Macau business daily, Aug 9th by Business Daily

Tam gives budget update Francis Tam Pak Yuen, Secretary for Economy and Finance, will today give legislators a mid-year summary of the government’s finances. It will be the first time he’s given a half yearly update since he took on the leadership of budgetary matters following the city’s handover from Portuguese administration in 1999. Page 4

Macau Foundation needs mission rethink T

he Macau government isn’t the only body in the city with more money than it can spend. Macau Foundation is drowning in cash thanks to the 1.6 percent of Macau’s annual gross gambling revenue it receives in tax from the authorities. It was allocated almost 4.3 billion patacas (US$530 million) from last year’s record gambling revenue of 267.9 billion patacas. To put this in perspective, it’s as much as international donors recently gave to Mozambique for electricity generation projects in the whole of that country. The foundation – started in 2001 after a merger of two older bodies – is supposed to advance

the culture, community, economy, education, science, academics and philanthropic activities of the city. But it hit the headlines for the wrong reasons in June after the public spending watchdog Commission of Audit released a report attacking the institution’s lax supervision. It cited cases of the foundation over-subsidising projects and of community associations getting more than one subsidy each. Now political science professor Eilo Yu Wing Yat tells Business Daily society may need to rethink the purpose and direction of the foundation if it is to meet the challenges of its embarrassment of riches.

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SJM Holdings, Macau’s largest casino operator by gross revenue, said yesterday its half-year net profit rose 28 percent to HK$3.41 billion (US$439.72 million) compared to a year ago. Nonetheless it was the slowest first half profit growth registered by the company since the financial crisis in 2009. The firm underperformed versus the market in VIP and mass table games as well as slots. Page 3

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Teens battle for casino jobs

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School leavers are scrambling for well paid jobs as casino dealers before the November 1 introduction of a new law to raise the casino entry and working age to 21. The demand for dealer training is now so strong that the Macau Gaming Industry Employees Association is charging 4,500 patacas for a course that used to be government-sponsored. Page 5

%Day

CHINA RES ENTERP

2.19

CHINA SHENHUA-H

1.84

CHINA COAL ENE-H

1.81

WHARF HLDG

1.62

CHINA MERCHANT

1.47

SINO LAND CO

-2.29

BELLE INTERNATIO

-2.54

WANT WANT CHINA

-3.65

CATHAY PAC AIR

-4.33

ESPRIT HLDGS

-12.23

Source: Bloomberg

Airport numbers taking off

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The number of passengers using Macau International Airport increased by 11.6 percent in July year-on-year to over 423,000. That was the highest monthly total in absolute terms since August 2008, according to the latest data from the Macau International Airport Co. Ltd (CAM). The total would have been higher but for the cancellation of 32 flights during Typhoon Vicente last month.

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Year I - Number 94 Thursday August 9, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

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business daily August 9, 2012

macau International driving licence ready in an hour

Govt offering course in business English

Macau motorists wishing to drive outside the territory will from today be able to obtain an international driving licence within one hour. Those with a valid Macau identity document and a valid Macau driving licence can apply to the Transport Bureau’s offices at Estrada D. Maria or China Plaza during normal office hours. Prior to the change, it took about two working days to get an international driving licence.

The Education and Youth Bureau’s language promotion centre will add a business English course to its continuing education programme. The course will focus on letter writing, drafting resumes, composing inquiries and complaints, among others. The language promotion centre will accept applications in person or online from prospective students whose English is above middle-school level. It will draw lots to select successful applicants.

City University reaps foundation’s largesse Privately owned City University took the lion’s share of the Macau Foundation’s grants in the second quarter, riling academics and legislators Vítor Quintã vitorquinta@macaubusinessdaily.com

ity University of Macau has taken 61 million patacas (US$7.6 million) in subsidies from the Macau Foundation in the past nine months, according to data published in yesterday’s edition of the Official Gazette. Overall, the foundation gave out less money in the April-June period compared with the same time last year. It handed out 362.1 million patacas in the second quarter of this year, a 12 percent drop in year-on-year terms. This figure is more than three times higher than the 106.2 million patacas spent in the first quarter of this year but official data show that the start of the year is always a slow period for applications. The biggest slice of the second quarter’s subsidies, 40 million patacas, went to help the City University of Macau fund its operations this year and next year, and to buy equipment. In the fourth quarter of last year, the university received 21 million patacas to help decorate three campuses, buy educational equipment and launch its Institute for Research on Official Portuguese-speaking Countries. Hotel businessman and legislator Chan Meng Kam bought City University two years ago, changed its name from Asia International Open University (Macao) and turned it into a non-profit foundation. Macau Foundation vice-president Peter Lam Kam Seng said yesterday

that the institution had approved grants to more than 40 secondary and primary schools. The City University grant was not a special case. He said the fund always put “cultivating professionals” in first place. He told public broadcaster TDM that the foundation would examine and review every application in a fair manner and closely monitor every case. “It is not about the problem of the Macau Foundation or the City University,” University of Macau political science professor Eilo Yu Wing Yat told Business Daily. “It is about how the government defines its role in subsidising the tertiary education institutions.”

Measuring up City University was the only higher education institution to get money from the Macau Foundation in the second quarter. But there were two grants to higher education colleges in the first quarter. The University of Saint Joseph received 3 million patacas to fund renovations at its NAPE campus, and the University of Science and Technology Foundation got a 27.3 million pataca grant to develop its football field and sports pavilion. Since January last year, the University of Science and Technology has

received almost 266 million patacas, including 75 million patacas to cover part of its operating expenses for the past two years. The New Macau Association has been particularly critical of the handouts to the institution. University of Science and Technology vice-rector Liu Liang said on Tuesday the money was being used “to contribute to society”. He said the university was developing new drugs and doing cancer research, as well as developing “new technology, methods and patterns to improve Chinese [traditional] medicine”. He did not itemise how the money was spent. Macau Foundation head Wu Zhiliang also rejected claims that the university was favoured. Although it was a private institution, he classified its work as being “of benefit to the public”. He told the Portuguese-language newspaper Tribuna de Macau that all universities here received grants or, in the case of public institutions, transfers from the government. “I totally support funding to universities or education institutions as education requires many financial resources,” legislator José Pereira Coutinho told Business Daily. “But the government should treat every applicant the same. This requires a more transparent mechanism.” Mr Yu wants the government to help

Grants from the Macau Foundation fell by 12 percent year-on-year in the second quarter

the universities “as much as possible” but demands more clarity on how they are helped. He said the government should consider if direct grants were suitable or institute a market-based mechanism and “let the universities survive accordingly”. Either way, better evaluation criteria and a cap for subsidies was needed. After the grants were approved, Mr Coutinho said, “the government should monitor closely that the subsidies can reach the right hands instead of being wasted in other uses”.

Cash flow Among other grants from the foundation in April-June was 38 million patacas to support the activities of the Macau Federation of Trade Unions. The grant was directed to expanding its service centre and its recreation space, called Stage. Federation chairman Chiang Chong Sek said the association had “always” used the subsidies to provide elderly care services and to finance nurseries, health clinics, schools and sports facilities. “In case we have unused subsidies, we returned the money,” he said last month. The School of Saint Paul, owned by the Catholic church, received 25 million patacas to help fund its expansion. The school will open its doors on September 1, with room for almost 1,300 students, the Portugueselanguage newspaper Clarim reported. Another 24 million patacas went to the Macau Religious and Cultural Exchange Association to host the exhibition of a Buddhist relic. In May, Susana Chou, who is a member of the foundation’s board of trustees, revealed that Chief Executive Fernando Chui Sai On had rejected the initial grant proposal of 34 million patacas. It had included plans for a 14 million pataca “cultural banquet”. The General Union of Neighbourhood Associations of Macau got 23 million patacas in foundation funds for its operations and the Women’s General Association received 15 million patacas. Most of the foundation’s assets come from indirect taxes on gambling, corresponding to 1.6 percent of gross gaming revenue. Last year the foundation had a budget of almost 4.3 billion patacas. with T.L.

August 9, 2012 business daily | 3

MACAU Fund’s woes blamed on too much money The Macau Foundation faces a dilemma: whether to keep too much money or give too much away Tony Lai tony.lai@macaubusinessdaily.com

laws in the operation of the Macau Foundation stem from its “abundant resources”, a University of Macau academic has said. Political science professor Eilo Yu Wing Yat told Business Daily that the foundation’s income had grown considerably because of the rapid development of the gaming industry. Mr Yu said that as the foundation’s resources had grown, people had paid more attention to how it disbursed them. Every year the government allocates 1.6 percent of gross gaming revenue to the foundation, which received almost 4.3 billion patacas (US$530 million) of last year’s record gaming revenue of 267.9 billion patacas. “The issue now is there is significant increase in the Macau Foundation’s income but the needs of the associations do not rise correspondingly with the gambling growth,” Mr Yu said. With its abundant resources, he said

the foundation would “try to subsidise as many associations as possible” but that the quality of many activities arranged by the associations did not match the public’s expectations. “Macau Foundation is facing a dilemma whether they should keep the resources or give out as much as possible,” Mr Yu said. “If too much money is left in the fund, people will criticise the foundation for not doing its job. If it gives out too much, some will say the Macau Foundation has loose standards.” The foundation was in the spotlight in June after the Commission of Audit released a report criticising its lax supervision, which led to excessive subsidies.

as the audit commission suggested. But he also proposes expansion of the scope of the foundation. “Society may consider expanding the social mission of the Macau Foundation, something that is lacking

Clearer criteria Mr Yu said there should be improvements in how the foundation granted subsidies and better follow-up on how associations spent them, just

SJM net profit up 28pct in first half But underperforms market in every major gaming segment Associate Editor

JM Holdings, Macau’s largest casino operator by gross revenue, said yesterday its half-year net profit rose 28 percent. The firm’s net profit for the first six months of the year totalled HK$3.41 billion (US$439.72 million) compared with HK$2.67 billion in the same period a year ago. Nonetheless it was the slowest first half profit growth registered by the company since the financial crisis in 2009 as mainland China’s high roller gamblers feel the pinch from a slowing economy. VIP baccarat supplied 70 percent of all revenue from games of fortune in the Macau market in the first half of 2012 according to data from the regulator the Gaming Inspection and Coordination Bureau. SJM’s revenue from mass-market table games was however up 15 percent year on year for the six months. Slot revenue was up 3.8 percent, though VIP table revenue was down 0.5 percent year-on-year. But the firm underperformed the overall market in all three segments. In the first half total Macau VIP baccarat revenue grew 15 percent year-on-year, while mass market table games revenue rose 33 percent and slot revenue was up 19 percent.

But SJM has the strongest balance sheet out of the six listed casino operators, with net cash of HK$22 billion. Seventeen analysts have a ‘buy’ or ‘very strong buy’ rating, while three have a ‘hold’. There are no sell ratings among the sample. SJM’s market share – which was 26.2 percent of gross revenue last month – is a topic of some controversy, as it includes so-called satellite casinos licensed by SJM but owned by third parties meaning the revenue generated has to be shared with outsiders.

