhongshan prefecture, where homes can cost one-tenth of Macau’s, are targeting clients here. Estate agents say that up to half of all buyers of homes in some developments there were from Macau. But not everyone is convinced that there is a trend of more Macau residents buying properties up north. Page 7

Accusations fly over Patane plots

www.macaubusinessdaily.com

20100

%Day

CHINA RES POWER

1.79

WANT WANT CHINA

1.50

WHARF HLDG

1.07

BELLE INTERNATIO

0.96

HONG KG CHINA GS

0.67

CHEUNG KONG

-1.89

SWIRE PACIFIC-A

-2.09

TENCENT HOLDINGS

-2.84

SANDS CHINA LTD

-3.34

LI & FUNG LTD

-19.27

Source: Bloomberg

The developer of two idle plots in the Patane area is fighting back. Tin Wai Investment Co. Ltd was was accused by authorities of delaying the land’s development trying to push through a parcel merger. Liu Chak Wan, the head of the company in 2008, says the company has been waiting for a reply from the government for the past two years and for a chance to receive both plots.

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Year I - Number 96 Monday August 13, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

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business daily August 13, 2012

macau

More eligible for subsidised flats The government will put subsidised housing within the reach of more people and raise a range of subsidies to offset increases in the cost of living Xi Chen xi@macaubusinessdaily.com

Chief Executive Fernando Chui Sai On, left, has announced bigger subsidies that will cost the government a further 938.8 million patacas

bout 80 percent of the public will be eligible for subsidised housing after the government announced increases to the income cut-offs, Chief Executive Fernando Chui Sai On claimed at the Legislative Assembly on Friday. During a three-hour question-andanswer session, Mr Chui sought to clarify the government’s position on issues such as housing, cash handouts and the social security fund. He announced a 938.8 million pataca increase to a grab-bag of subsidies, including household electricity bills and school fees. Assembly member Ho Ion Sang asked Mr Chui to pay closer attention to the housing market, warning that the cost of real estate bought in the open market was an economic problem that could become a political one. Mr Ho, who is the deputy director of the General Union of Neighbourhood Associations, suggested that the government restrict sales, limit overseas investment and increase the supply of public housing. Mr Chui said the government would work to improve housing prices in the short term by raising income eligibility levels for affordable housing by 13.8 percent. The new upper limit on monthly income would be set at 19,355 patacas (US$2,422) for oneperson households, up from 17,000 patacas, and to 38,710 patacas for a two-person household, up from 34,018 patacas. Mr Chui said about 80 percent of the public would be eligible under the new limits. However, the actual number of people that could buy an affordable flat could be much smaller. According to data from the Statistic and Census Services, 79.9 percent of the Macau labour force earned

less than 20,000 patacas at the end of March. But almost a third of the labour force is made up of non-resident workers, which are not eligible to buy public housing. In addition, non-permanent residents – almost 77,300 people at the end of last year – are also barred from the scheme. The government would take applications for public housing for rentals and build more public housing, subject to demand. A committee had also been established to examine the housing market, he added. The government wanted a solution that would utilise idle land by the end of this year an ad would announce how many plots of land it would take back in due course. A backlog of development applications would also be eased.

“Society is an integrated organism and the government will not neglect anyone from any background,” Mr Chui said. He announced a one-time cash subsidy of 27 million patacas for 5,000 low-income families

MOP19,355 New upper income limit for subsidised housing eligibility for singles

Subsidies galore Assembly member Chan Meng Kam asked Mr Chui if the government would consider giving more money to the public, in view of housing costs and inflation running at an annual growth rate of more than 6 percent since the end of March. Another member, José Pereira Coutinho, was more specific, suggesting that the government should increase the cash handout to 10,000 patacas next year. Several trade unions have proposed an increase in the annual handout and a petition with 24,000 signatures supporting the move was presented to the government on Thursday. Mr Chui said any increase in the cash handout would depend on the performance of the economy in the second half of the year, with any change to the budget decided in November.

and an 8-percent increase to the temporary cash allowance paid to households on the waiting list for public housing rentals. The annual subsidy for tuition fees would rise by 19.5 percent to between 14,000 patacas and 17,000 patacas, and the annual subsidy for school materials by 2.1 percent to 1,900 patacas. The government would also increase the electricity subsidy to 200 patacas a month in October, up from the current 180 patacas. Some assembly members questioned Mr Chui about the Social Security Fund. The fund said this month it wanted to double monthly contributions and ensure both

employers and employees contribute equally by 2015. At present employees contribute 15 patacas a month and employers pay 30 patacas.

Healthy path Chan Chak Mo, who represents education and sports in the assembly, and Kwan Tsui Hang, vice-president of the Macau Federation of Trade Unions, said 90 patacas was a reasonable monthly contribution. Mr Chan said employee contributions would need to be increased gradually until payments by workers and bosses were equal, otherwise company profits would be hit. Assembly member Kou Hoi In said the Standing Committee for the Coordination of Social Affairs should discuss the fund’s proposal to increase contributions. He asked the government to examine the fund’s changing role, worrying that it would become a social welfare fund rather than a fund based on a well-run labour policy. Melinda Chan Mei Yi wanted the government to link the fund to the city’s subsistence level, which rose to 3,300 patacas per month in June. Her concern was the fund exhausting its resources leaving it incapable of providing for retirees. Mr Chui said the government would put 37 billion patacas into the fund in the next few years, including 5 billion patacas in each of the next two years and another 13.5 billion patacas in 2015 and 2016. “The government will play the main role in the next decade in providing financial resources to the social security fund while in the meantime mapping out a healthy path for the long-term operation of the fund,” Mr Chui said.

August 13, 2012 business daily | 3

MACAU

Govt spending way off target

editorial

With investment in public infrastructure slowing to a crawl, the government is on course to undershoot its capital spending target for this year

Big picture retirement planning

Vítor Quintã vitorquinta@macabusinessdaily.com

he government is unlikely to reach its goal of spending 65.9 billion patacas (US$8.2 billion) this year as investment in public infrastructure projects ground almost to a halt last month. The government has spent 25.6 billion patacas in the first seven months of this year, just 38.9 percent of the budget, data released by the Financial Services Bureau on Friday show. It is likely to end up spending even less than the 48.98 billion patacas it spent last year, mostly because of chronic underspending in its capital account. The government spent 1.5 billion patacas in its capital account in June alone – more than in the first five months of this year put together. Most was spent on the new campus of the University of Macau on Hengqin

Island and the undersea tunnel that will connect it with Cotai. But spending last month tumbled to just 196.9 million patacas as work on the tunnel was halted after a cave-in at the construction site on July 19. The government says it is waiting for a report from the contractor before work can resume.

Surplus balloons The government has spent just 3.15 billion patacas of the 19.8 billion pataca capital budget for this year, which is more than triple the amount it spent in the first seven months of last year. Current expenditure, which includes the salaries of civil servants and other running expenses, is more on target. Civil servants got a 6.5 percent pay rise in May.

The government’s current expenditure so far this year is 20.5 billion patacas, 47.7 percent of the amount budgeted for the whole year. Official data show that government spending tends to rise in the second half of the year, but to hit its spending target of 65.9 billion patacas the government would have to spend almost 40.3 billion patacas in just five months. Even though gaming tax revenue slowed last month, flagging spending meant that the budget surplus increased by 6 billion patacas in July. The cumulative surplus this year is now about 45.96 million patacas. The surplus is already way above the 36 billion patacas forecast by the government for the whole year. At this rate the government will close its books for the year with a surplus of 78.8 billion patacas.

Investment in public infrastructure has almost stopped since work on the tunnel to Hengqin Island was halted

Rules readied for casino smoking areas

egulations controlling smoking in casinos to be in place by January 1 are “almost” ready, the Gaming Inspection and Coordination Bureau said on Saturday. “The SAR administration will publicise the requirements for setting up a smoking area in casinos within a shorttime period,” wrote Manuel Joaquim das Neves, director of the bureau in response to an inquiry by Legislative Assembly member Lee Chong Cheng. Last October, Health Bureau director Lei Chin Ion said the dispatch would be ready by the end of last year.

In a reply to an inquiry from legislator Paul Chan Wai Chi, Mr Lei said the government commissioned a study on casino air quality from the State Key Laboratory of Fire Science. The completed regulations will include rules governing ventilation and the separation of smoking and non-smoking areas, air quality standards and supervision measures. Mr Neves wrote that illnesses caused by working in an environment filled with second-hand smoke would not be considered an occupational hazard because they could also be caused by

other irritants, such as air pollution. Other jurisdictions did not classify illnesses triggered by second-hand smoke as occupation hazards, so the government “will temporarily set aside” this option. The Health Bureau said it would set up a meeting with representatives from the Labour Affairs Bureau, the Gaming Inspection and Coordination Bureau, casino operators and workers’ associations to discuss measures to provide staff with “a healthy working environment”. T.L.

TIAGO AZEVEDO tiago.azevedo@macaubusinessdaily.com

he current structure of Macau’s social security system is far from sustainable. With such small monthly contributions and a limited number of contributors, the government’s current strategy for the Social Security Fund is unlikely to be successful. The fund was launched in January last year with monthly contributions set at 45 patacas (US$5.6). Employers are required to pay two-thirds, 30 patacas, while workers pay 15 patacas. The government now says it wants monthly contributions to double to 90 patacas – still far less than what is actually needed to sustain the fund. Fund president Ip Peng King said last month that contributions had to increase to about 440 patacas a month to strike a reasonable balance between incomings and payments. The increase in contributions will ensure the fund’s future. It would help reduce the fund’s reliance on bailouts from the government. And with contributions exceeding the money paid out of the fund, the surpluses can be used to pay future bills. However, Macau is far from reaching that goal. Macau had about 236,400 employed residents in June, according the government’s data. Last year’s census showed there were about 40,000 residents aged 65 and above. It would take about 45 workers to pay into social security for every elderly retiree eligible to receive their benefit of 2,000 patacas a month. Having that number of people supporting elderly citizens is not necessarily a concern. The problem lies in the fund paying out much more than it takes in. Using the same numbers, the fund has to spend about 80 million patacas to cover old-age pensions. At the current level of 45 patacas a month, the resident working population pours about 10.6 million patacas into the fund each month. Even a doubling of contributions to 90 patacas would not cover the fund’s expenses. It will merely push the date at which the Social Security Fund exhausts its money further into the future. And that does not include rising benefit costs, inflation or an expanding number of pensioners. Taking into consideration a 90 pataca a month contribution across a 45 year career, the amount comes to 48,600 patacas. That is enough to cover a mere two years at the current pension – not nearly enough for an ageing society like Macau’s. With a big part of the population now aged between 55 and 64 years, the number of elderly will soon begin to increase rapidly. Macau currently has the second best demographic profile in the world but, according to a 2010 International Labour Organisation report, there will be eight nonworking residents – children and elderly – for every 10 active workers by 2050. An increasing number of people to support. Chief Executive Fernando Chui Said On said on Friday the government would inject 37 billion patacas into the fund over the next couple of years. We can expect to see 5 billion patacas paid in each of the next two years, followed by 13.5 billion patacas in 2015 and 2016. The government, however, has to make sure that the Social Security Fund is sustainable. The government’s major revenue source is casino money, and that looks increasingly volatile. The healthy surpluses the public has been used to seeing may shrink if the city remains so heavily reliant on a single industry. There are important people that need to understand that the system is completely out of balance. If they do not act in a timely manner, the fund will be drained much sooner than expected. Do not look at it as a cost, but rather an investment in your future.

