Markets not quotas create homes: expert L
umpy supply of new housing and lack of information on the government’s plans for fresh land release is causing unnecessary spikes in property prices, says a real estate boss. The government should publicise a land policy framework and use caution in revising public housing
rules, Jeff Wong Chi Wai, head of residential for Jones Lang LaSalle in Macau, told Business Daily. Projects offering about 30,000 residential units are currently awaiting approval, he said. But only 6,521 new units are expected on the market in the next three years, according to the company’s mid year property report.
Fernando Chui Sai On, Macau’s Chief Executive, said on Friday the government would increase land supply and lower barriers for affordable housing. But if the government really wants to make housing more affordable for all it should start not with sharp movements of economic levers – such as injecting a lot of new public
housing – but get the market to regulate itself, says Mr Wong. “The information flow has not been good. The public keeps waiting in the hope that property will be cheaper in the future when there is more supply, but the supply never comes and in the meantime the government loses credibility,” the executive said. More on page 3
I SSN 2226-8294
HANG SENG INDEX 20200
20160
20120
Macao Daily in clear over research centre
Safety lapses in university tunnel fall
Chinese-language newspaper Macao Daily News did not breach the terms of its land deal with the government by hosting a city legislator’s research centre. Last month the New Macau Association alleged the newspaper leased a floor in its building to the Macau Civility Development and Research Centre, headed by legislator Lee Chong Cheng, even though the terms of the concession granted to Macao Daily by the government banned such an arrangement.
The collapse of a tunnel linking the University of Macau’s new campus on Hengqin Island with the city was brought on by a combination of factors including a failure by the contractor to follow safe digging procedures. But an official inquiry rejected anonymous claims that at least one worker died trapped underground. Guangdong Nam Yue Group, a Chinese state-owned firm, was rushing to complete some work ahead of Typhoon Vicente said the report.
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20080
20040
August 13
HSI - Movers Name
%Day
SUN HUNG KAI PRO
3.04
SINO LAND CO
2.05
NEW WORLD DEV
1.36
POWER ASSETS HOL
1.06
HENDERSON LAND D
0.96
WANT WANT CHINA
-2.53
BELLE INTERNATIO
-2.57
CHINA RES LAND
-2.69
ALUMINUM CORP-H
-2.94
CHINA COAL ENE-H
-3.53
Source: Bloomberg
Sands China urges share calm
CEPA doesn’t mean deeper Page 4
www.macaubusinessdaily.com
China Star shines at Grand Lisboa Page 6
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2012-8-14
2012-8-15
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Year I - Number 97 Tuesday August 14, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00
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business daily August 14, 2012
macau High passenger load on Thai route
Melco’s MOP8b deal signed next month
Passenger load factor on Thai Smile’s Bangkok to Macau route is above 90 percent, the Bangkok Post reported yesterday. The daily newspaper quoted Thai Airways International chairman Ampon Kittiampon, the low-cost carrier’s parent company. Thai Smile has flown twice a day to Macau since July 7. The airline commences its first domestic flights on Thursday to Krabi, Chiang Mai and Surat Thani.
A deal between Melco Crown Entertainment Ltd (MPEL) and Philippines property and leisure firm Belle Corp. to develop a US$1 billion (8 billion pataca) casino-hotel in Manila should be ready next month. The online version of Philippines newspaper BusinessWorld quoted Belle vice-chairman Willy V. Ocier as saying the deal would be signed in the first week of September. MPEL could invest as much as US$580 million in the project.
Govt has no objection to Macao Daily office deal Nothing is wrong with the Macao Daily News providing an office space to a group headed by a legislator, the government says Tony Lai tony.lai@macaubusinessdaily.com
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tive Assembly member Lee Chong Cheng, even though its lease bans subletting. Mr Lee was absent from yesterday’s session but told reporters on Sunday that instead of rent, the centre paid about 29,000 patacas (US$3,625) to the newspaper every month for security, water and electricity. In a reply to questions from assembly member José Pereira Coutinho, Mr Carion said the concession contract prevented the Macao Daily News from selling or subletting any part of its offices, printing facilities or car park. He said the newspaper gave the centre an office without conditions and had written to the government explaining the arrangement. The centre and newspaper shared similar goals of
supporting the development of culture and public welfare. Another four associations have offices in the newspaper’s building, including the Macau Publication Association. Mr Coutinho said he had doubts about how Mr Lee’s research centre had spent a 10 million pataca grant from the Macau Foundation that was meant for renovation and operating expenses. He said the centre had just been established and had taken a grant without proving that it made any contribution to society. Macau Foundation vicepresident Peter Lam Kam Seng said the grant had been given to the General Volunteers Association, which had worked in the community since 2004. The association had, in turn, founded the centre last year
Photo by Diamantino Santos
he Macao Daily News has not broken the terms of its land deal with the government by providing space to a research centre headed by a member of the assembly, the government said yesterday. “The current usage of the newspaper building is strictly in accordance with the conditions of the land concession contract and there has not been any breach,” Land, Public Works and Transport Bureau director Jaime Carion told the Legislative Assembly yesterday. The New Macau Association had alleged the Chinese-language newspaper had let one floor of its building to the Macau Civility Development and Research Centre, a thinktank headed by Legisla-
to conduct research. Mr Lam said the association had returned about 3.5 million patacas it had not spent after the foundation rejected a request that the money be spent on renovation work. “Suchmoneywasonlygranted for the daily operation of the centre and cannot be used in other ways,” he said. Mr Lee told reporters on Sunday the centre had spent about 1 million patacas on events and activities last year and more than 8 million patacas on the renovation and refurbishment of its 12,600 square metre office. Mr Lam said the centre
Extra powers to fight illegal works
B
The government has accepted the Macao Daily News’ explanation it offered office services, not space, to a government-linked think tank
paid the newspaper 29,000 patacas a month – not 75,000 patacas as Macau Foundation president Wu Zhiliang told reporters last month. “This mistake was made because the association has not stated clearly in its activity report submitted last year that the 75,000 patacas it paid respectively in November and December were for five months since August,” Mr Lam said. He said such misunderstandings would not happen again because beneficiaries of foundation grants were now required to offer more detailed reports.
road changes to urban construction regulations will give Macau authorities greater legal powers to remove unauthorised structures on residential buildings. Lands, Public Works and Transport Bureau deputy director Chan Pou Ha said yesterday a draft of the new law had already been sent to the Executive Council for review. Speaking at yesterday’s Legislative Assembly meeting, Ms Chan said the draft regulation had two parts controlling both administrative and technical issues. Bureau director Jamie Carion said the revision would give authorities greater legal footing to operate without cooperation from the owner and courts to remove illegal structures and buildings. The new rules would also impose tougher penalties on flat owners that do not remove illegal structures.
Assembly members in yesterday’s meeting questioned the government’s efficacy in prosecuting cases of illegal structures. According to data released last month, there are 629 pending cases but the government has finished reviewing less than half, 283. Legislator Kwan Tsui Hang asked if the government needed to change the way it handled cases to improve efficiency. Assembly member Ung Choi Kun said urban construction laws were “outdated” and in need of urgent revision. The bureau faced technical and legal problems when it removed illegal structures. They cannot enter buildings without consent from the owners or a court order. In its current form, the new regulations will also provide additional legal powers to officials handling management at run-down buildings. T.L.
August 14, 2012 business daily | 3
MACAU Profits shrink at ACE insurance
Price for BOC’s notes skyrocket Buyers have paid up to 46,000 patacas (US$5,760) for a set of 30 uncut, 100th anniversary commemorative notes from the Bank of China Ltd. The Chinese-language Macao Daily News reported that the notes were sold for 6,000 patacas to 12,800 ballot winners in last weekend. More than 472,000 people had initially registered to buy the limited release notes. The report said some sellers were waiting for the price to blow out to 100,000 patacas before they would consider selling their commemorative sets.
Insurance company ACE Seguradora SA posted a profit of 667,000 patacas (US$83,500) last year, less than half of the 1.7 million pataca profit generated in 2010. Gross premium income fell by 9.3 percent to 14 million patacas, with the majority of revenue, 9.67 million patacas, from fire insurance premiums. Swiss-based ACE Ltd is the major shareholder of ACE Seguradora.
Agent demands clarity from govt’s land policy The government should tell the market exactly when it will make more land available for housing, an estate agent says Xi Chen xi@macaubusinessdaily.com
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n estate agent has called for the government to give a schedule for putting into action its plan to increase the supply of land. Jones Lang LaSalle’s head of residential property in Macau, Jeff Wong Chi Wai, also told Business Daily the government should be careful about allowing more household access the pool of affordable housing. Chief Executive Fernando Chui Sai On told the Legislative Assembly on Friday that the government would increase land available for housing by repossessing unused land, and make it easier for more people to access subsidised housing. Mr Wong said the government should repossess land that was not being used as soon as possible and reallocate it to developers fairly who could increase the supply of flats. But he said the government should give a clear schedule first. “The information flow has not been good. The public keeps waiting in the hope that property will be cheaper in the future when there is more supply, but the supply
never comes and in the meantime the government loses credibility,” he said. Mr Wong said more openness would calm the market, reducing “panic buying” of homes which served to increase the gap between demand and supply. Mr Chui said land law amendments and the urban planning bill would go before the Legislative Assembly this year. It was a move Mr Wong welcomed but he fears the legislative process will delay government approval of new housing projects, further tightening supply. Jones Lang LaSalle’s mid-year property report says projects that would supply about 30,000 homes are awaiting government approval and that 6,521 new homes were expected to go on the market in the next three years.
Unaffordable housing Mr Wong said he was worried about the government’s intention to allow more people to buy affordable flats. Mr Chui said the government would raise the income cut-offs
The government is to increase land available for housing by repossessing unused land
for eligibility for subsidised housing from 17,000 patacas (US$2,128) to 19,355 patacas for one-person households and from 34,018 patacas to 38,710 patacas for twoperson households. This would make it possible for about 80 percent of households currently renting public housing to buy an affordable flat. “The government needs to think clearly on what it
wants to achieve, as it would be extremely difficult for it to reverse public housing policy once implemented,” Mr Wong said. He said that if Macau were to follow Singapore in providing housing for all residents, the city would need a sustainable way to generate long-term revenue to support the policy. Macau did not have a wellrun central provident fund like Singapore’s
and the government had limited revenue sources, relying mainly on gaming tax for income. Singaporeans can withdraw money from their central provident fund saving accounts for the down payment on a home in subsidised housing. If gaming revenue declines, the government would have to increase income tax to support a long-term public housing policy, raising the financial burden faced by all residents.