Mass slippage

Grand Lisboa – 6.4 million visitors in the first half of 2012

In line The profit for Hong Kong-listed SJM Holdings – controlled by the family of gambling tycoon Stanley Ho Hung Sun – was however roughly in line with the average forecast of HK$3.5 billion by five analysts polled by Reuters. The company, which has a market

from discussions right now,” he said. He suggested the foundation could be divided up, with each division responsible for a specific sector and a broader remit. “With the resources dispersed in different divisions, which particularly focus on one of the fields, the overall efficiency of the funds can be higher and match residents’ expectations,” he said. Mr Yu said growth in gaming revenue meant the proportion allocated to the foundation should be reduced over time to minimise the chances of putting in too many resources. It was not achievable in the next few years because the figure of 1.6 percent was listed in the concession contracts between the government and casino operators. Legislative Assembly member José Pereira Coutinho thinks the Macau Foundation should be more open and establish “clear criteria” for approving grants. He said most of the activities approved were no help in promoting Macau as a world-class tourist destination. Instead, he said they were all about “eating and drinking”. He called for an efficient mechanism for overseeing the foundation. “The board of directors should be changed every two years,” Mr Coutinho said. “Their background, namely their résumé, should also be publicised so that the residents know whether they are qualified for the job”.

capitalisation of HK$83.09 billion, said its flagship Grand Lisboa hosted over 6.4 million visitors during the first half of the year, an average of more than 35,000 per day. SJM has no presence however on the increasingly important – especially in mass revenue terms – Cotai Strip. It is awaiting notice from the government

before it can build a new casino there. Three of its market rivals already have operations there and a fourth, Wynn Macau, has started ground works for its Wynn Cotai resort, expected to open in 2015. SJM and MGM China Holdings are currently waiting for confirmation of their Cotai land concessions.

Gabriel Chan, analyst at Credit Suisse in Hong Kong says SJM’s market share has stabilised in a narrow range of 29.4 to 33.6 percent since September 2011. But Ben Lee, an independent analyst and gaming industry consultant, suggests the company will need to ensure that recent losses of share in the more downturn-resistant mass segment don’t become a trend. “SJM continues losing major points in their mass gaming market share with a 4.4 percent loss this month on the back of a 3.5 percent loss for June – both on a year-on-year basis. We believe that with Stanley Ho out of the decision-making loop, there is a leadership vacuum at the moment, with stakeholders waiting for Ho to fully exit before making a power play,” he states in his regular newsletter Macau Gaming Gazette. Mr Ho, aged 90, founder of SJM and a co-founder of its gaming monopoly predecessor STDM, last year transferred the bulk of his SJM shares to Angela Leong On Kei, the mother of his youngest children, who is also a Macau legislator. It followed a family dispute last year as he moved to distribute his business interests among his consorts and 17 children. Hong Kong media last week reported that Mr Ho had been admitted to hospital, shining the spotlight on potential succession issues at SJM.

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business daily August 9, 2012

macau

Secretary to report on financial management The secretary for the economy and finance will answer questions from legislators about government spending and the fiscal reserve Xi Chen

xi@macaubusinessdaily.com

Francis Tam Pak Yuen is scheduled to update legislators on the government’s finances today

or the first time since the handover, Secretary for Economy and Finance Francis Tam Pak Yuen will today give the Legislative Assembly a mid-year

summary of the execution of the budget, and brief it on the fiscal reserve. Provisional data released by the Financial Services Bureau last month show the government’s capital

spending was 2.96 billion patacas (US$370 million) in the first half of this year, out of the total of 19.8 billion patacas it plans to spend. The government would need to spend more than 16.8 billion patacas in the second half to stick to its capital budget. Public investment accelerated in June. The government’s capital spending was 1.5 billion patacas in that month, slightly more than half of all its capital spending in the first half. This year’s capital budget includes money for the creation of an artificial island for this end of the Hong Kong-Zhuhai-Macau Bridge, the construction of public housing and the construction of the Light Rapid Transit railway. The budget surplus was 39.9 billion patacas at the end of June, more than the surplus of 36 billion patacas that the government had forecast for the whole year. Today’s meeting will be the first between the government and the assembly to discuss the handling of the fiscal reserve.

The reserve was created in February and is run by the Monetary Authority of Macau. However, the law also calls for the involvement of two other independent bodies, one to provide investment strategies and the other one to monitor management. These two bodies were formed in June, and Mr Tam is likely to be questioned about how they were formed. Assembly members are also likely to question him about big investments made with the fiscal reserve. Hong Kong, with a more mature financial market than Macau’s, has shown strong interest in attracting money from Macau’s fiscal reserve. The Monetary Authority said this year that Hong Kong would “become an effective platform for the investment of the fiscal reserve”. Macau has also obtained permission from the mainland’s central bank to make up to 10 billion yuan (12.56 billion patacas) in direct investments in the mainland’s interbank bond market.

MGM China hopes Cotai contractor ‘on board’ by Q4

GM China Holdings has submitted its plans for land preparation work at the proposed site of its new Cotai resort, the firm’s chief executive says. “We’re making every effort to hit the ground running once the land process is complete,” Grant Bowie told analysts in a conference call to discuss the second quarter earnings of MGM China and its owner MGM Resorts International. “We’re preparing our general building plan for submission shortly and we have submitted an application for our land prep work and [we’re] working to have our general contractor on board in the fourth quarter,” added Mr Bowie. MGM China recently completed a

US$1.5 billion (12 billion patacas) refinancing of its existing Macau project debt. That’s expected to make the company significant savings. MGM China’s interest expense in the second quarter was US$6 million. But the Hong Kong-listed unit has not yet made an announcement about the funding arrangements for its US$2.5 billion Cotai scheme. At the end of the second quarter, MGM China had approximately US$660 million in cash, debt of US$553 million and an adjusted leverage ratio of less than one, said the company. The slowdown in the Macau VIP market and the existence of a table cap means casinos must carefully

cademia’s role in playing a part in public life through the media was among the topics covered by representatives from the University of Macau and Business Daily at a meeting last month. The head of the university’s information and public relations office, Katrina Cheong Wai Kam (centre left), led the university’s delegation to the newspaper’s offices.

MGM Macau – new VIP area in fourth quarter

reallocate any underperforming tables. MGM Macau, the firm’s existing property on Macau peninsula, is to have a new high roller area on level two with 40 tables; expected to open early in the fourth quarter. “What we’re really doing is

reorganising the real estate, making sure we have the right tables and the right configurations in the right places such that we can have the maximum number of independent operators providing us the greatest depth,” said Mr Bowie. A.E.

ortuguese consul-general Manuel Cansado de Carvalho visited the Business Daily newsroom last month. He emphasised the influence of Portuguese expatriates in Macau’s media industry, especially at De Ficção – Multimedia Projects, the media arm of Project Asia Corp, which publishes several titles including this newspaper.

August 9, 2012 business daily | 5

MACAU

Youngsters rush to beat deadline for casino jobs Casino training courses will still be offered to students younger than 21 even though the law will bar them from gaming floors Xi Chen xi@macaubusinessdaily.com

other industries would be needed to create jobs. The government should offer interest-free loans to youths to fund further education if they could not find a job after graduating from secondary school. “People should be able to only repay the loan to the government once they secure work after gaining more skills,” he said.

Photo by Manuel Cardoso

total of 18 trainee croupiers aged under 21 are rushing to finish their training in the hope of finding work before November when a new law comes in to force that raises the minimum age for entry to a casino. The Macau Gaming Industry Employees Association runs the course. Association president João Bosco Cheang Hong Lok said his group would not raise the minimum age for course applicants to 21 when the new law came into effect. “The association will inform the applicants of the change in law. If they still insist on taking the course, they will be accepted,” he said. Mr Cheang said he supported the law to increase the minimum age for entering or working in casinos. “To some degree, the law can protect the youth in Macau, who are not mature and can be easily seduced into gambling,” he said. “However the government also needs to find other ways to assist the youth if they cannot work in casinos.” He said more job opportunities in

Worth the money The government will stop sponsoring free employment training courses at the end of this year. The gaming industry employees association has started offering unsubsidised courses for 4,500 patacas (US$563). Each course lasts three months and every intake has about 120 students. The association is currently running its third unsubsidised course. Mr Cheang said there were no more than 10 enrolments younger than 21 years of age for the course that starts after the law comes into effect.

The Macau Gaming Industry Employees Association is charging 4,500 patacas for training courses that used to be government-sponsored.

A total of 225 students are now taking the free or unsubsidised classes. Of these, 18 who are under 21 can still become croupiers because their courses are scheduled to finish before November. On Monday, the Legislative Assembly passed the bill that raises the minimum age for entering and

working in casinos from 18 to 21. The only people under 21 that will be allowed to work in casinos will be qualified technical staff, and only if the employer obtains special permission from the head of the Gambling Inspection and Coordination Bureau.

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business daily August 9, 2012

macau

Tighter control of utilities or face cascading cost increases A member of the Legislative Assembly wants government contracts with public utilities to spell out more clearly when the utilities can be paid more for their services Xi Chen

xi@macaubusinessdaily.com

Chan Meng Kam fears a parade of monopolies demanding more money from the government

egislative Assembly member Chan Meng Kam is calling for better government oversight of its long-term contracts with public utilities, saying he fears a domino effect as one monopoly after another demands more money from the public purse. Mr Chan voiced his concern in a written inquiry he put to the government this week. He said most public utilities held exclusive concessions, and that once they had monopolies in their respective markets it was difficult for the government to renegotiate their contracts. The contracts with bus operators and Macao Water Supply Co Ltd lacked terms that defined when and under what circumstances the

concessionaries could be paid more for their services, he said. Mr Chan warned of a domino effect as one utility followed another in demanding more money for their services. He said that now the bus operators had asked for an increase of 23 per cent in the government subsidy to run the buses, Macao Water Supply was asking for an increase of 26.2 per cent to supply water. Mr Chan called for a public hearing or Legislative Assembly committee meeting to look into concession contracts before the government increased the amount it paid any concessionaries. He also asked the government if it had any plans for stricter auditing of public utilities.

Corporate Notebook

Smaller insurance companies present their results S

everal insurance companies are present in Macau through small local branches. Some of them represent a relatively minor activity for the company, which will often have its main regional branch and focus in Hong Kong. This time of year, the Official Gazette publishes the 2011 results from these local branches. The last installment brought us the accounts of three additional companies. Two of them – QBE Insurance (International), Limited and MSIG Insurance (Hong Kong) Limited – published the Macau branches results from their general insurance activities. The other – Crown Life Insurance Company – published the results of its small life insurance activity. Their results confirm the general pattern defined by their bigger market siblings. General insurance is generally profitable in the current economic conditions, life insurance is a tougher activity. Starting with the latter we note the commendable optimism of the activity report, as published in the Official Gazette. It consists of two sentences. The first states that according to the law, the activity report is being published. The second highlights

the increase in premium income, which rose by 18,848 patacas relative to the previous year. It is possibly the sole positive note that could be made. On total premiums of about 2.65 million patacas, which admittedly means a very small operation, the company extracted an operating loss of 1,3 million patacas. That is, a loss equivalent to, roughly, half the income. The other two companies, QBE and MSIG, operating in the more profitable general insurance business, both produced net profits. They are still relatively small concerns in the local market, accumulating gross premiums to the tune of 25.8 million and 51.3 million patacas. In the case of QBE, half of that amount – 12.8 million patacas - came from work and fire insurance. Car insurance, often another important source of revenue, is a modest activity for this company. For MSIG, the three main areas of business - work, fire and car insurance generated 41.75 million patacas in premium income, more than 80 percent of the total. From these basic sources of income, the two companies managed to generate net profits of about 2.5 million and 3 million patacas,

respectively. That corresponds to 9.7 percent and 5.9 percent of the gross premiums. Note that being registered as simple local offices of their main companies, these branches do not have real stock. They

operate with installation and operation funds that represent their equity, as it were, but a profitability ratio based on those values would be mostly meaningless. J.I.D.