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business daily August 13, 2012

macau

Tap the mass market InBrief Dragon year fuels spike in baby births The number of births in Macau in the first half of this year increased by 23.1 percent over the same time last year, according to data released by the Statistics and Census Service on Friday. There were 3,233 births in the first half of the Year of the Dragon in the Chinese Lunar Calendar. The city’s population grey by 5,800 from the end of March, thanks largely to the hiring of about 3,900 non-resident workers.

Gambling revenue flat at month’s start

An uncertain economic outlook is squeezing credit offered to high-rolling gamblers. While the top end of the city’s gaming industry may be struggling, a burgeoning middle-class in the mainland has more money to travel, shop and gamble. Associate professor Carlos Siu Lam of the Macao Polytechnic Institute’s Gaming Teaching and Research Centre says these circumstances are creating a rare chance for the city to expand its market. Mr Siu says revenue from mass-market gaming will keep growing even during a prolonged period of uncertainty Luciana Leitão leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

incomer, which can afford some kind of travelling and spending.

Gross gambling revenue reached 3.4 billion patacas (US$425.5 million) in the first six days of August, investment bank Nomura Co Ltd said on Friday. The bank said revenue for the month could fall below last August’s 24.8 million patacas. The forecast is shared by analysts for Wells Fargo & Co. who said growth this month would be flat, following 1.5 percent growth last month.

There is speculation Beijing is restricting individual visas. Why? The gaming revenues in Macau have broken world records again and again, and, to some extent, this has aroused some kind of attention in the central government. Macau has developed at an incredibly fast beat, and there is a point whether there is the need for some kind of better management internally. From time to time, we might hear some complaints about transportation and about the quality of service offered in retail segments. Also, there are rumours saying that some people tried to do some kind of money laundering. I think the central government is keeping an eye on all of this. If there are restrictions in place, are they temporary or will it last? I think it’s a temporary measure, because in certain areas we have not done that well. We need some kind of better coordination internally.

Capital Research ups holding in Wynn Macau United States-based Capital Research and Management Co. bought 1.14 million shares in gambling operator Wynn Macau Ltd at an average price of HK$17.131 (US$2.2) apiece last week, according to a filing to the Hong Kong Stock Exchange. The purchase by the Los Angeles firm raised its stake in Wynn from 4.99 percent to 5.02 percent, Bloomberg reported on Friday.

Trade promotion roadshow for Beijing

Recent figures suggest mass-market gaming has been growing steadily, even as we see a slowdown in the mainland. Why? The gaming market in Macau is heavily dependent on mainland China because we haven’t diversified much further than that. Because of the economic situation in mainland China and the appreciation of the renminbi, we don’t have that great supply of workers in mainland China right now. The economic situation leads to rising wages, making this kind of middle-incomer earn a bit more, so they can afford travel, some kinds of luxury items and a bit of recreational gaming. That is something within expectations.

A three-day seminar will be held in Beijing between September 27 and 29 to promote trade between the mainland capital and Macau, the Macau Trade and Investment Promotion Institute said yesterday. The institute said the event would include promotion seminars and business matching. There are plans to include an exhibition of products made in Macau, with about 100 stands featuring creative products, clothing, food and wine.

Will it eventually reach VIP gaming? It will take some time, because China has already passed through an incredibly fast economic progress. It has now entered another stage, so its economic development will not be as fast as it was 10 or 20 years ago. Its economic development can be around 7 percent, and later 6 or 5 percent, but it is still really admirable by any standard in the world. The VIP market mainly depends on big patrons and I don’t expect that

Health authorities test infant formula The Health Bureau will test each of the 68 infant formulas available here after Hong Kong authorities found low iodine levels in six formulas made in Japan, which could have adverse health effects on the development of thyroid glands and brains. The bureau said it did not include iodine levels in its annual checks and that the six brands were not available in Macau.

Macau has developed

Will this have an impact on gaming revenue? I don’t think so. For 2009, the expenditure used only 52 percent of the revenue. For 2010, it used 43 percent. For 2011, it used 37 percent. This means that unless our gaming revenues drop considerably and also our expenditure increases by two or three times as much, I don’t think Macau will have severe problems. Macau can stand a reduction of maybe 20 or 30 percent of gaming revenues.

at an incredibly fast

Expanding markets

beat, and there is a

Macau is dependent on the mainland and its economy. How can the city fight off this dependency? At least in the short term, three to five years, I’m not particularly worried about Macau but we are heavily dependent on tourists from mainland China. Not in the near future but if the economic situation in China changes to a bad direction it will affect Macau severely, especially with the liberalisation of the gaming industry in neighbouring countries. One key issue for the Macau government to consider is to explore as many new markets as possible, for example India and South Korea. [It should] try to strengthen cooperation with travel agencies there. Macau can offer some kind of subsidy and try to encourage travel agencies to have different packages there, so as to diversify our customer base. Apart from that, we also need to think about what is our main appeal to travellers. What are the attractions in Macau, besides gaming? What

point whether there is the need for some kind of better management internally

these can make so much money as easily as they have done 20 or 30 years ago, unless they can explore some kind of business opportunities. But it is not that easy. It all depends on the economic development of mainland China. I would expect that there is an upward trend in the mass market. How does the mainland’s economic slowdown affect the gaming industry? It might affect the development of the VIP market and it will give rise to the emergence of the middle-

August 13, 2012 business daily | 5

MACAU kind of tour can you offer in Macau? We have cultural tours in Macau and these tours are not known to most travellers. We also have quite different varieties of nice food available and these are not marketed adequately to travellers. Also, besides gaming and nightlife, what else can Macau offer? These are things that the Macau government needs to consider really carefully.

be imposed on the operators to make such things a reality in the near future, and this is something very important, especially in the coming few years with the restructuring of mainland China’s economy. We need to diversify a bit and also we need to have a good discussion with Hengqin Island about what projects are going on, to do some kind of coordination work.

The media has linked junkets to recent crimes. Is there reason for concern? This is something normal, because the business of junkets is not so good as before and you could expect fierce competition. It is easy to lead to quarrels. I believe the police in Macau have a stronger awareness of this and they have started to do some work. I think, with the support of the government, they can do something, by allowing or not allowing [someone] to come in to Macau. I’m not worried that situations that occurred in 1999 or 1997 would happen again, as long as the Macau government has a very good and close working relationship with the central government and Guangdong province. The police nowadays have higher awareness of what is going on now than 10 years ago. If something happens, they can start action to prevent it from deteriorating.

Will the government’s restrictive human resources policy affect the development of the gaming industry? I think the human resources problem is a key issue. People always complain that they don’t have enough opportunities or they don’t have enough exposure to be promoted to higher-level positions. I wonder if the Macau government can do something or can impose this

Future Cotai projects seem to be hampered as a result of consecutive delays in getting approvals from the government. Why is it taking so long? I think if Macau really wants to go as a recreational centre of the world, it needs to think how it can add to its non-gaming element. Some policies or regulations need to

especially with the

If the economic situation in China changes to a bad direction it will affect Macau severely, liberalisation of the gaming industry in neighbouring countries

as some kind of requirement to the operators, so that the locals are not always considered inferior to the imported labour. Macau has a small workforce. Can the government maintain restrictions on imported labour? This is an issue but don’t forget we have a growing number of different graduates abroad. Many of them have expressed their intention to come back when they finish graduate studies. If they don’t see any opportunities to develop their careers they will not come back. Of course we need a certain number of imported workers, given that we have to deal with close to 30 million travellers per year.

Liberally applied The secretary for economy and finance recently clarified that the cap on gaming tables growing at 3 percent annually will be liberally applied. What’s your take? It is difficult to make predictions, especially in a free market environment. According to the figures suggested by the properties, if this might come up to 4 or 5 percent, I would say it is extremely difficult to make accurate predictions. If the government really wants to encourage the non-gaming sector, just let the market decide. I think it depends on the government stance, what it wants to achieve in the coming five years. Macau’s revenues are heavily dependent on gaming and we cannot be so idealistic to ignore the gaming tables. We have to be realistic. On the other hand, we can impose some restrictions on

the gaming operators to increase the non-gaming part, to make Macau more attractive again to outsiders. Macau relies on junkets, which are criticised for being opaque. Do you agree with that criticism? The junket system in Macau is considered to be something secret, at least to some people in Western countries. There is something that Macau can do to also improve the business prospects for this industry. Macau can regulate them [in a way] that is recognised by neighbouring countries. By achieving this, Macau can say to the world that it is regulating them. I’ve noticed the way to regulate the junket system in Macau has improved. The government has done something to regulate the practice, but I think they need to tell the world, maybe establishing a spokesman system to release some information to the outside world, that Macau is doing something. It is not as it was 20 years ago. But it is still regarded as one of the industry’s fragilities. Yes, to some extent. From time to time there are arguments and fights. A junket [operator] is still a private company and they want to maximise their profit. If they do something very drastic, they have to pay the cost and this is going to reduce their profit. Should Macau follow a more restrictive model, such as Singapore’s? I think it is a complicated issue. We need more discussion between the industry representatives, government and academics. I think that is something important.

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business daily August 13, 2012

macau

Stormy waters for CotaiJet LVS faces yet more questions over its Macau and China business Associate Editor

Not plain sailing – the story of CotaiJet is turbulent

he United States Department of Justice is reportedly to investigate whether there was any act of corruption in the way Las Vegas Sands Corp. subsidiary Cotai Ferry Company Ltd came to be allowed a ferry operating licence between Macau and Hong Kong. The DoJ and the U.S. Securities and Exchange Commission are said to be looking at two other deals for the same reason according to the Wall Street Journal. One is a US$50 million (400 million patacas) payment for real estate in Beijing that was to have housed an Adelson Center for U.S.-China Enterprise. The project didn’t happen. The other is LVS’s sponsorship of a Chinese basketball team. Neither the DoJ, nor the SEC nor LVS were available for comment. If the new inquiry is confirmed however, it will be the sixth instance of outside regulatory investigations into LVS’s Macau business in only two years. The difference this time is that the probes appear to have been initiated by the company itself. The WSJ quotes from LVS audit committee documents that the company is said to have shared initially with Nevada gaming regulators. The motive for that isn’t

known. Sands China’s share price was down 3.34 percent at the close of trading on Friday, to HK$24.60. The Nevada-based parent company LVS and its chairman Sheldon Adelson are currently two of the most talked about and blogged about topics in the U.S. That’s because of the combined US$10 million donation Mr Adelson and his wife Miriam have made to Republican Party presidential nominee-presumptive Mitt Romney.

Vested interests There has long been controversy in Macau surrounding the background to the introduction of Mr Adelson’s Macau ferry service – branded as CotaiJet. The U.S. Foreign Corrupt Practices Act forbids U.S. companies or individuals from bribing, offering to bribe or being the beneficiary of bribes paid to foreign officials. One question U.S. investigators might ask in any inquiry is why – after a Macau court ruled in February 2009 it was illegal for Cotai Ferry Co Ltd’s concession to be awarded by the Macau government without a competitive tender and voided the deal – the government later changed its own rules and introduced a new

permissions regime allowing ferry licences to be issued directly by the city’s Maritime Administration. Both LVS and a government spokesman cited at the time “public interest” as the reason for the licensing system change. While under international legal norms the decision might be regarded as an internal matter for Macau, if a person or company linked to a U.S. company is proven to have influenced a foreign official or a jurisdiction’s public policy via bribery then a U.S. company can be held liable for it.