Overseas Land profits from local land sales Mainland’s biggest developer by market value is confident luxury real estate market will stabilise Vítor Quintã vitorquinta@macaubusinessdaily.com
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hina Overseas Land and Investment Ltd, the mainland’s biggest developer by market value, said first-half profit climbed by 18 percent as property sales here and in Hong Kong almost tripled. The company told the Hong Kong Stock Exchange on Friday its net profit had risen to HK$8.4 billion (US$1.1 billion) or HK$1.02 a share in the first half from a year before. Sales rose by 10 percent to
HK$25.3 billion. Property sales in Macau and Hong Kong had been “satisfactory”, increasing to HK$6.07 billion from HK$2.12 billion. But revenues were no where near as great as the return from its mainland operations. Business here and in Hong Kong accounted for 24 percent of the company’s sales but just 7.3 percent of its operating profit,
or HK$890 million. “Economic development in Hong Kong and Macau was stable and the property market was fuelled with energy [sic],” the developer said. “The performance was good in the luxury sector which the group is focused on.” The company is confident the property markets here and in Hong Kong “will consolidate at a high level and the group will stick to the strategy of participating in the market in a
moderate manner”. The company has built a residential complex, La Cité, in the Areia Preta area. It bought two plots in the NAPE district for more than 2.2 billion yuan (346 million patacas) in July 2010. The government gave subsidiary Great Sky Property Investment Co. approval in March last year to build a four-star hotel on one of its plots next to the MGM Grand Macau casino.
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business daily August 14, 2012
macau Brought to you by
HOSPITALITY Shrinking short stays
Sands China appeals for investor calm Don’t judge the child on inquirie faced by the parent, says firm Associate Editor
A common indicator of the health of the tourism industry is a visitor’s length of stay. On average, tourists stayed in the city for less than one day each last month. Throughout the year, length of stay tends to fall within a narrow band of 0.9 days and 1.1 days.
The graph above shows quarterly data but the monthly values would illustrate a similar trend. However they have an in-built bias in that they “average out” overnight visitors and same-day visitors. Using monthly data, same-day visitors stay an average of 0.2 days, give or take two or three decimal points. That is, they stay in Macau less than 5 hours. It is difficult to make sense of these results without a more detailed breakdown that would distinguish between passengers in transit, short-stay visitors from across the border, and those who enter on a day-long visit in an organised tour group and stay in Zhuhai hotels. Disregarding sameday visitors, the picture is somewhat more complex. June’s data show an average stay of about 1.8 days, which is still unimpressive. Compared to the same time last year, it actually represents a decline of a little less than 0.3 days. That is potentially a worrying trend, if it is confirmed by future results, as it is true across the board and confirms the trend from previous quarters.
5 4 3 2 1 0
There are year-on-year declines in the length of stay for overnight visitors from all continents. Even arrivals from Asia, by far the city’s leading source of visitors, declined by about 13 percent last month. If the city’s source markets were plotted according to the length of stay a similar trend would emerge. For arrivals from Portugal, the Philippines and Vietnam – a trio of source markets which have contributed the longest staying tourists both this year and last year – length of stay has fallen by half in the first two cases, and one-third in the last. The mainland is ranked No10 and its arrivals have declined by 11 percent. Only Singapore goes against the grain, with a rise from 1.52 to 1.59 days. J.I.D.
Sands China – HK share price fall unjustified, company says
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ands China Ltd yesterday issued a statement to the Hong Kong Stock Exchange under the ‘unusual price movements’ rules to reassure investors that it wasn’t itself facing a regulatory inquiry by United States’ authorities. Sands China’s share price was down 3.34 percent at the close of Hong Kong trading on Friday, to HK$24.60. It coincided with a Wall Street Journal story that day saying the U.S. Department of Justice and the U.S. Securities and Exchange Commission were looking at three Macau- and China-related deals linked to Sands China’s parent company Las Vegas Sands Corp. for evidence of corruption. If Sands China – in making yesterday’s Hong Kong filing – was in effect asking investors to distinguish between its situation and that of its parent, it’s not clear whether the effort helped. Sands China was down a further 2.44 percent at the close yesterday, ending the day at HK$24.00. The Hang Seng Index – of which Sands China is a component – fared better. It was down 0.27 percent to close at 20,081.36.
Share movement Earlier in the day at lunchtime, a Sands China announcement to the HKSE said: “We have noted the decrease in the price of the shares of Sands China Ltd on August 10, 2012 and wish to state that we are not aware of any reasons for such decrease,” said the Sands China filing.
Sands China added: “The Company notes the article headed ‘Sands China Deals Scrutinized’ published by the Wall Street Journal on August 9, 2012. The Company wishes to clarify that the investigations referred to in the Article were filed against Las Vegas Sands Corp. (‘LVSC’), the indirect majority shareholder of the Company (and the Company, being a subsidiary of LVSC, has been cited in those investigations).” It’s well-documented however that regulatory investigations linked to LVS in the past two years have related to its Macau business, and all have stemmed – in some degree or other – from allegations made in a wrongful termination lawsuit brought by former Sands China president Steve Jacobs. Friday’s WSJ story was the sixth time LVS or its unit Sands China has made fresh headlines over regulatory inquiries sparked by Mr Jacobs’ lawsuit. Last year the U.S. Securities and Exchange Commission, then the U.S. Department of Justice, the Nevada Gaming Control Board and the Securities and Futures Commission in Hong Kong separately launched investigations over Mr Jacobs’ claims LVS had breached the U.S. Foreign Corrupt Practices Act that prevents the bribery of foreign officials. The SFC in Hong Kong concluded its investigation in December without any action according to a Sands China filing to the city’s stock market. Then on August 1 this year Sands China issued a voluntary
announcement to the HKSE that it was being investigated by Macau’s Office for Personal Data Protection. That was in relation to “the alleged transfer from Macao by VML [Venetian Macao Ltd] to the United States of America of certain data” said the statement, understood to refer to documents stored on a company computer used by Mr Jacobs.
Three deals The latest inquiries mentioned by the WSJ in its story on Friday concern three LVS deals with relevance to Macau operations. The DoJ and the SEC are reportedly to investigate whether there were any acts of corruption in relation to: the way LVS subsidiary Cotai Ferry Company Ltd got a ferry operating licence confirmed between Macau and Hong Kong; a US$50 million payment for real estate in Beijing that was to have housed an Adelson Center for U.S.-China Enterprise; and LVS’s sponsorship of a Chinese basketball team. It’s arguable that these inquiries are merely extensions of the original DoJ and SEC investigations rather than ‘new’ but they do cover issues not previously aired in the media, and therefore represent public information that is new as far as investors are concerned. Sands China – the Macau operating unit for LVS, was floated in Hong Kong via a US$2.5 billion initial public offering in November 2009.
August 14, 2012 business daily | 5
MACAU
Tunnel site cave-in blamed on haste The government says the builder of the Hengqin tunnel was rushing its work as a typhoon bore down on the city Xi Chen xi@macaubusinessdaily.com
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he government has placed some of the blame for the cave-in at the construction site of the tunnel to Hengqin Island on July 19 on the contractor’s failure to take due safety precautions as it rushed work before the arrival of typhoon Vicente. A report on the cave-in released by the Infrastructure Development Office yesterday, said of one several causes was the failure of the contractor to ensure that installation of the supporting infrastructure kept up with progress in digging the tunnel itself. For safety, the supporting infrastructure should have been installed before further digging took place. The report also blames last month’s heavy rain, which eroded soil around the tunnel. The cave-in has not harmed the main structure of the tunnel, most of which had already been built before the collapse. The cave-in would delay completion of the construction work, the government admitted. The undersea pedestrian tunnel was supposed to be ready this month to connect Cotai to the University of Macau’s new campus Hengqin, which is due to be ready by the end of October. The university’s rector, Wei Zhao, warned last month that any delay in
The government has flatly contradicted rumours that at least one worker was killed by the cave-in at the construction site of the Hengqin tunnel
the opening of the tunnel could delay the university’s move to its new campus. The Infrastructure Development Office told the contractor, stateowned Guangdong Nam Yue Group Construction Corp Ltd, to submit a feasible construction schedule. Nam Yue’s chief operating officer, Zhang Chuo, said that all the main work would
be finished by the end of November. The Infrastructure Development Office’s report says the cave-in killed nobody, flatly contradicting rumours that at least one worker had been trapped underground and perished. The office has ordered Guangdong Nam Yue Group Construction to do a full review of its safety measures.
The contractor should make thorough inspections and plan well ahead to prevent similar accidents from occurring in future. Guangdong Nam Yue said it had already introduced a stricter safety inspections. It has also arranged to have more managerial and technical staff on site to check for any potential problems.
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business daily August 14, 2012
macau
Businesses ‘hesitant’ to exploit mainland trade deal
Brought to you by
Tale of three currencies
CEPA opportunities being spurned: legislator
When an economy grows the amount of money required for transactions usually grows with it. In the absence of big economic disturbances or changes in the usual patterns of expenditure, there is a relatively stable relationship between the supply of money for transactions, as measured by M1, and the growth of both gross domestic product at current prices and private consumption. In most economies, the relationship between money supply and retail sales should also be relatively stable. None of these relationships is quite so clear in Macau’s case.
Luciana Leitão
Mainly one way traffic? CEPA not being used enough by Macau The supply of money for transactions does not seem to track any other indicators – GDP, consumption or retail sales, represented on the above graph by a growth index based on the 2008 figure. Putting aside retail sales and concentrating on the divergence from M1 from the other indicators, this trend may reflect an in-built bias in the estimation of M1. M1 comprises money in circulation and demand deposits. The demand deposit figures include deposits in other currencies, principally Hong Kong dollars. But it is probable that a considerable amount of cash transactions here are settled in Hong Kong dollars or in yuan. These currencies are not included in the figures for money in circulation.
If we pick two of M1 components – patacas in circulation and demand deposits in patacas – we find a much closer relationship with private consumption. This suggests that residents use the pataca mainly, and perhaps almost exclusively, for consumption spending. Many transactions are settled in other currencies, especially Hong Kong dollars. Changes in the supply of Hong Kong dollars show a closer relationship with GDP growth. And retail sales figures hint at a considerable use of other currencies – in all likelihood, yuan. Macau seems to be a de facto three-currency area. J.I.D.
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he Closer Economic Partnership Arrangement, or CEPA, signed individually by Macau and by Hong Kong with mainland China, was meant to improve levels of economic and trade cooperation. In reality CEPA hasn’t been used much by Macau businesses say economists and entrepreneurs. From CEPA’s inception in January 2004 to last March, the Economic Services Bureau has issued 1,990 certificates of origin. These allow goods from Macau and Hong Kong to enter China’s domestic market without a tariff being charged. But in the first half of 2012, Macau’s exports of CEPA goods reached just 48.4 million patacas (US$6.1 million). From 2004 to March 31, this year accumulated exports amounted to MOP277.5 million, with estimated tariff savings of more than MOP22 million. Neptune, a junket investor in Macau casinos, rolls as much value in VIP gaming chips in four months as CEPA has brought Macau in exports to China in eight years. Another area of cross-border liberalisation targeted by CEPA is services. The bureau approved 424 ‘Macau Service Supplier’ certificates up to June. But as of last November, just 50 companies had actually used these certificates, according to
officials. Fewer than half of those had actually used them set up companies on the mainland. “Up to now, I haven’t heard of any of our members using this agreement to initiate businesses in the mainland,” Tommy Lau Veng Seng, president of Macau Association of Building Contractors and Developers told our sister publication Macau Business. Mr Lau is also president of the Macau Management Association and a government-appointed legislator. “Maybe they will continue to explore [potential opportunities], looking for some kind of partnership to open up business in the mainland; taking advantage of CEPA,” Mr Lau adds.
