Macau Business Daily, February 13, 2013 by Business Daily

Year I Number 218 Wednesday February 13, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00

Tiny public spend in Jan, but lot more to come

www.macaubusinessdaily.com

In January the government spent just 20,000 patacas of its 17.9-billionpataca public investment plan for 2013 – although in cash terms the January 2013 disbursement was still twice as much as it spent in the same month a year earlier. The ambitious programme for 2013 includes construction of an offshore island that will act as a border-crossing post for the Hong Kong-Zhuhai-Macau Bridge, the continuing works on the Light Rapid Transit system and the University of Macau’s new campus on Hengqin Island. Page 4

The snake bites Clothing shops’ tough year ahead L

ocal clothing retailers face a grim Year of the Snake according to some experts. They’re being squeezed by rising commercial rents and competition. Casino resorts’ new malls offer overseas chain stores with greater product ranges and greater bulk purchasing power, says Choi Meng Wa, managing director of White Horse, which runs the Sun Star City mall on Macau peninsula.

The prospects for retailers focused mainly on the tourist trade look brighter. Alan Ho Hoi Meng, director of the Association of Pastry and Souvenir Traders, said his sector expects a 10 to 20 percent rise in sales revenue this year. “Even if we were to pass a 5 to 10 percent cost inflation on to our selling price this year, the consumers can take it,” said Mr Ho. More on page 2

I SSN 2226-8294

HANG SENG INDEX 23260

23220

23180

23140

23100

Revellers shuttled from Alcorcón preferred site Gongbei pinch point for LVS Euro project The Zhuhai government has been using buses during Chinese New Year to move mainland visitors to Macau to alternative and less busy entry points, suggests Union Gaming Research Macau. It recorded a “notable dayover-day inflection” [upward movement] in mainland visitors arriving via the Lotus Bridge on Cotai and the Taipa Temporary Ferry Terminal. Over the previous five days, total visitor numbers to Macau increased 17 percent to 515,493 persons, added Union Gaming yesterday. It expected casino visits to ramp up from day three of the holiday onwards.

Las Vegas Sands Corp. – as previewed by Business Daily last week – has chosen the town of Alcorcón southwest of the Spanish capital Madrid as the proposed site for the US$9 billion (70.2 billion patacas) first phase of a massive tourism and gaming resort. Phase one is likely to have a maximum five percent of the space used for gambling, and a modest 56 VIP tables said LVS president Michael Leven last week. But he added that some Asian high roller players would probably be interested in visiting it.

Page 8

Page 16

February 8

HSI - MOVERS Name

%Day

COSCO PAC LTD

3.03

CHINA RES POWER

2.70

WANT WANT CHINA

2.61

ESPRIT HLDGS

2.38

HENDERSON LAND D

2.15

KUNLUN ENERGY CO

-1.23

PETROCHINA CO-H

-1.31

WHARF HLDG

-1.48

TINGYI HLDG CO

-2.22

CHINA UNICOM HON

-3.94

Source: Bloomberg

Brought to you by

2013-02-13

2013-02-14

2013-02-15

13˚ 19˚

15˚ 20˚

14˚ 18˚

2 |

business daily February 13, 2013

macau Fund gets injection to scrap polluting cars The Macau administration is planning to inject 400 million patacas (US$50 million) into a funding scheme to support the gradual replacement of high-polluting vehicles for ‘greener’ cars, Environmental Protection Bureau director Cheong Sio Kei told media. In July the Environmental Protection Bureau and the Transport Bureau will release a report on the opinions collected over a public consultation on vehicle emissions and inspection standards. The ultimate goal is to introduce by next year legislation that would set pollution standards for all vehicles circulating in Macau.

