Lift off for biz jet plan A
plan to turn Macau into a hub for business jets is taking off. Macau International Airport Company Ltd (CAM) has opened a public tender for a new private jet hangar. The aviation regulator hopes it will further boost the city’s thriving business jet arrivals. Since 2005 – the year after
Macau’s first Las Vegas-style casino Sands Macao opened its doors – to last year, the airport’s business jet traffic has grown 196 percent. That’s from just 383 aircraft movements to 1,132 according to official figures. The tourism boom “has been driving more and more high-end tourists to visit Macau, leading to
more foreign business jets flying to Macau,” the Civil Aviation Authority told Business Daily. According to a draft master plan for the airport currently being considered by the government, the facility’s general aviation and business aviation area will expand from the present 12,000 square metres to 89,600 square metres after
2030. There will be a particular focus on a zone for private jets and small planes, it suggests. But a former executive at Menzies Macau Airport Services Ltd, the hub’s ground handler, questions if there’s room for expansion. “I do not see any land at the airport suitable for another hangar,” said John Galati. More on page 3
I SSN 2226-8294
HANG SENG INDEX
Green light for Studio City
Tunnel builder was warned of danger Page 2
Page 6
Unholy row at ex-monastery
20300
Page 7 20250
20200
20150
20100
August 14
HSI - Movers Name
Ready-made holidays a hit
Two into one doesn’t fit
At a time when overall tourism growth is contracting year-on-year, the proportion of package visitors is rising according to data released by the Statistics and Census Service yesterday. Total arrivals fell 3.4 percent in June, but more than 662,100 visitors entering on a package tour that month, an increase of 8.4 percent over the same time last year. Don Dioko, head of the Tourism Research Centre, told Business Daily rapid increases in hotel prices in recent years could be a factor boosting organised tours.
The government has turned down an appeal by developer Tin Wai Investment Co. Ltd for merger of two pieces of land at Patane to create one large scheme. The Land, Public Works and Transport Bureau said yesterday Tin Wai’s updated contract will be “basically unchanged” from the 2010 version, with a requirement the plots be developed separately. Tin Wai is due to pay 1.4 billion patacas (US$178 million) for the two plots but has so far paid only 150 million patacas.
Pages 4 & 5
Page 5
www.macaubusinessdaily.com
%Day
BANK OF COMMUN-H
3.05
ALUMINUM CORP-H
3.03
CHINA RES POWER
3.00
BANK EAST ASIA
2.80
CHINA UNICOM HON
2.42
CNOOC LTD
-0.89
COSCO PAC LTD
-0.94
CHINA RES LAND
-1.19
SINO LAND CO
-1.29
LI & FUNG LTD
-2.03
Source: Bloomberg
2012-8-15
2012-8-16
2012-8-17
27˚ 33˚
27˚ 34˚
26˚ 30˚
Year I - Number 98 Wednesday August 15, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00
2 |
business daily August 15, 2012
macau
Studio City gets its re-start permit But no clarity from govt or MPEL on when or why Associate Editor
MPEL’s future Macau story
Clear as mud – little public information shared on Studio City re-start (Photo: Manuel Cardoso)
T
he Studio City tourism resort on Cotai has been granted permission to restart construction works, confirmed the Land, Public Works and Transport Bureau in an e-mailed reply to Business Daily. “With regard to requests for renewal of the permit for piling and foundation works, they have already been approved by the Administration,” said the statement. The bureau didn’t specify the date of the permit renewal. It instead referred the newspaper to the notice in the Official Gazette on July 25 that outlined the project’s facilities but omitted mention of a casino or gaming. What the official re-start will mean in terms of the completion date or the ability of the project’s recently installed majority owner Melco Crown Entertainment Ltd to hire workers isn’t clear. Neighbouring projects Galaxy Macau Phase Two and Wynn
Cotai are already doing foundation work and Macau continues to face a construction labour shortage. MPEL has previously mentioned a completion date of 2015. The recent regulatory history of the Studio City project can best be described as opaque, with little clarity from the government or from MPEL regarding the timetable for recommenced construction. A kind of creeping restart has occurred, first with worker accommodation springing up in April, followed by reports of 200 workers being hired, then with Lawrence Ho Yau Lung, co-chairman of MPEL, telling analysts during the firm’s first quarter earnings call in May the company would probably get going without a formal announcement. Nor has there been any clear guidance on what legal route MPEL would be using in order to get a casino on the site. At the time Business Daily went to press the company had not filed any
announcements about a construction restart to either of the two stock markets where it is listed – New York’s Nasdaq or Hong Kong. Business Daily approached MPEL for a comment on the re-start but no response was available at the time the newspaper went to press. The July listing in the Official Gazette for Studio City referred to by the bureau mentions “a five-star hotel” and “facilities for tourism and recreation” but not a casino. Analysts again raised the lack of formal casino permission with the company during its second quarter earnings call earlier this month. Lawrence Ho, co-chairman of MPEL, replied he was “very confident to have gaming as part of this exciting integrated resort”. But both MPEL and the government have been sparse on detail. It has been left to the media – including Business Daily – and to bank analysts, to fill in the blanks. As we reported on July 26, there are
A second Cotai project for MPEL is likely to act as a counterbalance to what analysts describe as the relatively disappointing recent performance of MPEL’s US$580 million (4.63 billion patacas) VIP-focused property Altira Macau at Taipa, a mainly residential district with little foot traffic. Altira – originally known as Crown Macau – started slowly in 2007, ramped up VIP gaming revenue quickly in 2008 thanks to a price war on junket commissions, then fell back again after a government cap on junket commissions and the build up of US$2.1 billion sister property City of Dreams’ VIP business following its June 2009 opening. At MPEL’s second quarter 2012 earnings call earlier this month, an analyst openly raised the issue of whether the company might consider closing Altira. The company’s executives on the call didn’t respond directly to the suggestion. A.E.
two main routes to getting a casino in Macau. One is the so-called concession route, where the government grants land and gazettes it for gaming, and the ‘service agreement’ route where the land is purchased privately from a third party and where gaming permission can then be granted by Macau’s gaming regulator without the need for formal gazetting.
Prime real estate Authorities faced pressure to take back site
S
tudio City – previously known as Macao Studio City – has been a politically sensitive scheme in land-starved Macau. It had lain part-built since 2009 when the previous owners became deadlocked over funding. According to industry sources spoken to by Business Daily, the government was under some pressure from other would-be investors to take back and reallocate the 13-hectare (32-acre) site – a prime piece of real estate at the southwest end of the Cotai Strip next door to the Lotus Bridge Gate border crossing to the mainland.
By taking a 60 percent majority interest in the scheme in June last year, Melco Crown Entertainment Ltd added to its own future story in Macau as well as helping the government. It will pay a total of US$360 million (2.88 billion patacas) for its stake, although the total project cost for the venue’s development is likely to be US$1.9 billion said the company. According to some industry sources there is already US$100 million worth of piling in the ground from the previous owners. That is a potential liability as well as a blessing as it
might constrain the new developers’ revised plans for the site. In cash terms, MPEL acquired a stake previously controlled by Hong Kong company eSun Holdings for US$260 million, and will ultimately pay New Cotai Holdings – one of the original partners – US$100 million. New Cotai Holdings retains its 40 percent interest in the project. MPEL had previously been scheduled to be the gaming licence and gaming management provider for Studio City but not the project developer or equity owner. Little substantive information
has emerged recently on how the completed site will look – apart from the aforementioned five-star hotel and a “film studio” as mentioned in the gazetting. Recent industry rumours suggested some kind of film theming – possibly linked to an internationally recognised Hollywood film franchise. As Business Daily reported last week, rival casino operator Las Vegas Sands Corp. is planning a Paris theme complete with scale replica of the Eiffel Tower for its Cotai Lot 3 immediately north of Studio City. A.E.
August 15, 2012 business daily | 3
MACAU
Airport plans hangar to house private jets An invitation for bids to build a new hangar for private jets is a sign of the airport’s desire to move upmarket Vítor Quintã vitorquinta@macaubusinessdaily.com
M
acau International Airport Co. Ltd has called for bids to build a hangar exclusively for private jets as part of a plan to make the airport more profitable. At least one Macau company that operates private jets doubts whether the city can cash in on growth in private aviation. The tender document says the winning bidder will have four months to design the hangar and must give technical support during construction. The hangar must be at least 36 metres high to accommodate the most common private or business jets, include an adjacent two-storey building and a workshop with a floor area of 2,000 square metres. The purpose of the hangar is to “cope with the expansion of the general aviation facilities” the tender document says. CAM did not provide further details when questioned yesterday by Business Daily. Jet Asia chief executive John Galati said the airport needed more hangar space for business jets but cannot imagine where the new hangar will be built. “I do not see any land at the airport suitable for another hangar,” said Mr Galati, a former executive of Menzies Macau Airport Services Ltd, the only ground handling company at the airport. The tender document says the hangar will be in the northern part of the airport, next to an existing hangar.
Growth potential The Civil Aviation Authority says the new hangar will be an initial step in developing the private jet business, which is a priority in the airport master plan revealed a year ago. The tourism boom “has been driving more and more high-end tourists to visit Macau, leading to more foreign business jets flying to Macau,” a spokesperson for the Civil Aviation Authority told Business Daily. The spokesperson said 20 business
The airport operator wants to build a new hangar to cash in on rising demand for private and business aviation
jet operators had frequent flights to Macau last year and 15 had flown to Macau in the first half of this year. Since the Sands Macao opened, private jet traffic has grown steadily, leaping from 383 aircraft movements in 2005 to 1,132 last year. The airport reported 680 private jet movements in the first half of this year. Mr Galati said growth had been patchier than the numbers indicated. Jet Asia’s business had been flat since the beginning of last year. The Civil Aviation Authority expects traffic to continue its “promising growth”. The airport’s master plan forecasts around 3,400 business jet movements a year by 2030. TAG Aviation Asia chief executive Carlos Gomez said in May the city had become an attractive market for business jets but it could be much more appealing. TAG Aviation Asia offers aircraft
management, charters and brokerage services in the Asia-Pacific region. “If Macau provides more services, for example no limitations in movements, parking, hangarage and maintenance facilities, it will attract more business – no doubt about it,” Mr Gomez told Business Daily.
Master plan The Civil Aviation Authority spokesperson said business aviation “was one of the important issues to study in the formulation of the Macau International Airport Master Plan”. The spokesperson said it was government policy to develop the high-end passenger market. But the spokesperson said the present facilities would not handle the expansion and the master plan included better facilities. The general and business aviation area
will be expanded to 89,600 square metres after 2030 from the 12,000 square metres now, and particular attention will be given to the area for private jets and small planes. In the first two phases the number of parking spots for private jets should increase to 38, as the number of big inbound aircraft has been low. In phase three of the plan envisages 43 parking spots for small planes and budget airlines. The airport now has parking space for 24 small aircraft. The plan was drafted by ADP Ingenierie, a subsidiary of the group that operates all airports in the Paris metropolitan area. The plan was unveiled in July last year to select members of the news media. The Civil Aviation Authority spokesperson said the final report on the master plan had been completed. “It is now under final review by the SAR Government,” the spokesperson said.