New supplement The Macau government and the mainland’s Ministry of Commerce last month signed a new supplement to CEPA covering education and training, and rail transport. The partners also agreed to further relax market access in about 20 service sectors. “Even though it is a fantastic tool and it opens up a world of opportunities, CEPA has not been used so much by Macau,” says Carlos Simões, a partner at DSL Lawyers, a Macau law office specialising in business-related matters.
Macau business people “are hesitant and fear the difficulties” of entering the mainland market,” he suggests. Mr Simões also warns of complex bureaucracy on the mainland; unavoidable even with the agreement. His advice is: “You need people there”. Economist Albano Martins says CEPA’s ultimate goal is to boost the political integration of Hong Kong and Macau with the mainland, using economic integration as the first step. He adds Beijing should have already completely opened up its domestic market to Macau and Hong Kongbased companies. “There is no reason why the mainland is not doing that faster,” Mr Martins says. “It seems that the mainland is trying to protect itself from Macau and Hong Kong in a series of areas.” Macau’s merchandise exports to the mainland actually dropped by more than 60 percent between 2003 and last year. That was partially related to the continuing decline of the city’s manufacturing industry. But the value of exports to the mainland of other goods covered by CEPA has increased, reaching 87 million patacas last year. That’s still however less than eight percent of the total sales Macau made to the mainland in 2011. The full story on CEPA is in this month’s edition of Macau Business magazine.
Weather Beijing 29/20o C Changchun 27/16o C
Harbin 30/15o C
Xian 33/22o C Shanghai 35/28o C Chengdu 34/25o C Kunming 27/18o C Haikou 31/23o C Sanya 32/27o C
Guangzhou 33/25o C
MACAU (13-18 August) Day
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Shenzhen 31/26o C
ASIA (today)
Hong Kong 32/27o C
Manila
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Macau 31/26o C
Bangkok
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32/26o C
SINGAPORE
29/24o C
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taipei
34/26o C
August 14, 2012 business daily | 7
MACAU
Grand Lisboa helps China Star rebound
Bossini sales hit record high Fashion group posted a HK$1.35 bln profit in the year to June 2011
Better results at a Grand Lisboa VIP gambling room helped China Star
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n improvement in the performance of a VIP gambling room in Grand Lisboa casino has helped China Star Entertainment Limited rebound from a loss in the first half of this year. “It is expected that the group will record a profit for the six months ended 30 June 2012 as compared to a loss for the last corresponding period,” it
said in a filing to the Hong Kong stock exchange on August 10. The rebound is mainly due to the improvement in the results from gaming promotion operations at one of the VIP room in Grand Lisboa casino. In the first half of 2011 China Star posted an impairment loss of HK$73.8 million (US$9.5 million) as the room’s profits decreased
thanks to “keen competition”. But so far this year “the market environment is comparatively stable and the impairment loss to be recognised is expected to be substantially decreased,” the company said. The Hong Kong company is mostly focused on production and distribution of films and television drama series but it is also an investor in a VIP
gambling room at the Grand Lisboa casino and owns Macau hotel Lan Kwai Fong. Meanwhile China Star said it is hoping to solve by August 23 the dispute over a proposal to reduce the company’s shares by almost half, which has led major shareholder Charles Heung Wah Kueng to made an alternative bid to buy up to 59.79 percent of the shares. V.Q.
Sales of clothing distributor and retailer Bossini International Holdings Ltd in its Hong Kong segments, which includes franchised stores in Macau, “performed remarkably well and achieved record high in both top and bottom lines” for the year ended June 30, 2012. However, in a filling to the Hong Kong stock exchange last week, the company admitted the good results were “more than offset by the substantial losses” recorded in the mainland China, Taiwan and Singapore markets. As such, Hong Kong-based Bossini is expecting to record “a substantial decrease in profit” in comparison with the year ended June 30, 2011, when it posted profits of HK$1.35 billion (US$174 million). Still, the group, which has operations in 36 countries and territories, says it kept “a healthy financial position” with positive net cash and inventory turnover days “significantly lower” than that of last year. V.Q.
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business daily August 14, 2012
greater china
Lessons from the Libor scandal What will Beijing learn as it tries to build up its own market-oriented benchmark mechanism? Lu Jianxin and Pete Sweeney
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Major Chinese banks have the final say in market rates
he scandal surrounding the alleged rigging of the London interbank offered rate (Libor) by major global banks offers Beijing regulators a strong lesson on the risks such rate manipulation could pose for China as it tries to build up its own marketoriented benchmark mechanism. Although the Shanghai interbank offered rate (Shibor) is still too small for any similar manipulation to pose a systemic risk at present, traders say that there are already signs that major state-owned Chinese banks can exert an unhealthy influence on money market rates. Such fears could cramp Shibor’s developmentasacrediblereferenceforthe expanding Chinese derivatives market. Traders estimate that transactions based on more active bond repurchase rates currently outnumber Shiborbased transactions by a factor of five, but risk could increase exponentially if the Shibor market expands as officials intensify efforts to support
the benchmarks. China launched the Shibor, modelled after Libor, in 2007. The idea was to build a simple, non-guaranteed wholesale rate system calculated by arithmetically averaging interbank lending rates. Shibor is now quoted by a small group of 16 Chinese banks, which offer quotations in varying maturities from overnight to one-year. Foreign banks are barred from participating.
Final say Since the advent of the Shibor system, major Chinese banks have been vocal about their expectations regarding upcoming policy moves. In some cases they have effectively tightened or eased monetary conditions at the national level by tweaking money market rates before the People’s Bank of China (PBOC) officially acts. With only a limited number of Chinese banks permitted to quote Shibor, periodic dramatic jumps and falls in
Chinese consumers spur travel boom Fast-growing consumer class counters economy gloom Nick Edwards
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oaring numbers of Chinese tourists packed onto flights out of the country is a sure sign that a fast-growing consumer class of around 130 million is not worried that the likely slowest year of economic growth since 1999 will sap their spending power. Nearly 39 million mainlanders left China on overseas trips in the first half of 2012, roughly double on five years ago and evidence that a powerful consumer force – envisaged by the top leadership as the engine of economic expansion in a generation to come – may be bulking up faster than thought. The question for investors is if a burgeoning bourgeoisie is now big enough to fully offset the economic impact of faltering foreign demand evident in data last week, when undershoots in July new bank lending, export, import and industrial output growth prompted analysts to start slicing into GDP forecasts. Paul French, Shanghai-based chief China strategist at market intelligence consultancy Mintel, says the purest view of the domestic economy’s health always comes from the consumer. “If consumers feel good about things they’ll spend. If they don’t feel good they’ll stop,” Mr French told Reuters. “Travel is a good indicator because people are travelling more and they are consuming a lot when they travel abroad.” Investors, facing world growth slowing to levels economists define as marking a global recession, are anxious for any sign that critical consumer mass may have already
arrived in China. Consumer spending in China has comfortably enjoyed double-digit growth for a decade, while exports have slowed to become a net drag on the economy in 2011 and in the first half of 2012. But that’s not been enough to arrest six straight quarters of slowdown, with the latest Reuters poll forecasting economic growth to slide to 8 percent in 2012 from 9.2 percent in 2011.
Consumer cushion Evidence that consumers are rapidly getting stronger comes from the Geneva-based Digital Luxury Group, which reckons China’s travel market is already worth some US$232 billion. Its new World Luxury Index China
US$232 bln China’s travel market value according to Digital Luxury Group Hotels report says Chinese travellers made 70 million overseas trips in 2011 to be pampered at spa resorts in Bali, to shop in Dubai, Paris and London, and to spend in Singapore and Hong Kong. Annual double digit wage rises over
Nearly 39 million mainlanders went on overseas trips in the first half of 2012
the last decade – the government has decreed minimum wages rise at least 13 percent in the five years to 2015 – have helped China create what brokerage CLSA says is “the world’s best consumption story”. But while workers in the world’s second largest economy are earning more, they lag well behind those of the United States. Average annual wages in the stateowned firms which dominate economic output were 42,452 yuan (US$6,700) in 2011 and just 24,556 yuan in the private sector which creates some 75 percent of the country’s jobs. The U.S. average wage was US$39,959 in 2010, according to the latest data available. China’s wealthy elite, however, have generated a whole new market for the world’s luxury personal goods makers, estimated to be worth US$25 billion a year now and likely to
leapfrog Japan and the United States to the US$28 billion top spot by 2015. It indicates a consumer market presently polarised between the super rich and a middle-class with modest discretionary spending strength, but growing rapidly in size and affluence. It is one reason why Yolanda Fernandez Lommen, head of the economics unit at the Asian Development Bank’s China mission, says a self-sustaining consumer class is some way off. “We consider that 10-15 percent of the population shows a consumption pattern that is consistent with the type that would be regarded as a solid domestic driver of growth,” she said. “In general, economies where consumption plays a meaningful role as a driver of growth entail a wide middle class that on average comprises about 70-80 percent of the population.” Reuters
August 14, 2012 business daily | 9
greater china SolarWorld slashes outlook on Chinese price war Germany’s SolarWorld slashed its outlook for the current year, accusing Chinese peers of unfairly undercutting the prices of its components which pushed the company to a surprise first-half operating loss. The company, which makes components for solar panels that convert sunlight to electricity, reported a first-half operating loss of 144 million euros (US$177.3 million) compared with a 70 million profit a year ago. “Chinese manufacturers are breaking the rules and waging a trade war. Something has to be done to fight their illegal dumping practices,” chief executive Frank Asbeck said in a letter to shareholders.
money rates reflect the role that major banks play on the ground when it comes to setting market rates and by extension the role they play in influencing PBOC’s decision making, traders said. While Chinese banks conducting over-the-counter business can only allow deposit and loan rates to diverge slightly from official policy rates set by the central bank, China’s interest rates quoted in the money market can float freely.
KEY POINTS Big Four banks have unhealthy influence over rates Market distrust of Shibor keeps transactions low Need to expand number of market makers quoting Shibor No signs of reform driven by Libor scandal – traders
But this more liberalised market is dominated by China’s biggest four state-owned banks, which are the only net capital suppliers to the Shanghai-based interbank market, the China Foreign Exchange Trade System (CFETS). The majority of institutions trading in that market rely on the so-called Big Four for most of their cash calls, traders said. That gives these banks, in particular giants such as the massive Industrial and Commercial Bank of China (ICBC), a strong upper hand in deciding money market rates over smaller joint-stock banks, urban and rural lenders, China-based foreign banks, insurers, brokerages and mutual funds. “Major banks dominate in terms of liquidity, and in most cases, they also have the final say in market rates,” said a trader at a small Chinese commercial bank in Shenzhen. “Decisions by state-owned banks are affected by many factors, including the government’s policy trend. You cannot say that they are rigging prices at this moment, of course, but as authorities try to make Shibor more market-oriented, the fact that the majority of banks are excluded (from
HK court orders Occupy eviction HSBC wins court order allowing removal of protesters Stephanie Tong
H
SBC Holdings Plc won a Hong Kong court order for the removal of protesters who have spent almost 10 months under its Asian headquarters, one of the longestrunning demonstrations sparked by the Occupy Wall Street movement. Protesters must leave the area before 9pm on August 27, Master R. Lai said yesterday at Hong Kong’s Court of First Instance. The court will assign a bailiff to execute the order. Protesters for Occupy Wall Street, whose movement to highlight income inequality spread from New York to other cities globally, were evicted in November, and others in London were forced to leave from their Finsbury Square camp on June 14. In Hong Kong, protesters numbering about 50 at the peak have pitched tents and laid out couches in the ground floor plaza under HSBC’s Central building. “We don’t think the court ruling should be the only barometer,” Leung Wing Lai, a 30-year-old participant of Occupy Central, said yesterday. “We will think about what to do with the potential forceful removal. We won’t leave.” As many as 100 police officers were involved in evicting Occupy London campaigners from Finsbury Square near the city’s financial district in June. The operation followed a court
ruling that the area must be returned to community use. There were no arrests and no violent incidents during the operation, according to London’s Metropolitan Police Service.