Profits are stagnant for small clothing shops, even in popular areas, retailers say

Prognosis for retailers mixed in coming year The boom in the number of visitors is not benefiting all retailers, as some struggle with high rents and growing competition Stephanie Lai

sw.lai@macaubusinessdaily.com

he opening of Gongbei Station at the end of the Guangzhou-Zhuhai highspeed railway in December has boosted tourism and is good for Macau retailers – but more for souvenir shops than other kinds of business. Shopping mall operator White Horse Investment Ltd, which runs Sun Star City, has said shops here do not think the growth in the number of visitors guarantees higher earnings. The managing director of White Horse, Choi Meng Wa, predicts that the earnings of retailers in malls will continue their shrinking trend. “In the past three years malls like Sun Star City, Ginza Plaza and Pereira Plaza have seen an average of 30 to 40 retail outlets close each year,” Mr Choi told Business Daily. Sun Star City and Ginza Plaza are in Rua Pedro Nolasco de Silva in the

middle of the peninsula, the prime area for rented retailing space. All three shopping malls Mr Choi mentioned house small clothing shops, predominantly. “Their net profits have lingered at around 10,000 patacas [US$1,250], which is similar to the pay cheque of any ordinary clerk,” he said. Like malls around the world, malls here face competition from online retailers. But Mr Choi said malls here also faced competition from international retailing chains that had opened outlets in casino resorts. “The emergence of online sales platforms like Taobao. com in China has profoundly changed consumers’ habits, and that beats the mall business,” he said. “Brands like Zara change their product every two to three weeks, plus these brands have a purchasing advantage. The local small

and medium retail business has been almost wiped out,” he said.

Souvenir hunt Mr Choi concludes that the rigid rules for quotas of non-resident workers and the resulting surge in labour costs mean the Year of the Snake looks like being a tough one for malls and the retailing sector in general. However, the prospects are better for the pastry and souvenir business. The director of the Association of Pastry and Souvenir Traders, Alan Ho Hoi Meng, said the business expects a rise of 10 percent to 20 percent in sales revenue this year. “We are generally bullish on the biscuits and souvenir trade this year as we saw a clear rebound in the purchasing power of visitors from mainland China, compared to last year,” Mr Ho said.

His association has over 30 members, including the owners of the Choi Heong Yuen Bakery and Cherikoff brands. Most are in the San Ma Lou area. “The pastry business still has a strong pricing capacity. Even if we were to add 5 percent to 10 percent cost inflation to our selling price this year, the consumers could take it,” Mr Ho said. He said the earnings of shops in the pastry and souvenir chains were able to withstand the pressures of higher rents and wages. “Most of our pastry shop members have quite stable lease terms, compared with clothing or electronics outlets,” Mr Ho said. “Owners have usually arranged a four-to-five-year lease with the pastry shops.”

Chance missed Mr Choi said: “For mall retailers, or other boutique

businesses, the key is to look for unique products, while maintaining dedication to providing good service to consumers.” He said the city faced a problem of “homogenous” trade in prime areas, where chains had the financial strength to withstand the surge in rents, but small shops did not, meaning these areas were becoming less diverse and appealing. “Basically, operators that missed the chance to purchase their shops five years ago are facing a threat to their survival,” he said. At the end of last year the 70-year-old Meng Kei watch shop in the São Domingos area closed because it could not afford the rent being asked, and the landlord repossessed the premises. In 2011, as shop rents spiralled upwards, the premises that housed the renowned Long Kei Chinese restaurant in Senado Square were sold for HK$270 million, the restaurant having occupied them for 60 years. The president of the Macau Association of Retailers and Tourism Services, Frederick Yip Wing Fat, is not so pessimistic about the future of retailing. “The tourist office is implementing a scheme to divert visitors to less popular destinations where the rental pressures are not as bad,” Mr Yip said. “Small and medium businesses could consider moving to these zones.”

4 |

business daily February 13, 2013

macau Wynn Macau workers get 5 pct pay rise

Brought to you by

Wynn Macau Ltd announced on Monday a five percent salary increase effective from March 1, 2013, for all “non-senior management employees”. The firm said the pay rise covers 98 percent of the current 7,500 workforce. A one-month annual bonus was also given to all employees last week, in advance of the Chinese New Year holiday. “We see this as an integral part of our responsibility and dedication to our employees and the wider Macau community,” said Steve Wynn, chairman and chief executive of Wynn Resorts Ltd, commenting on the pay award.