Economy hobbles AERL’s Q2 profit Junket operator says it has cautious predictions in place for the remainder of the year
N
ASDAQ-listed junket operator AsiaEntertainment&Resources Ltd posted US$22 million (176 million patacas) in net profit for the second quarter of this year, 4 percent more than a year before. Rolling chip turnover in the company’s
VIP gaming rooms was US$4.7 billion – an 8-percent increase. “The Chinese economy has experienced a gradual slowing, which caused us to tighten our credit to junket agents, thus affecting our results for the second quarter,” said the company’s
chairman, Lam Man Pou. Earlier this month the company said it would switch from a commission arrangement to a revenue-sharing system for its VIP gaming rooms from next month. Casino operators MGM China Holdings Ltd, Wynn Macau Ltd and SJM Holdings Ltd preferred revenuesharing systems, it said. At present, the arrangement in each of the junket operator’s rooms - in StarWorld, the Galaxy Macau and The Venetian Macao – is for a fixed commission of 1.25 percent of rolling chip turnover. The company also said it had struck an initial deal to acquire Bao Li Gaming Promotion Ltd, a promoter of VIProom gaming with one room with five tables in the City of Dreams, a Melco Crown Entertainment Ltd casino resort in Cotai. Asia Entertainment said it
hoped to reach a final agreement on the acquisition by the end of next month. “We believe our new revenue-sharing model, which becomes effective September 1, will permit us to grow our commission base as a percentage of rolling chip turnover and, with the impending acquisition of BLGP, further grow our rolling chip turnover and help to reduce volatility,” said Mr Lam. He said the company had cautious projections in place for the next six months because the mainland economy was slowing. The company has lowered its forecast for average rolling chip turnover from US$2.08 billion a month to between US$1.67 billion and US$1.75 billion a month, which would mean an annual rolling chip turnover of between US$20 billion and US$21 billion. T.A.
4 |
business daily August 15, 2012
macau Photo by Manuel Cardoso
Brought to you by
HOSPITALITY Free flow The number of guests welcomed by Macau’s hotels in the first half of this year has increased by more than 12 percent compared to the same period last year. In real terms, that was an increase of almost half a million guests for a total of 4.48 million overnight stays – an additional 1,340 hotel guests a day. It is certainly good news for the hospitality sector but the improvements have not been distributed evenly.
Package tours grow as tourist price soar Package tour operators are more than holding their ground in the tourism market Vítor Quintã vitorquinta@macaubusinessdaily.com
Most of the additional guests headed to the premium-class hotels and guesthouses – the two extremes of the city’s graded accommodation. Although guesthouses saw an increase of about one-third in the number of overnight stays, this class of accommodation accounts for just 2.6 percent of the city’s inventory of rooms.
-100
10
20
30
40
50
60
70
80
Four of the five accommodation classes registered gains with the exception of threestar hotels, which lost about 9 percent of their guests. The city’s guesthouses and twostar accommodation made modest gains - put together, less than 5 percent of the total. Five-star hotels attracted four-fifths of the additional guests or about 390,000 of them. Four-star hotels attracted an additional 120,000 guests or 24.5 percent of the total. This category is likely to be the main beneficiary of the three-star accommodation relative contraction. In general, their offering seems overpriced when compared with their four-star competitors. J.I.D.
A
lmost one in three visitors in June arrived on a package tour, making up a growing proportion of all tourists. There were more than 662,100 visitors entering on a package tour in June, an increase of 8.4 percent over the same time last year, accounting for 31.4 percent of all tourists, according to data released by the Statistics and Census Service yesterday. The mainland was by far the biggest source market for tour groups, with almost 465,900 arrivals – 3.8 percent more than a year before. But it was package tourists from elsewhere in Asia that accounted for most of the growth. The number from Taiwan rose by almost two-thirds to about 59,000. Tour group arrivals from Hong Kong, South Korea and Japan increased by more than 22 percent. The first half’s data reveal an even faster rate of growth in package tourists. There were almost 4.1 million package tourist arrivals in the first half, onequarter more than for the first six months of last year. They accounted for about one-third of all visitors. The head of the Tourism Research
Centre, Don Dioko, is not surprised. “The cost of visiting Macau has over the years become more costly owing mostly to higher accommodation prices,” he told Business Daily. In the last three years, the tourism price index, which includes goods and services purchased by visitors during their stay in Macau, has grown over 27 percent, with a similar increase for accommodation. “Travelling on package tours afford visitors with the most cost-effective way to travel to Macau,” Mr Dioko said, especially for visitors from farther afield like Shanghai and Beijing who can save on airfare costs. Supply-side marketing and promotion also plays a role, the Institute for Tourism Studies professor said. With more hotel rooms to be filled, “aggregating available supply to sizeable demand in the Mainland make package tours very attractive as an option”. Although package tours have a poor reputation and leaving little money in the city, Mr Dioko warns that impressions can be deceiving. According to the centre’s quarterly Visitor Profile Survey, package tour
visitors tend to spend “significantly more”, as much as 45 percent more, than independent travellers, he recalled. However, the scholar admitted that package tour visitors can be “disadvantageous” to sectors such as small and medium enterprises, “because where and when visitors spend their time and money are much more ‘programmed’ into their itineraries”.
Packaged arrivals In the first half, 85.6 percent of package tourists came to Macau only. Just 5 percent visited Macau and the mainland. In June, however, the number of package tourists on tours that took in Macau and the mainland increased by 37.9 percent from a year before, and the number on tours that took in Macau and some other place of rose by 57.4 percent. Officials from Macau and Hong Kong promised in 2010 to improve the promotion of package tours to two or more cities in the Pearl River Delta region. Similarly, a supplement to the Closer Economic Partnership
August 15, 2012 business daily | 5
MACAU Arrangement between the mainland and Macau which came into effect in April commits the parties to promoting package tours taking in multiple destinations. Multi-destination travel is closely linked to distance and to first-time visitors, Mr Dioko said. “The farther a visitor resides from Macau and if it is the first time that he or she is visiting, such a visitor can be expected to travel to more destinations in and around Macau during the trip,” he explained.
Govt rejects bid to merge Patane plots
Travelling on package tours afford visitors with the most cost-effective way to travel to Macau Don Dioko, IFT’s Tourism Research Centre As such, to promote multi-destination travel, “efforts targeting visitors from farther away and that have never before visited this area should be targeted and prioritised,” the tourism expert concluded. In the first half of this year, even though mainland China has remained the dominant market for Macau’s tourism, the weight of neighbouring Guangdong province has decreased, with other regions further away, such as Zhejiang, Hunan and Beijing, picking up the slack.
New land concession contract to be sent this month (Photo: Manuel Cardoso)
T
he government will soon send a copy of a new land concession contract to Tin Wai Investment Co Ltd, the developer of the two idle land plots in Patane, after analysing a complaint filed by the company. The Lands and Public Works and Transport Bureau said in a press release yesterday it had turned down the company’s request to merge the two plots in May 2010 and sent Tin Wai a copy of the contract in August. But the developer “did not accept the
terms in the copy of the contract and filed a complaint,” said the bureau. The new contract will be “basically unchanged” from the 2010 version, with the two land plots developed separately, it added. Tin Wai “has to remove every building, materials and infrastructure from the land,” including abandoned cars, the bureau said. Executive Council member and former Tin Wai boss Liu Chak Wan said last Saturday the company
agreed to develop the plots separately but they had had no reply since 2010. The bureau is yet to comment on Tin Wai’s claims that the company never took possession of the land since winning the 2008 tender and that authorities rejected the developer’s offer to pay the whole premium. Tin Wai is due to pay a total of 1.4 billion patacas (US$178 million) for the two plots but has so far paid only 150 million patacas, Mr Liu said. T.L.
6 |
business daily August 15, 2012
macau
Tunnel contractor ignored govt warning
Brought to you by
House of cards Credit card data for the second quarter confirm a trend over the past three years: the number of cards denominated in renminbis or, to use the standard designation, the Chinese yuan, is rising. Before 2009, a few thousand of these cards had been issued. If a credit card billed in a second currency was required at all, Hong Kong dollars was once the preferred currency and their number remained more or less constant throughout the period.
Number of credit cards issues, by currrency
Authorities claim they warned of danger ahead of last month’s cave-in Xi Chen xi@macaubusinessdaily.com
A
450000 400000 350000 300000 250000 200000 150000 100000 50000 0
Since the middle of 2009 the growth in the number of cards billed in yuan has been explosive. From the second quarter of 2009 to the second quarter of this year, the number rose to 90,367 from 8,841, increasing more than tenfold. The number of issued cards billed in yuan surpassed the number billed in Hong Kong dollars only in the fourth quarter of last year but there are now 32 percent more billed in yuan than billed in Hong Kong dollars. These figures must be read cautiously. In the third quarter of 2009, banks began issuing cards billable in both patacas and yuan. They are counted as two cards. But the data do not indicate credit limits or the proportions of spending in the various currencies, limiting conclusions about the new cards effects on the behaviour of cardholders.
top government official was summoned to the Legislative Assembly yesterday to explain the reasons for the Hengqin tunnel cave-in. Chan Hong Kit, director of the Infrastructure Development Office revealed the contractor ignored his department’s warnings of problems. But he admitted Macau is powerless to sack the Chinese state-owned firm doing the work. Mr Chan said his staff detected abnormal data on the department’s monitoring system prior to the July 19 collapse. Officials warned the contractor but no action was taken, Mr Chan said. The legislators were unhappy with the explanation and pressured him for more answers. The report, released by his office on Monday, blamed the tunnel collapse on multiple factors including bad weather and flouting of safety rules by the contractor. The firm did not
implement a proper support system prior to digging the tunnel it said. Legislators Ho Ion Sang and Au Kam Sang both asked if safety systems and inspection teams have been put in place to monitor the construction. Other legislators further questioned the quality and the safety of the overall project, as well as emergency measures in case of another accident. Gabriel Tong Io Cheng asked if the government has any backup plan if another accident were to trap people in the tunnel. Mr Chan said that there would be an emergency exit in place to help evacuate people in case of danger. He also reiterated that according to the contractor’s rescue team, no one died in the collapse. The official pledged: “…the government would put safety and quality above all else, and would
not just rush to finish the project”. Legislator Melinda Chan Mei Yi asked whether the accident was a design problem or an execution problem, and if the contractor would pay compensation for the delay. The office admitted it has not seen a project as complex as this one. It also said the incident would delay the construction process considerably, as it will take significant financial and human resources to make up for the progress lost in the cave-in. It was too late to change contractors, said Mr Chan. He added that because the tunnel is a joint project between Guangdong and Macau, it is not all up to the territory to decide what to do with the contractor. He added the contractor would be responsible for any delays, but did not elaborate on whether there would be financial penalties.