Weather Beijing 31/22o C Changchun 27/13o C

Harbin 27/14o C

Xian 36/23o C Shanghai 28/25o C Chengdu 36/23o C Kunming 27/19o C Haikou 31/24o C Sanya 32/28o C

Guangzhou 33/25o C

MACAU (6-11 August) Day

Temperature

Humidity

08/06

28/33o C

50/90 %

08/07

28/34o C

45/95 %

08/08

27/32o C

50/95 %

08/09

27/32o C

50/95 %

08/10

27/32o C

50/95%

08/11

27/31o C

55/95 %

Shenzhen 33/27o C

ASIA (today)

Hong Kong 32/28o C

Manila

TOKYO

Jakarta

30/24o C

32/26o C

28/24o C

31/24o C

Macau 33/27o C

Bangkok

SEOUL

K. lumpur

31/26o C

SINGAPORE

32/24o C

34/25o C

taipei

33/27o C

August 9, 2012 business daily | 7

MACAU

Summer vacations a timely airport boost Passenger numbers, aircraft movements touched records last month Tony Lai tony.lai@macaubusinessdaily.com

ore passengers came through Macau International Airport last month than at any other time in the past four years, and most were holidaymakers. The Macau International Airport Co Ltd said 423,000 people used the facility last month, its highest monthly traffic since August 2008, when the airport handled 425,814 passengers. Passenger numbers increased by 11.6 percent over the same time last year. The result is more impressive when the negative effects of typhoon Vicente are factored in. Some 32 flights were cancelled when bad weather set in for about 15 hours at

423,000

Passengers moved through the airport last month

the end of last month. Heavy use from holidaymakers heading overseas on vacation and increased tourist arrivals created “significant growth” last month, the airport company said. Passenger numbers were also boosted by new routes from the four airlines that have commenced services to Macau this year. The airport company said new routes had “provided travellers with more flight options”. They helped set a new record for aircraft movements. Officials reported 3,660 aircraft movements last month, a 9-percent increase from one year earlier and the second highest ever recorded. There were 3,709 aircraft movements in April 2009. Mandarin Airlines Ltd and Vietnam Airlines Co Ltd opened routes between Macau and Taiwan and Vietnam in April. Last month, Thai Smile Air and Air Busan started operating the routes between Macau to Thailand and South Korea. The airport company said markets in Southeast Asia were performing well, with passenger numbers up by about one-third in year-on-year terms. More than 37 percent of passengers using the airport come from an Asean country. Southeast Asia is

Gas distributor to pay govt 10 pct of profits

atural gas distributor Companhia de Gás Natural Nam Kwong Ltda must pay 10 percent of pre-tax profit to the government, according to the concession contract. Details of the contract were published in yesterday’s Official Gazette, ratifying a deal that was signed on July 27. The contract guarantees a minimum annual profit margin of 9 percent to Nam Kwong, as is the case for Macao Water Supply Co Ltd. If Nam Kwong’s margin is wider, 60 percent of the excess profit must be used to lower gas charges to businesses and households. The vice-general manager of the state-owned company, Tang Chao Hui, said last month that management expected to recoup its 1 billion pataca (US$125 million)

investment within 15 years. The contract says the company’s pipe network should have the capacity to distribute 150.4 million cubic metres a year. Nam Kwong says it expects the network to reach 100,000 customers “in the medium term”. Under the terms of the contract, the company has three months to produce a report on possible sites for natural gas filling stations for vehicles, and 12 months to build a pilot filling station to supply at least 20,000 cubic metres of gas a day. The company has given the government a bank guarantee of 30 million patacas to cover any compensation or penalties. Any dispute between the parties will be settled by arbitration, and their decision cannot be challenged in court. V.Q.

Passenger growth at the airport is up by about 6.5 percent for the year to July 31.

the airport’s biggest source market. The mainland and Taiwan are the next biggest, with 32 percent and 31 percent of arrivals. Since the start of this year, more than

2.45 million passengers have used the airport – a 6.5 percent increase on the same time last year – and aircraft movements have increased by 2 percent to 23,000 flights.

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business daily August 9, 2012

greater china

China Medical bonds plunge 85 pct Company misses interest payments, bonds on sale Corp. filed for bankruptcy protection in March, owing about US$1.8 billion to bondholders. Its stock and bonds plunged after Carson Block’s Muddy Waters LLC accused it of overstating forestry assets, which SinoForest denied. China Medical has missed US$9.6 million of interest payments, according to a June 15 petition filed in the Cayman Islands. The company said in a U.S. regulatory filing in November that it had US$206.5 million in cash as of September 30. PricewaterhouseCoopers resigned as its auditor in April, according to Xiaofan Zhang, a spokesman for the accounting firm. The company, de-listed from Nasdaq, is being sued in American and Cayman courts

nvestors in China Medical Technologies Inc.’s US$398 million of convertible bonds face an 85 percent loss as the device maker skips interest payments and doesn’t respond to questions. Buyers are offering about 15 cents on the dollar for debt of the Beijing-based medical device maker, according to Danny Mandel, a broker at Hapoalim Securities

USA Inc. Visium Asset Management LP, Whitebox Advisors LLC and Man Group Plc’s GLG Partners LP sued chief executive Wu Xiaodong last month in California state court. The stock fell 94 percent from its 2008 peak and was delisted by Nasdaq in March. China Medical hasn’t made a statement since December andhasn’trespondedpublicly to lawsuits amid questions

about the finances of U.S.listed Chinese businesses. Investors “have absolutely no assurances that there’s any cash at all at this company, despite all the balancesheet cash they reported,” William Frohnhoefer, an analyst at BTIG LLC, said in a telephone interview. Chinese companies listed on U.S. stock exchanges have come under increased scrutiny since Sino-Forest

US$398 mln Value of convertible bonds at stake

Politics at heart of China murder trial Issue a major factor in the succession process

he murder trial of former Chinese leader Bo Xilai’s wife which opens today goes to the heart of a corruption scandal that has rocked the Communist Party of China ahead of a 10-yearly handover of power. The charismatic and ambitious Mr Bo saw his promising political career brought to a dramatic halt earlier this year when a key aide fled to a U.S. consulate and accused his boss’ wife of involvement in the murder of a British businessman. The move blew open a political scandal that has exposed deep rifts in China’s ruling Communist party as the country’s most senior officials prepare to give way to a new generation of leaders later this year. Analysts say Mr Bo’s wife Gu Kailai, herself a celebrated lawyer, will almost certainly be found guilty of murdering British business associate Neil Heywood when she is tried in the eastern Chinese city of Hefei today. But they say the verdict – and the fate of Mr Bo himself – are tied to the bargaining currently taking place at the very highest levels of the par-

China Medical didn’t respond to faxed questions to its office about the bond payments, the lawsuits and whether it would restructure its debts. A woman who answered the phone at the Beijing office who didn’t provide her name said that Mr Wu had left the company, without giving more details. A security guard at the office of Beijing Yuande BioMedical Engineering Co., a wholly-owned unit of China Medical, listed as its address in regulatory filings, said no one was able to talk to the media.

‘Effectively uncheckable’ Wilmington Trust Co. filed a petition on behalf of bondholders on June 15 in the Cayman Islands, where China Medical was incorporated, to force it to liquidate, saying the company ignored its messages about the debt. Hedge funds holding US$108 million of bonds claimed in the July 16 lawsuit in Orange County Superior Court that they were cheated by Mr Wu. Neither China Medical nor Mr Wu have filed a response to either lawsuit, California and Cayman Islands court records show. Liquidators were appointed

premier Wen Jiabao, who favour economic and social reforms in China. Mr Bo’s Maoist-style “red revival” campaign which he mounted while party boss in the southwestern megacity of Chongqing drew accolades from the party’s traditionalist left but alarmed other senior figures. His political career has effectively been over since April when the party suspended him from his senior positions and placed him under investigation for violation of discipline – usually code for corruption.

‘Red revival’ blues

Bo Xilai (right) – From rising star to scandal

ty over who will run China for the next decade. The wife of the former Chongqing party chief is said to have confessed to murder, South China Morning Post reported on Tuesday, quoting a senior prosecutor with

direct knowledge of the case. “Apparently, some kind of agreement has been reached on the Bo Xilai case, and this certainly has been in the bargaining and the lobbying concerning the final decisions on the leadership

line-up,” said Joseph Cheng, a political analyst at Hong Kong’s City University who specialises in China. Observers have characterised Mr Bo’s fall from grace as a victory for outgoing president Hu Jintao and

Even before the Heywood affair came to light, Mr Bo had alienated many senior party members by openly lobbying to join the Politburo Standing Committee, the party’s top decision-making body, seven of whose nine members are due to step down later this year. He was also heavily criticised for blatantly ignoring judicial procedures during a fierce crackdown on organised crime that saw several people executed in Chongqing during his time as Communisty party secretary. Analysts say the scandal over Mr Heywood – who was found dead last November in his hotel room – gave his opponents the excuse that they were looking for to oust Mr Bo, and he is now thought to

August 9, 2012 business daily | 9

greater china for the company last month, according to an August 7 U.S. Securities & Exchange Commission filing. China Medical defaulted on US$150 million of 6.25 percent notes due 2016, missing a US$4.7 million interest payment in December. It failed to make a US$4.9 million payment on its US$248 million of 4 percent notes in February. “All the inputs and outputs, other than the capital raised overseas, were internal to China and effectively uncheckable,” BTIG’s Mr Frohnhoefer said. China Medical had legitimate products and sales, according to Cole Capener, who resigned as a director in 2007. Mr Capener said he quit to spend more time on his charity, Saving African Families Enterprise, not because of any financial improprieties. “It had a successful manufacturing facility, it had sales, it had income,” Mr Capener said in a telephone interview. “Clearly early on, in 2007, the company had money in the bank. I just can’t speak to what happened after that.” China Medical planned a debt restructuring to “improve its balance sheet,” the company said in its last regulatory filing dated December 13. It recommended bondholders contact its lawyers at Thorp Alberga in the Cayman Islands. Michael Alberga, a senior partner at the firm, didn’t respond to a phone call and an e-mail seeking comment. Bloomberg

be under house arrest. Chinese state media has said that Mrs Gu feared Mr Heywood posed a threat to the safety of her son – an indication, some experts believe, that she will be spared the maximum sentence of the death penalty. Mrs Gu’s trial is expected to last just one or two days. State-run media have touted the case as evidence that not even elites like Mrs Gu – the daughter of a renowned general – and Mr Bo are above the law. An editorial in the Global Times daily said it had “sent a message to society that nobody, regardless of his or her status and power, can be exempt from punishment if he or she behaves unscrupulously.” Political corruption is a major cause of public outrage in China, where many still live in poverty. But Steve Tsang, head of the China Policy Institute at Britain’s University of Nottingham, said that when it comes to determining the fate of Mr Bo and Mrs Gu, heeding public opinion comes second to winning consensus among leaders. “The real issue really is what to do with Bo Xilai,” he said. “That requires a lot of significant compromises between the two main power blocks in the top leadership. And that is the crux of the matter.” AFP

Green light for local govts’ debt securitisation New issues to be backed by future cash flows from public utilities

hina has approved three local government investment vehicles to issue asset-backed securities (ABS), in the latest move to bolster infrastructure investment and support growth in the face of a slowing economy. The approvals also mark another step towards reforming the country’s financial markets, this time by encouraging asset securitisation as a fundraising method. “The purpose is to keep funds flowing to local governments. They have projects, but banks face constraints in funding them, so they need other sources,” said Ethan Mou, rates strategist at Bank of America-Merrill Lynch in Hong Kong. Issuing ABS will make it easier for local government investment companies (LICs) to issue debt. The companies will issue notes backed by the future cash flows from assets such as toll roads and public utilities. Because interest payments are drawn from dedicated assets with proven cash flows, the structure allows the securities to obtain higher credit ratings than the issuer itself, lowering financing costs. Zhang Zhiwei, chief China economist at Nomura Securities Co. Ltd, said the move helps out the central government as well. “They probably do not want to see banks bear all the burden, so they like to diversify financing options for local governments as well. If it’s used to finance old investments, it would still free up capacity for banks to lend to new investments.” Mr Mou said the main buyers for these securities were mostly likely to be investment funds and smaller commercial banks, while systemically important institutions would steer clear. Such institutions are still dealing with the aftermath of China’s 2008/10 stimulus plan, when the central government ordered banks to lend liberally to local governments to support

Another step in the reform of national capital markets

infrastructure investment. “The last stimulus package was very successful in boosting China’s economic growth rate. But it also left China with the problem of nonperforming loans, and all that was concentrated in the banking sector,” said Mark Williams, an economist at Capital Economics.