Income inequality In New York, police pushed into Zuccotti Park in lower Manhattan on November 15, forcibly removing demonstrators who had been camping there to protest unemployment, income inequality and the financial industry. “We welcome the decision of the court and look to the occupiers to follow the terms of the court order,” said Gareth Hewett, an HSBC spokesman. Other Asian cities including Seoul, Taipei and Tokyo have seen protests inspired by the Occupy Wall Street movement spread to their streets since last October. While Hong Kong has seen its wealth gap widen to a record, stoking public discontent, the Occupy Central movement has failed to attract demonstrators equal in number to those that took part in protest marches this year. On July 1, the anniversary of Hong Kong’s return to China, as many as 112,000 people took to the streets to demand more be done about income inequality, human rights in China and higher minimum wages. Bloomberg
quoting Shibor rates), including foreign banks, will simultaneously exclude balancing forces.” This makes the Shibor rate reflective only of the least market-oriented banks in China. In order to prevent the Shibor from being abused by the big four banks, as the Libor was, regulators must widen the participation, traders said.
No hints But dealers trading in Shibor have not yet received directives or seen any hints of changes or investigations into the way Chinese standardised rates are set, they said. An official at CFETS, a PBOC unit, said decisions regarding Shibor would only be made by the central bank. A PBOC official contacted by Reuters declined to discuss the issue. But change is required, because the lack of trust in a Shibor dominated by state-run banks is one key factor that has been keeping volumes low. Instead, most of the market relies on China’s repo rates, traders say. This effectively leaves China without any single effective benchmark rate. Due to good liquidity, short-term
Shibor rates with tenors up to one month, including as the relatively active seven-day Shibor, tend to quote in line with the same-tenor repo rates, such as the seven-day, traders said. But longer-term Shibor rates, from three months out, often betray signs of the dominance of major banks, consistently diverging from repo rates for no clear reason, traders said. Globally, central bankers and regulators will hold talks in September on whether the troubled global Libor interest rate can be salvaged or whether it’s credibility has been irrecoverably stained. Dozens of banks, including JPMorgan Chase & Co. and Deutsche Bank, are under investigation in the raterigging scandal. “When you are learning something from a teacher, and the teacher turns out to have a problem, it is embarrassing,” said a trader at a major Chinese stateowned bank in Beijing. “But I don’t think this should delay China’s reforms. As a late-starter, China should be able to learn lessons from the Libor scandal and take precautions to build up a better system.” Reuters
10 |
business daily August 14, 2012
asia
Japan economic growth pace slows Gross domestic product grew by 0.3 percent in the three months through June
J
apan’s economy expanded just 0.3 percent in April-June, half the pace expected, raising doubts about the strength of the recovery as a rebound in consumer spending loses momentum and Europe’s debt crisis weighs on worldwide demand. The cabinet figures yesterday provide fresh evidence of a global slowdown as growth in the United States, Europe and China flounders, raising expectations in financial markets that policymakers will take action to lift the world economy. Economists had expected Japan’s growth to pull back to 0.6 percent after a strong expansion of 1.3 percent in the first quarter when government subsidies on low-emission cars drove private consumption up at its fastest pace in three years. But private consumption was weaker than expected and exports, traditionally the driver of Japan’s economic growth, shaved 0.1 percentage point off of the quarter’s gross domestic product. “As domestic demand is losing momentum and exports will likely weaken further due to Europe’s debt trouble, there is a possibility that Japan will go back into an economic lull in July-September,” said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance in Tokyo. Policymakers expect reconstruction spending after last year’s earthquake and tsunami to support economic activity until early next year. But global headwinds and the yen’s strength are raising increasing worries among
Japan’s economic growth slowed in the second quarter as exports and consumer spending weakened
policymakers and companies about the prospects for already weakening exports. Just last week, Bank of Japan Governor Masaaki Shirakawa warned the fallout from Europe’s debt crisis was broadening and may delay a pickup in key markets for Japanese goods like the United States and China. Analysts have slashed their forecasts for Japan’s factory output, which is closely tied to the country’s exports, as the slowdown in the global economy
becomes more pronounced. “Europe’s sovereign debt crisis remains a major risk to Japan and the global economy,” said Tatsushi Shikano, senior economist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “The Bank of Japan will likely take a wait-and-see stance but it could act again next month if financial turmoil and further monetary easing by the U.S. Federal Reserve prompt a spike in the yen, threatening Japanese
exporters’ earnings and the economy’s recovery prospects,” Mr Shikano said.
Slowdown eyed Despite the slowdown, April-June growth of 0.3 percent is close to Japan’s average quarterly growth over the last decade of 0.24 percent, suggesting a pull back to its long-term trend. Indeed, Economics Minister Motohisa Furukawa said Japan’s economy
Kingfisher Air jumps amid talks for investment Carrier flies 20 percent higher as it seeks investors to raise funds Karthikeyan Sundaram
Kingfisher cut services to about 120 flights a day
K
ingfisher Airlines Ltd, struggling with a cash shortage, is poised for the biggest daily jump in more than three years after the Indian carrier said it is in talks with several investors to raise funds. Kingfisher, controlled by billionaire Vijay Mallya, soared by the daily 20 percent limit, the steepest climb since May 2009, to 8.88 rupees (US$0.16) in Mumbai. The carrier is betting on a change in India’s aviation rules to win investments as it pared two-third of flights, grounded planes and struggled to pay salaries following more than 19
quarters of losses. Kingfisher posted a wider first-quarter loss on August 11 as passengers shunned the carrier because of service disruptions. “There is speculation that some investmentsarecomingforKingfisher,” said Sudip Bandyopadhyay, chief executive of Destimoney Securities Pvt. “So the market has ignored the financial results.” Kingfisher has said potential investments hinge on a change in India’s aviation rules as the government is planning to allow overseas carriers to buy as much as 49 percent in local airlines.
The carrier “continues to believe it will get recapitalised and get on a path of sustained profitability,” the company said in a statement dated August 10, without giving details. Parent UB Group gave more than 7.5 billion rupees (US$135 million) to help the airline meet cash requirements, it said.
‘Obvious candidate’ The UB Group’s “intention is to keep the airline going until they can find an investor,” said Binit Somaia, a Sydney-based director at CAPA
Centre for Aviation, an industry consultant. “The most obvious candidate as a strategic investor is a foreign airline.” The carrier has asked banks for more loans as its market share plummeted to sixth from second. Mr Mallya has been seeking investments since at least November. Prakash Mirpuri, a spokesman for Kingfisher, declined to comment on the share-price jump and on fundraising talks. Kingfisher posted a net loss of 6.5 billion rupees in the three months ended June 30, compared with 2.6 billion rupees a year earlier, it said in the statement. That was narrower than the 11.5 billion-rupee loss in the quarter ended in March. The carrier is operating 20 planes as it cut services to about 120 flights a day, compared with 66 aircraft and about 340 daily flights in March 2011. Kingfisher’s market share dropped to 4.2 percent as of June, compared with 27.4 percent for Jet and 26 percent at discount carrier IndiGo. Kingfisher may post a loss as high as 14 billion rupees this fiscal year and the carrier needs about US$1 billion of funds, CAPA said in May. The carrier has ended international operations and delayed Airbus SAS A380 deliveries beyond 2016 because of the losses. It was also shut out from International Air Transport Association’s billing systems after failing to pay required cash deposits. Bloomberg
August 14, 2012 business daily | 11
asia Sun Pharma raises buyout price
Australia to regulate trading
India’s Sun Pharmaceutical Industries Ltd has upped the buy-out price for its Israeli unit Taro Pharma by 60 percent, winning over Taro’s board and ending a long battle to gain full control of the U.S. listed drugmaker. Under the latest offer, Sun Pharmaceutical will pay US$571 million to buy about a third of Taro’s 44.5 million shares at US$39.50 a share, up from an offer of US$24.50 a share. Mumbai-based Sun Pharma said in a statement it planned to delist Taro from the New York Stock Exchange once the buy-out process was completed.
The Australian Securities and Investments Commission is proposing new rules to regulate automated stock trading. Electronic trading platforms have come under scrutiny this month after a trading error at Knight Capital Group Inc. drove the market maker to the verge of bankruptcy. “The enhancements to participant-level controls that ASIC has released for consultation, together with the market-level controls released in June, will build confidence in the integrity and cleanliness of our capital markets,” Belinda Gibson, deputy chairman of ASIC, said in a statement.