18
14
10
6
2 However, the data that are available suggest that the increase in the number of cards billed in yuan had little effect on the behaviour of cardholders. The combined credit limit has increased by 83 percent since early 2007 but the average credit limit per card has been mostly steady and has decreased slightly by the end of the period. The story is similar with the average turnover per card. The explosion in the number of yuan cards has hardly caused a blip in the main credit card indicators. J.I.D.
Tunnel construction work suspended since July 19 (Photo: Manuel Cardoso)
Weather Beijing 28/21o C Changchun 27/15o C
Harbin 27/15o C
Xian 33/23o C Shanghai 36/27o C Chengdu 34/24o C Kunming 26/17o C Haikou 31/23o C Sanya 32/27o C
Guangzhou 35/25o C
MACAU (13-18 August) Day
Temperature
Humidity
08/13
25/29o C
75/95 %
08/14
26/31o C
60/95 %
08/15
27/32o C
55/90 %
08/16
27/31o C
60/95 %
08/17
27/31o C
60/95%
08/18
27/32o C
60/95 %
Shenzhen 33/27o C
ASIA (today)
Hong Kong 33/28o C
Manila
TOKYO
Jakarta
29/24o C
30/26o C
31/26o C
31/23o C
Macau 33/27o C
Bangkok
SEOUL
K. lumpur
32/26o C
SINGAPORE
26/22o C
34/25o C
taipei
34/26o C
August 15, 2012 business daily | 7
MACAU Minimum wage study begins Almost a year and a half after the Standing Committee for the Coordination of Social Affairs agreed to commission a study on a possible statutory minimum wage for all cleaning and security staff, research will begin today. The University of Macau will send enquiries to cleaning and security companies this month and again in early next year. In between, around mid September, university researchers will also survey employees, the committee announced yesterday.
Ilha Verde monastery claimant cries fraud He alleges a 160 million pataca fee to sign away control of prime real estate has not been paid Tony Lai tony.lai@macaubusinessdaily.com
Land in Ilha Verde occupied by a former monastery could be worth more than 5 billion patacas (Photo: Manuel Cardoso)
O
ne of two parties claiming a plot of land in Ilha Verde occupied by a former monastery has accused the other of defrauding him of 160 million patacas (US$20 million). FongLap,ashareholderinKongCheong Investment Co Ltd, claims the biggest shareholder in Wui San Development Co Ltd, Sun Weimin, persuaded him to sell Kong Cheong’s rights to the land for 160 million patacas. But Mr Fong complained to the Judiciary Police on Monday that Mr Sun had yet to pay up. The Chinese-language Apple Daily reported this year that Mr Sun is a son of a member of Chinese People’s Political Consultative Conference in the city of Ningbo and is involved with more than 20 companies. Mr Fong told a press conference yesterday that Wui San Development
did not have rights to the disputed parcel of land “as Kong Cheong still owns the management rights”. Wui San chief executive Fu Weijie told a press conference last week that Wui San indisputably held full rights to the land and accused Kong Cheong of letting the former monastery to illegal workers. TDM reported that the authorities raided the building on Friday. The government declined to give any details of the raid. “I urge government departments to exercise their power cautiously in the Ilha Verde land rights dispute so that the administration will not be used by Wui San,” Mr Fong said. He showed reporters documents indicating that in April Wui San sued a Kong Cheong employee who is in charge of the land, Wu Tak Lan,
demanding that he acknowledge Wui San’s rights to the land. “If Wui San, like what it said, has the full land rights, why does it need to file a case in court?” Mr Fong said. He said the court case had yet to be decided. But he said the courts had ruled in Kong Cheong’s favour in several similar cases.
Partnership soured Mr Fong said that in 2005 Kong Cheong and Wui San had agreed to co-develop the land through another firm, Kam Sek Investment Co. Ltd. “Kong Cheong transferred all the land rights to the new company, Kam Sek, except the management rights,” said Mr Fong. He said Mr Sun had promised to help Kong Cheong repay 581 million
Congratulations on the 100th issue of Macau Business
patacas it owed Seng Heng Bank Ltd. Mr Fong said that in 2006 Mr Sun held a meeting of the board of Kam Sek and persuaded the directors to transfer the rights to the land from Kam Sek to his own name. “Sun Weimin could not proceed without my approval, so he said he would pay me 160 million for my agreement,” Mr Fong said. He said he had never received the money, alleging that Mr Sun had “tricked” him. “If he gives me 160 million, I will not stop him from taking the land,” Mr Fong said. “The only matter left then will be between my company, Kong Cheong, and him.” Apple Daily quoted estate agents as saying the plot covers 56,166 square metres and is estimated to be worth more than 5 billion patacas.
8 |
business daily August 15, 2012
greater china
Focus Media gets offer in biggest leveraged buyout Carlyle Group, China’s top private equity funds, targeting the biggest ever delisting of a New York-listed Chinese company Anne-Sylvaine Chassany and Belinda Cao
F
ocus Media Holding Ltd, a Chinese advertising company targeted by short-seller Carson Block, received a bid from privateequity firms including Carlyle Group LP in what would be the country’s largest leveraged buyout. The bidders made a “non-binding” offer of US$27 for each American depositary share, the Shanghaibased company said yesterday in a statement. The offer is 15 percent more than Focus’s August 10 closing price and above the level when Block’s Muddy Waters LLC began targeting it in November. Some Chinese companies that were the subjects of research by short sellers rose in U.S. trading yesterday after the bidders, who include Citic Capital Partners and Focus Media chief executive Jason Nanchun Jiang, made the proposal that values the company at US$3.5 billion. A successful deal would see the advertising group join Chinese companies such as Fushi Copperweld Inc. and Winner Medical Group Inc. in backing moves to go private after short sellers raised accounting and corporate governance concerns. “The company’s board of directors has formed a committee of independent directors to consider the proposed transaction,” Focus Media said in the statement. The offer “is another example of how Chinese are taking more and more of their companies private,” Sachin Shah, a Jersey City, New Jerseybased special situations and mergerarbitrage strategist at Tullett Prebon Plc, said. “The U.S. market isn’t properly valuing them and doesn’t know if the offer price is right, allowing the management of the
“The current offer price represents a reasonable premium,” Jin Yoon, an analyst at Nomura Holdings Inc., said in a report. “Despite Focus Media’s wide coverage in top-tier cities and scalable business model, market concerns regarding corporate governance will continue to weigh.” Private-equity investors including Carlyle and TPG Capital are turning to China and its growing middle class as the volume of deals shrinks in Europe and the U.S. Focus Media runs an out-of-home advertising network in China, using
US$3.5 bln Buyout offer for display-advertising firm Focus Media
Focus Media uses audiovisual displays placed in cities and large venues in China
companies to possibly win in getting the assets at lower valuations.”
Options surge Focus Media’s American depositary shares climbed 8.9 percent to US$25.45 on Monday after jumping 7.6 percent on August 10. The
company has about 129.3 million ADRs outstanding. Focus Media’s bullish options trading jumped to the highest level since November on August 10. More than 29,000 calls to buy the stock changed hands, five times the fourweek average, compared with 7,635 for puts to sell.
audiovisual displays placed in cities and large venues. “Focus Media is very dominant in the public-display advertising space in China and has geographically diversified itself throughout China’s big cities,” said Timothy Ghriskey, chief investment officer of Solaris Group LLC, a New York-based firm that sold its stake in the company a year ago. “The PE firms are seeing a bargain here.” Bloomberg
SouthGobi says Chalco may drop takeover bid Concern Mongolia will block the deal Charlie Zhu
S
outhGobi Resources Ltd said yesterday that it expects China’s state-controlled Aluminum Corp. of China Ltd, also known as Chalco, to drop its US$926 million takeover offer for the Mongoliafocused coal miner in the face of Mongolian opposition. The proposed deal has the backing of SouthGobi’s majority shareholder, Turquoise Hill Resources Ltd, formerly known as Ivanhoe Mines Ltd, but it faced political opposition almost immediately within Mongolia, which is becoming wary about the growing Chinese presence in its mining sector. “I personally believe Chalco is not continuing to work on the deal,” SouthGobi chief executive Alex Molyneux told Reuters. “The evidence I have before me seems highly unlikely that the bid is
going to go forward,” Mr Molyneux said by telephone, citing Mongolia’s recent efforts to block the deal. “It’s 100 percent clear that Mongolia has made the deal impossible.” Chalco this month said it had decided to extend its offer for up to 60 percent of the common shares of Toronto and Hong Kong-listed SouthGobi Resources for the second time as it needs more time to “engage with the Mongolian government and review the terms and conditions of the transaction”. The company in April had announced the bid for a controlling interest in SouthGobi, which owns large coal projects in Mongolia close to China, which has a huge appetite for energy and minerals to feed its giant economy. Chalco has until September 4 to formalise its bid.
SouthGobi shares down four percent in Hong Kong
SouthGobi’s shares, which last traded at C$3.7 in Toronto, have wilted. Its Hong Kong-listed shares were down nearly 4.6 percent at HK$29.60 yesterday. SouthGobi has had no formal contact from Chalco for more than a month, another sign that the deal will not happen, Mr Molyneux said. Chalco board secretary Liu Qiang said she had no comment, when asked by Reuters whether Chalco was still pursuing a takeover of SouthGobi. SouthGobi said late on Monday its second-quarter profit plunged on lower output after Mongolia suspended its mining licence following Chalco’s bid.
Operations at its flagship Ovoot Tolgoi mine in the south of the landlocked country had been “fully curtailed” since June 30 and were not expected to resume in the third quarter, SouthGobi said. The company’s second quarter net income attributable to equity holders fell to US$237,000 from US$67.3 million a year earlier. “They [Mongolian government] have done everything in their power to roadblock the deal by the Chinese state company,” Mr Molyneux said, adding that profits were also hurt by weakening demand for coking coal in China. Reuters
August 15, 2012 business daily | 9
greater china
More women, youth delegates for party congress
Hanlong to cut offer for Sundance Chinese investor lowered its takeover offer to 45 Australian cents a share
Dates for leadership change meeting remain secret
between September and November. While the number of women delegates to the congress is increasing, there is currently only one woman on the 25-member Politburo, State Councilor Liu Yandong, and four women on Premier Wen Jiabao’s 35-member state council. There are no women on the Politburo Standing Committee, the country’s supreme decision-making body. Congress delegates will elect the members of the Central Committee, which selects the Politburo and the Politburo Standing Committee. Only Vice President Xi Jinping and Vice Premier Li Keqiang, who are in line to succeed Mr Hu and Premier Wen Jiabao respectively, are expected to retain their positions on the Standing Committee.