Unfavourable outcome On November 16 2009, when LVS published the prospectus for its local unit Sands China’s listing on the Hong Kong Stock Exchange – and was still awaiting the outcome of the legal process over Cotai Ferry Co. Ltd – the firm said, citing its external lawyer in Macau, Leonel Alves: “Our Macau legal advisor is of the opinion that, although uncertain, the outcome of the decision of the Court of Final Appeal is more likely to be unfavourable [to LVS] than favourable.” Mr Alves is also a member of the Executive Council

that advises Macau’s chief executive. His name was mentioned recently in a wrongful termination lawsuit brought by Steve Jacobs, a former president of Sands China. Mr Jacobs said in his deposition Mr Alves had sent him an e-mail in late 2009 saying a contact in Beijing had offered to intervene on the company’s behalf in two other unrelated matters in exchange for US$300 million. In the same paragraph of the 2009 IPO prospectus however, the LVS said of the Cotai Ferry issue: “We are exploring the legal rights and remedies available to protect our ferry operations and investments and, should we receive an adverse ruling, will explore all legal options with the Macau government to try to ensure that we suffer no ferry business disruption. We expect the Macau government to take measures to secure the continuous operations of ferry services to and from Taipa in order to protect the public interest, and we believe we would be permitted to continue to operate our business on this basis.” The U.S. authorities might wish to satisfy themselves that the Macau government’s decision to overrule its own courts, re-write the rules and support LVS in its ambition for a

Weather Beijing 28/22o C Changchun 27/15o C

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MACAU

Rowing against the tide LVS faced headwinds in launching then keeping its CotaiJet service

as Vegas Sands Corp. realised soon after it was granted a Macau gaming sub-concession in 2002 that having its own ferry service for visitors transiting via Hong Kong was the only way to guarantee a reliable pipeline of customers to its planned Venetian Macao resort. A quarter of Macau’s 2.1 million visitor arrivals in June this year were Hong Kong residents. Even more visitors transit via Hong Kong for short trips to Macau. The Taipa Temporary Ferry Terminal, used by CotaiJet and serving the Cotai Strip, had more than 1.49 million visitor arrivals in the first five months of the year – the majority aboard CotaiJet ferries. Macau’s main ferry operator TurboJET does have some Taipa services. It is run by Shun Tak Holdings Ltd, a conglomerate controlled by the family of Stanley Ho Hung Sun – the founder of rival casino company Sociedade de Jogos de Macau SA. SJM currently has no casino on Cotai and Shun Tak therefore has limited commercial interest – beyond basic fare revenue

Cotai ferry service was indeed due to public interest motives and not private interest motives. The government certainly wasn’t doing it to court popularity at home. Feelings were running high against LVS in early 2009 after the firm announced it was suspending work on Cotai Lots 5 & 6 (now known as Sands Cotai Central) in order to concentrate on finishing its Marina Bay Sands property in Singapore. Stanley Ho Hung Sun, the former gaming monopolist in Macau, had in early 2009 delivered a number of speeches strongly critical of LVS. In one, on February 9 that year, the Chinese-language press reported Mr Ho as urging Macau to “unite against” The Venetian. He added: “We are Chinese. We should unite against foreign capital. We cannot keep silent. If not, the foreign capital will bully us.”

The Guangdong connection A Chinese businessman is mentioned by the Wall Street Journal as the common factor linking the ferry deal, the Beijing real estate deal and the basketball team. He is Yang Saixin, said by the WSJ to be a paid consultant and business partner of LVS. It said the well-connected Mr Yang was hired by the company to help build relationships and facilitate deals in China. According to an LVS filing, CotaiJet’s ferry service is fully managed and operated by an outside company – Cotai Chu Kong Shipping Management Services Co. Ltd of Hong Kong, but using catamarans owned by Cotai Ferry Company Ltd. Chu Kong Shipping Enterprises (Group) Company Ltd is a listed firm incorporated in Hong Kong but held ultimately by Guangdong Province Navigation Holdings Co. Ltd, a stateowned enterprise in mainland China, according to the Chu Kong Shipping Enterprises’ website. A.E.

LVS chairman Sheldon Adelson doesn’t shirk a challenge

– in sending visitors there. So in 2007 – the year The Venetian Macao opened – LVS applied to the Macau government for permission to operate its own service between Hong

Kong and Taipa. That permission was granted in November 2007. But it had been operating for only a few weeks when in December another ferry company – that had never

previously publicly announced any interest in running vessels on the Hong Kong-Taipa route – filed a lawsuit challenging the decision by then Macau chief executive Edmund Ho Hau Wah to give Cotai Ferry Company Ltd the rights without a public tender. The firm behind the lawsuit was Hong Kong-registered North West Express Ltd – the same business that hit the headlines eleven days ago when the Hong Kong government threatened to withdraw its licence to run a North West Expressbranded service from Macau to Tuen Mun in Hong Kong’s New Territories because of unpaid pier rental fees. North West wasn’t the only opponent faced by LVS back in 2007. In November Stanley Ho’s fourth consort – the Macau lawmaker Angela Leong On Kei – asked Macau’s Secretary for the Economy and Finance Francis Tam Pak Yuen during a Legislative Assembly session why the government had granted a ferry licence to a company “which does not have experience in operating ferry services”. A.E.

Homebuyers look north in hunt for bargain flats Macau residents are buying up property in Zhongshan, betting on the border being open around the clock Xi Chen xi@macaubusinessdaily.com

state agents in Zhongshan, to the north of neighbouring Zhuhai, have Macau investors in their sights, saying buyers are flocking to snap up property there. The Chinese-language Macao Daily News quoted estate agents as saying that up to half of all buyers of homes in some developments there were from Macau. Property near Zhuhai Avenue, just off the Guangzhou-Macau expressway, is the most popular among Macau buyers. The expressway will eventually be connected with the Lotus Bridge to Cotai, which is likely to become a round-the-clock border crossing. Estate agents said Zhongshan property had become more attractive to Macau buyers since the decision in April by the authorities in Zhuhai to stop giving homebuyers dual licence plates for their vehicles. In one building in Zhongshan, flats with a floor area of around 112 square metres were sold for between 680,000 yuan (853,000 patacas) and 760,000 yuan last week. In another development, flats with a floor area of around 177 square metres were selling for slightly more than 1 million yuan each, and Macau residents had bought half of them so far. Estate agents said buyers tended to either be in their 30s and hoped to commute to work in Macau, or were in their 50s and wanting to retire in the mainland. Not everyone is convinced that the trend is for Macau residents to head north in search of homes. Simon Zhou, a sales agent for Centaline (Macau) Property Agency Ltd, told Business Daily he was unaware of many purchases in the mainland. “Most people that buy already have strong ties with the neighbouring Chinese cities. Probably that place is where they were originally from,” he said.

Real estate agents say up to half of all buyers of homes in some developments in Zhongshan are from Macau

Mr Zhou said people tended to buy there on the advice of personal acquaintances or relatives, because buying property in an unfamiliar place was risky.

Price decline slows Owning a home in Macau is growing beyond the reach of many residents. But the Macao Daily News said property in Zhongshan, less than an hour away, cost one-tenth of what something similar in Macau would cost, on average. Prices of homes in the mainland have fallen in the past year because of government efforts to cool the property market, and they have show signs of picking up only in the past two months. Last November, the Zhuhai city government capped the price of housing at 11,285 yuan a square metre and restricted the number of homes that an individual could purchase in the city centre.

It lifted the price cap and limited the area where other restrictions apply in July, after city officials realised that these measures were choking off the revenue the city gets from developers. Zhongshan also imposed a price cap last November. It set the ceiling at 5,800 yuan a square metre, when the average price there was around 6,000 yuan per square metre. Hong Kong’s South China Morning Post reported that residential property prices in Zhongshan had risen by 14 percent last year, faster than the government’s growth rate target of 11 percent. They have since fallen, in line with residential property prices in the mainland generally. The average price of residential property in Zhongshan was around 5,186 yuan a square metre in the first half of this year, nearly 14 percent less than a year before. But the Macao Daily News reported that since June the decline in prices had slowed.

8 |

business daily August 13, 2012

macau

Tin Wai, govt at odds over idle Patane land Tin Wai says it would have no problem with developing two plots of land separately but the government has a different story Tony Lai tony.lai@macaubusinessdaily.com

in January 2008, when it made the winning bid for the two plots of land. The company bid 555 million patacas (US$69.4 million) for one plot, with an area of 1,704 square metres, and 867.9 million patacas for the other, with an area of 2,967 square metres. The bids were about 10 times the asking prices. But the land deal has never been published in the Official Gazette and the development project has made no progress. Mr Liu said Tin Wai had accepted the government’s rejection in 2010 of Photo by Manuel Cardoso

he would-be developer of two idle plots of land in Patane says it has neither taken possession of the land since it made the winning bid for the land 2008, nor heard anything about the matter from the government for the past two years. Executive Council member Liu Chak Wan said on Saturday that the developer, Tin Wai Investment Co Ltd, could not start the development project, which should have been completed by last year, if it did not have possession of the land. Mr Liu was the owner of Tin Wai

Tin Wai says it has paid the government about 150 million patacas of what it bid for two plots in Patane

its request to combine the two plots for development purposes. “We have no problems. It is reasonable to develop the plots separately,” Mr Liu said. “There is no legal dispute. I don’t know why [the government] has not done anything,” he said. “I have replied to it two years ago but it has not given me any reply.” But Mr Liu’s version of events differs from the version given by the government earlier this year. The director of the Lands and Public Works Bureau, Jaime Carion, told the Legislative Assembly in May that the development was stalled because Tin Wai insisted on combining the plots.

Revocation threat Mr Carion said his bureau had turned down requests to combine the two plots “many times” because the idea was not in accordance with the urban plan for the area. He said the government would soon send the contract to the company for confirmation of its conditions. “If the winning bidder does not accept this arrangement again, we do not

rule out the possibility of revoking the land deal and getting back the land,” Mr Carion said. Mr Liu said Tin Wai had asked the government to remove vehicles dumped on the land but that the government had not done so. The company was not entitled to remove them. He said the number of dumped vehicles had increased in the past two years and their presence there would hinder development. Mr Liu said Tin Wai had already paid the government about 150 million patacas, or about 10 percent of what it bid for the land, and had proposed two years ago to pay the rest. But he said the government had rejected this suggestion, saying it was not entitled to receive the rest of the payment. The winning bidder in a land auction usually first pays 10 percent of the amount it bid within 10 days of the result being announced and another 30 percent when it and the government agree on the conditions of the land concession contract. The remainder is usually paid in instalments, starting six months after the contract is gazetted.

‘Lucky’ Crown’s profit up 53 percent Results year ending June 30 boosted by Macau, high casino win rates, earnings timing Associate Editor

Photo Australian Financial Review

rown Ltd, Australia’s largest gambling company by market value, posted full-year profit that beat analyst estimates – partly on its share of earnings from players in Macau. The company has a 34 percent stake in Melco Crown Entertainment Ltd (MPEL), a Macau casino developer and concessionaire. Earnings from MPEL grew almost fourfold to A$136 million (1.14 billion patacas), driven by gross gaming revenue in Macau that rose 29 percent in the period. Revenue from high stakes players at Crown’s Australian casinos also rose by 19 percent year-on-year. Crown’s net income group-wide climbed 53 percent to A$513.3 million (4.31 billion patacas) in the 12 months to the end of June from A$335.9 million a year earlier, the Melbournebased firm said in a statement. That compares with the A$435 million average of nine analysts’ estimates compiled by Bloomberg. The full-year result was boosted by higher-than-normal win rates for the house at its casinos. If adjusted for typical win rates, the profit would have risen a more modest 22 percent, Crown said. The timing of Crown’s report was also advantageous for the company. The inclusion of figures from the second half of 2011 – when Macau gambling revenues were still growing 40 percent year-on-year – softened the effect on the balance sheet of the general slowdown seen particularly in VIP play in Macau in the first half of 2012 and the slowing in the Australian economy in the first six months of the year. VIP play in Macau has for the past three years accounted

The economics of building a luxury hotel in Australia of world standard is just not good without crosssubsidisation from gaming Rowen Craigie

Rowen Craigie, chief executive of Crown Ltd

for around 70 percent of all gross gaming revenue.