Financial reform Beijing has been cautious about pushing securitisation. Stunned by the 2008/09 global financial crisis, authorities pulled the plug in 2008 on a three-yearold pilot that had rolled out 17 deals worth 67 billion yuan (US$10.5 billion) between 2005 and 2008. But authorities are now pushing ahead in an effort to sustain the flow of investment in an economy that grew at its slowest pace in three years in the second quarter. In June they re-launched the pilot, approving an initial quota allowing 50 billion yuan (US$7.8 billion) in bank assets to be packaged and sold to investors. The quota is small compared with a banking system with 76 trillion yuan in assets. The latest approvals for ABS, which apply to non-financial

The three local government investment companies They are Shanghai Pudong Road and Bridge probably do Construction Co, Nanjing Public Utility not want to see Holdings and Ningbo banks bear all the Urban Construction Investment Holdings, burden, so they like sources told Reuters. China’s local governto diversify financing ments are generally options for local forbidden from diissuing bonds or governments as well. If rectly borrowing from banks, so municipalities typiit’s used to finance old cally take on debt via investments, it would special-purpose investcompanies. still free up capacity for ment Ningbo Urban Construction Investment banks to lend to new Holdings and Naninvestments jing Public Utility Holdings each plan Zhang Zhiwei, to issue 1 billion yuan Nomura Securities Co. Ltd in notes, the sources said. Shanghai Pudong Road and Bridge Confirms, are separate from the struction plans to raise 500 million yuan, they said. bank securitisation plan. The National Association of The steps on securitisation Financial Market Institutional fit in with broader reforms Investors (NAFMII), an industry initiated this year, including organisation established by the moves to allow banks more central bank to help supervise room to decide on the interest the country’s bond market, rates they offer depositors and announced the approvals on charge borrowers. Reuters its website on Tuesday.

Taipei, Beijing set to sign key investment pact Agreement seen as a bold step towards reconciliation

aiwan will sign a key investment pact with China at a top-level meeting today, but anti-Beijing critics remain deeply sceptical of closer ties with the “rascal” mainland government. China’s chief negotiator Chen Yunlin will put his name under the much-delayed agreement in Taipei, providing a legal umbrella for the more than 80,000 Taiwanese businesses operating in China. Taiwan’s China-friendly

government has described the new pact as a milestone, reached two years after the Economic Cooperation Framework Agreement, or ECFA, eased tariff restrictions and gave trade a major boost. The ECFA was widely characterised as the boldest step yet towards reconciliation. “The investment protection agreement is of significance as it is the first agreement to be signed after ECFA,” Mr Chen’s Taiwanese counterpart

Chiang Pin Kung said at a press conference ahead of the meeting. This is the eighth time in four years that Mr Chen and Mr Chiang meet for talks – unthinkable a decade ago in the absence of formal diplomatic ties but which have now become almost routine. But despite the expanding interdependence – reflected in an estimated Taiwanese investment on the mainland well in excess of US$100 billion – many question the merit of

pursuing closer links with China. Even so, once-fierce hostility to closer ties with China may be gradually waning. The Democratic Progressive Party, Taiwan’s leading opposition party, has said that unlike previous talks it will not mobilise its supporters to take to the streets. The investment pact to be inked this week, along with a more technical customs pact, has been the subject of significant delays. AFP

10 |

business daily August 9, 2012

asia Billionaire Wee to step down

Rupee forecasts cut

Wee Cho Yaw, the 83-year-old billionaire who turned a local Singapore bank into Southeast Asia’s thirdbiggest lender, plans to step down as chairman of the family-controlled United Overseas Bank Ltd. Mr Wee will give up his role to Hsieh Fu Hua, a former president at Temasek Holdings Pte in April, according to an exchange filing yesterday. The lender also reported a 12 percent increase in second-quarter profit to S$713 million (US$574 million).

Global lenders from Barclays Plc to Commonwealth Bank of Australia are cutting rupee forecasts as the weakest monsoon since 2009 leads the Reserve Bank of India to reduce growth estimates. Barclays predicts the rupee will end the year at 53.17 per dollar, compared with its earlier estimate of 48.83. Commonwealth Bank lowered its forecast to 54 from 48.50, while Westpac Banking Corp. cut its estimate to 53.98 from 53.50. HSBC Holdings Plc maintained its prediction of 57.

Japan sales tax bill at risk Noda’s Democrats offer polls in ‘near future’ Yuko Yoshikawa and Tetsushi Kajimoto

apan’srulingDemocratsyesterday offered to call an election in the “near future” to save their sales tax increase plan after the opposition demanded a commitment to early polls in return for backing the bill in an upper house vote. The opposition has yet to formally respond to the pledge, but first reactions suggested it was too vague. “[PM Noda] will go to the people in the near future when the bill is enacted,” Fumio Kishida, parliamentary affairs chief for the opposition Liberal Democratic Party (LDP), quoted his Democrat counterpart as saying. It is the first time the Democrats have made such a pledge, but Mr Kishida told reporters it was not enough. “We won’t be satisfied with promise of ‘near future’.” LDP number two Nobuteru Ishihara said nothing short of an immediate

election would do. Elections are not due until August 2013 and Prime Minister Yoshihiko Noda’s Democrats have long resisted demands to bring them forward, with opinion polls showing they would lose badly. The passage of the plan to double the sales tax by 2015 had appeared assured after the Democrats and two main opposition parties struck a deal in June and passed it in the lower house. But several fringe parties filed censure and no-confidence motions against Mr Noda and his cabinet on Tuesday and the LDP seized the opportunity to pile on more pressure. It threatened to file its own censure and no-confidence motions against him and his government, which would effectively block the tax vote and deem the June deal void - unless the Democrats agreed to bring

forward general elections. Markets have long factored in the tax plan’s safe passage and the renewed uncertainty put government bonds under pressure. “The tax bill is expected to pass eventually, but with JGB yields already headed up, it’s just another reason to sell,” said a fixed-income fund manager at a Japanese asset management firm. Mr Noda has staked his political future on his plan to double the sales tax to 10 percent by 2015 in an effort to curb a snowballing public debt, splintering his party in the process. The upper house vote was initially scheduled for yesterday, but got pushed back following the noconfidence and censure motions. The Democrats should still be able to defeat the motions unless 15 or more MPs vote with the opposition. Reuters

Philippine July inflation quickens Accelerates to six-month high on food costs

hilippine inflation accelerated to a six-month high in July as the costs of food and utilities climbed, reducing scope for the central bank to cut interest rates further. Price gains may be exacerbated by heavy monsoon rains that have flooded the capital and nearby provinces, posing a threat to the country’s ricegrowing areas. The central bank governor said, however, that inflation was expected to remain at manageable levels, and analysts still saw room for a fourth interest rate cut sometime this year. The consumer price index in July rose 3.2 percent from a year earlier, the statistics office said, faster than market estimates and picking up from 2.8

KEY POINTS Inflation at 6-month high Outlook remains for inflation at manageable levels – c.bank Recent flooding, torrential rain to put upward pressure on prices Food prices are likely to stay high due to weather-related supply shocks

Analysts see room for fourth rate cut this year

percent in June. The central bank had forecast 2.6 to 3.5 percent inflation in the month. The index rose 0.3 percent in July from the previous month. Core inflation, which strips out some of the more volatile components, picked up pace to 4.1 percent from a year earlier after the previous month’s 3.7 percent.

Close watch Food and non-alcoholic beverage costs rose 2.3 percent last month from a year earlier. Fuel, electricity and water prices climbed 5 percent, according to yesterday’s release. Transport costs added 0.7 percent. “This bears watching to see the duration and extent of the up move. The overall assessment of manageable inflation remains,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco told reporters. Inflation averaged 3.1 percent in the seven months to July, near the low end of the central bank’s 3 to 5 inflation target this year. “The recent weather tragedy has inflicted significant damage to infrastructure and farming output. While the actual damage is yet not determined, short-term supply shocks are anticipated and likely to fuel inflationary pressures,” said Trinh Nguyen, economist at HSBC in Hong Kong. Analysts say that so long as inflation remained benign there was scope for a fourth interest rate cut this year if pressures from a slowdown in the global economy threaten the country’s strong growth momentum. “The primary risk is food prices,” Edward Teather, a Singapore-based economist at UBS AG, said before the report. “It may tick up a little bit and

August 9, 2012 business daily | 11

asia Japan account surplus beats estimates

Thai C.Bank confident on credit growth

Japan posted a bigger-than-expected current-account surplus in June as oil prices fell to a low for this year, easing concern that the nation is at immediate risk of needing overseas funding to service its debt burden. The excess in the widest measure of the nation’s trade was 433.3 billion yen (US$5.51 billion), compared with a 215.1 billion yen in May, the Ministry of Finance said yesterday.

Thailand’s central bank said yesterday its monetary policy committee decided against cutting interest rates, currently at 3.0 percent, in July because economic growth was close to potential and credit growth robust. “Further easing of monetary policy at an early stage would thus help to shore up confidence and sustain private investment growth,” the bank said in minutes of its July 25 meeting.

Seoul proposes raising taxes on rich

Opposition wants PM Yoshihiko Noda (right) to promise polls ‘immediately’

that, coupled with the strength of the domestic economy, means the central bank may take a while before it pulls the trigger again.” Ms Nguyen said that chances of a cut were increasingly likely, as the governor’s comments sounded dovish, and the central bank would also want to reduce the costs of sterilising the expansionary effects of foreign currency inflows. But she doubted whether the central bank would act on rates in September. “We expect the BSP to stay on hold at the next meeting to monitor price conditions,” she said. The BSP cut interest rates by 25 basis points to a new low of 3.75 percent on July 26, the third reduction this year, to shield the economy from slower global growth and temper a rising peso that is hurting exports and remittances.

outh Korea plans to raise 1.7 trillion won (US$1.5 billion) in additional tax revenue from next year through 2021 by raising levies on corporations and investors as officials grapple with rising welfare costs. The government’s annual tax review proposes increasing the minimum corporate tax to 15 percent from 14 percent on companies with annual net income over 100 billion won, the Finance Ministry said yesterday in a statement. Income tax on annual investment earnings would start from 30 million won, down from 40 million won, and varying rates will apply to derivative trades, it said. “The 2012 tax revision aims to respond to the European fiscal crisis and the sluggish global economy, while broadening the tax base for the country as the costs of an aging population rise,” Finance Minister Bahk Jae Wan told reporters at a briefing on the tax plan.

Philippine financial markets and offices reopened yesterday even as a fifth of the Manila region remained under water after the worst flood in three years. The weather bureau dropped its rainfall warning to yellow, the lowest in its threestep color-coded system that moves up to green and red. Tuesday’s deluge killed at least 15 people on the main Philippine island of Luzon and forced 130,000 to flee their homes, according to police and disaster officials. Flooding crippled transport links in the capital, forcing the closure of schools and offices.