Sichuan Hanlong Group, a Chinese investor in highway and power projects, lowered its takeover offer for Sundance Resources Ltd by 21 percent, said a person with knowledge of the matter. Hanlong, which won conditional approval for the bid this month, offered 45 Australian cents a share for the company, said the person, asking not to be identified as the information is private. The new offer values the Australian iron ore developer at A$1.4 billion (US$1.5 billion). Slowing demand in Europe and China, the biggest metals consumer, is weighing on commodity prices, prompting companies to assess spending plans on new mines and takeovers. Hanlong, which already owns about 17 percent of Sundance, had agreed to buy the rest for 57 cents a share on October 4. “Negotiations with Hanlong are incomplete,” Sundance said in an e-mail response to questions about the 45-centa-share bid. “While discussions are ongoing, Sundance isn’t commenting.” The company was considering reducing its offer to about 50 cents earlier this month, people with knowledge of the matter said on August 2. Since Hanlong made the 57cent offer, iron ore prices have declined 34 percent, according to data compiled by The Steel Index Ltd. Sundance and Hanlong are in talks about a “reasonable acquisition price,” Perthbased Sundance said in an August 2 statement. The approval from China’s National Development and Reform Commission, is conditional on the price, Hanlong securing debt funding and mining development rights, Sundance said.
Bloomberg
Bloomberg
Party congresses since 1982 have all been held between September and November
C
hina said women and young people will be better represented at its Communist Party Congress, widening efforts to bolster the legitimacy of a leadership transition clouded by the ouster of Politburo member Bo Xilai. Of the 2,270 delegates elected to attend the 18th congress, 521 are women, 76 more than in 2007, Wang Jingqing, Vice Minister of the Organisation Department in the party, said at a briefing yesterday in Beijing. There is a 1.9 percentage-point increase in the number of people under the age of 35 who will be attending, Mr Wang said. Outgoing party chief Hu Jintao and his colleagues are seeking to maintain Communist dominance of a society that’s been transformed in the three decades
since the nation embraced economic opening. By shining a light on cronyism and corruption, the scandal surrounding Mr Bo has highlighted the need for the party to bolster public backing. “They are trying to provide some kind of confirmation that everything is going on smoothly regardless of the Bo Xilai affair,” said Bo Zhiyue, senior research fellow at the National University of Singapore’s East Asia Institute. “For a long time there’s been no information on the 18th party congress and there are so many rumours.” Mr Wang didn’t give a date for when the party congress will be held. The date for the 2007 Congress, which convened in mid-October, was announced at the end of August that year. The six party congresses since 1982 have all been held
10 |
business daily August 15, 2012
asia Thai Bev buys F&N stake
NZ retail sales recover
Thai Beverage Pcl’s holdings in Fraser & Neave Ltd are inching closer to a threshold at which acquirers of company stakes are expected to begin takeover offers. Thai Bev, controlled by Thai billionaire Charoen Sirivadhanabhakdi, completed its acquisition of a 22 percent stake in F&N yesterday. Heineken last month offered to buy F&N’s 40 percent share of Asia Pacific Breweries Ltd, the brewer of Tiger Beer, while Mr Charoen’s son-in-law said he would purchase F&N’s 7.3 percent direct stake in APB at a price that’s 10 percent higher than Heineken’s bid.
New Zealand retail sales volumes recovered more strongly than expected in the June quarter, data showed yesterday, adding to signs of an uneven economic recovery that is set to keep interest rates at a record low well into next year. Sales volumes, which strip out price movements, rose a seasonally adjusted 1.3 percent in the three months to June 30, nearly double expectations for a 0.7 percent rise. Sales volumes were boosted by a 7.3 percent jump in sales of motor vehicles and parts in the quarter.
Indian inflation eases to a 32-month low Wholesale-price index increased 6.87 percent last month Ltd in Singapore. Mr Varathan added he is looking for no more than a 25 basis points interest-rate cut in September. The yield on the 8.15 percent government bond due June 2022 dropped to 8.17 percent from 8.24 percent earlier. The BSE India Sensitive Index rose 0.4 percent as of 12:50pm in Mumbai, while the rupee weakened 0.6 percent to 55.655 per dollar. The currency has tumbled more than 18 percent in the past year.
BRIC’s fastest
Food prices rose just over 10 percent in July from a year earlier
I
ndian inflation eased more than estimated in July to a 32-month low, in a sign that faltering economic growth may be cooling price pressures. The benchmark wholesale-price index increased 6.87 percent from a year earlier, after climbing 7.25 percent in June, the Commerce Ministry said in New Delhi yesterday. Reserve Bank of India Governor Duvvuri Subbarao refrained from joining a wave of rate cuts from China to Europe last month as he tackles what is still the fastest inflation among
the biggest emerging markets. The slowest economic growth in nine years may help counter the climb in costs, which has been fanned by a weaker rupee, food prices and gaps in infrastructure underscored in July by the nation’s worst power outages. “On the surface, this number increases the scope for a rate cut but it is not a game changer as core inflation has moved up and pressures still exist like food prices spiking up later, oil remaining high, the rupee remaining weak,” said Vishnu Varathan, an economist at Mizuho Corporate Bank
Some sacrifice in growth is inevitable and an unavoidable cost in bringing inflation down Duvvuri Subbarao, Reserve Bank of India Governor
Non-food manufactured goods prices, a measure of core inflation, rose 5.45 percent in July from a year earlier compared with 4.89 percent in June, according to calculations by Bloomberg. Food articles climbed 10.06 percent last month, yesterday’s statement showed, less than the previously reported 10.81 percent rise in June. Fuel and power increased 5.98 percent, compared with 10.27 percent in June. “It’s too early to celebrate,” said Brinda Jagirdar, an economist at State Bank of India in Mumbai. “The headline inflation number is lower but core inflation, which is mainly manufactured products, has moved up.” The pace of headline price increases remains the fastest in the BRIC group of largest emerging markets, which also includes Brazil, Russia and China. Separately, Director General of Foreign Trade Anup Pujari said yesterday that Indian exports fell 14.8 percent in July from a year earlier to US$22.4 billion, while imports slid 7.61 percent to
Genting to sell power assets Malaysian state firm buys utility unit for US$738 mln
M
alaysian state development firm 1Malaysia Development Bhd (1MDB) has agreed to buy conglomerate Genting Bhd’s power and utility unit for 2.3 billion ringgit (US$738 million) in cash, Genting said, as 1MDB adds to its power holdings. Local newspapers had quoted sources as saying that 1MDB had identified power as a core business and was buying assets from Genting as it aimed to ensure Malaysian security of supply. The purchase of the unit, Mastika Lagenda, would be the second major utility deal for the state company, which in March acquired the power assets of Malaysia’s second richest man, Ananda Krishnan, for 8.5
billion ringgit. “The proposed Mastika Lagenda disposal represents a good opportunity for the Genting group to realise an immediate and attractive return on its investment,” Genting said in a stock exchange filing late on Monday. It added that the deal, which is expected to complete by August 30 will also enable its power division to focus time and resources on developing its power generation portfolio abroad. Mastika Lagenda, of which Genting and its subsidiaries hold 97.7 percent, owns 75 percent of electric power generator Genting Sanyen Power and all of Mastika Utilities & Services and Mastika Water Management, both involved in water treatment, supply
and management businesses. As part of the deal, Genting said it was also selling six parcels of industrial land measuring 3.22 million square feet in state-rich Selangor to 1MDB for 38.8 million ringgit. Genting said it expected to record a one-off net gain of 1.9 billion ringgit from the proposed disposals, contributing to an increase of 52 sen to its consolidated earnings per share and net asset per share for the current financial year ending December 31, 2012. “However, following the proposed disposals, the earnings contribution from the Genting group’s power division will be reduced,” it said. Asia Trade Investments Ltd, which owns the remaining 2.3 percent stake
Deal expected to be completed this month
in Mastika Lagenda, will also sell its entire stake to 1MBD for 49.6 million ringgit, according to Genting.
August 15, 2012 business daily | 11
asia Elpida bondholders offer rival plan
NAB’s profit disappoints
Elpida Memory Inc.’s bondholders told a Tokyo court that Micron Technology Inc.’s takeover offer for the bankrupt Japanese memory-chip maker is too low. Elpida, which sought bankruptcy protection in February, is worth 300 billion yen (US$3.8 billion), compared with Micron’s proposed 200-billion yen offer, the bondholders said in a statement yesterday. The group, which represents 20 institutional investors, submitted its version of a revival plan for the chipmaker, which includes offering 30 billion yen in credit line, the group said.
National Australia Bank, the country’s top lender by assets, reported a flat third-quarter profit that missed market expectations due to lower revenue and weak results at its U.K. unit, sending its shares down to a three-week low. NAB posted a cash profit of A$1.4 billion (US$1.5 billion) in the three months to June 30 compared with A$1.4 billion in the yearago period and less than the A$1.5 billion expected by analysts. The bank has 337 branches in U.K. through its Yorkshire and Clydesdale units.
US$37.9 billion, leaving a trade deficit of US$15.5 billion.