Softer ending There was “evidence of weak consumer sentiment” in the second half of Crown’s reporting period said the company’s chief executive Rowen Craigie in a statement. “At Crown Melbourne, in particular, we saw a softening of activity.” Darren Thompson, who helps manage about A$2 billion as chief executive

of Northward Capital Pty in Sydney added: “It was a good solid set of numbers with a slightly softer tone towards the end.” Cash flow from Crown’s operations rose to A$571 million, giving the company more scope for planned investments in hotel projects and to build its stake in Echo Entertainment Group Ltd, which holds the only casino licence in Sydney. Crown, which is seeking regulatory approval to increase its stake in Echo to 25 percent from 10 percent,

wants to build a luxury hotel at the Barangaroo development site on the shores of Sydney harbour. Malaysia’s Genting Bhd is also seeking to increase its stake in Echo. Crown’s plan depends on being able to operate gaming on the site Mr Craigie said. “Without a gaming component that building cannot be commercially justified,” he said in a conference call. “The economics of building a luxury hotel in Australia of world standard is just not good without cross-subsidisation from gaming.” Echo is due to report its earnings on August 15. Shares in Crown, controlled by billionaire James Packer, rose a modest 0.35 percent on Friday on the back of the 12-month results, closing at A$8.56. The benchmark S&P/ASX 200 index fell 0.72 percent on the day to close at 4277.30. With Bloomberg

August 13, 2012 business daily | 9

greater china Beijing quickens fiscal spending China’s fiscal spending jumped in July to 37.1 percent from a year earlier, quickening from 17.7 percent in June, official data showed on Friday, the latest evidence that the government is stepping up efforts to combat an economic slowdown. Fiscal expenditure of 952.8 billion yuan (US$149.83 billion) in July consisted of 167 billion yuan by central government and 785.8 billion yuan by local governments, the Ministry of Finance said. China’s fiscal revenues rose 8.2 percent in July from a year earlier to 1.07 trillion yuan, the ministry’s data showed.

China export growth collapses

Imports hold up better than expected, but outlook poor

hina’s export growth collapsed and imports and new yuan loans trailed estimates in July, adding to signs the global economy is weakening and raising the odds the government will step up measures to support expansion. Outbound shipments increased 1 percent from a year earlier, the customs bureau said on Friday, after an 11.3 percent rise in June. New local-currency lending was 540.1 billion yuan (US$85 billion), the central bank said, lower than all 30 estimates in a Bloomberg News survey, compared with 919.8 billion yuan in June. Stocks slid as the data boosted evidence that China’s interest-rate cuts and accelerated approval of investment projects have yet to propel growth, after a report on Thursday showed industrial output rose the least since 2009. The slowdown intensifies risks of a seventh quarter of deceleration in the world’s secondlargest economy. “Monetary policy easing has to be more aggressive in the remainder of the year,” said Liu Li Gang, Hong Kong-based head of Greater China economics at Australia & New Zealand Banking Group Ltd. He said

there’s a risk of a “hard landing” and the government may lower banks’ reserve requirements soon. Separate reports showed industrial output growth unexpectedly slowed last month to 9.2 percent from a year earlier and retail sales rose 13.1 percent, trailing analysts’ forecasts. Imports rose 4.7 percent, versus the survey estimate for 7 percent and a 6.3 percent increase in June. The trade surplus was US$25.1 billion in July compared with US$31.5 billion a year earlier. The median projection was US$35.1 billion. Excluding distortions caused by the timing of the Lunar New Year holiday, it was the worst export growth since 2009. The figures put China further at risk of missing its 10 percent goal of trade expansion for the year. China is still “confident” of achieving the target, Gao Hucheng, a vice commerce minister, said at a briefing on Friday. China’s sales to European Union countries fell 16.2 percent last month and growth in U.S. exports slowed to 0.6 percent from 10.6 percent in June, customs data showed. The odds the government will “greatly step up” policy easing or stimulus are “surely on the rise,” Lu Ting, head

of Greater China economics at Bank of America Corp. in Hong Kong, said in a note. The central bank may cut banks’ reserve requirements “soon” and another interest-rate reduction is “in the pipeline,” Mr Lu said, after two so far this year.

Commodities held up China’s imports of key commodities, such as iron ore and copper, held up better than expected in July. China is the world’s second-largest oil consumer and the top buyer of iron ore, coal and several industrial metals, with investors and miners around the world relying on its appetite to prop up commodities prices hit by sluggish demand from the United States and Europe. Analysts said an unexpected monthly rise of 6 percent in copper imports in July and a slight 0.8 percent fall in shipments of iron ore belied broader signs that China’s economy was slowing swiftly. “I would not link an increase in Chinese copper imports to domestic demand because I don’t see demand improving from here, it’s actually very soft,” said Judy Zhu, a commodities analyst at Standard Chartered Bank

Hong Kong cuts growth forecast New forecast down sharply from a 5 percent expansion in 2011

ong Kong’s government cut its estimate for the city’s expansion this year after the economy grew at close to the slowest pace since the financial crisis amid waning export demand from advanced nations. Growth will probably be in a range of 1 percent to 2 percent, the government said in a statement on Friday, compared with a previous forecast of 1 percent to 3 percent. Gross domestic product rose 1.1 percent from a

year earlier in the second quarter, after a revised 0.7 percent gain in the first three months. It shrank 0.1 percent from the first three months of the year. The trade-reliant economy risks further deterioration this quarter after China reported a slump in July export growth to 1 percent. Expansion across Asia is slowing as U.S. consumers limit spending and Europe’s debt crisis continues, adding to the challenges for Hong Kong’s new Chief Executive

Leung Chun Ying. “China’s stimulus measures have yet to revive growth and given such a difficult external environment, Hong Kong’s economic growth is still facing a lot of uncertainty,” said Raymond Yeung, a Hong Kongbased senior economist at Australia & New Zealand Banking Group Ltd. Mr Yeung said he cut his full-year forecast for the city’s expansion to 2.4 percent from 3.4 percent. The government’s new full-year growth estimate “is predicated on

in Shanghai. “A lot of imports are under term contracts so they have to import anyway, and this could result in bonded stockpiles rising.” China’s implied oil demand stood at its second-lowest this year, despite an annual rise of 0.9 percent to 9.15 million barrels per day, while average daily imports fell 3 percent from a month ago to hit a nine-month low. Copper imports in July were 366,548 tonnes, while those of iron ore dipped to 57.87 million tonnes. Tumbling July spot prices of steel, iron ore and coal, which are leading indicators of industrial activity, underscored that China’s demand for commodities had weakened further in the third quarter, raising doubts about whether growth is bottoming out. “I expect to see bigger declines in imports in August and September. We’ve already seen production cuts among steel companies and even the larger ones have also scaled back output,” said Helen Lau, a senior analyst with broking house UOBKay Hian. “More importantly, there are no signs of improvement in steel demand, so steel mills will probably keep inventory of iron ore low.” Bloomberg/Reuters

the assumption that Europe will continue to muddle through and the situation is largely contained,” government economist Helen Chan said at a briefing on Friday. “All in all for external trade there is no ground for optimism.” Hong Kong’s GDP increased 5 percent last year and 7.1 percent in 2010. The city’s imports and exports in June were below all forecasts in analyst surveys. Overseas sales unexpectedly fell 4.8 percent from a year earlier and imports slipped 2.9 percent, a July 24 government report showed. If external trade improves faster than expected “there is a chance we’ll reach 2 percent” growth this year, Ms Chan said at the briefing. Bloomberg

10 |

business daily August 13, 2012

asia Yoshihiko Noda has staked his political career on the controversial sales tax

Japan sales tax clears final vote Parliament passes doubling of sales tax to 10 percent, a move that could spark an early election Tetsushi Kajimoto and Linda Sieg

Japan’s contentious plan to double the sales tax cleared the final hurdle in a parliamentary vote on Friday after Prime Minister Yoshihiko Noda promised to bring forward an election likely to end his party’s three-year rule. The passage of the plan in the opposition-controlled upper house is a result of a rare political compromise and a breakthrough for Japan trapped for years in a cycle of revolving-door governments and policy paralysis. “Politicians tend to delay or avoid policies that increase the burden on the public, but we have to do this to ensure that there is a sustainable source of funds for our welfare system,” Mr Noda told reporters. “Europe’s debt crisis shows the dramatic damage that a country can suffer once confidence is lost in public finances.” “Each party involved was determined to send a message to the world that Japan’s politics is functioning, and that an effort is being made to steer clear of Japan’s fiscal collapse,” said Natsuo Yamaguchi who represented small opposition party New Komeito in 11th hour talks to save the tax plan.

But as the focus now shifts to the elections, analysts expect horsetrading over the exact timing of the polls to stall any further significant policy initiatives. The plan to bring the tax to 10 percent by 2015 has been billed as a test of Japan’s ability and resolve to tackle its snowballing debt that already tops two years’ worth of its economic output, a record among industrialised nations.

Bittersweet victory It is also a victory for Mr Noda, though a bittersweet one. The former finance minister and the ruling Democrats’ third leader in as many years made the tax plan his top goal and has worked relentlessly to achieve it, saying he was ready to sacrifice his political career if necessary. With his offer to call an election “soon” he may have just done that given the Democrats’ likely drubbing at the polls. In its 2009 landslide victory the party rode a wave of public disillusionment with half a century of nearly non-stop rule by the rival Liberal Democratic Party (LDP). Now it faces a similar backlash over

broken promises, the government’s The lower house term runs through confused response to last year’s tsu- to August 2013 and some commennami and nuclear crisis and Mr No- tators said Mr Noda might want to da’s embrace of unpopular causes delay the polls until next year after such as the tax hike or restarts of he drafts the next budget. That, however, may be impossible nuclear reactors. A poll last week showed only 13 because of the opposition pressure. percent of those surveyed said they “The prime minister should seek would vote for the Democrats. But a mandate from the people as soon as possible ... with support for ‘Soon’ can in no their main rivals way be interat 23 percent and preted as ‘somenearly half of time after the voters undecided new year’,” New some form of a Komeito’s leadwobbly coalition Tax bill passes final vote er Mr Yamaguand more muddling through on after PM’s election pledge chi told Reuters. Since no party policies and reBill passage is breakthrough has majority in forms is a likely for Japan, PM Noda the upper house, outcome. Keen to seize a certain level Haggling over poll timing the momentum, of cross-party the opposition is seen stalling other initiatives c o o p e r a t i o n will be necesthreatening nosary regardless confidence and Noda’s Democrats may face censure motions heavy defeat of the result of the lower house if Mr Noda drags poll, although a his feet on the elections while grand coalition trying to pass more bills, including of major parties is unlikely, Mr Yaone needed to sell new bonds to fi- maguchi said. nance the budget deficit. Reuters

KEY POINTS

Myanmar to debate investment law Legislative process may be completed this month

yanmar’s parliament is due to debate a keenly awaited foreign investment law this week and the president could sign it into law this month, sources close to the legislative process said on Friday. One lawmaker, who asked not to be identified, said the bill had been put on the agenda for the lower house to debate today. Officials said it could

proceed quickly to the upper house next week and then go to the president a few days after that. A quasi-civilian government took office in March 2011 and has pushed through a series of political and economic reforms. In response, Western countries have eased sanctions imposed on the previous military regime and foreign

companies are now lining up to assess business prospects in the country. Many are waiting for clarification of investment regulations before firming up their plans. The latest version of the foreign investment bill, seen by Reuters on Friday, contains some changes to the draft that circulated earlier in the year. One article bars foreign investors

from investing in “small and medium industries and enterprises; agricultural and livestock business being carried on by local business people; retail business; and small and medium service enterprises”. Some domestic firms had complained that they were not yet strong enough to compete with big foreign investors. One proposed article would allow 100 percent foreign investment only for enterprises that involve hightech industries beyond the reach of domestic investors. Currently all firms can be 100 percent foreign-owned. Otherwise the bill allows foreign

August 13, 2012 business daily | 11

asia India PM sees better GDP growth

BoJ warns of weakening exports

India’s Prime Minister Manmohan Singh expects a better performance from the economy this fiscal year even as private economists cut growth forecasts for Asia’s third largest economy. However, Mr Singh played down on Saturday the lower forecasts, saying the fundamentals of the economy remained strong. “We shouldn’t draw unwarranted conclusions. This year we will see better than 6.5 percent [gross domestic product] growth of last year,” he said. “We have the highest savings and investments rate in the world.”