Bloomberg

Malaysia trade surplus strong Outbound shipments up 5.4 percent in June buoyed by energy exports

Reuters/Bloomberg

Markets, offices reopen

The Finance Ministry is following through on tax pledges made by the ruling New Frontier Party, which aims to ensure wealthy citizens share the burden of growing social welfare costs. The NFP, which narrowly won parliamentary elections in April, is trying to hold on to the presidency in December elections. “It’s fair enough that the government wants to collect more taxes from the wealthy, but this isn’t the right time to do it,” Kim Hyeon Wook, an economist at SK Research Institute, said before the Finance Ministry released the details of the taxes. “This kind of tax reform may hit companies at a time when the economy could sharply turn into recession.” A levy on the principal of inflationlinked bonds would start from 2015, the statement said, and new taxes on derivative trades would take effect in 2016.

Imports of intermediate goods fell 5.3 percent; shows industrial output may decline

alaysia achieved its biggest trade surplus in three months in June, buoyed by energy exports, but a drop in imports of intermediate goods could mean the country’s trade-reliant economy may be starting to feel the pinch from global economic slowing. The Southeast Asian country yesterday reported a surplus of 9.2 billion ringgit (US$2.97 billion) for June, double May’s 4.6 billion ringgit and above the 7.9 billion ringgit of a year earlier. It was the biggest surplus since March’s 10.5 billion ringgit. The June surplus was above the median forecast of 5.2 billion ringgit by 17 analysts polled by Reuters. Exports were up 5.4 percent, above the

median forecast of 3.3 percent while imports rose 3.6 percent, compared with an 8.6 percent forecast. In May, exports rose 6.7 percent from a year earlier, while imports had jumped 16.2 percent on year. Exports of electronic products, which are one-third of Malaysia’s total, rose 2.1 percent in June on year, while exports of liquefied natural gas rose 25.6 percent. In June, imports of intermediate goods – used to make other products, usually to be exported – fell 5.3 percent, in an indication global slowing may be starting to affect Malaysia’s industrial output. Today, Malaysia will report industrial output data for June.

Azrul Azwar Ahmad Tajudin, chief economist of Bank Islam, said he is concerned the import numbers “could imply slower momentum in domestic demand. The 5.3 percent decline in intermediate goods could translate into sluggish industrial production for the next few months.” With falling commodity prices – earnings from palm oil in June were 14 percent below a year earlier – Mr Azrul said Malaysia “is losing an important cushion to face sluggish global demand for manufactured goods”. June’s 5.4 percent rise for exports showed how Malaysia depends on strong Asian demand for liquefied natural gas and petroleum products to shore up sluggish growth in electronic shipments. A drop in exports of electrical and electronic items to the EU were offset by rises for China, the United States and Japan. In June, Malaysia’s exports to China were up 13.2 percent from a year earlier while they rose 4.9 percent to the U.S. Exports to the European Union were down 8.4 percent. Malaysia’s economy grew at an annual pace of 4.7 percent in the first quarter of 2012, slowing from the previous three months as firm domestic demand helped offset an export drop. Reuters