Growth sacrifice Mr Subbarao said yesterday a below-average monsoon may stoke expectations of higher costs. He has previously said headline inflation exceeds a “threshold” level of about 5 percent. The Reserve Bank left its benchmark repurchase rate unchanged at 8 percent for a second meeting on July 31 while reducing the amount of deposits lenders must keep in government bonds to try and spur credit. It lowered borrowing costs by 0.5 percentage point in April, the first cut since 2009. India will have to accept slower growth as it struggles to contain price pressures that have left Asia’s third-largest economy with no space for economic stimulus, RBI’s governor said. “Some sacrifice in growth is inevitable and an unavoidable cost in bringing inflation down,” Mr Subbarao said late on Monday, citing monetary policy as the most immediate tool to contain costs. His reluctance to join a wave of cuts in borrowing costs from China to Brazil adds to pressure for Finance Minister Palaniappan Chidambaram to shore up India’s economic growth. “Subbarao is in significant danger of sacrificing more growth than is necessary,” said Robert PriorWandesforde, a Singapore-based economist at Credit Suisse Group AG. “India is effectively in a hard landing. It’s a Mexican standoff between the government and the Reserve Bank of India, with the central bank wanting the government to show some action and the government clearly finding it difficult to do so.” Bloomberg
Hyundai Heavy declines as profit plunges
H
yundai Heavy Industries Co., the world’s largest shipbuilder, fell in Seoul trading after second-quarter profit declined more than analysts expected. The shipbuilder fell as much as 3.3 percent, before closing 1 percent lower at 241,000 won (US$231) as of 3pm. The Ulsan, South Koreabased company was the biggest decliner on the Kospi 50 Index, followed by competitor Samsung Heavy Industries Co. Second-quarter net income dropped 83 percent to 134.1 billion won because of lower vessel prices and a loss at a refining unit, Hyundai Heavy said on Monday. That missed analyst projections of 462.5 billion won, based on the average of 21 estimates compiled by Bloomberg. The company only achieved 28 percent of its full-year orders target in the first half because of a slowdown in demand for new ships and oil refineries. “It was an earnings shock,” Lee Yoon Sang, an analyst at NH Investment & Securities Co., wrote in a report yesterday. “The company is also likely to find the second half difficult amid the global economic slowdown.” The refining unit may return to profit this quarter, cushioning earnings, he said. NH Investment, which has a “buy” rating on the stock, reduced its share-price estimate to 300,000 won from 360,000 won. Samsung Securities Co., Tong Yang Securities Inc. and Hana Daetoo Securities Co. also cut their price estimates for the stock. Shares of the shipbuilder, which also has an engineering division,
SingTel posts strong Q1 profit
S
ingapore Telecommunications Ltd, Southeast Asia’s biggest telephone company, earned S$945 million (US$759 million) in its fiscal first quarter ended June, up from S$916 million a year ago, helped by larger one-time gains and as higher earnings from Thailand and Indonesia offset a drop in contributions from Bharti Airtel. SingTel, which owns Australia’s No.2 telecommunications firm, Optus, and holds large stakes in several regional mobile phone operators including India’s Bharti Airtel, has been struggling to grow profits as demand slows for its services. The Singapore dollar’s strength against most Asian currencies has also hurt earnings from overseas. “The group delivered a resilient performance this quarter despite regional currency headwinds and operating challenges in India,” SingTel Group CEO
Chua Sock Koong said yesterday. SingTel’s core net profit, which excludes one-time gains and charges, fell 2.6 percent to S$850 million from S$873 million a year earlier, while free cash flow declined 21 percent to S$725 million mainly from working capital changes and lower cash flow from Australian unit Optus. Looking ahead, Ms Chua said SingTel was trying to build growth platforms by buying and creating digital content, citing recent investments in California-based mobile advertising firm Amobee and websites eatability and hungrygowhere. SingTel said its outlook for revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) for the financial year ending March 2013 could be affected by exchange rate movements. Reuters
Second-quarter net income dropped 83 percent
have lost 6.2 percent this year, compared with a 7.2 percent advance for the Kospi index. Samsung Heavy’s second-quarter net income fell 26 percent from a
year earlier to 193.1 billion won, the company, the world’s secondbiggest shipyard, said separately on Monday. Bloomberg
12 |
business daily August 15, 2012
MARKETS Hang SENG INDEX NAME AIA GROUP LTD ALUMINUM CORP-H BANK OF CHINA-H BANK OF COMMUN-H BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO
PRICE
DAY %
Volume
12.7
2.419355
22082706
CITIC PACIFIC
11.86
0.6791171
Day %
VOLUME
27.2
0.9276438
19609142
CHINA UNICOM HON
3.4
3.030303
12586010
3.02
1.003344
418000047
5.4
3.053435
26843163
29.4
2.797203
2648977
14.56
1.111111
10910874
24.8
2.057613
16906041
CATHAY PAC AIR
12.98
1.24805
4514124
CHEUNG KONG
111.6
1.546861
5858838
7.51
1.761518
30721490
CHINA COAL ENE-H
NAME
PRICE
CHINA CONST BA-H
5.42
1.498127
221112362
CHINA LIFE INS-H
21.9
0.921659
27923107
CHINA MERCHANT
24.4
1.455301
2014269
NAME
PRICE
DAY %
POWER ASSETS HOL
62.7
1.210654
2884140
1937850
SANDS CHINA LTD
24.3
1.25
11521439
SINO LAND CO
13.74
-1.293103
9783921
SUN HUNG KAI PRO
105.8
0.7619048
11453707
CLP HLDGS LTD
67.75
0.2218935
3160533
CNOOC LTD
15.58
-0.8905852
90131876
COSCO PAC LTD
10.58
-0.9363296
4897862
SWIRE PACIFIC-A
91.9
-0.2171553
5052920
ESPRIT HLDGS
11.58
1.757469
4567210
TENCENT HOLDINGS
230.4
0.8756567
3675641
HANG LUNG PROPER
27.7
-0.5385996
6588657
TINGYI HLDG CO
20.05
2.087576
8119100
HANG SENG BK
111
1.00091
1418849
WANT WANT CHINA
9.39
1.513514
10400456
HENDERSON LAND D
47.8
0.8438819
2612000
WHARF HLDG
46.8
0.2141328
5041814
72
0.7697691
1954345
HENGAN INTL HONG KG CHINA GS
18.34
1.214128
6984215
HONG KONG EXCHNG
107.6
0.7490637
3096939
HSBC HLDGS PLC
69.5
1.238165
17475190
MOVERS
40
1 20300
CHINA MOBILE
92.55
2.152318
19082027
HUTCHISON WHAMPO
69.3
1.020408
8037345
17.54
-0.7918552
31038630
IND & COMM BK-H
4.55
1.336303
199613219
CHINA PETROLEU-H
7.47
1.494565
63156242
12.52
-2.034429
41619680
HIGH
20291.68
CHINA RES ENTERP
22.5
0
3232780
MTR CORP
28
1.265823
5218276
LOW
20048.97
15
-1.185771
8759436
NEW WORLD DEV
10.42
0.1923077
8058378
CHINA RES POWER
16.46
3.003755
4330384
52W (H) 21760.33984
PETROCHINA CO-H
9.78
0.7209063
76011675
CHINA SHENHUA-H
30.65
1.658375
11174629
PING AN INSURA-H
60.85
0.5785124
12142416
LI & FUNG LTD
8
INDEX 20291.68
CHINA OVERSEAS
CHINA RES LAND
Volume
20040
(L) 16170.35 10-Aug
14-Aug
Hang SENG CHINA ENTErPRISE INDEX PRICE
DAY %
VOLUME
PRICE
DAY %
Volume
AGRICULTURAL-H
3.18
1.273885
62796142
CHINA PACIFIC-H
24.9
-1.190476
7495800
AIR CHINA LTD-H
5.44
3.816794
16374112
CHINA PETROLEU-H
7.47
1.494565
63156242
3.4
3.030303
12586010
CHINA RAIL CN-H
6.51
0.3081664
6754000
ANHUI CONCH-H
20.15
-2.657005
24196000
CHINA RAIL GR-H
3.17
-1.857585
17815792
BANK OF CHINA-H
3.02
1.003344
418000047
CHINA SHENHUA-H
30.65
1.658375
11174629
CHINA TELECOM-H
NAME ALUMINUM CORP-H
NAME
5.4
3.053435
26843163
4.18
1.95122
51281004
14.46
0.1385042
1425705
DONGFENG MOTOR-H
11.06
-1.25
8204011
CHINA CITIC BK-H
4.04
1
27725325
GUANGZHOU AUTO-H
5.95
0.676819
2526692
CHINA COAL ENE-H
7.51
1.761518
30721490
HUANENG POWER-H
5.47
2.434457
43227624
CHINA COM CONS-H
6.9
0.5830904
14177676
IND & COMM BK-H
4.55
1.336303
199613219
CHINA CONST BA-H
5.42
1.498127
221112362
JIANGXI COPPER-H
18.34
0.5482456
4727635
CHINA COSCO HO-H
3.44
2.380952
11343704
PETROCHINA CO-H
9.78
0.7209063
76011675
CHINA LIFE INS-H
21.9
0.921659
27923107
PICC PROPERTY &
8.76
0.228833
7483518
5.1
0.990099
2387000
PING AN INSURA-H
60.85
0.5785124
12142416
14.58
0.9695291
9396974
SHANDONG WEIG-H
8.75
2.339181
1748047
BANK OF COMMUN-H BYD CO LTD-H
CHINA LONGYUAN-H CHINA MERCH BK-H
NAME
PRICE
DAY %
Volume
12.44
-0.1605136
27652853
ZIJIN MINING-H
2.54
-0.3921569
32586000
ZOOMLION HEAVY-H
9.07
-2.78671
24107960
11.48
2.5
4878942
YANZHOU COAL-H
ZTE CORP-H
MOVERS
31
0 9975
INDEX 9915.44 HIGH
9970.65
LOW
9800.02
CHINA MINSHENG-H
7.35
2.367688
25310700
SINOPHARM-H
24
3.004292
2517350
52W (H) 11916.1
CHINA NATL BDG-H
7.88
-1.129235
64414470
TSINGTAO BREW-H
45.6
0.6622517
807651
(L) 8058.58
12.46
1.797386
6626730
WEICHAI POWER-H
22.45
1.814059
1806419
CHINA OILFIELD-H
9
9800
10-Aug
14-Aug
Shanghai Shenzhen CSI 300 NAME
PRICE
DAY %
VOLUME
PRICE
DAY %
Volume
AGRICULTURAL-A
2.54
0.3952569
66267072
DAQIN RAILWAY -A
5.95
-0.6677796
37940084
AIR CHINA LTD-A
5.59
-2.101576
15877021
DATANG INTL PO-A
4.84
-1.425662
5906648
ALUMINUM CORP-A
6.14
0
8145492
DONGFANG ELECT-A
15.76
-0.6931317
6572348
14.21
-1.319444
14268299
EVERBRIG SEC -A
11.16
-1.32626
ANHUI CONCH-A
NAME
NAME
PRICE
DAY %
Volume
12.4
0.8130081
11633145
