Macau Business Daily, August 14, 2012

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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

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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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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

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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

Temperature

Humidity

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75/95 %

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60/95 %

08/15

27/32o C

55/90 %

08/16

27/31o C

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60/95 %

Shenzhen 31/26o C

ASIA (today)

Hong Kong 32/27o C

Manila

TOKYO

Jakarta

32/25o C

30/26o C

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Macau 31/26o C

Bangkok

SEOUL

K. lumpur

32/26o C

SINGAPORE

29/24o C

31/24o C

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)

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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


16 |

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


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