As domestic demand is losing momentum and exports will likely weaken further due to Europe’s debt trouble, there is a possibility that Japan will go back into an economic lull in JulySeptember Yuichi Kodama, Meiji Yasuda Life Insurance was growing at a healthy pace. The slowdown was largely a reaction to unusually strong growth in the previous quarter, he said. “Japan’s economy continues in an uptrend led by domestic demand,” Mr Furukawa told a news
conference, although he added that the government would consider a supplementary budget to support the economy “if necessary”. On an annualised basis, the world’s third-largest economy grew 1.4 percent in the April-June quarter, less that the median 2.5 percent forecast and slightly below the 1.5 percent annualised pace of the United States. The U.S. economy had expanded at a 2.0 percent pace in the JanuaryMarch quarter. Growth in Japan’s private consumption, which makes up about 60 percent of the economy, slowed to just 0.1 percent from 1.2 percent in the previous quarter. The sharp slowdown, well short of a median estimate of 0.3 percent, cast doubt on whether consumption will sustain its momentum once the boost from stimulus measures fades. Subsidies on low-emission cars are set to run out in August. Worries over the economic outlook are already taking a toll on consumer confidence, which
E&O plunges as regulator probes trading Malaysian property developer fell the most in six years Gan Yen Kuan
E
astern & Oriental Bhd., a Malaysian property developer, fell the most in six years after the Securities Commission said it’s investigating a surge in its shares last week after an online newspaper “rumoured” that the regulator may order Sime Darby Bhd. to make a general offer. The stock sank as much as 19 percent in Kuala Lumpur trading to 1.54 ringgit, its largest intraday decline since June 6, 2006 and yesterday’s biggest drop in the FTSE Bursa Malaysia Top 100 Index, which gained 0.1 percent. E&O jumped 28 percent on August 10, the most since August 2003, after the Malaysian Insider reported that the commission would U-turn and order Sime Darby to make a general offer after acquiring a 30 percent stake last year. Last October’s decision that this isn’t required remains unchanged and is subject to a judicial review pending in court, the regulator said in an e-mailed statement the same day. “The clarification by the Securities Commission should put to rest such speculation for now,” Terence Wong, head of research at Kuala Lumpurbased CIMB Group Holdings Bhd., wrote in a report yesterday. “We were very surprised by the Malaysian Insider report. We expect E&O’s share price to give back most of Friday’s
42 sen gain immediately.” Palm oil producer Sime Darby agreed to pay 766 million-ringgit (US$246 million), or 2.30 ringgit per share, for its E&O stake in August last year to expand its Malaysian real estate business. That was a 59 percent premium to its last closing price at the time and 55 percent more than E&O’s share price on August 9 before the Insider report. General offers are typically made at the original acquisition price. The commission has begun an examination of trading arising from “the rumour,” its statement said. Sime Darby shares rose 0.1 percent to 9.81 ringgit yesterday. Investors should wait for E&O’s shares to fall to about 1.50 ringgit before accumulating the stock, said CIMB’s Mr Wong, who kept his trading buy call. This means the stock’s total return is expected to exceed the benchmark FTSE Bursa Malaysia KLCI Index by at least 5 percent over the next three months. “Longer-term fundamental prospects of the group remain promising as its Penang properties are selling well and the launch of new projects in Kuala Lumpur and Johor in the fourth quarter of 2012 and first quarter of 2013 should excite the market,” Mr Wong said. Bloomberg
worsened in July from June. It could take a further blow after parliament last week approved plans to double Japan’s 5-percent consumption tax by 2015. Critics argue the higher tax will dampen domestic consumption, which contributed 0.4 percentage point to GDP in the latest figures. At the BOJ, a growing number of officials had increasing doubts about the strength of Japan’s recovery even before yesterday’s GDP figures due to the global fallout to the euro area debt crisis. “Europe’s sovereign debt woes are already having a huge impact on the global economy,” Mr Shirakawa told a news conference last week after the central bank left monetary policy unchanged. “If the situation worsens further, it could trigger market turmoil or further cool global growth,” he said in a signal of the central bank readiness to further ease policy if economic conditions deteriorate. With yen strength and Europe’s crisis curbing exports, yesterday’s report
escalates pressure on policymakers to head off a deeper slowdown in the world’s third-largest economy. “Drafting a supplementary budget is already a done deal, as the Japanese economy can anticipate little support from overseas demand and the government has no other choice but to mobilise fiscal spending,” said Hiroshi Watanabe, a senior economist at SMBC Nikko Securities Inc. in Tokyo. “Political pressure on the Bank of Japan will probably intensify as deflation is expected to remain entrenched, just as today’s [yesterday’s] GDP deflator indicates.” Several exporters, including electronics giant Sony Corp. and carmaker Nissan Motor Corp., say the yen’s strength is hitting the bottom line. The currency has become a safe haven from the debt woes of Europe and the United States. It closed out the April-June quarter at 79.77 per dollar versus 82.79 in the previous quarter and was trading yesterday around 78.27. Reuters/Bloomberg
12 |
business daily August 14, 2012
MARKETS Hang SENG INDEX NAME
NAME
PRICE
DAY %
Volume
12.4
-0.1610306
19169787
11.78
0.170068
1469976
67.6
0.4457652
832194
CNOOC LTD
15.72
-0.7575758
26456322
SUN HUNG KAI PRO
COSCO PAC LTD
10.68
-0.1869159
1631076
SWIRE PACIFIC-A
9990471
ESPRIT HLDGS
11.38
-0.8710801
4267744
TENCENT HOLDINGS
228.4
-1.890034
5493240
4783599
HANG LUNG PROPER
27.85
0.3603604
3652346
TINGYI HLDG CO
19.64
0.3064351
4387000
109.9
-0.7226739
992664
WANT WANT CHINA
9.25
-2.528978
7829595
47.4
0.9584665
4013995
WHARF HLDG
46.7
-1.372756
3569239
71.45
-0.5567154
1784809
PRICE
Day %
VOLUME
26.95
0.7476636
16541524
CHINA UNICOM HON
3.3
-2.941176
10552930
CITIC PACIFIC
BANK OF CHINA-H
2.99
0
146993193
BANK OF COMMUN-H
5.24
-0.56926
13878211
BANK EAST ASIA
28.6
-0.1745201
723239
BELLE INTERNATIO
14.4
-2.571042
BOC HONG KONG HO
24.3
-0.2053388
AIA GROUP LTD ALUMINUM CORP-H
CLP HLDGS LTD
CATHAY PAC AIR
12.82
0.7861635
3749172
HANG SENG BK
CHEUNG KONG
109.9
0.8256881
6163010
HENDERSON LAND D
CHINA COAL ENE-H
7.38
-3.529412
28042856
CHINA CONST BA-H
5.34
0.1876173
199404568
CHINA LIFE INS-H
21.7
-0.6864989
20778948
CHINA MERCHANT
24.05
-0.2074689
2383272
CHINA MOBILE
HENGAN INTL HONG KG CHINA GS
18.12
0
2026092
HONG KONG EXCHNG
106.8 -0.09354537
2062493
HSBC HLDGS PLC
68.65
8296836
0.3654971
NAME
DAY %
Volume
61.95
1.060359
1608321
24
-2.439024
6019538
13.92
2.052786
5943320
105
3.042198
8943376
92.1
-1.916933
2181864
SANDS CHINA LTD SINO LAND CO
MOVERS
15
31
3 20300
INDEX 20081.36
90.6
-0.1102536
7104561
HUTCHISON WHAMPO
68.6
-0.867052
7082563
17.68
-2.212389
27851263
IND & COMM BK-H
4.49
-0.443459
179149010
CHINA PETROLEU-H
7.36
-0.1356852
41916872
LI & FUNG LTD
12.78
-0.9302326
52732544
HIGH
20291.32
CHINA RES ENTERP
22.5
-2.173913
1719894
MTR CORP
27.65
0
1121023
LOW
20048.97
CHINA RES LAND
15.18
-2.692308
3714449
NEW WORLD DEV
10.4
1.364522
9316934
CHINA RES POWER
15.98
0.5031447
2525599
52W (H) 21760.33984
PETROCHINA CO-H
9.71
-1.120163
47851213
CHINA SHENHUA-H
30.15
-0.8223684
12416236
PING AN INSURA-H
60.5
-2.419355
9482493
CHINA OVERSEAS
PRICE
POWER ASSETS HOL
(L) 16170.35
20040
9-Aug
13-Aug
Hang SENG CHINA ENTErPRISE INDEX NAME
PRICE
DAY %
Volume
CHINA PACIFIC-H
25.2
-1.369863
5469208
CHINA PETROLEU-H
7.36
-0.1356852
41916872
10552930
CHINA RAIL CN-H
6.49
-0.764526
-3.944316
19255672
CHINA RAIL GR-H
3.23
0
146993193
CHINA SHENHUA-H CHINA TELECOM-H
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.14
-1.257862
99106305
AIR CHINA LTD-H
5.24
0.1912046
6205427
3.3
-2.941176
ANHUI CONCH-H
20.7
BANK OF CHINA-H
2.99
ALUMINUM CORP-H
NAME
PRICE
DAY %
Volume
12.46
-5.175038
33689269
ZIJIN MINING-H
2.55
-2.298851
65351666
6392000
ZOOMLION HEAVY-H
9.33
-4.601227
15422921
-1.52439
8566000
ZTE CORP-H
11.2
-4.43686
7205395
30.15
-0.8223684
12416236
5.24
-0.56926
13878211
4.1
-0.243309
35358525
14.44
-1.500682
1348467
DONGFENG MOTOR-H
11.2
-1.234568
10460375
4
-0.7444169
22389797
GUANGZHOU AUTO-H
5.91
-2.31405
1972133
CHINA COAL ENE-H
7.38
-3.529412
28042856
HUANENG POWER-H
5.34
2.298851
23929091
CHINA COM CONS-H
6.86
-1.719198
8458000
IND & COMM BK-H
4.49
-0.443459
179149010
BANK OF COMMUN-H BYD CO LTD-H CHINA CITIC BK-H
CHINA CONST BA-H
5.34
0.1876173
199404568
JIANGXI COPPER-H
18.24
-2.66809
7473777
CHINA COSCO HO-H
3.36
-1.466276
7718281
PETROCHINA CO-H
9.71
-1.120163
47851213
CHINA LIFE INS-H
21.7
-0.6864989
20778948
PICC PROPERTY &
8.74
-1.019253
10644895
CHINA LONGYUAN-H
5.05
-1.174168
3498366
PING AN INSURA-H
60.5
-2.419355
9482493
CHINA MERCH BK-H
14.44
-0.1383126
7980694
SHANDONG WEIG-H
8.55
-0.5813953
1328000
NAME YANZHOU COAL-H
MOVERS
4
1 10000
INDEX 9814.59 HIGH
9995.4
LOW
9808.16
CHINA MINSHENG-H
7.18
-0.9655172
16325235
SINOPHARM-H
23.3
1.084599
1707993
52W (H) 11916.1
CHINA NATL BDG-H