12 |

business daily August 9, 2012

MARKETS Hang SENG INDEX PRICE

Day %

VOLUME

PRICE

Day %

VOLUME

AIA GROUP LTD

26.8

-0.1862197

22370171

CHINA UNICOM HON

12.26

0.3273322

27110356

ALUMINUM CORP-H

3.35

-1.179941

13122716

CITIC PACIFIC

11.68

0.6896552

2897245

SANDS CHINA LTD

BANK OF CHINA-H

2.97

-0.3355705

208786187

BANK OF COMMUN-H

5.25

0.3824092

14406529

NAME

CLP HLDGS LTD

66.9

-0.5204461

2135161

CNOOC LTD

15.88

0.1261034

48424327

COSCO PAC LTD

BANK EAST ASIA

28.1

0.1782531

1594921

10.68

-0.3731343

4670808

BELLE INTERNATIO

14.6

-2.536716

12979660

ESPRIT HLDGS

11.2

-12.22571

38806144

BOC HONG KONG HO

24.2

0.8333333

13036674

HANG LUNG PROPER

27.2

-2.158273

6298319

CATHAY PAC AIR

12.36

-4.334365

11847661

HANG SENG BK

109.7

0.3659652

874610

CHEUNG KONG

109.4

-0.0913242

4971387

HENDERSON LAND D

47.35

-0.8376963

3921834

7.88

1.808786

43016881

HENGAN INTL

72.45

0.55517

2006779

CHINA COAL ENE-H CHINA CONST BA-H

5.32

-0.1876173

170310814

CHINA LIFE INS-H

21.35

0.2347418

21004427

CHINA MERCHANT

24.15

1.470588

3455427

CHINA MOBILE

89.15

0.1685393

8717118

CHINA OVERSEAS

17.68

-1.995565

24840289

CHINA PETROLEU-H

7.33

-0.4076087

51383753

CHINA RES ENTERP

23.3

2.192982

5178857

CHINA RES LAND

15.14

-1.303781

8603700

CHINA RES POWER

15.62

0.5148005

8280600

CHINA SHENHUA-H

30.4

1.842546

17899874

HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC HUTCHISON WHAMPO

0.3344482

3438088

109.1

0.9250694

4352969

67.5

0.2227171

11632265

69.05

-0.0723589

9078457

IND & COMM BK-H

4.56

-0.4366812

195896928

LI & FUNG LTD

15.5

11406702

MTR CORP

27.45

-0.1818182

1039403

NEW WORLD DEV

10.18

-1.165049

10855251

PETROCHINA CO-H

9.75

1.141079

118084489

PING AN INSURA-H

61.45

0.1629992

4004123

NAME

PRICE

Day %

60.55

-0.8190008

2363078

1.419878

12989601

SINO LAND CO

13.64

-2.292264

7429604

SUN HUNG KAI PRO

100.2

0.804829

7730556

POWER ASSETS HOL

SWIRE PACIFIC-A

VOLUME

94.4

-1.100052

2409728

TENCENT HOLDINGS

235.6

0.3407155

3029371

TINGYI HLDG CO

19.08

-2.053388

4598100

9.25

-3.645833

20211729

46.95

1.623377

5679897

WANT WANT CHINA WHARF HLDG

MOVERS

1 20190

INDEX 20065.52 HIGH

20188.88

LOW

19979.21

52W (H) 21760.33984 (L) 16170.35

19980

6-Aug

8-Aug

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.2

0.3134796

49150702

CHINA PACIFIC-H

25.5

0.990099

7115592

AIR CHINA LTD-H

5.14

-4.283054

13676702

CHINA PETROLEU-H

7.33

-0.4076087

51383753

ALUMINUM CORP-H

3.35

-1.179941

13122716

CHINA RAIL CN-H

6.44

-1.978691

ANHUI CONCH-H

21.3

-1.388889

12721739

CHINA RAIL GR-H

3.23

BANK OF CHINA-H

2.97

-0.3355705

208786187

CHINA SHENHUA-H

BANK OF COMMUN-H

5.25

0.3824092

14406529

BYD CO LTD-H

14.5

0.4155125

3150528

CHINA CITIC BK-H

4.03

0.4987531

CHINA COAL ENE-H

7.88

1.808786

CHINA COM CONS-H

6.78

8624610

CHINA CONST BA-H

5.32

-0.1876173

170310814

NAME

PRICE

DAY %

VOLUME

13.46

1.508296

38329852

ZIJIN MINING-H

2.63

-1.12782

27933556

17690900

ZOOMLION HEAVY-H

9.33

-1.582278

10083492

-1.223242

39540284

ZTE CORP-H

11.48

1.234568

13825464

30.4

1.842546

17899874

CHINA TELECOM-H

4.22

-0.2364066

33476045

DONGFENG MOTOR-H

11.7

0.6884682

17701910

24865279

GUANGZHOU AUTO-H

5.76

4178399

43016881

HUANENG POWER-H

5.13

0.984252

47822000

IND & COMM BK-H

4.56

-0.4366812

195896928

JIANGXI COPPER-H

18.04

1.234568

14713332

3.5

1.156069

31220997

PETROCHINA CO-H

9.75

1.141079

118084489

21.35

0.2347418

21004427

PICC PROPERTY &

8.62

11064754

CHINA LONGYUAN-H

5.01

1.008065

10199452

PING AN INSURA-H

61.45

0.1629992

4004123

CHINA MERCH BK-H

14.28

4831298

SHANDONG WEIG-H

8.66

0.1156069

1972594

CHINA COSCO HO-H CHINA LIFE INS-H

NAME YANZHOU COAL-H

MOVERS

4 9930

INDEX 9867.76 HIGH

9920.51

LOW

9797.3

CHINA MINSHENG-H

7.24

-0.6858711

12988465

SINOPHARM-H

24.3

3.404255

9766908

52W (H) 11916.1

CHINA NATL BDG-H

8.17

-0.969697

29404986

TSINGTAO BREW-H

44.6

-0.3351955

1663686

(L) 8058.58

12.28

0.6557377

7721754

WEICHAI POWER-H

21.85

-1.131222

1564456

CHINA OILFIELD-H

9790

6-Aug

8-Aug

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.51

0.4

48305563

DAQIN RAILWAY -A

6.07

0.3305785

20995945

AIR CHINA LTD-A

5.77

-0.5172414

13366284

DATANG INTL PO-A

4.93

-0.804829

ALUMINUM CORP-A

6.18

0.8156607

13652157

DONGFANG ELECT-A

16.34

ANHUI CONCH-A

15.04

-0.1328021

13912150

EVERBRIG SEC -A

BANK OF BEIJIN-A

7.56

0.3984064

7860856

BANK OF CHINA-A

2.78

1.459854

22860605

GD POWER DEVEL-A

4.4

0.9174312

44940395

GF SECURITIES-A

10.23

0.4911591

17543482

GREE ELECTRIC

14850256

GUANGHUI ENERG-A

BANK OF COMMUN-A BANK OF NINGBO-A BAOSHAN IRON & S

4.24

-0.7025761

NAME

GD MIDEA HOLDING

NAME

PRICE

DAY %

VOLUME

SAIC MOTOR-A

12.51

0.4819277

11916827

5448562

SANY HEAVY INDUS

12.03

-0.4139073

13816805

0.06123699

11642485

SHANDONG GOLD-MI

34.77

-0.2295552

9276592

12.64

0.3971406

6021895

SHANG PHARM -A

11.2

0.1788909

9849757

9.68

-1.725888

11821335

SHANG PUDONG-A

7.73

0.520156

53821168

2.64

26422731

SHANGHAI ELECT-A

4.39

-0.678733

3412864

14.14

1.653487

21890282

SHANXI LU'AN -A

21.47

0.1399254

13041705

20.65

-1.71347

13797506

SHANXI XINGHUA-A

37.87

-0.8379157

1989247

12.87

0.0777605

9411399

SHANXI XISHAN-A

14.78

1.163587

19900020

15.03

-2.212101

7048075

GUIZHOU PANJIA-A

17.64

0.6849315

9328254

SHENZEN OVERSE-A

5.91

-1.5

27073442

CHINA CITIC BK-A

3.97

1.017812

15584053

HAITONG SECURI-A

9.84

0.3058104

42733185

SUNING APPLIAN-A

6.44

-1.829268

54121941

CHINA CNR CORP-A

3.77

-0.2645503

16645789

HANGZHOU HIKVI-A

29.72

-2.429416

2018729

TSINGTAO BREW-A

-0.6428989

1885857

CHINA COAL ENE-A

7.78

0.7772021

10766548

HENAN SHUAN-A

63.8

0.1727116

850878

WEICHAI POWER-A

23.8

-0.5016722

4456580

CHINA CONST BA-A

4.04

0.4975124

20002900

HONG YUAN SEC-A

19.12

1.810437

20186293

WULIANGYE YIBIN

36.05

-1.475813

20094923

CHINA COSCO HO-A

4.37

-0.4555809

7122806

HUATAI SECURIT-A

9.56

0.104712

14625622

XIAMEN TUNGSTEN

46.06

10.00717

28382163

CHINA CSSC HOL-A

21.07

3715332

HUAXIA BANK CO

8.96

1.472254

21521086

YANGQUAN COAL -A

15.82

21984861

CHINA EAST AIR-A

3.91

-0.5089059

12925146

IND & COMM BK-A

3.78

1.069519

31185707

YANTAI CHANGYU-A

61.1

-0.2123142

1095595

CHINA EVERBRIG-A

2.78

0.3610108

26301715

INDUSTRIAL BAN-A

12.65

1.281025

32264491

YANTAI WANHUA-A

13.48

0.07423905

7621390

CHINA LIFE INS-A

18.73

1.188547

7853667

INNER MONG BAO-A

41.39

-3.113296

79018927

YANZHOU COAL-A

19.46

1.038422

6475161

CHINA MERCH BK-A

10.07

0.7

28736017

INNER MONG YIL-A

18.83

-0.2119767

9074512

YUNNAN BAIYAO-A

60.61

-0.6393443

1362478

BYD CO LTD -A

CHINA MERCHANT-A

10.9

0.4608295

8720683

INNER MONGOLIA-A

5.8

-3.010033

93277012

ZHONGJIN GOLD

22.24

-0.6699419

7187282

CHINA MERCHANT-A

21.34

0.9460738

15166155

JIANGSU HENGRU-A

29.07

-2.970628

4985482

ZIJIN MINING-A

3.97

-0.5012531

83374451

ZOOMLION HEAVY-A

9.72

-1.419878

28691313

11.48

-0.6060606

19817171

CHINA MINSHENG-A

6.02

0.6688963

53881288

JIANGSU YANGHE-A

142.01

-0.3788145

1182905

CHINA NATIONAL-A

6.44

3.870968

41308727

JIANGXI COPPER-A

22.06

2.271674

17398408

CHINA OILFIELD-A

16.9

-0.2361275

6001388

JINDUICHENG -A

12.79

1.507937

9792523

CHINA PACIFIC-A

21.48

0.04657662

16224364

JIZHONG ENERGY-A

14.86

2.06044

22096374

6.1

-0.3267974

20081770

KANGMEI PHARMA-A

15.12

-4.243192

19074823

252.8

0.3572846

1489341

40.19

-1.422615

6241280

CHINA PETROLEU-A CHINA RAILWAY-A

4.69

-0.212766

14695179

KWEICHOW MOUTA-A

CHINA RAILWAY-A

2.61

-0.3816794

19833094

LUZHOU LAOJIAO-A

CHINA SHENHUA-A

22.68

0.04411116

8637074

METALLURGICAL-A

2.33

-0.4273504

12788065

2.53

0.3968254

13385689

ZTE CORP-A

MOVERS

136

149

15 2410

INDEX 2389.795

CHINA SHIPBUIL-A

4.82

0.2079002

15203751

NINGBO PORT CO-A

CHINA SOUTHERN-A

4.14

0.2421308

16728016

PANGANG GROUP -A

3.84

41049887

CHINA STATE -A

3.13

0.3205128

26159063

PETROCHINA CO-A

9.02

0.1109878

11922303

HIGH

2404.58

CHINA UNITED-A

3.72

-0.2680965

35884800

PING AN BANK-A

15.04

0.5347594

11754171

LOW

2350.12

CHINA VANKE CO-A

8.93

1.132503

42680473

PING AN INSURA-A

44.37

1.02459

12718645

CHINA YANGTZE-A

6.56

8316495

POLY REAL ESTA-A

10.75

1.606805

43281506

CITIC SECURITI-A

12.21

0.2463054

42022795

QINGDAO HAIER-A

10.76

-1.284404

8426654

CSR CORP LTD -A

4.32

13648937

QINGHAI SALT-A

35.55

1.600457

7130357

52W (H) 2932.14 (L) 2254.567

2350

6-Aug

8-Aug

FTSE TAIWAN 50 INDEX NAME ACER INC ADVANCED SEMICON

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

26.1

0.3846154

16406187

FORMOSA PLASTIC

84.9

5115863

TAIWAN MOBILE CO

105

0.4784689

7951511

25.05

3.298969

52296930

FOXCONN TECHNOLO

105

1.449275

9186796

TPK HOLDING CO L

358

2.1398

9198153

ASIA CEMENT CORP

39.3

1.28866

8433373

FUBON FINANCIAL

0.4709576

36072450

TSMC

80.5

-1.105651

40138071

ASUSTEK COMPUTER

274

3.787879

7606060

HON HAI PRECISIO

87.3

27285830

UNI-PRESIDENT

54.6

0.9242144

20588855

AU OPTRONICS COR

8.78

6.166868

127792138

HOTAI MOTOR CO

218.5

5.811138

1782374

12.75

0.3937008

24630331

CATCHER TECH

141

2.545455

24614208

HTC CORP

236

-1.871102

40457708

1.576182

41356260

HUA NAN FINANCIA

17.1

0.5882353

8306130

YUANTA FINANCIAL

14.05

11417408

CHANG HWA BANK

16.5 -0.3021148

10076162

LARGAN PRECISION

598

0.1675042

1619278

YULON MOTOR CO

56.4

2.545455

14668734

CHENG SHIN RUBBE

73.8 -0.4048583

10178659

LITE-ON TECHNOLO

35.9

1.269394

5376605

CHIMEI INNOLUX C

9.19

6.984866

73205558

MEDIATEK INC

282

0.3558719

17880103

CHINA DEVELOPMEN

7.09

0.1412429

35009170

MEGA FINANCIAL H

23.3

1.969365

65094453

CHINA STEEL CORP

26.4 -0.3773585

19902962

NAN YA PLASTICS

59.5

0.8474576

6603813

CHINATRUST FINAN

18.15 -0.8196721

22917966

PRESIDENT CHAIN

162

3286943

8628463

QUANTA COMPUTER

76.2

2.419355

9627355

11629151

SILICONWARE PREC

33.4

1.212121

14436263

CATHAY FINANCIAL

CHUNGHWA TELECOM

88.6 -0.4494382

COMPAL ELECTRON

27.6

0.729927

1.226994

4351623

SINOPAC FINANCIA

12.1

-1.22449

20185602

FAR EASTERN NEW

DELTA ELECT INC

34.2 -0.1459854

8811623

SYNNEX TECH INTL

1.404056

2884025

FAR EASTONE TELE

72.4

0.9762901

11727404

TAIWAN CEMENT

35.5 -0.5602241

7937031

30853786

FIRST FINANCIAL

18.4 -0.2710027

FORMOSA CHEM & F

81.1

0.6203474

4369436

TAIWAN FERTILIZE

FORMOSA PETROCHE

88.3

0.6841505

2062377

TAIWAN GLASS IND

TAIWAN COOPERATI

17.05

11082567

72.8

1.392758

9757439

1.265823

2230333

UNITED MICROELEC WISTRON CORP

32.3 -0.6153846

MOVERS

11504253

5 5050

INDEX 5020.07 HIGH

5042.58

LOW

4986.85

52W (H) 5621.53 4980

(L) 4643.05 6-Aug

8-Aug

August 9, 2012 business daily | 13

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

MElco crowN ENTErTAINMENT

MGM cHINA HolDINGS

20.0

19.8

Max 19.98

Average 19.821

Min 19.66

last 19.98

19.6

Max 27.95

SANDS cHINA lTD

Average 27.477

Min 27.25

last 27.5

28.0

13.0

27.8

12.8

27.6

12.6

27.4

12.4

27.2

Max 12.82

SjM HolDINGS lTD

Average 12.513

Min 12.26

last 12.8

12.2

wyNN MAcAu lTD

25.1 24.9

15.3

18.1

15.1

17.9

14.9

17.7

24.7 24.5

Average 24.795

Max 25.1

Min 24.3

24.3

last 25

14.7 Max 15.2

Average 15.007

Min 14.78

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Sep12

93.06

-0.651222376

-5.876403358

110.8699951

77.69999695

BRENT CRUDE FUTR Sep12

111.16

-0.75

5.947388486

124.1999969

88.90999603

GASOLINE RBOB FUT Sep12

297.54

-0.53154147

12.01295034

320.4399824

237.3699903

GAS OIL FUT (ICE) Sep12

944.25

-0.237717908

5.062586926

1046.5

798.5

2.976

0.4048583

-9.351203168

4.630000114

2.221999884

NATURAL GAS FUTR Sep12 HEATING OIL FUTR Sep12 METALS

297.9

-0.633755837

4.566674857

332.9600096

251.5599966

Gold Spot $/Oz

1607.15

-0.5033

2.6992

1921.18

1522.75

Silver Spot $/Oz

27.9113

-0.3168

0.2741

44.2175

26.085

Platinum Spot $/Oz

1402.5

-0.5143

0.5737

1915.75

1339.25

Palladium Spot $/Oz

583.7

-0.3245

-10.6809

792.93

537.54 1832.25

LME ALUMINUM 3MO ($)

1909.5

1.623203832

-5.47029703

2476

LME COPPER 3MO ($)

7580

1.134089393

-0.263157895

9304

6635

LME ZINC

1873

1.297998918

1.517615176

2311

1718.5

3MO ($)

LME NICKEL 3MO ($)

15750

-0.347991142

-15.82041689

22600

15236

15.665

-0.508097809

4.224883566

13.95499992

795

-0.687070581

35.60767591

820.5

499

WHEAT FUTURE(CBT) Dec12

893.75

-0.996953752

24.13194444

953.25

629.5

SOYBEAN FUTURE Nov12

1560.75

-0.319335782

29.60348765

1691.5

1115.75

COFFEE 'C' FUTURE Sep12

172.25

-0.231682595

-26.46744931

288.8500061

SUGAR #11 (WORLD) Oct12

21.4

-0.093370682

-6.26368813

COTTON NO.2 FUTR Dec12

74.3

-1.458885942

-15.4143898

AGRICULTURE ROUGH RICE (CBOT) Sep12 CORN FUTURE

Average 17.866

Dec12

PRICE MAJORS

ASIA PACIFIC

CROSSES

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

last 18.08

Min 17.56

DAY %

YTD %

(H) 52W

3.3794 0.6305 -3.5373 -4.6987 -1.6999 0.1364 0.147 -1.0422 -3.9287 0.0634 4.0861 1.0411 5.0337 -4.3254 -5.015 1.3038 5.5325 3.3702 4.9143 3.125 0.0097

(L) 52W

1.0857 1.6618 0.9972 1.4549 84.18 8.0441 7.8113 6.4236 57.3275 32 1.3199 30.716 44.35 9662 88.637 1.24736 0.88861 9.2841 11.6793 111.94 1.0311

0.9388 1.5235 0.7071 1.2043 75.35 7.9823 7.7526 6.2769 44.9525 29.78 1.2001 28.792 41.57 8507 72.057 1.00749 0.77553 7.7018 9.6245 94.12 1.0288