HOSPITALITY Adding pressure The expansion of the economy and the growth of the population have brought to Macau a curse once almost unknown: traffic congestion. The number of motor vehicles of all kinds, ranging from heavy lorries to motorcycles, keeps growing by about 10,000 per year. The growing number of visitors and residents keeps up demand for vehicles, even though last year’s slowing of growth in the number of visitors will have eased the demand pressure somewhat. However, given that the city has little land and less for roads and parking, the pressure is unlikely to ease sustainably any time soon. So the number of vehicles for tourists, such as coaches and minibuses, keeps growing. And demand to increase the number of taxis is ever-present.

Public spending soars in January Government spending growth outpaces revenue but surplus still above expectations Vítor Quintã

vitorquinta@macaubusinessdaily.com

The number of taxis has begun to grow again after holding steady for a few years. At the end of last year the city had 1,058 cabs, 8 percent more than a year before. The number had been steady in 2011. The number of tourist vehicles of all kinds kept growing at a strong pace. The number of light tourist vehicles grew by 10.7 percent between 2010 and last year and the number of heavy tourist vehicles grew by 9.7 percent. These growth rates are not far from the average for all kinds of vehicles, which was 10.5 percent. But the growth in the number of tourist vehicles was different. While the number of light tourist vehicles grew more slowly than the number of light vehicles in general, the number of heavy tourist vehicles grew at over twice the rate of the number of heavy vehicles in general. Taxis and tourist vehicles are usually on the road for more hours of the day than private vehicles, often driving in less than optimal conditions. Their contribution to the amount of traffic is therefore particularly strong.

he government’s spending last month was more than 50 percent higher than a year earlier. But the figure was still only a tiny faction of the 74 billion patacas (US$926 million) budgeted spending for the whole of 2013, official data show. Public spending reached 1.7-billion patacas in January, up by 56.1 percent year-on-year, the Financial Services Bureau announced on February 8. Almost all of that was on running costs, which includes the salaries and benefits of public servants. And a wage hike for civil servants is coming, the secretary for Administration and Justice Florinda Chan, said in November. Workers’ associations are calling for a 6.8 percent increase. In January the government spent just 20,000 patacas of its 17.9-billionpataca public investment plan for 2013 – although in cash terms the January 2013 disbursement was still twice as much as it spent in the same

month a year earlier. The ambitious programme for 2013 includes construction of an offshore island that will act as a bordercrossing post for the Hong KongZhuhai-Macau Bridge, the continuing works on the Light Rapid Transit system and the University of Macau’s new campus on Hengqin Island. Despite this January’s spending increase, the administration only used 3.1 percent of the yearly funds allotted to bureaucracy costs and 2.3 percent of the 74 billion patacas budgeted.

MOP20,000 January spending on public investment plan

J.I.D.

10%

Rise in number of tourist vehicles since 2010

Wage hike for civil servants will further increase administration’s running costs

In January spending grew more than two-times faster than revenue. The latter hit 12.1 billion patacas, up by 23.7 percent year-on-year, reflecting the strengthening of the gaming market, from where most public revenue comes.

Gaming reliance Public revenue was even more dependent on gaming revenue than usual last month, suggest the data. Direct taxes on gaming revenue amounted to 10.2 billion patacas, or 84.4 percent of all public revenue, up from 82.8 percent of public revenue in the January-November period. The bureau’s data for December have not yet been published. The government pockets 35 percent of gaming revenue directly. Another four percent of gaming revenue is also collected indirectly. Gaming revenue grew 7.3 percent year-on-year in January. The public budget for 2013 predicted that taxes on gaming could bring in 100 billion patacas, accounting for about 78 percent of government revenue. Secretary for the Economy and Finance Francis Tam Pak Yuen said in November that the economy’s reliance on gaming “would remain for some years to come”. Even though spending growth outpaced revenue, the fiscal surplus still reached a very healthy 10.4 billion patacas, more than a quarter of the 41 billion patacas budgeted for the whole of the year. The cumulative surplus in the first 11 months of 2012 was 76 billion patacas, more than double the 36 billion patacas forecasted by the government. The public budget surplus will be added to Macau’s fiscal reserve, established a year ago. That reserve reached 100.24 billion patacas in December.