7.97
-2.923264
40465400
TSINGTAO BREW-H
45.3
-0.2202643
783819
(L) 8058.58
12.24
-0.8103728
2957735
WEICHAI POWER-H
22.05
-2
3617179
CHINA OILFIELD-H
35
9800
9-Aug
13-Aug
Shanghai Shenzhen CSI 300 NAME
PRICE
DAY %
VOLUME
PRICE
DAY %
Volume
AGRICULTURAL-A
2.53
0
44744665
NAME DAQIN RAILWAY -A
5.99
-0.4983389
27259087
AIR CHINA LTD-A
5.71
-1.039861
7238513
DATANG INTL PO-A
4.91
-1.996008
5604937
ALUMINUM CORP-A
6.14
-0.1626016
7740898
DONGFANG ELECT-A
15.87
-3.231707
8137337
ANHUI CONCH-A
14.4
-4.318937
18199923
EVERBRIG SEC -A
11.31
-9.302326
25281201
NAME
PRICE
DAY %
Volume
12.3
-2.303415
15164972
SANY HEAVY INDUS
11.55
-3.266332
28205241
SHANDONG GOLD-MI
34.9
1.512507
8112433
SHANG PHARM -A
11.47
2.869955
27818954
SAIC MOTOR-A
BANK OF BEIJIN-A
7.54
-0.3963012
10661978
GD MIDEA HOLDING
9.71
-0.5122951
13350923
SHANG PUDONG-A
7.75
-0.6410256
47282079
BANK OF CHINA-A
2.77
0
15581890
GD POWER DEVEL-A
2.65
-0.7490637
29620159
SHANGHAI ELECT-A
4.32
-1.818182
2933100
BANK OF COMMUN-A
4.47
0.6756757
45343760
GF SECURITIES-A
12.82
-7.570296
36585480
SHANXI LU'AN -A
20.44
-3.219697
9668066
BANK OF NINGBO-A
9.89
-1.884921
14282417
GREE ELECTRIC
20.52
-2.099237
11924588
SHANXI XINGHUA-A
39.12
0.07674597
2954111
BAOSHAN IRON & S
4.21
-0.7075472
16598467
GUANGHUI ENERG-A
13.06
-4.322344
23545470
SHANXI XISHAN-A
14.3
-2.78722
10101713
14.73
-4.536617
6528109
HAITONG SECURI-A
8.9
-8.62423
134709422
SHENZEN OVERSE-A
5.75
-3.685092
39041719
CHINA CITIC BK-A
3.94
-0.5050505
7946228
HANGZHOU HIKVI-A
30.41
-0.295082
1834767
SUNING APPLIAN-A
6.33
-2.615385
43795795
CHINA CNR CORP-A
3.69
-2.122016
21842350
2.65
-1.119403
18316352
TSINGTAO BREW-A
34.95
0.1145803
2171014
CHINA COAL ENE-A
7.61
-1.679587
7365806
HENAN SHUAN-A
64.95
0.5417957
2652288
WEICHAI POWER-A
23.33
-0.4692833
5293765
CHINA CONST BA-A
4.06
0.2469136
17052639
HONG YUAN SEC-A
17.06
-7.08061
25630456
WULIANGYE YIBIN
36.13
-1.23018
15126523
CHINA COSCO HO-A
4.31
-1.146789
6180773
HUATAI SECURIT-A
8.61
-8.792373
39709002
XIAMEN TUNGSTEN
47.83
0.1675393
23172429
CHINA CSSC HOL-A
21.1
0.3328578
4654027
HUAXIA BANK CO
8.98
-0.6637168
17183286
YANGQUAN COAL -A
15.19
-2.377892
9445352
CHINA EAST AIR-A
3.87
-1.526718
11653829
IND & COMM BK-A
3.81
0.5277045
27974403
YANTAI CHANGYU-A
56.12
1.611443
5698001
CHINA EVERBRIG-A
2.78
-0.3584229
29762995
INDUSTRIAL BAN-A
12.68
-0.3144654
39493540
YANTAI WANHUA-A
13.1
-1.281085
8829870
CHINA LIFE INS-A
17.9
-5.090138
14517358
INNER MONG BAO-A
39.58
-1.664596
43832102
YANZHOU COAL-A
18.69
-2.146597
3123455 2624839
BYD CO LTD -A
HEBEI IRON-A
CHINA MERCH BK-A
10.15
-0.1966568
38715291
INNER MONG YIL-A
19.44
0
11532152
YUNNAN BAIYAO-A
63.45
1.63383
CHINA MERCHANT-A
10.26
-5.350554
15572823
INNER MONGOLIA-A
6.04
-4.43038
134810053
ZHONGJIN GOLD
21.59
-1.099404
6830612
CHINA MERCHANT-A
20.11
-4.601518
20706002
JIANGSU HENGRU-A
30.51
-0.3917728
4673630
ZIJIN MINING-A
3.88
-1.772152
45967454
CHINA MINSHENG-A
6.05
-0.1650165
56161253
JIANGSU YANGHE-A
145.3
1.324965
1128993
ZOOMLION HEAVY-A
9.25
-5.708461
63763365
CHINA NATIONAL-A
6.19
-4.915515
31254183
JIANGXI COPPER-A
21.47
-1.151013
6295944
ZTE CORP-A
11.31
-2.077922
12592027
CHINA OILFIELD-A
16.81
-2.153667
4641791
JINDUICHENG -A
12.47
-1.656151
4398202
CHINA PACIFIC-A
20.45
-5.455386
33025887
JIZHONG ENERGY-A
14.12
-3.155007
15796018
6.12
-0.1631321
14397621
KANGMEI PHARMA-A
16.13
0.6866417
23500270
248
-0.08460578
2303706 8510368
CHINA PETROLEU-A CHINA RAILWAY-A
4.52
-3.829787
17231555
KWEICHOW MOUTA-A
CHINA RAILWAY-A
2.57
-1.532567
15322991
LUZHOU LAOJIAO-A
41.25
-1.668653
CHINA SHENHUA-A
22.36
-0.5780347
8113520
METALLURGICAL-A
2.31
-0.4310345
17273816
2.49
-0.7968127
10285337 186803268
MOVERS
35
9 2420
INDEX 2351.931
4.9
2.083333
48219956
NINGBO PORT CO-A
CHINA SOUTHERN-A
4.07
-1.690821
18966040
PANGANG GROUP -A
4.32
2.369668
CHINA STATE -A
3.16
0
36809264
PETROCHINA CO-A
8.98
-0.2222222
9187256
HIGH
2411.96
CHINA UNITED-A
3.7
-0.2695418
44392500
PING AN BANK-A
15.03
-0.331565
10799064
LOW
2351.7
CHINA VANKE CO-A
8.42
-4.209329
123215010
PING AN INSURA-A
41.92
-6.512043
41444705
CHINA YANGTZE-A
6.6
0.3039514
12346232
POLY REAL ESTA-A
10.19
-4.139229
67463426
CITIC SECURITI-A
10.99
-9.098428
175148588
QINGDAO HAIER-A
10.75
-0.8302583
6437439
CSR CORP LTD -A
4.25
-1.847575
15642104
QINGHAI SALT-A
34.61
-0.8593526
5192540
CHINA SHIPBUIL-A
256
52W (H) 2932.14 (L) 2254.567
2350
9-Aug
13-Aug
FTSE TAIWAN 50 INDEX PRICE DAY %
Volume
ACER INC
26.45
-1.121495
29070494
FORMOSA PLASTIC
83.9 -0.1190476
4005388
ADVANCED SEMICON
24.95
-1.188119
13940982
FOXCONN TECHNOLO
115
ASIA CEMENT CORP
39.85 -0.1253133
NAME
PRICE DAY %
Volume
NAME
NAME
PRICE DAY % 103 -0.4830918
3219267
-0.862069
16561797
TPK HOLDING CO L
377 -0.3963012
10661135 30295284
6483969
FUBON FINANCIAL
30.6
0
24342837
TSMC
82.7
ASUSTEK COMPUTER
279
1.086957
4948775
HON HAI PRECISIO
84.9
0.5924171
31984536
UNI-PRESIDENT
49.8 -0.7968127
AU OPTRONICS COR
9.27
3.344482
85683598
HOTAI MOTOR CO
214
-1.382488
867432
UNITED MICROELEC
12.5
HTC CORP
CATCHER TECH
Volume
TAIWAN MOBILE CO
0.8536585 -1.574803
9842099 22997204
149 -0.3344482
17293272
240
-3.225806
14296970
WISTRON CORP
33.25 -0.8941878
5657892
CATHAY FINANCIAL
29.45 -0.3384095
9235076
HUA NAN FINANCIA
17.25
0
10937083
YUANTA FINANCIAL
14.15
-1.393728
7649572
CHANG HWA BANK
16.55 -0.6006006
610
1.497504
1154043
YULON MOTOR CO
55.8 -0.3571429
6100359
36 -0.2770083
2908249
17654467
LARGAN PRECISION
72.4
-2.425876
10493870
LITE-ON TECHNOLO
CHIMEI INNOLUX C
9.73
3.952991
44876519
MEDIATEK INC
293.5
3.34507
19892086
CHINA DEVELOPMEN
7.24 -0.9575923
28900104
MEGA FINANCIAL H
23.15
-0.856531
18632863
-1.30597
13630620
NAN YA PLASTICS
60.5 -0.9819967
3548367
CHINATRUST FINAN
18 -0.8264463
19822054
PRESIDENT CHAIN
CHUNGHWA TELECOM
90
CHENG SHIN RUBBE
CHINA STEEL CORP
26.45
0.1112347
5672682
166.5
0.9090909
2228705
QUANTA COMPUTER
78.1
0.3856041
6112441
COMPAL ELECTRON
28.25
-0.877193
5432772
SILICONWARE PREC
33.3 -0.8928571
7433386
DELTA ELECT INC
103.5
-1.428571
6001054
SINOPAC FINANCIA
12.1 -0.8196721
16065322
FAR EASTERN NEW
34.6
0
5708580
SYNNEX TECH INTL
67.4
0.7473842
3316180
FAR EASTONE TELE
70.3
-1.95258
5510249
TAIWAN CEMENT
36
0.5586592
9120586
FIRST FINANCIAL
17.5
0.286533
13445284
TAIWAN COOPERATI
16.9
-1.169591
6898936
FORMOSA CHEM & F
81.7
0.3685504
1610826
TAIWAN FERTILIZE
71.7
-1.103448
2780188
FORMOSA PETROCHE
88.8 -0.2247191
1795997
TAIWAN GLASS IND
28.4
-1.217391
1057822
MOVERS
15
32
3 5140
INDEX 5114.77 HIGH
5130.14
LOW
5059.72
52W (H) 5621.53 5050
(L) 4643.05 9-Aug
13-Aug
August 14, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) gaLaXy eNTerTaINMeNT
MeLCo CroWN eNTerTaINMeNT
MgM CHINa HoLDINgS 26.3
20.2
12.3
20.1
12.2 26.2
20.0
12.1
19.9
Max 20.15
average 19.973
Min 19.86
19.8
Last 19.9
Max 26.2
SaNDS CHINa LTD
average 26.2
Min 26.2
26.1
Last 26.2
Max 12.24
SJM HoLDINgS LTD
average 12.119
Min 12
12.0
Last 12
WyNN MaCaU LTD 15.3
24.3
17.9
24.2
17.8
15.2
24.1
17.7
24.0
15.1
17.6
23.9 average 24.056
Max 24.3
Min 23.85
23.8
Last 24
15.0 Max 15.28
average 15.053
Min 15
Commodities PRICE
DAY %
YTD %
(H) 52W
(L) 52W
WTI CRUDE FUTURE Sep12
93.61
0.796812749
-5.320117326
110.8699951
77.69999695
BRENT CRUDE FUTR Sep12
114.59
1.451969898
9.21654594
124.1999969
88.90999603
GASOLINE RBOB FUT Sep12
303.65
1.085255834
14.31314234
320.4399824
237.3699903
GAS OIL FUT (ICE) Sep12
963.5
0.890052356
7.204450626
1046.5
798.5
NATURAL GAS FUTR Sep12
2.748
-0.794223827
-16.29607067
4.630000114
2.221999884
HEATING OIL FUTR Sep12 METALS
304.71
0.880648899
6.95707115
332.9600096
251.5599966
Gold Spot $/Oz
1624.94
0.9436
3.836
1921.18
1522.75
Silver Spot $/Oz
28.1331
0.7994
1.071
44.2175
26.085
Platinum Spot $/Oz
1402.45
0.1285
0.5701
1915.75
1339.25
581.9
0.3535
-10.9564
792.93
537.54 1832.25
Palladium Spot $/Oz LME ALUMINUM 3MO ($)
1881
-1
-6.881188119
2476
LME COPPER 3MO ($)
7490
-0.584019113
-1.447368421
9304
6635
LME ZINC
1835
-1.344086022
-0.54200542
2311
1718.5
15400
-0.64516129
-17.69107429
22450
15236
15.79
-0.972091565
5.05655356
18
13.95499992
803.75
-0.679641643
37.10021322
849
499
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep12 CORN FUTURE
17.5 Max 17.88
average 17.702
Last 17.6
Min 17.5
CURRENCY EXCHANGE RATES
NAME ENERGY
Last 15.14
Dec12
WHEAT FUTURE(CBT) Dec12
PRICE MAJORS
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
DAY %
1.0556 1.5687 0.9745 1.2325 78.21 7.9897 7.7571 6.3627 55.4225 31.42 1.2448 29.991 41.93 9494 82.555 1.20101 0.78568 7.8194 9.847 96.39 1.03
YTD %
0.3327 0.4997 0.4207 0.4319 0.2813 0.0025 0.0013 -0.0393 -0.2481 0.2228 0.1285 -0.1134 -0.1789 -0.0948 -0.0569 -0.01 0.0675 -0.1637 -0.4225 -0.1556 0
(H) 52W
3.399 0.9265 -3.7352 -4.907 -1.6622 0.1239 0.1328 -1.064 -4.2537 0.4137 4.1613 0.9603 4.5552 -4.4765 -4.9942 1.3139 6.0724 4.0259 5.1285 3.3925 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
MACAU RELATED STOCKS (H) 52W
(L) 52W
ARISTOCRAT LEISU
2.52
-0.3952569
14.54545
3.25
1.88
1268922
153.6999969
CROWN LTD
8.59
0.3504673
6.180468
9.29
7.47
1869709
890
-1.248266297
23.61111111
953.25
629.5
SOYBEAN FUTURE Nov12
1629.75
-0.851711027
35.33319493
1691.5
1115.75
COFFEE 'C' FUTURE Dec12
168.95
-0.236197225
-28.41101695
285.6499939
NAME
PRICE
DAY % YTD %
VOLUME CRNCY
SUGAR #11 (WORLD) Oct12
20.84
0.482160077
-8.716600964
25.77999878
19.23999977
AMAX HOLDINGS LT
0.061
0
-29.88506
0.119
0.055
0
COTTON NO.2 FUTR Dec12
72.52
-0.684743906
-17.44080146
102.25
64.61000061
BOC HONG KONG HO
24.3
-0.2053388
32.06522
24.45
14.24
4783599
CENTURY LEGEND CHEUK NANG HLDGS