SANY HEAVY INDUS
11.76
1.818182
16953642
SHANDONG GOLD-MI
34.79
-0.3151862
5652679
12849466
SHANG PHARM -A
11.54
0.6102877
15055542 39743689
SAIC MOTOR-A
BANK OF BEIJIN-A
7.57
0.397878
7364464
GD MIDEA HOLDING
9.56
-1.544799
18729702
SHANG PUDONG-A
7.8
0.6451613
BANK OF CHINA-A
2.78
0.3610108
15103030
GD POWER DEVEL-A
2.64
-0.3773585
27190743
SHANGHAI ELECT-A
4.29
-0.6944444
2509488
BANK OF COMMUN-A
4.48
0.2237136
34499069
GF SECURITIES-A
12.8
-0.1560062
25986444
SHANXI LU'AN -A
20.49
0.2446184
12279422
BANK OF NINGBO-A
9.97
0.8088979
16293421
GREE ELECTRIC
20.52
0
12666094
SHANXI XINGHUA-A
39.55
1.099182
2729243
15481793
GUANGHUI ENERG-A
13.5
3.369066
19331129
SHANXI XISHAN-A
14.51
1.468531
9848777
8.8
-1.123596
83772457
SHENZEN OVERSE-A
5.83
1.391304
24001366
27.88
-8.319632
13279504
SUNING APPLIAN-A
5.88
-7.109005
135755687
2.64
-0.3773585
20468500
TSINGTAO BREW-A
34.68
-0.7725322
1586164
64.39
-0.8622017
1613466
WEICHAI POWER-A
23.76
1.84312
4247514
BAOSHAN IRON & S
4.18
-0.7125891
14.72
-0.06788866
5328758
HAITONG SECURI-A
CHINA CITIC BK-A
3.96
0.5076142
6183516
HANGZHOU HIKVI-A
CHINA CNR CORP-A
3.72
0.8130081
15048463
CHINA COAL ENE-A
7.6
-0.131406
6729597
CHINA CONST BA-A
4.06
0
12280249
HONG YUAN SEC-A
16.8
-1.524033
24496691
WULIANGYE YIBIN
36.41
0.7749792
19404264
CHINA COSCO HO-A
4.29
-0.4640371
5856587
HUATAI SECURIT-A
8.54
-0.8130081
24587776
XIAMEN TUNGSTEN
44.93
-6.06314
36836930
CHINA CSSC HOL-A
21.11
0.04739336
3149762
HUAXIA BANK CO
9.01
0.3340757
12455008
YANGQUAN COAL -A
15.35
1.053325
9223308
CHINA EAST AIR-A
3.86
-0.2583979
7570162
IND & COMM BK-A
3.83
0.5249344
23057399
YANTAI CHANGYU-A
55.86
-0.4632929
2498722
CHINA EVERBRIG-A
2.79
0.3597122
21527265
INDUSTRIAL BAN-A
12.8
0.9463722
28690295
YANTAI WANHUA-A
12.95
-1.145038
11801039
BYD CO LTD -A
HEBEI IRON-A HENAN SHUAN-A
CHINA LIFE INS-A
17.71
-1.061453
12168452
INNER MONG BAO-A
38.76
-2.071753
65796867
YANZHOU COAL-A
18.87
0.9630819
2466228
CHINA MERCH BK-A
10.17
0.1970443
31553215
INNER MONG YIL-A
19.44
0
12289581
YUNNAN BAIYAO-A
63.05
-0.6304177
2210298
CHINA MERCHANT-A
10.08
-1.754386
15385137
INNER MONGOLIA-A
6.04
0
114424161
ZHONGJIN GOLD
21.86
1.250579
5442802
CHINA MERCHANT-A
20.65
2.685231
11589782
JIANGSU HENGRU-A
29.78
-2.392658
4629247
ZIJIN MINING-A
3.85
-0.7731959
34955286
CHINA MINSHENG-A
6.07
0.3305785
40606797
JIANGSU YANGHE-A
145.55
0.1720578
1353482
ZOOMLION HEAVY-A
9.38
1.405405
37571504
CHINA NATIONAL-A
6.37
2.907916
25036429
JIANGXI COPPER-A
21.74
1.257569
6040015
ZTE CORP-A
11.49
1.591512
9905908
CHINA OILFIELD-A
17.34
3.152885
10098886
JINDUICHENG -A
12.56
0.7217322
3782551
CHINA PACIFIC-A
20.35
-0.4889976
24148904
JIZHONG ENERGY-A
14.23
0.7790368
16895864
6.19
1.143791
24556567
KANGMEI PHARMA-A
15.85
-1.735896
13554843
247.5
-0.2016129
1878686
CHINA PETROLEU-A CHINA RAILWAY-A
4.56
0.8849558
11858985
KWEICHOW MOUTA-A
CHINA RAILWAY-A
2.57
0
12998638
LUZHOU LAOJIAO-A
42
1.818182
7327985
CHINA SHENHUA-A
22.53
0.7602862
5064182
METALLURGICAL-A
2.29
-0.8658009
14360485
2.49
0
10226082 123976161
MOVERS
175
105
20 2415
INDEX 2357.016
CHINA SHIPBUIL-A
4.86
-0.8163265
43798943
NINGBO PORT CO-A
CHINA SOUTHERN-A
4.03
-0.982801
22574978
PANGANG GROUP -A
4.44
2.777778
CHINA STATE -A
3.13
-0.9493671
40593529
PETROCHINA CO-A
8.98
0
6871340
HIGH
2411.96
CHINA UNITED-A
3.71
0.2702703
33840382
PING AN BANK-A
15.26
1.530273
18037022
LOW
2328.54
CHINA VANKE CO-A
8.58
1.900238
49906761
PING AN INSURA-A
41.6
-0.7633588
24576229
CHINA YANGTZE-A
6.59
-0.1515152
14073353
POLY REAL ESTA-A
10.49
2.944063
34883031
CITIC SECURITI-A
10.81
-1.637853
107696225
QINGDAO HAIER-A
10.63
-1.116279
8523512
CSR CORP LTD -A
4.25
0
12200989
QINGHAI SALT-A
34.71
0.2889338
7250799
52W (H) 2932.14 (L) 2254.567
2320
10-Aug
14-Aug
FTSE TAIWAN 50 INDEX NAME
PRICE DAY %
Volume
NAME
PRICE DAY %
Volume
NAME
PRICE DAY %
ACER INC
26.5
0.1890359
12252050
FORMOSA PLASTIC
84.3
0.476758
6000846
TAIWAN MOBILE CO
ADVANCED SEMICON
25.3
1.402806
23797157
FOXCONN TECHNOLO
117
1.73913
12736459
TPK HOLDING CO L
Volume
106
2.912621
7125417
380.5
0.928382
5558936 33337141
ASIA CEMENT CORP
39.6 -0.6273526
6938928
FUBON FINANCIAL
30.8
0.6535948
12336248
TSMC
83.2
0.6045949
ASUSTEK COMPUTER
288
3.225806
6938029
HON HAI PRECISIO
85
0.1177856
40206424
UNI-PRESIDENT
50.8
2.008032
6606022
AU OPTRONICS COR
9.3
0.3236246
53469142
HOTAI MOTOR CO
215
0.4672897
721573
UNITED MICROELEC
12.5
0
34209086
254
5.833333
20058133
WISTRON CORP
33.7
1.353383
8655281
17.15 -0.5797101
29733439
YUANTA FINANCIAL
14.4
1.766784
23231586
YULON MOTOR CO
55.8
0
5364494
CATCHER TECH
152
2.013423
19650912
HTC CORP
CATHAY FINANCIAL
29.6
0.5093379
17702565
HUA NAN FINANCIA
CHANG HWA BANK
16.5 -0.3021148
CHENG SHIN RUBBE
72.6
14230739
LARGAN PRECISION
614
0.6557377
1836014
0.2762431
6503924
LITE-ON TECHNOLO
36.2
0.5555556
4314512
CHIMEI INNOLUX C
9.71 -0.2055498
38677845
MEDIATEK INC
291 -0.8517888
11864766
CHINA DEVELOPMEN
7.29
0.6906077
56717584
MEGA FINANCIAL H
22.7
-1.943844
40935031
CHINA STEEL CORP
26.75
1.134216
15528158
NAN YA PLASTICS
60.8
0.4958678
5638438
CHINATRUST FINAN
17.75
-1.388889
36200152
PRESIDENT CHAIN
165 -0.9009009
2409135
90.2
0.2222222
6269984
QUANTA COMPUTER
78.2
0.128041
6390627
COMPAL ELECTRON
28.45
0.7079646
8333917
SILICONWARE PREC
33.3
0
10449703
DELTA ELECT INC
103.5
0
9860573
SINOPAC FINANCIA
12.15
0.4132231
21323903
FAR EASTERN NEW
34.6
0
5689868
SYNNEX TECH INTL
68.1
1.038576
2657783
FAR EASTONE TELE
72.2
2.702703
7334202
TAIWAN CEMENT
35.3
-1.944444
6850774
FIRST FINANCIAL
17.4 -0.5714286
14861738
FORMOSA CHEM & F
82.8
1.346389
3835131
TAIWAN FERTILIZE
FORMOSA PETROCHE
91
2.477477
3854956
TAIWAN GLASS IND
CHUNGHWA TELECOM
TAIWAN COOPERATI
17
0.591716
8532884
72.2
0.6973501
2274400
28.95
1.93662
3417689
MOVERS
34
11
5 5165
INDEX 5144.93 HIGH
5160.49
LOW
5085.71
52W (H) 5621.53 (L) 4643.05
5085
10-Aug
14-Aug
August 15, 2012 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GALAXy ENTErTAINMENT
MELCo CroWN ENTErTAINMENT
MGM CHINA HoLDINGS
20.1
20.0
19.9
Max 20.1
Average 19.983
Min 19.84
19.8
Last 20.1`
SANDS CHINA LTD
Average 24.131
Max 24.5
Max 26.8
Average 26.483
Min 26.2
Min 23.95
12.2
26.5
12.1
26.3
12.0
26.1
Max 12.24
Average 12.092
Min 11.94
Last 12.22
WyNN MACAU LTD 15.3
17.9
24.3
15.2
17.7
24.1
15.1
17.5
15.0 Max 15.22
Average 15.128
DAY %
YTD %
(H) 52W
(L) 52W
WTI CRUDE FUTURE Sep12
93.12
0.420575865
-5.815717609
110.8699951
77.69999695
BRENT CRUDE FUTR Sep12
113.99
0.343309859
8.644681662
124.1999969
88.90999603
GASOLINE RBOB FUT Sep12
299.85
0.260808506
12.88258103
320.4399824
237.3699903
959
0.182815356
6.703755216
1046.5
798.5
2.743
0.513008428
-16.44837039
4.630000114
2.221999884
HEATING OIL FUTR Sep12
303.25
0.470463506
6.44459265
332.9600096
251.5599966
Gold Spot $/Oz
1612.7
-0.6518
3.0538
1921.18
1522.75
GAS OIL FUT (ICE) Sep12 NATURAL GAS FUTR Sep12
Silver Spot $/Oz
27.915
-0.5256
0.2874
44.2175
26.085
Platinum Spot $/Oz
1402.05
0.0357
0.5414
1915.75
1339.25
Palladium Spot $/Oz
578.55
-0.4902
-11.469
792.93
537.54 1832.25
LME ALUMINUM 3MO ($)
1857
-1.275917065
-8.069306931
2476
LME COPPER 3MO ($)
7395
-1.26835781
-2.697368421
9304
6635
LME ZINC
1819
-0.871934605
-1.409214092
2311
1718.5
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep12 Dec12
15375
-0.162337662
-17.82469268
22450
15236
15.625
-0.191632066
3.958749168
18
13.95499992
797.75
0.694225308
36.07675906
849
499
WHEAT FUTURE(CBT) Dec12
Min 15
17.3
Last 15.22
Max 17.84
Average 17.613
Last 17.78
Min 17.36
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 %
1.0525 1.5698 0.9719 1.2357 78.54 7.9896 7.7568 6.3589 55.7075 31.42 1.2459 29.954 41.985 9488 82.664 1.20101 0.78714 7.8729 9.8724 97.05 1.03
YTD %
-0.3597 -0.0446 0.1543 0.154 -0.3438 0.0013 0.0039 0.0598 -0.6529 -0.0318 -0.1043 0.1235 -0.131 0.0632 0.0085 0 -0.1969 -0.6795 -0.1459 -0.4946 0
(H) 52W
3.0953 0.9972 -3.4777 -4.6601 -2.0754 0.1252 0.1367 -1.0049 -4.7435 0.4137 4.0693 1.085 4.4182 -4.4161 -5.1195 1.3139 5.8757 3.319 4.858 2.6893 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
2.49
-1.190476
13.18182
3.25
1.88
859537
153.6999969
CROWN LTD
8.52
-0.814901
5.315202
9.29
7.47
1608220
879
0.371110477
22.08333333
953.25
629.5
SOYBEAN FUTURE Nov12
1609.75
0.562236452
33.67241021
1691.5
1115.75
COFFEE 'C' FUTURE Dec12
167.85
0.478898533
-28.87711864
285.6499939
NAME
PRICE
DAY % YTD %
VOLUME CRNCY
SUGAR #11 (WORLD) Oct12
20.66
1.324178519
-9.505037232
25.77999878
19.23999977
AMAX HOLDINGS LT
0.061
0
-29.88506
0.119
0.055
0
COTTON NO.2 FUTR Dec12
72.69
1.394908829
-17.24726776
102.25
64.61000061
BOC HONG KONG HO
24.8
2.057613
34.78261
24.85
14.24
16906041
0.234
0
1.739129
0.335
0.204
0
3.1
0
10.71429
3.62
2.3
150344
CHINA OVERSEAS
17.54
-0.7918552
35.13098
19.16
9.99
31038630
CHINESE ESTATES
9.3
0.1076426
-25.6
13.68
8.3
208000
CHOW TAI FOOK JE
9.74
0
-30.02874
15.16
8.4
1595503
EMPEROR ENTERTAI
1.38
0
24.32432
1.6
0.97
390000
FUTURE BRIGHT
1.18
11.32075
180.9524
1.18
0.3
14298000
GALAXY ENTERTAIN
20.1
1.005025
41.15169
24.95
8.69
6889563
HANG SENG BK
111
1.00091
20.45578
116.7
84.4
1418849
HOPEWELL HLDGS
23.8
-0.2096436
19.83887
24.658
18.56
533100
HSBC HLDGS PLC
69.5
1.238165
17.79661
71.8
56
17475190 6429761