GOT SOMETHING TO SAY? Celebrating the first year of GOLDFISH | creative agency, we are launching "ads of macau" facebook page. Is a forum open to all because, like it or not, ads are part of our daily life, culture and society. After all, ‘there's nothing bad about advertising as long as it's good’. Search for : ads of macau on facebook, and express your opinion! T +853 2833 1258 • M +853 6284 5289 • info@goldfishmacau.com • www.goldfishmacau.com

6 |

business daily February 13, 2013

macau Year of the Dragon baby boom close to record

Brought to you by

There were 7,315 babies born in 2012, a 25 percent increase from 2011, data from Statistics and Census Service show. The birth spike was higher than the 14-20 percent forecast by the government last year. Last year’s figures were the highest in the last decade, which shows parents’ urge to have children during the Lunar Year of the Dragon, traditionally viewed as a auspicious period conducive to fortune and power. However, 2012 failed to break the record reached in 1988, also a Year of the Dragon year, during which 7,913 babies were born.

Market segregation Construction is special in that there is an abundance of detailed information about the costs of labour and materials that is not found in other industries. This abundance probably owes more to the industry’s political importance than its economic importance. Since 2010 the Statistics and Census Service has given quarterly figures for the average daily wages of skilled and semiskilled construction workers, of unskilled construction workers and of construction workers in 17 different trades. It gives separate sets of figures for all construction workers in each category and for resident construction workers only, making a total of more than 40 average daily wages in the industry each quarter.

BCP Macau profit soars The Macau branch of the biggest Portuguese bank made three times the amount it had expected Vítor Quintã

vitorquinta@macaubusinessdaily.com

700

650

600

550

500

Clearly, the real wages of resident construction workers have increased. Since the first quarter or 2010 the nominal wages of resident construction workers have risen by 27.6 percent, much faster than consumer prices. The nominal wages of resident construction workers have also risen faster than the nominal wages of construction workers generally, which have risen by 11 percent. This implies that the rise in the nominal wages of imported construction workers was smaller than 11 percent. This, in turn, inevitably means that the real wages of imported construction workers have decreased. The wages of skilled and semi-skilled workers show the same pattern. However, the average nominal wage has not risen for every construction trade. In some construction trades the average nominal wage reached its present level before. In other construction trades the average nominal wage has fallen. J.I.D. The content of this column is the work of Business Daily’s journalists.

MOP688 Average daily wage of resident construction workers, 2012Q4

he profit last year of the Macau branch of Banco Comercial Português (BCP) SA “almost tripled” what it first expected, managing director João José Pãosinho has said. The Portuguese-language Rádio Macau has quoted Mr Pãosinho as saying BCP Macau has a profit of 177.7 million patacas (US$22.2 million). Mr Pãosinho forecast in March a profit of 60 to 65 million patacas for 2012. The bank made a profit of 67 million patacas in 2011. BCP Macau’s annual results will be published in the Official Gazette any day now. The executive also revised upwards its forecast for the bank’s 2013 profit to “ranging between 130 and 150 million patacas”. Last month the Portugueselanguage newspaper Hoje Macau quoted Mr Pãosinho as saying the positive results were a product of a strategy that was designed in 2010

to develop the bank’s business with companies, other institutional customers and rich individuals. He said the bank’s main aim was “to be a platform in the relations between China and the Portuguesespeaking countries”. Mr Pãosinho reiterated that the ultimate goal was to get a banking licence in the mainland, but declined to say when the bank hoped to get one. “The procedures are ongoing … This is not a project that can be looked at from a short-term perspective, but

from a long-term one,” he told Rádio Macau. In June credit rating agency Moody’s Investor Services put BCP Macau’s long-term and short-term deposits in its junk category after the branch guaranteed notes issued as part of a 25 billion euro (266 billion pataca) medium-term financing programme by its troubled Portuguese parent company, Millennium BCP. BCP, Portugal’s biggest private financial company, closed 2012 with losses of 1.2 billion euros.