Slowing overseas growth may delay a recovery in Japanese exports, with no clear signs of improvement in external demand, the Bank of Japan said on Friday, issuing its strongest warning to date over growing risks to the country’s economic recovery. “The overseas economic slowdown, if prolonged, may delay a recovery in exports,” the BoJ said. “The environment surrounding exports hasn’t shown clear signs of improvement. It may take some more time for exports to clearly recover,” it said.

Sharp running out of options Shares tumble as company warned of more red ink to come

apan’s Sharp Corp. is fast running out of options to repair its disintegrating balance sheet, analysts say, raising fears about its viability as investors bolt for the exit. The century-old consumer electronics giant suffered a bloodletting this month with its Tokyo-traded shares diving to near 40-year lows after it reported huge quarterly losses and warned of more red ink to come. On August 3 the shares plunged by about one-third to levels last seen in the early 1970s, shaving more than US$1.0 billion off the embattled firm’s value. They staged a recovery towards the end of last week, closing Friday at 209 yen (US$2.7), up from 181 yen earlier in the month. Standard & Poor’s quickly cut Sharp’s credit rating after the results – making it tougher to raise fresh funds – and the producer of Aquos televisions faces a worrying cash crunch as it scrambles to re-tool its business. The corporate overhaul includes cutting thousands of jobs from Sharp’s global workforce, the first layoffs since 1950, in a bid to chop about US$1.3 billion in fixed costs from its dented balance sheet. “Sharp needs to stop haemorrhaging... Its bad performance casts doubt on cash flow, the lifeblood of a company,” said Toshiyuki Kanayama, senior market analyst at Monex Securities. Investor fears spiked when Sharp said it lost 138.4 billion yen (US$1.77 billion) in the April to June quarter, nearly three times more than in the same period last year, citing falling demand for liquid crystal display televisions. The Osaka-based firm warned it expected to book a net loss of 250 billion yen in the fiscal year through March 2013. The share price plunge also casts doubt on the future of a deal that would see Taiwan’s Hon Hai

investors to set up joint ventures with the government or citizens. “The foreign capital shall be at least 35 percent of the total capital if a jointventure is formed,” it said. Foreign investors can lease land for 50 years initially, and can extend that for two 10-year terms, depending on the nature of the business and the size of the investment. Foreign companies will benefit from a five-year tax holiday from when their operations start on a commercial scale, and that period can be extended if there is some benefit to the country. Reuters

Precision Industry Co. Ltd inject about US$800 million into struggling Sharp and invest in one of its LCD factories. Hon Hai’s founder said he may renegotiate the deal, announced earlier this year, in the wake of the stock’s plunging value. “Sharp’s performance is distinctly bad,” said Nobuo Kurahashi, analyst at Mizuho Investors Securities. “And given worsening business conditions such as the high level of the yen, it will be extremely hard for the company to build a business that is globally competitive.” In recent years, Sharp has poured money into liquid crystal displays used for flat-panel televisions, but the investment has not paid off. “Demand for LCD televisions in developed economies has been saturated while growth in emerging markets is slowing. Falling prices for LCDs is not going to stop,” Mr Kurahashi said. “The trouble with Sharp is that it cannot find a new cash cow... It is an extremely difficult task to build a new mainstay business which can survive intensifying global competition.” AFP