World Stock MarketS - Indices NAME
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
13207.95
0.3247959
8.106288
13338.66016
10404.49
NASDAQ COMPOSITE INDEX
US
3020.86
0.07354305
15.95725
3134.17
2298.89
FTSE 100 INDEX
GB
5842.05
-0.08653848
4.841286
5989.07
4868.6
DAX INDEX
GE
6950.28
0.08236663
17.8343
7194.33
4965.8
NIKKEI 225
JN
8885.15
-0.0707422
5.083182
10255.15
8135.79
0.234
0
1.739129
0.335
0.204
0
3.1
0.6493506
10.71429
3.62
2.3
73000 27851263
CHINA OVERSEAS
17.68
-2.212389
36.20956
19.16
9.99
CHINESE ESTATES
9.29
-0.1075269
-25.68
13.68
8.3
1000
CHOW TAI FOOK JE
9.74
1.564129
-30.02874
15.16
8.4
3242600
EMPEROR ENTERTAI
1.38
-0.7194245
24.32432
1.6
0.97
1005000
FUTURE BRIGHT
1.06
1.923077
152.381
1.1
0.3
2556000
GALAXY ENTERTAIN
19.9
-0.3006012
39.74719
24.95
8.69
6088350
HANG SENG BK
109.9
-0.7226739
19.26207
116.7
84.4
992664
HOPEWELL HLDGS
23.85
-0.4175365
20.09063
24.658
18.56
928300
HSBC HLDGS PLC
68.65
0.3654971
16.35593
71.8
56
8296836
HUTCHISON TELE H
3.71
-1.329787
24.08027
3.86
2.53
6379000
LUK FOOK HLDGS I
19.5
1.246106
-28.04428
46.15
14.7
1867000
MELCO INTL DEVEL
5.74
-0.173913
-0.5199303
9.94
4.3
558000
MGM CHINA HOLDIN
12
-0.990099
25.10225
15.276
7.6
879100
4.29
0.7042254
8.496435
5.217
2.887
755000
0
46.84684
0.205
0.08
16265000
HANG SENG INDEX
HK
20081.36
-0.2719491
8.934218
21760.33984
16170.35
CSI 300 INDEX
CH
2351.931
-1.992707
0.2638383
2932.14
2254.567
TAIWAN TAIEX INDEX
TA
7436.3
-0.0647752
5.150108
8170.72
6609.11
MIDLAND HOLDINGS
KOSPI INDEX
SK
1932.44
-0.7172215
5.844203
2057.28
1644.11
NEPTUNE GROUP
0.163
S&P/ASX 200 INDEX
AU
4283.293
0.1400649
5.589277
4448.5
3840.2
NEW WORLD DEV
10.4
1.364522
66.13418
10.96
6.13
9316934
24
-2.439024
9.339404
33.05
14.9
6019538
SHUN HO RESOURCE
1.13
0
13
1.28
0.82
0
SHUN TAK HOLDING
2.78
0.7246377
8.63074
4.148
2.241
4699144 4228814
JAKARTA COMPOSITE INDEX
SANDS CHINA LTD
ID
4102.53
-0.9424942
7.340095
4234.734
3217.951
FTSE Bursa Malaysia KLCI
MA
1646.32
0.05834589
7.551297
1650.42
1310.53
NZX ALL INDEX
NZ
801.511
0.5776075
9.826071
806.015
712.548
SJM HOLDINGS LTD
15.14
-0.3947368
21.06638
18.798
10.079
PHILIPPINES ALL SHARE IX
PH
3493.54
0.1315582
14.72887
3531.5
2695.06
SMARTONE TELECOM
16.64
2.08589
23.80953
18.5
9.8
629422
HSBC Dragon 300 Index Singapor
SI
588.99
-0.08
18.67
NA
NA
WYNN MACAU LTD
17.58
-0.4530011
-9.846154
25.969
14.62
1743800
STOCK EXCH OF THAI INDEX
TH
1219.37
0.1371438
18.9258
1247.72
843.69
ASIA ENTERTAINME
3.48
3.880597
-40.81633
8.7
2.4
118585
HO CHI MINH STOCK INDEX
VN
426.17
0.1433405
21.22601
492.44
332.28
BALLY TECHNOLOGI
44.65
6.334842
12.86653
49.32
24.74
4185688 8175
Laos Composite Index
LO
1016.4
-0.8931706
13.00113
1049.18
876.33
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
BOC HONG KONG HO
3.18
0
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
JONES LANG LASAL
70.22
-0.1280046
14.62619
87.52
46.01
335058
LAS VEGAS SANDS
39.95
0.2006521
-6.505967
62.09
34.72
6286931
MELCO CROWN-ADR
10.3
0.6154147
7.068608
16.02
7.05
2675707
MGM CHINA HOLDIN
1.36
0
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
0.2954792
-7.837812
154.7051
90.108
1254209
SHUFFLE MASTER SJM HOLDINGS LTD WYNN RESORTS LTD
AUD HKD
USD
Contact Information
ONE YEAR Suscription REGULAR 1,560 Mop 20% discount 1,150 Mop
First Name (Mr/Mrs/Ms)
Last name
Address Postal Code
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business daily August 14, 2012
Opinion
How Google can avert the next financial crisis Mark Buchanan
Physicist, former editor of Nature and now a columnist for Nature Physics
T
he mathematical insight that turned Google Inc. into a multibillion-dollar company has the potential to help the world avert the next financial crisis. If only banks made public the data required to do the job. Sixteen years ago, the founders of Google – computer scientists Larry Page and Sergey Brin – introduced an algorithm to measure the “importance” of Web pages relative to any set of keywords. Known as PageRank, it works on the notion that Web pages effectively vote for other pages by linking to them. The most important ones, Page and Brin reasoned, should be those drawing links from many other pages, especially from other really important ones. If this definition sounds circular, it is. It also captures an authentic reality, which is why respecting it gives far superior results. Page and Brin’s breakthrough involved using mathematics to make it work. The required ideas don’t go much beyond high-school algebra, although it takes lots of computing power to make something as sprawling as the World Wide Web possible. What could this have to do with finance? Quite a lot. The systemic risk that turned the U.S. subprime-lending crisis into a global disaster is circular, too. We can’t identify it simply by looking for the banks with the most assets or the biggest portfolios of risky loans. What matters is how many links a bank has to other institutions, how strong those links are and how risky those other banks are, not least because they too have links to other risky banks.
Creating DebtRank Something like PageRank might be just the right thing to cut through it. That’s the argument, at least, made by a team of European physicists and economists in a new study. Their algorithm, DebtRank, seeks to measure the total economic value that would be destroyed if a bank became distressed or went into default. It does so by moving outward from the bank through the web of links in the financial system to estimate all the various consequences likely to accrue from one failure. Banks connected to more banks with high DebtRank scores would, naturally, have higher DebtRank scores themselves. (I have put a little of the technical detail on my blog.) As a demonstration, the researchers calculated DebtRank on the basis of the known network of equity investments linking institutions – pretty much the best they can do with publicly available data. If Bank A owns stock in Bank B, the two are linked. This network, of course, reflects only a subset of the many
links created by derivatives and other instruments, so the calculation is a little like working out the best driving route from New York to Los Angeles while ignoring two-thirds of all the roads. Nevertheless, it’s useful for demonstrating what might be possible with more complete data. The analysis offers some surprises. At the peak of the financial crisis, in November 2008, for example,
With full transparency, it’s just possible that the core business of lenders would go back to assessing the creditworthiness of borrowers
DebtRank scores for the largest 20 or so banks show that simple bank size isn’t as important as we have come to think. Institutions such as Barclays Plc, Bank of America Corp., JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc presented more systemic risk than did Citigroup Inc. or Deutsche Bank AG, despite being significantly smaller in total assets. Wells Fargo & Co. stands out even more: it presented as much systemic risk as Citigroup, despite having only a quarter of the assets. An algorithm alone can’t save the world, and this isn’t the final word on the best way to measure systemic risk. Yet the apparent superiority of the DebtRank approach underscores how our ability to monitor the financial system depends wholly on the availability of data. Currently, most of the information that would be needed to calculate DebtRank or any other similar measure is simply not public.
Imagine transparency Imagine a world in which banks and other financial institutions were legally required to disclose absolutely all of their assets and liabilities to
central banks, which would in turn make that information public on a website. Regulators – indeed, anyone – would then be able to see the whole network and assess a bank’s situation in full clarity. Anyone so inclined could calculate measures such as DebtRank and assess how much any particular bank is contributing to potential financial instability. With full transparency, it’s just possible that the core business of lenders would go back to assessing the creditworthiness of borrowers. They would need to do so to maintain a good reputation and to borrow themselves, as any risky loans they made would be known to all. In such a situation, the economist and physicist Stefan Thurner of Medical University of Vienna suggests, “financial institutions would only survive and prosper if they assess the risk of others better than their peers.” That is a radical idea, so radical it is almost certainly a political nonstarter. But as the British physicist William Thomson, also known as Lord Kelvin, put it back in the 19th century: “What you cannot measure, you cannot hope to improve.” It’s a lasting piece of wisdom. Bloomberg View
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August 14, 2012 business daily | 15
OPINION Business
wires Leading reports from Asia’s best business newspapers
South Korea’s budding femocracy Yuriko Koike
Japan’s former Minister of Defence and National Security Adviser
Business Standard First quarter results suggest the Indian hospitality industry may have to face gloomier times ahead. The average hotel room rates for 2012-13 are expected to fall five to 10 percent and the occupancy is likely to come down 5 percent, compared with the previous financial year. This will take the occupancy and room rates of the hospitality industry closer to the levels during the economic crisis of 2008. Room tariffs may touch the lowest so far in the past five years.