(H) 52W

(L) 52W

2.38

8.181816

3.25

1.88

3127073

150.0999908

CROWN LTD

8.58

0.2336449

6.056858

9.29

7.45

1242793

25.77999878

19.23999977

AMAX HOLDINGS LT

0.061

-29.88506

0.119

0.055

102.25

64.61000061

BOC HONG KONG HO

24.2

0.8333333

31.52174

24.45

14.24

13036674

0.234

1.739129

0.335

0.204

3.05

-0.3267974

8.928573

3.62

2.3

10000

CHINA OVERSEAS

17.68

-1.995565

36.20956

19.16

9.99

24840289

CHINESE ESTATES

9.32

1.304348

-25.44

13.68

8.3

1000

CHOW TAI FOOK JE

9.81

2.830189

-29.52586

15.16

8.4

16408300

EMPEROR ENTERTAI

1.39

-0.7142857

25.22522

1.6

0.97

1718425

FUTURE BRIGHT

1.04

147.6191

1.1

0.3

1236000

GALAXY ENTERTAIN

19.98

1.731161

40.30899

24.95

8.69

12156722

HANG SENG BK

World Stock MarketS - Indices PRICE

YTD %

-0.3117 -0.0894 -0.4833 -0.5155 0.1662 -0.0213 -0.0219 0.0833 -0.3009 -0.1586 -0.4174 -0.1034 -0.1174 -0.0738 0.4868 0.0391 0.4356 0.4715 0.5007 0.6933 0

ARISTOCRAT LEISU

NAME

PRICE

CENTURY LEGEND

COUNTRY

DAY %

1.0554 1.5641 0.9725 1.2352 78.24 7.9887 7.756 6.3613 55.235 31.53 1.2457 29.967 41.739 9479 82.573 1.20113 0.7897 7.869 9.8671 96.64 1.03

MACAU RELATED STOCKS

CHEUK NANG HLDGS

NAME

Max 18.08

CURRENCY EXCHANGE RATES

NAME ENERGY

17.5

last 15.1

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13168.6

0.3894794

7.784206

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

3015.86

0.8679191

15.76532

3134.17

2298.89

FTSE 100 INDEX

5811.5

-0.5091385

4.29304

5989.07

4791.01

DAX INDEX

6920.23

-0.6848499

17.32484

7194.33

4965.8

NIKKEI 225

8881.16

0.8843265

5.03599

10255.15

8135.79

DAY % YTD %

VOLUME CRNCY

109.7

0.3659652

19.04503

116.7

84.4

874610

HOPEWELL HLDGS

23.5

-1.67364

18.32829

24.658

18.56

1220200

HSBC HLDGS PLC

67.5

0.2227171

14.40678

72.05

11632265

HUTCHISON TELE H

3.72

-0.2680965

24.41472

3.86

2.53

4705700

LUK FOOK HLDGS I

19.04

-1.754386

-29.7417

46.15

14.7

2201409

MELCO INTL DEVEL

5.88

2.26087

1.906413

9.94

4.3

2970277

12.22

5.344828

27.39579

15.276

7.6

11209793 1909000

HANG SENG INDEX

20065.52

-0.03502295

8.848293

21760.33984

16170.35

CSI 300 INDEX

2389.795

0.03859561

1.877998

2932.14

2254.567

TAIWAN TAIEX INDEX

7319.8

0.3336321

3.502785

8170.72

6609.11

MIDLAND HOLDINGS

4.27

-0.4662005

7.990624

5.217

2.887

KOSPI INDEX

1903.23

0.8707865

4.244306

2057.28

1644.11

NEPTUNE GROUP

0.163

46.84684

0.205

0.08

2070500

S&P/ASX 200 INDEX

4312.561

0.4892622

6.310777

4448.5

3765.9

NEW WORLD DEV

10.18

-1.165049

62.6198

10.96

6.13

10855251

4090.709

0.1255391

7.030811

4234.734

3217.951

12989601

FTSE Bursa Malaysia KLCI

1635.92

0.2942763

6.871889

1647.94

1310.53

NZX ALL INDEX

797.137

-0.2606291

9.226734

806.015

700.441

SJM HOLDINGS LTD

PHILIPPINES ALL SHARE IX

3517.04

0.1275423

15.50062

3531.5

2695.06

SMARTONE TELECOM

HSBC Dragon 300 Index Singapor

594.54

-0.21

19.79

WYNN MACAU LTD

STOCK EXCH OF THAI INDEX

1214.13

0.4916445

18.41475

1247.72

843.69

HO CHI MINH STOCK INDEX

423.57

0.2532544

20.48642

492.44

332.28

Laos Composite Index

1015.38

-0.9926284

12.88773

1061.86

876.33

JAKARTA COMPOSITE INDEX

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

MGM CHINA HOLDIN

SANDS CHINA LTD

1.419878

13.89521

33.05

14.9

SHUN HO RESOURCE

1.13

1.28

0.82

SHUN TAK HOLDING

2.66

0.3773585

3.941644

4.148

2.241

7402979

15.1

0.8010681

20.74652

18.798

10.079

12686699

16.18

-0.2466091

20.38691

18.5

9.8

943500

18.08

2.961276

-7.282051

25.969

14.62

8117884

ASIA ENTERTAINME

2.81

-0.3546099

-52.21089

9.45

2.4

84922

BALLY TECHNOLOGI

41.89

-3.501497

5.889784

49.32

24.74

2152042

BOC HONG KONG HO

3.03

-0.6557377

26.39812

3.15

1.81

6227

GALAXY ENTERTAIN

2.47

0.4065041

32.08556

3.24

1.08

100

INTL GAME TECH

11.34

1.25

-34.06977

18.1701

10.92

4853383

JONES LANG LASAL

68.69

1.823303

12.12864

87.52

46.01

325577

LAS VEGAS SANDS

40.46

2.171717

-5.312426

62.09

34.72

11652674

MELCO CROWN-ADR

10.73

1.706161

11.53846

16.02

7.05

8562034

MGM CHINA HOLDIN

1.36

14.12333

1.9672

1.0025

13800

MGM RESORTS INTE

10.08

7.462687

-3.355708

14.9401

7.4

31565698

SHUFFLE MASTER

14.45

1.90409

23.29351

18.77

7.35

393170

1.91

4.371585

18.81266

2.4557

1.2624

1000

102.64

4.948875

-7.104714

154.7051

90.108

3457756

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

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business daily August 9, 2012

Opinion Iran’s big crisis: the price of chicken Meir Javedanfar

Iranian-Israeli Middle East analyst and teacher on contemporary Iranian politics at the Interdisciplinary Center in Herzliya, Israel

yatollah Ali Khamenei, the supreme leader of the Islamic Republic of Iran has a lot on his mind these days. Especially chicken. The rising price of this food staple is the cause of such anxiety among Iranian officials that last month, Iran’s police chief, Esmail AhmadiMoghaddam, urged the country’s TV stations not to broadcast images of people eating the birds. He was worried it could lead to social unrest. Khamenei is Iran’s most powerful man, but he knows the chicken crisis is one he must address. He needs to find a solution to it and, like any politician, someone to blame. None of the options available to Khamenei is attractive, a situation that’s increasingly the case in other areas, too. His country is being pushed ever further into international isolation and economic hardship by its insistence on pursuing a nuclearfuel programme that the rest of the world believes is designed to produce weapons, despite Iran’s protestations to the contrary. The supreme leader could, for example, blame the price of chicken – which has tripled since last year – on sanctions that the U.S. and the European Union imposed to deter Iran from continuing its nuclear-fuel plan. Yet that would mean admitting to both the West and ordinary Iranians that sanctions are having a big impact, something the regime is desperately trying to avoid. Iranian officials have instructed the news media not to discuss the effect that sanctions are having on the economy.

Blame game Another option would be to blame President Mahmoud Ahmadinejad, but that could backfire, too. Khamenei was once the president’s main backer. It was the supreme leader who allowed Ahmadinejad to go ahead with the subsidy-reform plan that has been a core driver of inflation. Escaping from international isolation doesn’t look any easier for Khamenei, either with regard to the nuclear issue or the turmoil in Syria, Iran’s most important ally in the region. One avenue Khamenei could take would be to stop supporting Syrian President Bashar al-Assad now, before it’s too late. That would mean ditching an ally in his hour of need and at a time when Assad has a fighting chance of holding on to power. An unfriendly Sunni regime could still take over in Damascus, and abandoning Assad would meanwhile damage Iran’s credibility among other friends in the region. If Assad can’t rely on Khamenei when the chips are down, for example, would Hezbollah leader Hassan Nasrallah be able to? Khamenei could also compromise on the nuclear programme to avoid subjecting his regime’s economy to

further pain of sanctions. But so far, that would require Iran to give up its insistence that it has the right to enrich uranium, a public defeat for the government. Judging by a speech he made late last month, Khamenei appears to think he can tough it out. “Long-term continuation of sanctions is not in the West’s interests,” he said. The logic of digging in is based on the belief that once Iran is a regional nuclear power, rivals such as Saudi Arabia, the U.S. and Europe might find they have no choice but to deal with Iran on its terms. Yet this carries risks, too: a nuclear bomb might make the regime even more

With the added impact of sanctions, Iran’s economy now faces one of its most serious economic crises since the 1979 revolution and there’s little sign of relief

isolated and subject to hostile policies from regional and Western countries than before.

Sanctions’ cost The supreme leader doubtless knows that there’s a substantial risk he’s wrong and that time is not on his side, but on that of the U.S. and its allies. Sanctions haven’t caused the feared increase in global oil prices, a result of Saudi intervention and a global economic slowdown. The current cost of sanctions to Iran, by contrast, is US$133 million a day in lost revenue – annualised, that would be about 10 percent of the country’s annual gross domestic product. Iran’s oil exports are down by 1.2 million barrels a day, or 52 percent. One way for Khamenei to improve the government’s standing at home against both internal and external pressure would be to try to address its perceived corruption and mismanagement of the economy. Here, too, Khamenei’s options are constrained. Should he begin a real campaign to fight corruption, he could turn vital supporters into enemies. The loyalty of many regime insiders is based on being allowed to profit. Nor can Khamenei easily provide an escape valve for popular anger by introducing political reforms – he believes his opponents would interpret any move to open up the system as a sign of weakness. Ahmadinejad was already ruining the economy before the U.S. and Europe introduced the latest rounds of much tougher sanctions. This is why two

heads of Iran’s central bank have resigned since the president was first elected to office in 2005. His populist spending policies have pushed up inflation and unemployment levels. The subsidy-reform policy is a good example. Under the programme, Ahmadinejad cut government support for certain goods and industries, but then distributed cash handouts to compensate. That increased the money supply and inflation rate. At the same time, his government failed to invest the money saved from the reduced subsidies, damaging productivity. The poultry industry was a case in point. Parliament speaker Ali Larijani has said Iran’s poultry farmers warned eight months ago about lack of feed for their chickens, yet the government did nothing to fix the problem. With the added impact of sanctions, Iran’s economy now faces one of its most serious economic crises since the 1979 revolution and there’s little sign of relief. Last week, the U.S. administration introduced more sanctions, including on Chinese and Iraqi banks doing business in Iran, to further tighten the noose. Two days later, the U.S. Congress followed up by voting in favour of further measures against Iran. Unless a solution is found, the price that Iran’s economy is paying for intransigence may turn its nuclear-fuel programme into a bigger danger to the existence of the regime in Tehran than to the state of Israel. Khamenei’s challenge is to find an answer to this dilemma, without making feathers fly. Bloomberg View

editorial council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief José I. Duarte Newsdesk Vitor Quintã (Chief Reporter) Tony Lai, Xi Chen Creative Director José Manuel Cardoso Designer Janne Louhikari Contributors Frederico Rato, Pereira Coutinho, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, John Si, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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August 9, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

How long for low rates? Kenneth Rogoff

Professor of Economics and Public Policy at Harvard University

Korea Herald Samsung Electronics has formed an alliance with Verizon, the biggest telecom company in the U.S., to boost content for smart TVs. The two companies will offer Internet Protocol television content, including video on demand, through the Verizon FiOS App on Samsung’s smart TV. Some 120 million consumers subscribing to Verizon telecom services will be able to view such content without using set-top boxes. The deal will also provide Samsung the opportunity to expand in the U.S. TV market.