US$1.77 billion

Sharp’s losses in the April to June quarter

Demand for LCD televisions ‘has been saturated’ – analyst

12 |

business daily August 13, 2012

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

PRICE

Day %

VOLUME

26.75

-0.3724395

20438968

3.4

-0.8746356

9272000

2.99

-0.3333333

168193924

NAME

PRICE

Day %

VOLUME

CHINA UNICOM HON

12.42

26607309

CITIC PACIFIC

11.76

PRICE

Day %

VOLUME

POWER ASSETS HOL

61.3

0.5742412

2445847

3736573

SANDS CHINA LTD

24.6

-3.339882

67.3

7389686

-0.222387

1725211

SINO LAND CO

13.64

-1.30246

5402524

15.84

-1

48415263

SUN HUNG KAI PRO

101.9

5202881

10.7

-0.9259259

2500410

SWIRE PACIFIC-A

93.9

-2.085506

2029911

ESPRIT HLDGS

11.48

-0.8635579

6784489

TENCENT HOLDINGS

232.8

-2.838063

6158169

27.75

0.1805054

4759135

TINGYI HLDG CO

19.58

0.513347

4918000

CLP HLDGS LTD

5.27

-1.125704

16623698

BANK EAST ASIA

28.65

-0.5208333

2346815

BELLE INTERNATIO

14.78

0.9562842

11482930

BOC HONG KONG HO

24.35

0.2057613

9004392

HANG LUNG PROPER

CATHAY PAC AIR

CNOOC LTD COSCO PAC LTD

NAME

12.72

-0.9345794

3732641

HANG SENG BK

111.8

-0.1785714

1617026

WANT WANT CHINA

CHEUNG KONG

109

-1.890189

5611244

HENDERSON LAND D

46.95

-1.675393

3045310

WHARF HLDG

CHINA COAL ENE-H

7.65

-0.7782101

22843000

1608240

CHINA CONST BA-H

5.33

-0.3738318

164031975

CHINA LIFE INS-H

21.85

0.4597701

36334135

CHINA MERCHANT

24.1

-0.8230453

1236267

90.7

0.6100943

11680166

HUTCHISON WHAMPO

69.2

-1.28388

7113134

18.08

30434157

IND & COMM BK-H

4.51

-1.528384

220572853

LI & FUNG LTD

CHINA MOBILE CHINA OVERSEAS

HENGAN INTL

71.85

-0.1389854

HONG KG CHINA GS

18.12

0.6666667

5626580

HONG KONG EXCHNG

106.9

-1.746324

3726676

68.4

12120340

HSBC HLDGS PLC

MOVERS

9.49

1.497326

6781187

47.35

1.067236

5086614

5 20300

INDEX 20136.12

CHINA PETROLEU-H

7.37

-0.270636

64504423

12.9

-19.27409

352848969

HIGH

20291.32

CHINA RES ENTERP

0.6564551

2116495

MTR CORP

27.65

-0.1805054

2252027

LOW

19979.21

CHINA RES LAND

15.6

0.3861004

4628000

NEW WORLD DEV

10.26

-1.346154

9618712

CHINA RES POWER

15.9

1.792574

3603000

52W (H) 21760.33984

PETROCHINA CO-H

9.82

0.1019368

69865969

CHINA SHENHUA-H

30.4

0.6622517

12670440

PING AN INSURA-H

-0.2413516

8342016

19970

(L) 16170.35 8-Aug

10-Aug

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

25.55

-1.351351

14371000

YANZHOU COAL-H

CHINA PETROLEU-H

7.37

-0.270636

64504423

9272000

CHINA RAIL CN-H

6.54

3.154574

-0.4618938

17583675

CHINA RAIL GR-H

3.28

2.99

-0.3333333

168193924

CHINA SHENHUA-H CHINA TELECOM-H

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.18

-1.547988

98671751

AIR CHINA LTD-H

5.23

1.160542

9266000

3.4

-0.8746356

ANHUI CONCH-H

21.55

BANK OF CHINA-H

ALUMINUM CORP-H

NAME CHINA PACIFIC-H

PRICE

DAY %

VOLUME

13.14

-1.351351

17997380

ZIJIN MINING-H

2.61

-2.61194

66244280

18166500

ZOOMLION HEAVY-H

9.78

0.5138746

18234740

0.9230769

16833792

ZTE CORP-H

11.72

-2.49584

11137340

30.4

0.6622517

12670440

5.27

-1.125704

16623698

4.11

-2.606635

63013756

14.66

-1.212938

1493057

DONGFENG MOTOR-H

11.34

-1.903114

12770993

CHINA CITIC BK-H

4.03

-1.707317

24123802

GUANGZHOU AUTO-H

6.05

1.170569

4360844

CHINA COAL ENE-H

7.65

-0.7782101

22843000

HUANENG POWER-H

5.22

0.7722008

43910000

CHINA COM CONS-H

6.98

-0.7112376

13372972

IND & COMM BK-H

4.51

-1.528384

220572853

CHINA CONST BA-H

5.33

-0.3738318

164031975

JIANGXI COPPER-H

18.74

0.2139037

19963226

CHINA COSCO HO-H

3.41

-2.292264

11476588

PETROCHINA CO-H

9.82

0.1019368

69865969

21.85

0.4597701

36334135

PICC PROPERTY &

8.83

8356261

CHINA LONGYUAN-H

5.11

-0.9689922

3123000

PING AN INSURA-H

-0.2413516

8342016

CHINA MERCH BK-H

14.46

-0.4132231

9492098

SHANDONG WEIG-H

8.6

-1.035673

1661048

BANK OF COMMUN-H BYD CO LTD-H

CHINA LIFE INS-H

NAME

MOVERS

1 10000

INDEX 9905.22 HIGH

9995.4

LOW

9823.82

CHINA MINSHENG-H

7.25

-1.761518

16184700

SINOPHARM-H

23.05

-3.151261

3354542

52W (H) 11916.1

CHINA NATL BDG-H

8.21

-1.794258

26826000

TSINGTAO BREW-H

45.4

-0.4385965

879307

(L) 8058.58

12.34

0.3252033

4329030

WEICHAI POWER-H

22.5

-0.6622517

1921251

CHINA OILFIELD-H

9820

8-Aug

10-Aug

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.53

31022693

NAME DAQIN RAILWAY -A

6.02

-0.660066

18175340

AIR CHINA LTD-A

5.77

-0.3454231

9805881

DATANG INTL PO-A

5.01

1.212121

ALUMINUM CORP-A

6.15

-0.3241491

5264408

DONGFANG ELECT-A

16.4

ANHUI CONCH-A

15.05

-0.7255937

6989687

EVERBRIG SEC -A

BANK OF BEIJIN-A

7.57

0.1322751

10641661

GD MIDEA HOLDING GD POWER DEVEL-A

NAME

PRICE

DAY %

VOLUME

SAIC MOTOR-A

12.59

-1.099764

11051855

7700789

SANY HEAVY INDUS

11.94

-1.077051

12125928

-1.560624

16419815

SHANDONG GOLD-MI

34.38

-1.771429

5954878

12.47

-1.11023

7189591

SHANG PHARM -A

11.15

-1.152482

8240555

9.76

-0.204499

5915188

SHANG PUDONG-A

7.8

0.6451613

46782980

BANK OF CHINA-A

2.77

0.3623188

9015148

2.67

1.136364

32290320

SHANGHAI ELECT-A

4.4

-0.2267574

3017207

BANK OF COMMUN-A

4.44

0.6802721

25666438

GF SECURITIES-A

13.87

-2.255109

12279369

SHANXI LU'AN -A

21.12

-1.90432

7546468

BANK OF NINGBO-A

10.08

-0.9823183

13082557

GREE ELECTRIC

20.96

-0.7105637

6025262

SHANXI XINGHUA-A

39.09

-0.3568697

2435226

BAOSHAN IRON & S

4.24

13917633

GUANGHUI ENERG-A

13.65

2.708804

18437057

SHANXI XISHAN-A

14.71

-0.6081081

8555703

GUIZHOU PANJIA-A

17.35

-1.810979

8049944

SHENZEN OVERSE-A

5.97

17623234

15.43

0.1948052

7774606

CHINA CITIC BK-A

BYD CO LTD -A

3.96

11303897

HAITONG SECURI-A

9.74

-0.9155646

28860121

SUNING APPLIAN-A

6.5

-0.1536098

31195523

CHINA CNR CORP-A

3.77

-0.2645503

16836195

HANGZHOU HIKVI-A

30.5

-1.038287

1801972

TSINGTAO BREW-A

34.91

0.6922411

2143361

CHINA COAL ENE-A

7.74

-0.5141388

5443948

HENAN SHUAN-A

64.6

0.795756

1542008

WEICHAI POWER-A

23.44

-2.49584

5393694

CHINA CONST BA-A

4.05

-0.2463054

9584358

HONG YUAN SEC-A

18.36

-2.184337

11640321

WULIANGYE YIBIN

36.58

-2.349172

30588795 27986199

CHINA COSCO HO-A

4.36

-0.456621

4646841

HUATAI SECURIT-A

9.44

-1.564129

8773908

XIAMEN TUNGSTEN

47.75

0.4840067

CHINA CSSC HOL-A

21.03

-1.360225

2997615

HUAXIA BANK CO

9.04

0.110742

35062279

YANGQUAN COAL -A

15.56

-1.456618

9300408

CHINA EAST AIR-A

3.93

0.255102

7671876

IND & COMM BK-A

3.79

0.7978723

20150272

YANTAI CHANGYU-A

55.23

-9.828571

11096033

CHINA EVERBRIG-A

2.79

0.3597122

26510069

INDUSTRIAL BAN-A

12.72

0.1574803

55246493

YANTAI WANHUA-A

13.27

-1.776462

7062084

40.25

-3.035413

80925622

YANZHOU COAL-A

19.1

-1.342975

2923090

YUNNAN BAIYAO-A

62.43

-0.1758874

1165882

CHINA LIFE INS-A

18.86

0.9635974

6895397

INNER MONG BAO-A

CHINA MERCH BK-A

10.17

0.8928571

27065385

INNER MONG YIL-A

19.44

-0.4098361

6411190

CHINA MERCHANT-A

10.84

-1.275046

5877926

INNER MONGOLIA-A

6.32

4.290429

251878378

ZHONGJIN GOLD

21.83

-2.107623

6378687

CHINA MERCHANT-A

21.08

-2.31696

8231430

JIANGSU HENGRU-A

30.63

2.1

4132975

ZIJIN MINING-A

3.95

-0.2525253

43712845

CHINA MINSHENG-A

6.06

0.4975124

70840691

JIANGSU YANGHE-A

143.4

-3.081914

2078008

ZOOMLION HEAVY-A

9.81

-0.5070994

17203953

CHINA NATIONAL-A

6.51

-1.661631

19347350

JIANGXI COPPER-A

21.72

-1.630435

5925784

ZTE CORP-A

11.55

-1.869159

14177927

CHINA OILFIELD-A

17.18

-1.207591

5842428

JINDUICHENG -A

12.68

-0.6269592

3102835

CHINA PACIFIC-A

21.63

0.8391608

11462898

JIZHONG ENERGY-A

14.58

-2.27882

13789449

6.13

-0.3252033

17656238

KANGMEI PHARMA-A

16.02

2.692308

14931825

248.21

-4.871225

9122580

41.95

-0.8039726

11198776

CHINA PETROLEU-A CHINA RAILWAY-A

4.7

-0.2123142

12427331

KWEICHOW MOUTA-A

CHINA RAILWAY-A

2.61

-0.3816794

12306550

LUZHOU LAOJIAO-A

CHINA SHENHUA-A

22.49

-1.142857

7495223

METALLURGICAL-A

2.32

-0.8547009

9915742

2.51

-0.3968254

7966858

4.22

9.895833

19161383

-0.3322259

MOVERS

12 2415

INDEX 2399.751

4.8

-1.030928

14615227

NINGBO PORT CO-A

CHINA SOUTHERN-A

4.14

12241500

PANGANG GROUP -A

CHINA STATE -A

3.16

0.3174603

24986601

PETROCHINA CO-A

6130612

HIGH

2411.96

CHINA UNITED-A

3.71

-1.066667

33950855

PING AN BANK-A

15.08

0.2659574

10549817

LOW

2380.85

CHINA VANKE CO-A

8.79

-2.333333

45993456

PING AN INSURA-A

44.84

0.4030452

13709996

CHINA YANGTZE-A

6.58

0.4580153

11508241

POLY REAL ESTA-A

10.63

-2.655678

31023457

CITIC SECURITI-A

12.09

-1.22549

32180835

QINGDAO HAIER-A

10.84

0.2775208

5620131

CSR CORP LTD -A

4.33

-0.4597701

9829876

QINGHAI SALT-A

34.91

-1.384181

4294653

CHINA SHIPBUIL-A

189

52W (H) 2932.14 (L) 2254.567

2380

8-Aug

10-Aug

FTSE TAIWAN 50 INDEX NAME

PRICE DAY %

Volume

NAME

ACER INC

26.75

0.3752345

21560233

FORMOSA PLASTIC

ADVANCED SEMICON

25.25

16476097

PRICE DAY %

Volume

-0.591716

5207941

FOXCONN TECHNOLO

116

4.035874

NAME

PRICE DAY %

Volume

TAIWAN MOBILE CO

103.5

-1.428571

5210533

30259622

TPK HOLDING CO L

378.5

6.022409

17507968

ASIA CEMENT CORP

39.9

0.2512563

5448550

FUBON FINANCIAL

30.6 -0.6493506

20411564

TSMC

-0.36452

30075236

ASUSTEK COMPUTER

276 -0.3610108

5259678

HON HAI PRECISIO

84.4

3.685504

74735692

UNI-PRESIDENT

50.2

-1.761252

11933738

AU OPTRONICS COR

8.97

0.5605381

44951491

HOTAI MOTOR CO

217

-1.363636

689600

UNITED MICROELEC

12.7

-1.167315

27008372

149.5

0.3355705

27132802

HTC CORP

248

1.22449

15908120

WISTRON CORP

33.55

1.359517

12987342

14.35 -0.3472222

13804152

56 -0.5328597

6936688

CATCHER TECH CATHAY FINANCIAL

29.55 -0.1689189

13472853

HUA NAN FINANCIA

17.25

9242543

YUANTA FINANCIAL

CHANG HWA BANK

16.65 -0.2994012

15129697

LARGAN PRECISION

601

-1.313629

2248933

YULON MOTOR CO

CHENG SHIN RUBBE

74.2 -0.9345794

6379914

LITE-ON TECHNOLO

36.1

0.2777778

3013790

CHIMEI INNOLUX C

9.36

0.6451613

24187070

MEDIATEK INC

284

0.7092199

13877832

CHINA DEVELOPMEN

7.31 -0.6793478

57995286

MEGA FINANCIAL H

23.35

-1.476793

31914271

CHINA STEEL CORP

26.8

0.1869159

16536196

NAN YA PLASTICS

61.1

0.3284072

5392160

CHINATRUST FINAN

18.15

-2.156334

35700919

PRESIDENT CHAIN

165

1.226994

3553874

CHUNGHWA TELECOM

89.9

0.1113586

8256259

QUANTA COMPUTER

77.8

-2.261307

8915589

COMPAL ELECTRON

28.5

1.785714

13496999

SILICONWARE PREC

33.6

0.4484305

12598154

DELTA ELECT INC

105

4.477612

7198701

SINOPAC FINANCIA

12.2

-1.612903

19302981

FAR EASTERN NEW

34.6

0.727802

5389545

SYNNEX TECH INTL

66.9

0.1497006

1989939

FAR EASTONE TELE

71.7

4218197

TAIWAN CEMENT

35.8

12924915

17.45

0.867052

48479405

TAIWAN COOPERATI

17.1 -0.2915452

7867291

FORMOSA CHEM & F

FIRST FINANCIAL

81.4

1.118012

3464400

TAIWAN FERTILIZE

72.5

1.256983

3379919

FORMOSA PETROCHE

0.1124859

2131944

TAIWAN GLASS IND

28.75

0.3490401

3018454

MOVERS

4 5120

INDEX 5114.66 HIGH

5115.31

LOW

5013.26

52W (H) 5621.53 5010

(L) 4643.05 8-Aug

10-Aug

August 13, 2012 business daily | 13

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

MelCo CroWN eNtertaINMeNt

MgM CHINa HolDINgS 27.3

19.999999

12.55

27.1

12.45

26.9

19.950000

12.35

26.7 19.900000

Max 20

average 19.958

Min 19.86

last 19.96

19.850000

SaNDS CHINa ltD

Max 27.2

average 26.675

Min 26.15

last 26.15

26.5

12.25

26.3

12.15

26.1

Max 12.52

SJM HolDINgS ltD

average 12.185

Min 12.08

last 12.12

WyNN MaCau ltD 15.4

25.4

18.4

25.2

18.2

15.3

25.0

18.0

24.8

15.2

17.8

24.6 average 25.731

Max 25.3

Min 24.45

last 24.6

24.4

15.1 Max 15.4

average 15.214

Min 15.1

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Sep12

92.87

-0.524850043

-6.068574896

110.8699951

77.69999695

BRENT CRUDE FUTR Sep12

112.95

-0.238473768

7.653450248

124.1999969

88.90999603

GASOLINE RBOB FUT Sep12

300.39

0.103305785

13.08587132

320.4399824

237.3699903

GAS OIL FUT (ICE) Sep12

955

-0.598490762

6.258692629

1046.5

798.5

NATURAL GAS FUTR Sep12

2.77

-5.942275042

-15.62595187

4.630000114

2.221999884

HEATING OIL FUTR Sep12 METALS

302.05

-0.804597701

6.023377444

332.9600096

251.5599966

Gold Spot $/Oz

1620.15

0.6461

3.5299

1921.18

1522.75

Silver Spot $/Oz

28.115

0.7345

1.0059

44.2175

26.085

Platinum Spot $/Oz

1400.3

-0.025

0.4159

1915.75

1339.25

Palladium Spot $/Oz

581.93

0.3587

-10.9518

792.93

537.54 1832.25

LME ALUMINUM 3MO ($)

1881

-1

-6.881188119

2476

LME COPPER 3MO ($)

7490

-0.584019113

-1.447368421

9304

6635

LME ZINC

1835

-1.344086022

-0.54200542

2311

1718.5

3MO ($)

LME NICKEL 3MO ($)

15400

-0.64516129

-17.69107429

22450

15236

15.945

0.157035176

6.087824351

13.95499992

809.25

-1.760242792

38.03837953

849

499

WHEAT FUTURE(CBT) Dec12

901.25

-2.777777778

25.17361111

953.25

629.5

SOYBEAN FUTURE Nov12

1643.75

0.766283525

36.49574424

1691.5

1115.75

COFFEE 'C' FUTURE Dec12

169.35

-0.117959304

-28.24152542

285.6499939

SUGAR #11 (WORLD) Oct12

20.74

-0.288461538

-9.154621113

COTTON NO.2 FUTR Dec12

73.02

-3.857801185

-16.8715847

AGRICULTURE ROUGH RICE (CBOT) Sep12 CORN FUTURE

Max 18.34

average 18.884

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

last 17.64

Min 17.64

PRICE

DAY %

YTD %

0.5323 0.5189 0.1433 0.1385 0.1916 0.0038 -0.0052 -0.0142 0.0181 0.0636 0.1768 -0.1369 -0.1792 -0.0738 -0.3358 0.0042 0.3625 0.5098 0.3386 0.0728 0