JoongAnd Daily After five failed attempts to sell Daewoo Electronics, creditors will try again next week to conclude their decadelong search for a new owner. Five local and foreign bidders submitted letters of intent by mid-July to the majority stakeholder Korea Asset Management Corporation. Germany’s Bosch-Siemens pulled out later last month. The remaining four bidders for the country’s third-largest electronic appliance producer, which is unlisted, include Samra Midas Group; Sweden’s Electrolux; One Rock Capital, a small U.S. private equity; and Dongbu Group.
Jakarta Post Plastic manufacturers have complained over the widening coverage of plastic products exempted from import duty under the ASEAN–China Free Trade Agreement, saying that it will seriously harm the downstream industry. A new regulation passed at the end of last month increases the number of zero-duty plastic products to 10,012 items from 8,738 items. Overall imported plastic products are estimated to rise by 8 percent this year to 523,800 tonnes in terms of volume, and by around 10 percent to US$1.46 billion in terms of value.
Bangkok Post The Tourism Authority of Thailand yesterday kicked off its Amazing Weekday campaign aimed at boosting tourism during the low season. The target groups for the campaign are retirees (numbering 7.4 million nationwide), housewives and business owners. The campaign is also focusing on first-jobbers, families and white-collar workers aged 2539 (numbering 3.4 million). Designed specifically for Thais, the campaign is meant to help operators fill their businesses on weekdays, especially during the low season.
Park Geun-hye
T
his is a year of presidential elections worldwide, and the last to take place – on December 19 – will be in South Korea. That ballot, however, is already having an international impact, in part because South Korea’s failure to ratify an important new intelligence-sharing treaty with Japan is widely seen as a result of campaign politics. But the election may well have a more positive impact on the region as a whole. On July 10, the frontrunner, Park Geun-hye of the ruling Saenuri (New Frontier) Party, became the first to announce her candidacy. In addition to other opposition candidates, much attention has focused on Ahn Cheol-soo, Dean of the Graduate School of Convergence Science and Technology at Seoul National University, who is a successful entrepreneur and a charismatic figure for South Korea’s young and independent voters. But it is Park who has so far stimulated the greatest interest. There is great anticipation among conservative voters, in particular, concerning her policy toward North Korea, a country that continues to be as unpredictable as ever. (Witness Kim Jong-un’s sudden dismissal of senior military officer Ri Yong-ho, anointment of himself as a marshal, and revelation that he had married a woman first glimpsed when she accompanied him to a concert featuring appearances by Disney’s Mickey and Minnie Mouse.) So far, Park, sensing that the electorate trusts her foreign-policy instincts, has kept her North Korea cards close to her chest. For many South Koreans, Park is a tragic heroine. Both her mother and her father, President Park Chung-hee, were assassinated, in 1974 and 1979, respectively. Indeed, her father was murdered by his
The triumph of a female president would be an important symbolic and practical victory and it would provide a powerful example to other Asian countries
own intelligence chief, KCIA Director Kim Jaegyu. Park avoided active politics for many years after her parents’ death, but later won a parliamentary seat. She has also served as a leader of the Saenuri Party (formerly known as the Grand National Party). In 2006, an assailant slashed her face as she was campaigning on behalf of the GNP’s candidate in Seoul’s mayoral election.
Real challenges But now the real battle begins. If elected, Park will become South Korea’s first female president. Like Japan and other Asian countries, Korean society, which is underpinned by Confucian thought, has experienced little political participation by women, though that appears to be
changing rapidly. In 2000, only 5.9 percent of the National Assembly’s299memberswere women. In 2004, however, women more than doubled their share, to 13 percent, when 39 were elected from single-seat constituencies and through party-list proportional representation. According to the InterParliamentary Union (IPU), that election pushed South Korea from 101st to 62nd place worldwide in terms of the proportion of female MPs, well ahead of 121st-ranked Japan. The increase in women MPs led not only to an increase in female cabinet members, but also to a variety of policies and institutional improvements aimed specifically at women. And, although South Korea has slipped to 80th place in the IPU’s most recent rankings, the fall reflects subsequent growth in the proportion of female legislators in other countries. The main reason for the increase in the number of women MPs was the introduction of a quota system, according to which South Korea’s political parties should ensure that 30 percent
of their candidates are women. The campaign-finance law was revised to provide additional government funding to parties that meet the quota, and to reduce the amount for parties that do not. As a result, more than half of the 56 members elected through proportional representation in 2004 were women. Moreover, 10 percent of government funding to political parties is now used for the advancement of women in politics, with each party establishing institutions for training women MPs and candidates. Although the quota system is still a matter of constitutional debate in South Korea, years of effort by women’s groups have made a significant contribution to boosting women’s role in policymaking. The triumph of a female president would be an important symbolic and practical victory for all who have sought to establish a political environment that is hospitable to women. And it would provide a powerful example to other Asian countries – including my own – in which women have struggled to gain an electoral foothold. © Project Syndicate
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business daily August 14, 2012
CLOSING StandChart weighs settling probe
Greece sinks as crisis batters economy
British bank Standard Chartered is hoping to reach a settlement within days over charges it hid transactions tied to Iran, sources familiar with the situation said. The London-based bank’s U.S. legal team have got as far as discussing an amount with regulators, indicating progress has been made before tomorrow’s deadline, the sources told Reuters. Standard Chartered vehemently disagrees with New York’s Department of Financial Services’ allegation the bank improperly processed US$250 billion tied to Iran. Standard Chartered could be forced to pay a fine of up to US$1 billion to settle the charges, analysts said last week.
Greece’s economy contracted for a ninth straight quarter, making it harder for the government to meet the budget-reduction targets required under the country’s international bailouts. Gross domestic product declined 6.2 percent in the second quarter from the same period last year after dropping 6.5 percent in the first three months, the Athens-based Hellenic Statistical Authority said yesterday. Think tank IOBE expects the economy to shrink 6.9 percent this year, a bleaker outlook than estimates by the Bank of Greece and the OECD earlier this year, which project a contraction of 5.0 to 5.3 percent, respectively.
Julius Baer to buy Merril Lynch non-US business Markets send the share down on high deal costs
S
Motorola to cut staff and offices Google-owned company to slash 4,000 jobs in restructuring
G
oogle Inc. plans to eliminate about 4,000 jobs at its Motorola Mobility Holdings Inc. unit, or about 20 percent of the staff at the company it bought for about US$12.5 billion. Two-thirds of the reductions will be outside the U.S., the Mountain View, California-based company said in a regulatory filing yesterday. Google will also shut down about one-third of Motorola Mobility’s 90 facilities and simplify its wireless product portfolio, it said. Google said the measure will incur severance-related costs of no more than US$275 million. “These changes are designed to return Motorola’s mobile devices unit to profitability,” Google said in the filing. “Investors should expect to see significant revenue variability for Motorola for several quarters. While lower expenses are likely to lag the immediate negative impact to revenue, Google sees these actions as a key step for Motorola to achieve sustainable profitability.” Larry Page, who became the chief executive of Google last year, is streamlining the company as it pushes into the hardware market. Google, owner of the world’s most-popular search engine, completed the takeover of Motorola Mobility in May in its biggest takeover, boosting its patent portfolio and stepping up competition with competitor Apple Inc. “Motorola is committed to helping them through this difficult transition and will be providing generous severance packages, as well as outplacement services to help people find new jobs,” Motorola Mobility said in an e-mailed statement before Google’s filing was released.
Too many devices Google has also shaken up Motorola management, eliminating 40 percent of its vice presidents, said a person familiar with the matter, asking not
to be identified because the detail isn’t public. Motorola said it expects this strategy to create new opportunities and help return its mobile devices unit to profitability. It also understands how hard these changes will be for employees, the company said. The acquisition, announced last year, gives Google a trove of more than 17,000 patents amid rising popularity for its mobile Android software. Motorola and other handset makers that use Android, including Samsung Electronics Co. and HTC Corp., have faced legal battles around the world over technology used in the devices. Android has emerged as the No. 1 operating system on smartphones with 68 percent of the global market in the second quarter, according to market researcher IDC. In the first quarterly report with Motorola included in results, Google said Motorola Mobility contributed revenue of US$1.25 billion for the second quarter. Overall, sales were US$12.2 billion, compared with US$9.03 billion a year earlier, the company said on its website. Google plans to use the Motorola division to produce smartphones and tablet computers that can help it set the pace of innovation in the mobile business, Dennis Woodside, who leads the Motorola unit, said in an interview with Bloomberg Businessweek in May. “This is a huge opportunity to really show what Android can do in a well-designed, well-packaged, and well-marketed product,” Mr Woodside said. Motorola released about 20 smartphones last year, which Mr Woodside said is too many. He plans to focus on trying to make a few great devices and then concentrate on marketing resources to sell them, he said. Bloomberg
wiss private bank Julius Baer is to buy Bank of America’s Merrill Lynch private bank outside the United States, paying 860 million Swiss francs (US$882 million) to boost its assets under management by 40 percent and backing the deal with plans to raise 1.19 billion francs in new capital. The acquisition, the latest in a string of purchases for deal-hungry Baer, is the bank’s most assertive move since it bought Ehinger Armand von Ernst, Ferrier Lullin & Cie, BDL Banco di Lugano and asset manager GAM for 5.6 billion francs from UBS in 2005. But the cost of the deal including the new capital requirements, was taken badly by investors, who sent the shares sharply lower in early trading yesterday. Baer said that while it has 530 million francs in cash to help fund the deal it also intends to raise 750 million francs in a rights issue and in addition will grant Bank of America of 240 million francs worth of shares, making the Charlotte, N.C.-based bank a 3 percent shareholder.
It also plans to raise another 200 million francs in hybrid bonds. The acquisition will also cost around 400 million francs in restructuring, integration and retention costs, the bank said, but will boost its assets under management by 40 percent to 251 billion Swiss francs and add to earnings from the third full year after closing. From 2015, Julius Baer targets net new money inflows of up to 6 percent, a cost-income ratio of between 65 percent and 70 percent, and a pre-tax profit margin of up to 35 basis points. Merrill Lynch’s international private bank’s cost-income ratio was 105 percent and it pulled in only a 1 percent rise in net new money in 2011, Baer said. “To us, this looks like a defensive and value-destructive transaction,” said Dirk Becker of Kepler Capital Markets who rates the stock as a ‘hold’. Mr Becker criticised dilution which he calculates to be 15 percent more shares and questioned how an unprofitable business can add to Baer’s earnings. Reuters
Baer hungry for acquisitions