CENTURY LEGEND CHEUK NANG HLDGS
World Stock MarketS - Indices NAME
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
13169.43
-0.2916425
7.791
13338.66016
10404.49
NASDAQ COMPOSITE INDEX
US
3022.52
0.05495124
16.02096
3134.17
2298.89
FTSE 100 INDEX
GB
5863.59
0.5437355
5.227843
5989.07
4868.6
DAX INDEX
GE
6966.11
0.8166804
18.10269
7194.33
4965.8
NIKKEI 225
JN
8929.88
0.5034243
5.61219
10255.15
8135.79
HUTCHISON TELE H
3.7
-0.2695418
23.74582
3.86
2.53
LUK FOOK HLDGS I
19.34
-0.8205128
-28.63469
46.15
14.7
1801872
MELCO INTL DEVEL
5.76
0.3484321
-0.1733099
9.94
4.3
1551194 1430400
HANG SENG INDEX
HK
20291.68
1.047339
10.07513
21760.33984
16170.35
CSI 300 INDEX
CH
2357.016
0.2162053
0.4806227
2932.14
2254.567
MGM CHINA HOLDIN
12.22
1.833333
27.39579
15.276
7.6
TAIWAN TAIEX INDEX
TA
7479.25
0.5775722
5.757428
8170.72
6609.11
MIDLAND HOLDINGS
4.35
1.398601
10.01387
5.217
2.887
1782167
KOSPI INDEX
SK
1956.96
1.268862
7.187221
2057.28
1644.11
NEPTUNE GROUP
0.163
0
46.84684
0.205
0.08
14665000
S&P/ASX 200 INDEX
AU
4292.174
0.2073405
5.808203
4448.5
3840.2
NEW WORLD DEV
10.42
0.1923077
66.45367
10.96
6.13
8058378
SANDS CHINA LTD
24.3
1.25
10.70615
33.05
14.9
11521439
JAKARTA COMPOSITE INDEX
11.9
24.5
23.9
Last 24.3
PRICE
CORN FUTURE
26.7
CURRENCY EXCHANGE RATES
NAME
METALS
12.3
SJM HoLDINGS LTD
Commodities ENERGY
Last 26.8
26.9
ID
4121.556
0.4637626
7.837908
4234.734
3217.951
FTSE Bursa Malaysia KLCI
MA
1652.9
0.3996793
7.981163
1652.9
1310.53
NZX ALL INDEX
NZ
803.968
0.306546
10.16274
806.015
712.548
PHILIPPINES ALL SHARE IX
PH
3486.58
-0.1992249
14.5003
3531.5
2695.06
HSBC Dragon 300 Index Singapor
SI
590.95
0.33
19.06
NA
NA
WYNN MACAU LTD
STOCK EXCH OF THAI INDEX
TH
1226.82
0.6109712
19.6524
1247.72
843.69
HO CHI MINH STOCK INDEX
VN
429.47
0.7743389
22.1647
492.44
332.28
Laos Composite Index
LO
1024.54
0.8008658
13.90612
1049.18
876.33
SHUN HO RESOURCE
1.13
0
13
1.28
0.82
10000
SHUN TAK HOLDING
2.77
-0.3597122
8.239982
4.148
2.241
2860504
SJM HOLDINGS LTD
15.22
0.5284016
21.7061
18.798
10.079
7355513
SMARTONE TELECOM
17.18
3.245192
27.82738
18.5
9.8
967421
17.88
1.706485
-8.307692
25.969
14.62
2598601
ASIA ENTERTAINME
3.27
-6.034483
-44.38776
8.7
2.4
157449
BALLY TECHNOLOGI
44.64
-0.02239642
12.84125
49.32
24.74
701027
BOC HONG KONG HO
3.18
0
32.65546
3.18
1.81
8175
GALAXY ENTERTAIN
2.5
-0.8919722
33.68984
3.24
1.08
6560
11.4
0.2638522
-33.72093
18.1701
10.92
3724699
JONES LANG LASAL
70.48
0.3702649
15.05061
87.52
46.01
482620
LAS VEGAS SANDS
39.37
-1.451815
-7.863327
62.09
34.72
8337206
MELCO CROWN-ADR
10.35
0.4854369
7.588359
16.02
7.05
2317728
MGM CHINA HOLDIN
1.52
11.76471
27.54961
1.9672
1.0025
200
MGM RESORTS INTE
9.94
2.792141
-4.697989
14.9401
7.4
11284919
13.57
-0.0736377
15.78498
18.77
7.36
352661
1.94
0
20.67883
2.4557
1.2624
5500
100.13
-1.669449
-9.376412
154.7051
90.108
1001712
INTL GAME TECH
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
SHUFFLE MASTER SJM HOLDINGS LTD WYNN RESORTS LTD
AUD HKD
USD
Contact Information
ONE YEAR Suscription REGULAR 1,560 Mop 20% discount 1,150 Mop
First Name (Mr/Mrs/Ms)
Last name
Address Postal Code
Country
Phone Fax Email
Payment
Subscription Period: from
(yy)|
(mm)|
to |
(yy) |
(mm) |
I wish to pay by Cheque or Direct Deposit Make payable to De Ficção-Projectos Multimedia Banco Comercial de Macau (BCM) Acct# 1099732111 Make payable to De Ficção-Projectos Multimedia Limitada Banco Nacional Ultramarino (BNU) Acct# 9008096687 Visa Master Card American Express Credit Card
Account Number Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau
Expiration Date mm
Cardholder’s Name Cardholder’s Signature
yy
CVV2/CVC2
14 |
business daily August 15, 2012
Opinion
Indian power failure highlights growing political gridlock Clive Crook James Gibney
F
requent power failures are routine in India, but this week’s back-to-back blackouts were on a stunning scale. They shut down half the country and raised questions about the competence of India’s government. They also drew attention to broader failings in the country’s stalled economic reforms. Two cascading power-grid collapses left more than 640 million people without electricity. Factories and hospitals closed. Trains were halted, traffic clogged the roads, miners were trapped underground. Pumps stopped, leaving many without water in stifling summer temperatures. It’s thought to be the country’s worst power failure. Accidents, even on such a scale, can happen. India’s energy system is more susceptible to them because its ordinary performance is so bad. Dealing with this chronic inefficiency – an inefficiency that spans India’s public sector – is a huge political challenge, and the country’s politicians are failing to meet it. On average, India’s peak electricity demand exceeds supply by nearly 10 percent, leading to the system’s repeated failures. Indians have been complaining about it for decades. According to the government’s estimates, even routine power interruptions cut 1.2 percentage points from annual economic growth. Ask foreign multinationals what deters them from investing in India, or what holds them back once they’re there, and they almost always mention erratic power supply. Ministers have been promising big investments in electricity supply and distribution since the 1950s. They’ve broken those promises with equal consistency. The country added 55,000 megawatts of capacity in the past five years – 30 percent less than planned. There’s a reason that closing the gap between demand and supply is so hard. India’s energy system ignores prices and costs. It’s based on a decadesold Soviet-style system of command and control. Electricity is deliberately underpriced, a disguised subsidy that bedevils the country’s fiscal policy as well as suppresses private energy supply. Even so, theft of power is rampant. On every street you see a tangle of bootlegged connections to power lines. Estimates run as high as 30 percent of total supply. Even in the relatively well-run state of Gujarat, about 23 percent of power generated is lost in the course of transmission and distribution. This system offers no incentive for economy in the use of power, or for investment in new generating and distributive capacity. This week Prime Minister Manmohan Singh said the government would look into the causes of the shutdown, and an adviser at the
Manmohan Singh
Planning Commission said approvals for coal mines and power plants would be speeded up. It should consider allowing private ownership of coal mines, the privatisation of some of the country’s beleaguered power distribution companies, and letting utilities set higher energy rates.
Opportunity for a change Any one of those measures would be a tall political order. But of all people, Singh should know that in crisis there is opportunity. When he was appointed finance minister in 1991, India faced huge deficits and was down to barely US$1 billion in foreign reserves, or enough to pay for a few weeks of imports.
He used that moment of crisis to force reforms that opened India’s economy to foreign investment and competition. As a result, Indians today complain when growth in GDP slows to 6 percent a year, as it has lately. Back before Singh’s reforms, they were thrilled if it exceeded 3 percent – the so-called Hindu rate of growth. Singh’s ruling Congress Party did badly in recent regional elections, and its prospects in the next national elections, in 2014, look poor. It has been pandering to important constituencies to hold together its coalition, and its continuing reform efforts, such as they were, have stalled. Moves to cut losses in state-run enterprises – for instance, by increasing rail fares – have been defeated.
Foreign investors took note when the government suspended its plan to let foreign retailers such as WalMart invest, in another capitulation to populist politics. Confidence in the Indian economic miracle is leaking away. India needs an emboldened leadership and a new zeal for reform. In its fractious democracy, that can only happen if its leaders bring voters along. It can be done, as the reforms of the 1990s showed, but India’s politicians have lately stopped trying. In the struggle for short-term advantage, they’ve lost sight of the prize – the furious long-term growth the economy has shown it’s capable of. Led by the prime minister, they need to regain their vision. Bloomberg View
editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Newsdesk Vitor Quintã (Chief Reporter) Tony Lai, Xi Chen Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
August 15, 2012 business daily | 15
OPINION Business
wires Leading reports from Asia’s best business newspapers
Korea Herald Hyundai Motor Group, which owns Hyundai Motor and Kia Motors, is expanding its presence in the North American market where the Korean company led car sales in the small and mid-sized segments in July. Hyundai Motor has been the first car brand in the subcompact segment for four consecutive months to July. In both the compact and midsize segments it sold more cars than its Japanese rivals, which used to dominate that market. In Canada, Hyundai Motor also posted a new record in July sales.