(H) 52W

3.6047 0.9458 -4.0012 -5.1848 -1.7501 0.1252 0.1263 -1.0251 -4.0156 0.2542 4.2115 1.0749 4.7426 -4.3859 -5.2593 1.3282 6.3852 4.1964 5.5745 3.629 0.0097

(L) 52W

1.0857 1.6618 0.9972 1.4549 84.18 8.0413 7.8077 6.406 57.3275 32 1.3199 30.716 44.35 9662 88.637 1.24736 0.88845 9.2841 11.6793 111.94 1.0311

0.9388 1.5235 0.7712 1.2043 75.35 7.9823 7.7526 6.2769 45.1738 29.79 1.2001 28.829 41.57 8507 72.057 1.1002 0.77553 7.7018 9.6245 94.12 1.0288

(H) 52W

(L) 52W

ARISTOCRAT LEISU

2.53

6.302521

3.25

1.88

3791140

153.6999969

CROWN LTD

8.56

0.3516999

5.80964

9.29

7.47

3211088

25.77999878

19.23999977

AMAX HOLDINGS LT

0.061

-29.88506

0.119

0.055

102.25

64.61000061

BOC HONG KONG HO

24.35

0.2057613

32.33696

24.45

14.24

9004392

CENTURY LEGEND

0.234

1.739129

0.335

0.204

3.08

3.62

2.3

22000 30434157

World Stock MarketS - Indices COUNTRY

DAY %

1.0577 1.569 0.9772 1.2289 78.28 7.9896 7.7576 6.3602 55.285 31.47 1.2442 29.957 41.855 9485 82.786 1.20084 0.78337 7.8066 9.8054 96.17 1.03

MACAU RELATED STOCKS NAME

PRICE

CHEUK NANG HLDGS

NAME

17.6

last 15.2

CURRENCY EXCHANGE RATES

NAME ENERGY

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13207.95

0.3247959

8.106288

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

3020.86

0.07354305

15.95725

3134.17

2298.89

FTSE 100 INDEX

5847.11

-0.07519427

4.932094

5989.07

4868.6

DAX INDEX

6944.56

-0.2933242

17.73733

7194.33

4965.8

NIKKEI 225

8891.44

-0.9707527

5.157573

10255.15

8135.79

DAY % YTD %

VOLUME CRNCY

CHINA OVERSEAS

18.08

39.29122

19.16

9.99

CHINESE ESTATES

9.3

1.086957

-25.6

13.68

8.3

13500

CHOW TAI FOOK JE

9.59

-1.94274

-31.10632

15.16

8.4

4275200

EMPEROR ENTERTAI

1.45

2.112676

30.63063

1.6

0.97

3950000

FUTURE BRIGHT

1.04

147.6191

1.1

0.3

438000

GALAXY ENTERTAIN

19.96

-1.432099

40.16854

24.95

8.69

6300151

HANG SENG BK

111.8

-0.1785714

21.32393

116.7

84.4

1617026

HOPEWELL HLDGS

23.95

-0.2083333

20.59416

24.658

18.56

546108

HSBC HLDGS PLC

68.4

15.9322

71.8

12120340

HUTCHISON TELE H

3.76

0.5347594

25.75251

3.86

2.53

4442000

LUK FOOK HLDGS I

19.26

-1.129363

-28.92989

46.15

14.7

1490000

MELCO INTL DEVEL

5.75

-1.202749

-0.3466201

9.94

4.3

1447478 1199891

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20136.12

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9.231271

21760.33984

16170.35

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2399.751

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2.302428

2932.14

2254.567

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12.12

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26.35327

15.276

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7441.12

0.0998157

5.218267

8170.72

6609.11

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4.26

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2.887

994000

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1946.4

0.2993935

6.608829

2057.28

1644.11

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0.163

46.84684

0.205

0.08

4815000

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4277.302

-0.7189188

5.441586

4448.5

3840.2

NEW WORLD DEV

10.26

-1.346154

63.89776

10.96

6.13

9618712

SANDS CHINA LTD

24.6

-3.339882

12.07289

33.05

14.9

7389686

SHUN HO RESOURCE

1.13

1.28

0.82

SHUN TAK HOLDING

2.76

1.470588

7.849224

4.148

2.241

16052512

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12.05

4141.564

0.2515994

8.3614

4234.734

3217.951

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1645.36

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7.488585

1647.94

1310.53

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796.908

-0.1046703

9.195354

806.015

712.548

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15.2

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21.54617

18.798

10.079

6505653

PHILIPPINES ALL SHARE IX

3488.95

0.1133429

14.57813

3531.5

2695.06

SMARTONE TELECOM

16.3

-0.122549

21.27977

18.5

9.8

1323476

HSBC Dragon 300 Index Singapor

589.45

-0.04

18.76

WYNN MACAU LTD

17.66

-3.707743

-9.435897

25.969

14.62

2800265

ASIA ENTERTAINME

3.48

3.880597

-40.81633

8.72

2.4

118585

BALLY TECHNOLOGI

44.65

6.334842

12.86653

49.32

24.74

4185688 8175

STOCK EXCH OF THAI INDEX

HO CHI MINH STOCK INDEX

Laos Composite Index

1219.37

0.1371438

18.9258

1247.72

843.69

425.56

-0.3325683

1025.56

0.09955687

21.05249

492.44

332.28

14.01953

1049.18

876.33

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

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3.18

32.65546

3.18

1.81

GALAXY ENTERTAIN

2.5225

-2.152832

34.89305

3.24

1.08

2400

INTL GAME TECH

11.37

2.248201

-33.89535

18.1701

10.92

3696147

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70.22

-0.1280046

14.62619

87.52

46.01

335058

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39.95

0.2006521

-6.505967

62.09

34.72

6286931

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10.3

0.6154147

7.068608

16.02

7.05

2675707

MGM CHINA HOLDIN

1.36

14.12333

1.9672

1.0025

13800

MGM RESORTS INTE

9.67

0.5197505

-7.286676

14.9401

7.4

7377764

13.58

0.7418398

15.8703

18.77

7.36

450747

1.94

-1.522843

20.67883

2.4557

1.2624

5500

101.83

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90.108

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business daily August 13, 2012

Opinion

Russian punk rockers rest case in court of world opinion Leonid Bershidsky

Correspondent for World View

he Moscow trial of a punk action group ended Wednesday, with the three accused women making impassioned speeches. Judge Marina Syrova will deliver the ruling on Aug. 17, and though it is likely that Nadezhda Tolokonnikova, Maria Alekhina and Yekaterina Samutsevich will be convicted, they have won a huge victory. The unprecedented international resonance of the case appears to have thwarted plans to hold a series of show trials against the opposition to President Vladimir Putin’s authoritarian rule. The three women are in a Moscow feminist punk collective that performs loud songs with cheeky lyrics at locations such as subway stations or the middle of Red Square. Tolokonnikova, Alekhina and Samutsevich were arrested in March after entering the ornate Christ the Savior Cathedral in Moscow and, for less than a minute, lip-synching a song slamming the Russian Orthodox Church for being too close to Putin. The three women were charged with “hooliganism motivated by religious hatred,” a crime with a maximum sentence of seven years in prison. The prosecutor asked the judge for a three-year term. Most people who watched the trial came away with a sense of hopelessness and despair. Judge Syrova made no attempt to hide where her sympathies lie. She agreed to hear only three of the 17 witnesses called by the defence. All the prosecution witnesses were duly heard, and the judge disallowed about half of the questions asked by group’s lawyers. She refused to let the defence question experts who

found signs of “religious hatred.” The three women were kept in a glass cage built specifically for two other high-profile prisoners, Mikhail Khodorkovsky, once Russia’s richest man and founder of the oil company Yukos, and his business partner Platon Lebedev. In 2010, the same court sentenced them to 14 years in prison for theft and money laundering, though few questioned that the case had been politically motivated. Initially, Khodorkovsky and Lebedev were held behind bars during their trial. After they complained about this to the European Court of Human Rights, the glass cage was built. “One feels like a tropical fish in it during the summer,” Khodorkovsky wrote from his prison cell, commenting on the rockers’ trial. “I cannot imagine how the poor girls fit in it. ... The word ‘trial’ is only applicable here

The unprecedented international resonance of the case appears to have thwarted plans to hold a series of show trials against the opposition

in the sense in which the medieval inquisition used it.”

Flawed trial The three defence lawyers repeatedly expressed no confidence in the judge, but Syrova refused to step down. Her bitter debates with the defence counsellor were accompanied by the barking of a police dog brought to the courtroom to guard the prisoners. “This trial is so absurd that it is more and more reminiscent of the Dreyfus case,” wrote Alexei Venediktov, the Radio Echo Moscow editor-in-chief, referring to the historic French trial in which a Jewish officer was falsely accused of selling state secrets to the Germans. While the proceedings left little room for doubt that Syrova intended to convict the three women, they were buoyed by the public support they received from famous musicians including Sting and Madonna. On Tuesday, Yoko Ono joined the chorus: “Mr. Putin, you are a wise man & dont need to fight with musicians & their friends,” she tweeted. Madonna campaigned the most fervently for the three women’s release. “I mean no disrespect to the church or the government, but I think that these three girls, Masha, Katya and Nadya, have been courageous, that they have paid a price for this act, and I pray for their freedom,” the singer told a sold-out stadium in Moscow. “Are you with me?” she screamed. The audience roared in response. The deputy prime minister in charge of the military-industrial complex, Dmitry Rogozin, responded by calling Madonna a prostitute who, “as she gets older, wants to lecture

everybody on morality, especially on world tours,” he tweeted. The Western stars who have campaigned for the punk group mean little to Putin and his team. They are much more fearful of offending the church and their conservative electorate, the only power base they still have in Russia.

Unwanted visibility Yet the international support meant the world to the three women themselves. “On the one hand, we expect a conviction. Compared to the judicial machine, we are nobodies and we have lost,” Samutsevich said in her last word on Wednesday. “On the other hand, we have won. The whole world can see now that the case against us is a fabrication. ... Again, in the eyes of the world, Russia does not look the way Putin would like it to look.” The two other women took similar pains in their statements. The trial is already part of history, and it will to a large extent define Putin’s third term in power, which ends in 2018. Alekhina told the court: “You can only take away my so-called freedom, since that is the only kind that exists in Russia today. As for my inner freedom, no one can take that away. It lives in my words, and it will live on when thousands of people read or hear them.” As the journalist Andrei Kozenko tweeted, “These were definitely not just last words but documents of the era.” Pro-Putin politicians poured scorn on the women’s somewhat naive grandiloquence. “The lawyers shouldn’t have written such bathetic speeches for them, they could not even read them normally,” United Russia party activist Vitaly Sapelkin tweeted. But these are definitely not the kind of speeches Putin’s people want to hear again in a widely covered public trial. So there are doubts that a second planned spectacle, the trial of 14 people arrested on charges of provoking violence at a May 6 opposition rally in Moscow, will even take place. Instead, indications are that the 14 will be tried separately, the popular news site Gazeta.ru reported. “The participants in the May 6 events will be separated to keep things calm, and those who admitted their guilt will be tried first,” Vasily Kushnir, a lawyer for one suspect, told Gazeta.ru. In fact, Putin may find it to his advantage to show some leniency now. It was announced Wednesday that a local court in the Arkhangelsk region, where Khodorkovsky and Lebedev are doing time, had decided to grant Lebedev an early release seven months from now. This was unexpected considering Putin’s personal interest in the case. But the political signal seems logical given the public reaction to the punk group’s trial.