Business Review Subway plans to operate 1,000 stores in India by 2015 through the franchise route. The brand is present in 50 Indian cities with 263 franchisee-run restaurants. The total investment of US$58 million to set up the planned number of stores will be made by local franchisees. Subway will invest in providing training and technical knowhow to its partners. The company is aiming to expand aggressively in tier-II and tier-III locations and hopes to generate employment opportunities for 15,000 people.

Jakarta Globe Southeast Asia’s largest budget carrier, AirAsia, officiated the headquarters of its new Asean unit in Jakarta yesterday. Tony Fernandes, chief executive of AirAsia Group, said AirAsia Asean was launched to anticipate an increase in flights between member states after the “open skies” policy takes effect in 2015. The policy is expected to liberalize the regional aviation market allowing airlines to serve routes in other countries. AirAsia Group currently serves more than 160 routes to 85 destinations, including 55 in the Asean region.

Bangkok Post Asean countries should synchronise their information to strengthen the Mice industry when the Asean Economic Community (AEC) kicks off in 2015. At Asean’s first joint public-private Mice forum, delegates discussed industry preparations to cope with the AEC. The number of Mice visitors to Thailand is expected to grow by 75 percent to 1.4 million by 2016, with industry revenue gaining 87 percent to 103 billion baht (US$3.27 billion). Mice visitors are projected to contribute 18.4 percent of total tourism revenues, representing 1.1 percent of gross domestic product.

ow long can today’s record-low, majorcurrency interest rates persist? Ten-year interest rates in the United States, the United Kingdom, and Germany have all been hovering around the once unthinkable 1.5 percent mark. In Japan, the ten-year rate has drifted to below 0.8 percent. Global investors are apparently willing to accept these extraordinarily low rates, even though they do not appear to compensate for expected inflation. Indeed, the rate on inflation-adjusted US Treasury bills (so-called “TIPS”) is now negative up to 15 years. Is this extraordinary situation stable? In the very near term, certainly; indeed, interest rates could still fall further. Over the longer term, however, this situation is definitely not stable. Three major factors underlie today’s low yields. First and foremost, there is the “global savings glut,” an idea popularised by current Federal Reserve Chairman Ben Bernanke in a 2005 speech. For various reasons, savers have become ascendant across many regions. In Germany and Japan, aging populations need to save for retirement. In China, the government holds safe bonds as a hedge against a future banking crisis and, of course, as a byproduct of efforts to stabilise the exchange rate. Similar motives dictate reserve accumulation in other emerging markets. Finally, oil exporters such as Saudi Arabia and the United Arab Emirates seek to set aside wealth during the boom years. Second, in their efforts to combat the financial crisis, the major central banks have all brought down very short-term policy interest rates to close to zero, with no clear exit in sight. In normal times, any effort by a central bank to take short-term interest rates too low for too long will boomerang. Shortterm market interest rates will fall, but, as investors begin to recognise the ultimate inflationary

consequences of very loose monetary policy, longer-term interest rates will rise. This has not yet happened, as central banks have been careful to repeat their mantra of low long-term inflation. That has been sufficient to convince markets that any stimulus will be withdrawn before significant inflationary forces gather.

Meltdown threat But a third factor has become manifest recently. Investors are increasingly wary of a global financial meltdown, most likely emanating from Europe, but with the US fiscal cliff, political instability in the Middle East, and a slowdown in China all coming into play. Meltdown fears, even if remote, directly raise the premium that savers are willing to pay for bonds that they perceive as the most reliable, much as the premium for gold rises. These same fears are also restraining business investment, which has remained muted, despite extremely low interest rates for many companies. It is the combination of all three of these factors that has created a “perfect storm” for super low interest rates. But how long can the storm last? Although highly unpredictable, it is easy to imagine how the process could be reversed. For starters, the same forces that led to an upward shift in the global savings curve will soon enough begin operating in the other direction. Japan, for example, is starting to experience a huge retirement bulge, implying a sharp reduction in savings as the elderly start to draw down lifetime reserves. Japan’s past predilection toward saving has long implied a large trade and current-account surplus, but now these surpluses are starting to swing the other way. Germany will soon be in the same situation. Meanwhile, new energy-extraction technologies, combined with a softer trajectory for global growth, are having a

marked impact on commodity prices, cutting deeply into the surplusesofcommodityexporters from Argentina to Saudi Arabia. Second, many (if not necessarily all) central banks will eventually figure out how to generate higher inflation expectations. They will be driven to tolerate higher inflation as a means of forcing investors into real assets, to accelerate deleveraging, and as a mechanism for facilitating downward adjustment in real wages and home prices.

Today’s low interestrate dynamic is not an entirely stable one. It could unwind remarkably

Inflation expectations

quickly

It is nonsense to argue that central banks are impotent and completely unable to raise inflation expectations, no matter how hard they try. In the extreme, governments can appoint central bank leaders who have a long-standing record of stating a tolerance for moderate inflation – an exact parallel to the idea of appointing “conservative” central bankers as a means of combating high inflation. Third, eventually the clouds over Europe will be resolved, though I admit that this does not seem likely to happen anytime soon. Indeed, things will likely get worse before they get better, and it is not at all difficult to

imagine a profound restructuring of the eurozone. Nevertheless, whichever direction the euro crisis takes, its ultimate resolution will end the extreme existential uncertainty that clouds the outlook today. Ultra-low interest rates may persist for some time. Certainly Japan’s rates have remained stable at an extraordinarily low level for a considerable period, at times falling further even as it seemed that they could only rise. But today’s low interestrate dynamic is not an entirely stable one. It could unwind remarkably quickly. © Project Syndicate

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business daily August 9, 2012

CLOSING ICBC wins Saudi branch licence

Singapore PM narrows growth forecast

Saudi Arabia has decided to let Industrial and Commercial Bank of China Ltd open a branch in the country, a sign of growing economic ties between the world’s top oil exporter and second-biggest oil consumer. “The cabinet approved the licence...to open a branch in the kingdom and authorised the finance minister to decide on any subsequent request to open other branches of the bank,” the Saudi Press Agency quoted Information Minister Abdulaziz al-Khoja as saying. State-owned ICBC has branches in Abu Dhabi and Qatar, as well as a subsidiary in Dubai.

Singapore’s trade-driven economy is likely to grow by 1.5 percent to 2.5 percent this year, Prime Minister Lee Hsien Loong said yesterday, narrowing the outlook from an earlier forecast of 1 to 3 percent. Mr Lee also said that Singapore’s economy expanded 1.7 percent in the first half, indicating growth in the second quarter was around 2 percent yearon-year. The government reported first quarter growth of 1.4 percent. Singapore will release detailed gross domestic product data for April to June tomorrow that will likely show the economy expanded slightly on a sequential basis.

Cathay Pacific in surprise loss Posts worst first half loss since 2003

athay Pacific Airways Ltd, the world’s largest air freight carrier, posted its worst firsthalf loss since 2003, weighed down by high fuel and maintenance costs, fewer premium passengers and weak cargo demand. The airline swung to a first-half loss of HK$935 million (US$121 million) as it carried 10 percent less cargo and suffered from wider losses at a freight venture with affiliate Air China Ltd. Volumes have fallen because of slower global trade and competition from fast-growing Middle Eastern airlines. “Demand for cargo shipments from our two main markets, Hong Kong and Shanghai, remained weak for most of the first half of 2012. The situation was exacerbated by strong competition. Demand was particularly weak on routes to Europe,” the company said in a statement. It said it expected the cargo market to improve, but did not provide a time frame. “Cargo is really bad,” said Jim Wong, a Hong Kong-based transport analyst at Nomura Holdings Inc. Earnings “may recover in the second half as cost pressures will be eased by lower

Hong Kong-based Cathay recorded a net loss of HK$935 million

fuel prices and cargo may pick up for the traditional peak season.” The company fell the most in about three months in Hong Kong. The Hong Kong carrier, which forecast “disappointing” first-half earnings in May, slid 4.3 percent to close at HK$12.36. Part-owner Air China dropped 4.3 percent. Cathay, which also holds a stake in Beijing-based Air China, has dropped 7.2 percent this year, compared with an 8.85 percent

gain for the city’s benchmark index. The loss was Cathay’s worst for a first-half period since the outbreak of Severe Acute Respiratory Syndrome hit the city in 2003, when it posted a first-half loss of HK$1.24 billion.

Cargo Slump Cathay’s first-half cargo revenue fell 7.6 percent to HK$11.9 billion. It filled 64.3 percent of freight space, down

4.1 percentage points from a year earlier, even after cutting capacity. The carrier made a loss of HK$300 million from its stake in Air China Cargo, finance director Martin Murray said at a Hong Kong press briefing. It also had a smaller gain from its Air China stake, according to the statement. The company’s total earnings from all of its affiliates slumped to a HK$167 million loss from a HK$861 million profit. “The combination of very, very high fuel prices and generally weak revenues is a big challenge for every airline in the world,” chief executive John Slosar told reporters. Cargo is always “very volatile” and will eventually rebound, he said. The global airline industry is grappling with economic uncertainty in Europe and the United States that has weighed on passenger and cargo traffic, and hurt some of the big players such as Cathay’s regional rival Singapore Airlines. Fuel costs rose 6.5 percent from a year earlier and accounted for about 42 percent of the carrier’s total operating costs. Aircraft maintenance expenses rose 23 percent. Cathay said premium class yields remained under pressure in the first half and it highlighted a drop in demand for corporate travel from Hong Kong. Reuters/Bloomberg

U.K. growth forecast cut to zero Bank of England slashes estimate; stocks drop from four-month high

he Bank of England has cut its growth forecast to close to zero from the 0.8 percent predicted in May, as the double-dip recession intensifies. The quarterly inflation report indicated no growth for 2012, compared with 2 percent predicted a year ago. U.K. stocks dropped from a fourmonth high after the announcement. The FTSE 100 Index declined 26.25 points, or 0.5 percent, to 5,814.99 at 11am in London, snapping three days of gains. The gauge has rebounded 11 percent from its June 1 low amid optimism central banks will introduce more measures to stimulate growth. The data had fuelled anticipation for an interest rate cut, but Governor Sir Mervyn King dismissed calls for a reduction in the near term. He said recovery hopes had consistently

been dashed. “The big picture is that output’s been flat for two years, and has continually disappointed expectations of a recovery,” Mr King told a news conference. “We are navigating rough waters and storm clouds continue to roll in from the euro area.” “Unlike the Olympians who have thrilled us over the past fortnight, our economy has not yet reached full fitness.” He said that the future was unpredictable, since no-one could predict what would happen in the eurozone crisis, which would have an impact on the U.K. “The outlook for U.K. growth remains unusually uncertain, the BOE said earlier in a statement. “The greatest threat to the recovery stems from the risk that an effective policy response is not implemented sufficiently

U.K. said to been affected by the ‘storm’ in the eurozone

promptly in the euro area.” “It’s a saga that goes on, and on, and on. [The idea] that we have come to the end of it is unrealistic. There’s still a long way to go,” Mr King said. Regarding interest rates, which currently are at an all-time low of 0.5 percent, he said: “Another quarter

point [cut] on bank rate is not going to be the difference between having a recovery and not having a recovery.” A rate cut would damage some financial institutions, such as building societies, and therefore would be “more counterproductive than beneficial,” he added. Agencies