Nikkei Fujifilm Corp. will launch a premium printing service for customers of its X series of high-end digital cameras. Each photo will be printed on highquality glossy paper with the process to be handled at the company’s domestic photo labs. The photos will be placed in special packaging and include a certificate. Prices will be about 80 percent higher than prints at typical stores. Fujifilm hopes to boost the value of its X series and popularise the printing of high-quality digital photos.
Daily Tribune The Bangko Sentral ng Pilipinas (BSP) has penalised a number of universal, commercial, savings and rural banks for noncompliance to a law requiring them to allocate at least 25 percent of their loanable portfolio to farmers and agrarian reform beneficiaries. The strict implementation of the law has led the BSP to impose monetary fines ranging from P25,000 (US$596) to P100,000 against various banks. The official declined to give the number of banks that have been penalised for noncompliance.
Jakarta Post PT Bank Negara Indonesia (BBNI), the nation’s fourth largest lender by assets, is looking to partner with 46 Japanese regional banks by the end of this year to tap into the US$48.8 billion potential transactions with Japanese companies operating in Indonesia. The bank has formed a so-called “Japan Desk”, which will exclusively serve the Japanese clientele. There are about 1,000 Japanese companies operating across Indonesiamainlyinmanufacturing, services, construction and engineering, trading, and transportation.
Europe’s summer reading list Barry Eichengreen
Professor of Economics and Political Science at the University of California, Berkeley
I
n August, Europeans head for the beach. The continent shuts down on the assumption that nothing of consequence will happen until everyone returns, suitably tanned, in September. Never mind the subprime crisis of August 2007 or, closer to home, the European monetary crisis of August 1992: the August holiday is a venerable tradition. So, what should Europeans be reading beneath their sun umbrellas this year? Milton Friedman’s and Anna Schwartz’s A Monetary History of the United States belongs at the top of the list. At the centre of their gripping narrative is a chapter on the Great Depression, anchored by an indictment of the U.S. Federal Reserve Board for responding inadequately to the mounting crisis. Friedman and Schwartz are generally seen as reproving the Fed for failing to react swiftly to successive waves of bank failures, first in late 1930 and then again in 1931 and 1933. But a close reading reveals that the authors reserve their most scathing criticism for the Fed’s failure to initiate a concerted programme of security purchases in the first half of 1930 in order to prevent those bank failures. That is a message that the European Central Bank’s board members could usefully take to heart, given their announcement on August 2 that they were ready to respond to events as they unfolded but were taking no action for now. Reading Friedman and Schwartz will remind them that it is better to head off a crisis than it is to rely on one’s ability to end it.
Leadership A second recommendation is another account of the crisis of the 1930s, Charles Kindleberger’s The World in Depression, 1929-1939. (If vacationing officials detect a pattern in their summer reading, all the better.) Kindleberger’s point is that avoiding a crisis – and when failing to avoid one, successfully exiting from it – requires leadership. Specifically, it requires leadership by a country with the power of the purse and the willingness to use it. The problem in the interwar period, as Kindleberger recounts it, was the reluctance of the leading power, the U.S., to provide the leadership and financial wherewithal to resolve the crisis. In Europe today, reunified and reinvigorated Germany is the only country capable of assuming this role. It could agree to swift bank recapitalisation, a banking licence for the European Stability Mechanism, and a more expansionary ECB policy. If Germany provided
Birth of Athena
this kind of leadership, other countries would be quick to follow. Europe’s crisis would then be well along the path to resolution. Germans sunning themselves on Greek islands, one hopes, would be inspired by such reading. But it is hard to be confident. Of course, books by economics professors about the Great Depression hardly a summer holiday make. For variety, European leaders could take along Ron Chernow’s biography of Alexander Hamilton. Hamilton was a colourful character, born out of wedlock, raised in the West Indies, and captain of an artillery company in America’s revolutionary war. More to the point, as George Washington’s Treasury secretary, he crafted the bargain that successfully rationalised the U.S. states’ debts.
Vision U.S. states entered their new union with different debt loads and different capacities to service them. Hamilton made the case that the federal government should assume responsibility for their liabilities stemming from the costs of financing the war. He identified a source of revenue – the tariff – that could be devoted to this end, and he rendered the bargain politically palatable by making clear that if state governments accumulated additional debts, and again got into trouble, they would not be bailed out a second time. European officials will argue that their problem is more difficult. Not only does Europe lack a federal government, but there is no desire to create one.
A series of seemingly reasonable decisions can have cataclysmic consequences if no one bothers to figure out the endgame
A close reading of Hamilton’s accomplishments, however, will remind European readers that there was an equally deep aversion to federalism in the early U.S.It took politicians with vision and diplomatic skills to craft the political entity that
emerged after independence. Finally, European leaders should consider adding to their book bag Barbara Tuchman’s The Guns of August (again, notice the month). Tuchman describes how a series of individual decisions, all of which seemed sound when considered in isolation, had the unintended consequence of leading Europe into World War I. No one is predicting war in Europe today. But what is true of international diplomacy – that a series of seemingly reasonable decisions can have cataclysmic consequences if no one bothers to figure out the endgame – is equally true of international finance. Europe is dangerously close to its financial Sarajevo. The continent’s leaders, while relaxing on southern Europe’s crisis-ridden shores, should take Tuchman’s message to heart. © Project Syndicate
16 |
business daily August 15, 2012
CLOSING China signs deal with North Korea
Google buys Frommer’s travel brand
Beijing says it has signed agreements stepping up economic co-operation with North Korea during a visit to Beijing by a senior Pyongyang official. China’s Commerce Ministry said that a management committee to oversee two economic zones would be established with North Korea. The deals came as Chang Song-taek, uncle of North Korean leader Kim Jong-un who is believed to be a key influence on him, visited China. Meanwhile, Japan says it will also hold talks with North Korea this month. This will be the first time in four years that Japan and North Korea will hold government-level talks.
Google Inc is buying the Frommer’s line of travel guidebooks, the latest move to amass a trove of publishing content that could strengthen the No. 1 Internet search company’s push to become a major online travel broker. The sale by John Wiley & Sons Inc comes nearly a year after Google’s US$151 million purchase of Zagat Survey, which offers reviews of restaurants, hotels and nightclubs in cities around the world. Google and Wiley & Sons did not announce financial terms for the deal. U.S. online travel sales are expected to reach US$119.2 billion this year, according to eMarketer.
Eurozone economy shrinks by 0.2pct Germany skirts recession as investor confidence falls
T
he euro-area economy contracted in the second quarter after the worsening debt crisis and tougher budget cuts forced five nations into recessions. Gross domestic product in the 17-nation currency bloc fell 0.2 percent from the first quarter, when it stagnated, the European Union’s statistics office in Luxembourg said yesterday. From the year-earlier quarter, GDP dropped 0.4 percent. Quarterly growth flatlined in January-March, meaning the region averted the two consecutive quarters of contraction that define a recession. Eurostat revised up the year-onyear GDP figure for that period to zero from a 0.1 percent contraction. Europe’s slump is deepening as governments struggle to restore investor confidence in their ability to plug budget gaps. Euro-area economic confidence dropped to the lowest in almost three years in July and some of the region’s largest companies, including Deutsche Bank AG, announced job cuts. “It was a broad-based weakness in the second quarter, with cooling global demand curbing exports and uncertainty weighing on investment and employment,” said Christoph Weil, an economist at Commerzbank AG in Frankfurt. “The economy will continue to shrink; we’re in recession. We only expect an economic stabilisation in 2013 at the earliest.” In Germany, Europe’s largest economy, GDP rose 0.3 percent from the first quarter, when it gained 0.5 percent. France’s economy stalled for a third straight quarter in the
German gross domestic product grew by 0.3 percent in the second quarter
three months through June and Italy’s economy contracted for a fourth straight quarter, shrinking 0.7 percent.
Gloomy picture “Unfortunately, Germany and France alone won’t prevent a euroarea economic contraction,” said Christian Schulz, an economist at Berenberg Bank in London. “Still, for Germany the outlook remains pretty robust. The third quarter will be hit by the crisis, but once it’s under control we’ll see a pick-up. For France, the outlook is less rosy.” In Spain, which received external aid earlier this year, GDP dropped
0.4 percent from the first quarter, when it fell 0.3 percent. Portugal’s economy contracted 1.2 percent in that period and Cyprus also remained in a recession. The statistics office didn’t provide quarterly data for Ireland and Greece. The European currency has decreased 4.6 percent against the dollar this year, reflecting investors’ concern about a breakup after Cyprus and Spain were both forced to ask for international aid in June. Recent indicators suggest the economic slump may deepen in the current quarter. Euro-area services and manufacturing output contracted for a sixth month in July and unemployment held at a record
of 11.2 percent in June. Investor confidence in Germany unexpectedly fell for a fourth month in August as the sovereign debt crisis curbed growth. The ZEW Centre for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, declined to minus 25.5 from minus 19.6 in July. The euro-area economy may contract 0.2 percent in the third quarter before returning to growth in the following three months, according to the median of 20 economists’ forecasts in a Bloomberg News survey. Bloomberg
Defecting PM says Syrian regime collapsing Raid Hijab says govt only controlls 30 pct of the country
S
yria’s former prime minister Riad Hijab, who fled to Jordan last week after defecting, said yesterday the regime was collapsing and now only controlled a third of the conflict-wracked country. “The Syrian regime only controls 30 percent of Syria’s territory. It has collapsed militarily, economically and morally,” Mr Hijab told a news conference in Amman. “I assure you, based on my experience and the post I held, that the regime has cracked.” Mr Hijab said he had made his
decision to quit his post on August 5. “I decided to leave on August 5 after losing hope that this corrupt and brutal regime would change. The trip to Jordan took three days,” he said, adding “I was not sacked.” “I have no interest in holding any position, now or in the future following the liberation of Syria.” Mr Hijab, who was agriculture minister until being appointed prime minister on June 6, urged Syria’s rebels to “continue their fight against the regime as the Syrian people have high hopes and
faith in you.” “I also call on the Syrian armed forces not to point their guns at the Syrian people.” He is the latest in a string of highlevel defections from President Bashar al-Assad’s regime, which is becoming increasingly embattled as the 17-month conflict shows no signs of abating. “Syria is full of officials and military leaders who are awaiting the right moment to join the revolt,” Mr Hijab said, while urging Syria’s fractured opposition to unite.
“The opposition outside Syria needs today to united their efforts and stop accusations that they are scattered. The fact that the have different opinions does not mean they do not share the same goal,” he said. “We thank Saudi Arabia, Qatar and Turkey and urge them to continue their support for the just revolt until victory is achieved.” The conflict has killed over 21,000 people since March last year, according to activists, including 160 people on Monday alone. AFP