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 13, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

From resource curse to blessing

Joseph E. Stiglitz

Nobel laureate in Economics and Professor of Economics at Columbia University

Jakarta Globe Indonesian Communication and Information Minister Tifatul Sembiring said he hopes to see Asean states roamingfree, bringing comprehensive and integrated mobile phone coverage throughout the region by 2014. “I want this [roaming-free Asean] quickly. It may be achieved in the next two years,” Mr Tifatul was quoted as saying during an event on Saturday. Roamingfree would not only lower the costs of cell phone conversations between citizens of different Asean member states, but also become a viable solution for Indonesians living in border areas, he added.

Korea Herald South Korea’s producer prices declined for the first time in nearly three years in July on falling oil costs, the central bank said on Friday, pointing to easing pressure on consumer inflation in Asia’s fourth-largest economy. The producer price index, a barometer of future consumer inflation, fell 0.1 percent in July from a year earlier, a turnaround from a 0.8 percent year-on-year gain in June, according to the Bank of Korea. The July figure marks the first decline since November 2009 when such prices declined 0.4 percent year-on-year.

Business Inquirer Philippine exports grew by 4.2 percent in June after a doubledigit rebound in May. The National Statistics Office on Friday reported that exports for the month reached US$4.31 billion, with electronics shipments dipping 14.6 percent to US$1.89 billion. Total exports in the first half of 2012 rose 7.7 percent to US$26.75 billion from US$24.85 billion in the same period last year. “It’s back to reality. The initial euphoria brought by a 19.7-percent increase in exports [in May] has been dashed back to more realistic level in June,” former budget secretary Benjamin Diokno was quoted as saying.

Bangkok Post Thailand is going to introduce some changes to the country’s pension scheme. Greater incentives should be offered to encourage the poor to participate in a new national retirement scheme, Finance Minister Kittiratt Na-Ranong was quoted as saying. A law establishing a national savings fund has already been approved, although operations have yet to begin. The programme is aimed at supplementing the country’s social safety net, particularly as trends show the population is ageing rapidly.

ew discoveries of natural resources in several African countries – including Ghana, Uganda, Tanzania, and Mozambique – raise an important question: will these windfalls be a blessing that brings prosperity and hope, or a political and economic curse, as has been the case in so many countries? On average, resource-rich countries have done even more poorly than countries without resources. They have grown more slowly, and with greater inequality – just the opposite of what one would expect. After all, taxing natural resources at high rates will not cause them to disappear, which means that countries whose major source of revenue is natural resources can use them to finance education, health care, development, and redistribution. A large literature in economics and political science has developed to explain this “resource curse,” and civil-society groups (such as Revenue Watch and the Extractive Industries Transparency Initiative) have been established to try to counter it. Three of the curse’s economic ingredients are well known: resource-rich countries tend to have strong currencies, which impede other exports; because resource extraction often entails little job creation, unemployment rises; volatile resource prices cause growth to be unstable, aided by international banks that rush in when commodity prices are high and rush out in the downturns (reflecting the time-honoured principle that bankers lend only to those who do not need their money).

Bad strategies Moreover, resource-rich countries often do not pursue sustainable growth strategies. They fail to recognize that if they do not reinvest their resource wealth into productive investments above ground, they are actually becoming poorer. Political dysfunction exacerbates the problem, as conflict over access to resource rents gives rise to corrupt and undemocratic governments. There are well known antidotes to each of these problems: a low exchange rate, a stabilization fund, careful investment of resource revenues (including in the country’s people), a ban on borrowing, and transparency (so citizens can at least see the money coming in and going out). But there is a growing consensus that these measures, while necessary, are insufficient. Newly enriched countries need to take several more steps in order to increase the likelihood of a “resource blessing.” First, these countries must do more to ensure that their

in place the

foundations of its remarkable growth for the last four decades. Moreover, it is not only developing countries, such as Bolivia and Venezuela, that renegotiate; developed countries like Israel and Australia have done so as well. Even the United States has imposed a windfall-profits tax.

institutions,

Development orientation

These countries [need time to] put

policies, and laws needed to ensure that the resources benefit all of their citizens

citizens get the full value of the resources. There is an unavoidable conflict of interest between (usually foreign) natural-resource companies and host countries: the former want to minimize what they pay, while the latter need to maximize it. Well designed, competitive, transparent auctions can generate much more revenue than sweetheart deals. Contracts, too, should be transparent, and should ensure that if prices soar – as they have repeatedly – the windfall gain does not go only to the company. Unfortunately, many countries have already signed bad contracts that give a disproportionate share of the resources’ value to private foreign companies. But there is a simple answer: renegotiate; if that is impossible, impose a windfall-profit tax. All over the world, countries have been doing this. Of course, natural-resource companies will push back, emphasise the sanctity of contracts, and threaten to leave. But the outcome is typically otherwise. A fair renegotiation can be the basis of a better longterm relationship. Botswana’s renegotiations of such contracts laid the

Equally important, the money gained through natural resources must be used to promote development. The old colonial powers regarded Africa simply as a place from which to extract resources. Some of the new purchasers have a similar attitude. Infrastructure (roads, railroads, and ports) has been built with one goal in mind: getting the resources out of the country at as low a price as possible, with no effort to process the resources in the country, let alone to develop local industries based on them. Real development requires exploring all possible linkages: training local workers, developing small and mediumsize enterprises to provide inputs for mining operations and oil and gas companies, domestic processing, and integrating the natural resources into the country’s economic structure. Of

course, today, these countries may not have a comparative advantage in many of these activities, and some will argue that countries should stick to their strengths. From this perspective, these countries’ comparative advantage is having other countries exploit their resources. That is wrong. What matters is dynamic comparative advantage, or comparative advantage in the long run, which can be shaped. Forty years ago, South Korea had a comparative advantage in growing rice. Had it stuck to that strength, it would not be the industrial giant that it is today. It might be the world’s most efficient rice grower, but it would still be poor. Companies will tell Ghana, Uganda, Tanzania, and Mozambique to act quickly, but there is good reason for them to move more deliberately. The resources will not disappear, and commodity prices have been rising. In the meantime, these countries can put in place the institutions, policies, and laws needed to ensure that the resources benefit all of their citizens. Resources should be a blessing, not a curse. They can be, but it will not happen on its own. And it will not happen easily. © Project Syndicate

16 |

business daily August 13, 2012

CLOSING Lee cuts down monthly expenses The Macau Civility Development and Research Centre pays the Chinese-language newspaper Macao Daily News 30,000 patacas (US$3,750) to cover monthly expenses, not 75,000 patacas, centre director Lee Chong Cheng said in a press conference yesterday. The 75,000-pataca figure mentioned by Macau Foundation president Wu Zhiliang two weeks ago was based on provisional data, Mr Lee said. The legislator again denied paying a rent for an office in the newspaper’s building, which could be illegal according to the land concession deal with the government.

Bundesbank to launch Tokyo trading hub Germany’s Bundesbank is in the final stage of talks with Japan to establish a trading hub in Tokyo, as the central bank wants to manage some foreign currency reserves in Asian financial markets, the Nikkei business daily reported yesterday, citing financial sources of both nations. Germany’s central bank has foreign reserves worth about 190 billion euros (US$233.97 billion). Bundesbank has largely agreed with Japan’s Financial Services Agency, the Bank of Japan and the Ministry of Finance to start trading in September, the report said.

Libor rate overhaul launched Regulation could extend to other benchmarks

The existing structure and governance of Libor ‘is no longer fit for purpose,’ said Martin Wheatley, head of the Financial Services Authority

ibor benchmark interest rates are no longer “fit for purpose” and must be changed or replaced, Britain’s regulator said last week as he set out proposals to restore their credibility. The initial review by the Financial Services Authority is the first concrete step to reforming Libor after a rigging scandal that has implicated global banks and hurt the reputation of regulators on both sides of the Atlantic. “The existing structure and governance

of Libor is no longer fit for purpose and reform is needed,” the FSA’s managing director, Martin Wheatley, said. “It’s completely untenable that we can go forward without some level of regulatory change,” Mr Wheatley added. The future of other benchmarks – for everything from oil and gold to stock prices – was also under scrutiny, he told a Bloomberg News event. The London Interbank Offered Rate, known as Libor, sets prices for everything from credit card payments to complex derivatives,

but its credibility has been damaged since it emerged that it had been manipulated by the big banks that set it. Mr Wheatley’s review was ordered after British bank Barclays Plc was fined more than US$450 million for rigging Libor. Lenders such as Royal Bank of Scotland also face fines. In his proposals, Mr Wheatley makes clear alternative benchmarks to Libor should be used in some cases while the calculation of the rates themselves needs to be done differently to make it harder to fiddle. “The short and medium term focus has to fix Libor and then there is a broader question about whether there are better rates going forward,” Mr Wheatley said. “Ultimately it’s a market solution as to what is used. Our responsibility is to make sure that widely used benchmarks have integrity.”

Wider participation Benchmarks would be based less on judgment and more on actual trades, he suggests. Banks could also be obliged to contribute to setting Libor to widen participation. Until now, membership of the Libor

rate setting panel has been the preserve of a small group of banks, which volunteer daily estimates for the rates at which they would borrow different currencies for different periods. It was impossible to replace Libor straight away because so many contracts were linked to it and it might not be possible to replace completely because alternatives are not perfect, Mr Wheatley told Reuters. Basing benchmarks on actual trades would raise the problem of what to do when there were no trades for a specific rate, but Mr Wheatley suggested that could be addressed through “interpolation” from more frequently traded rates. The industry will have until September 7 to respond to Mr Wheatley’s review with final recommendations to be made by the end of next month. Some of those are expected to be enshrined in a new law next year, with changes to bank practices introduced earlier. Mr Wheatley expects London to continue with “something called Libor” – probably based on a narrower range of currencies and periods – while other financial centres set up their own versions with the market deciding which ones to use. Reuters

Standard Chartered agrees on monitor demand Bank tries to avoid losing its New York licence

tandard Chartered Plc has agreed to a New York Department of Financial Services demand that the bank hire an outside monitor to ensure compliance with U.S. anti-money laundering laws, according to a person familiar with the matter. The agreement on the monitor, mandated by the regulator in an August 6 order, stems from negotiations between the bank and state officials ahead of an August 15 hearing at which Standard Chartered will be asked to explain why its licence to do business in New York shouldn’t be revoked. New York banking Superintendant Benjamin Lawsky alleged Londonbased Standard Chartered flouted U.S. banking laws as part of a decade-long deception, helping launder about US$250 billion in Iranian funds in contravention of U.S. statutes and without proper

disclosure. Mr Lawsky is said to seek as much as US$700 million to settle the investigation, another person familiar with the case said. The regulator’s threat panicked the bank’s investors, sent its share price down about 16 percent the day after and provoked a defiant response from Standard Chartered chief executive Peter Sands, who said the vast majority of wire transfers identified by Mr Lawsky complied with federal law. The bank’s stock fell about 10 percent last week. According to the terms of the order, the state regulator will select the monitor, and the bank will pay for it and provide access to all compliance and transaction records. Mr Lawsky hasn’t yet decided which outside monitor should be hired, said the person familiar with requirement, who declined to be identified because the discussions are confidential. The loss of Standard Chartered’s

The bank’s stock fell about 10 percent last week

New York licence would significantly damage the bank’s corporate banking model and could result in a 40 percent drop in earnings, said Chirantan Barua, an analyst at Sanford Bernstein Research in London.

The bank, which had US$17.6 billion in income and US$5 billion in profit last year, has US$40.8 billion in assets associated with its New York branch, according to Mr Lawsky’s order. Bloomberg