Businessmen eye CPPCC standing committee P

rominent businessmen Ngan In Leng and Ma Iao Lai, the son of industrialist Ma Man Kei, are in the running for the standing committee of the Chinese People’s Political Consultative Conference (CPPCC), the Portuguese-language Rádio Macau said, without quoting any sources. The elections for the standing committee of China’s highest advisory body will take place during a March joint meeting with the National People’s Congress. A possible election would be a

welcome respite for Fujian-born Mr Ngan, who is involved in several legal disputes, namely over a Taipa housing project and the sale of casinos Rio and Casa Real. Mr Ngan is chairman of Hang Huo Enterprise Group, which runs hotel, entertainment, property and trading companies. He was also chairman of the defunct low-cost Viva Macau Airlines. In January Mr Ngan saw local courts reject an appeal to retrieve assets seized over the Taipa housing project and a lawsuit over the 2010

grounding of Viva Macau. Meanwhile Mr Ma, president of the Macau Chamber of Commerce, would be following in the footsteps of his father, the 93-year-old who will be stepping down from his position as CPPCC vice-chairman. Susana Chou Kei Jan, former president of the Legislative Assembly, Liu Chak Wan, businessman and Executive Council member, and toy manufacturer Eric Yeung Tsun Man are the other Macau members in the CPPCC standing committee.

Stay in the finest hotels in Macau and read Business Daily

news where it matters

V.Q.

8 |

business daily February 13, 2013

macau Possible U-turn in New Jersey on Pansy Ho MGM Resorts International has formally petitioned New Jersey’s regulators to re-establish its casino licence there. MGM agreed to divest in March 2010 amid questions about its Macau business partner Pansy Ho Chiu King. That process is still pending and its 50 percent of The Borgata in Atlantic City is held in trust. MGM also has 51 percent of MGM Macau’s parent company MGM China Holdings Ltd. Ms Ho’s stake is 27 percent, according to a filing on February 8. New Jersey’s Division of Gaming Enforcement had said Ms Ho was “unsuitable” for a licence based on her father’s alleged historical ties to organised crime.

Tourists throng city for Lunar New Year Macau had one-fifth more visitors in the first two days of the holidays this year, and more are coming Tony Lai

tony.lai@macaubusinessdaily.com

Zhuhai ‘helping’ ease border congestion: Union Gaming

The holiday wave of visitors was set to crest yesterday and today

he city had over 237,000 visitors in the first two days of the Lunar New Year holidays, mainland Chinese accounting for over 60 percent of them, the latest data from the Public Security Police show. The figures suggest the number of tourists on February 10 and 11 was over 20 percent higher than in the corresponding period last year.

Our focus is really on attracting tourists to stay longer, to stay in hotels and spend more money in Macau Maria Helena de Senna Fernandes, director, Macau Government Tourist Office

The growth was due largely to mainland visitors – more than 144,000 of them, 33 percent more than last year. However, the seven days of the Lunar New Year holidays fall this year in February, one month later than last year, so complicating comparisons. The Gongbei border crossing remained the main point of entry, having been used by about 113,000 of visitors in the first two days of the holidays. Over 62,000 visitors, or 26.3 percent, entered through the Outer Harbour Ferry Terminal in the NAPE area. About 14,708 arrived by air. Gongbei customs post supervisor Lao Ngai Leong said the wave of visitors was expected to grow, cresting yesterday and today. Mr Lao told reporters on Sunday that more tourists would come this year now that Gongbei Station at the end of the Guangzhou-Zhuhai high-speed railway was open. Mr Lao, who is also a Macau deputy in the National People’s Congress, said the railway would schedule between 10 and 35 extra trains per day during Lunar New Year.

However, the new director of the Macau Government Tourist Office, Maria Helena de Senna Fernandes, said in an interview with our sister publication, Macau Business, that it would take a while for the city to feel the effect of the new railway on visitor numbers.

Gongbei burden The Zhuhai government announced last week that it expected the average number of mainlanders using the Gongbei border crossing each day to surge to 160,000 during the Lunar New Year holidays this year from 120,000 last year. Mr Lao said the central government should review the individual visa scheme for mainlanders, but that it did “not suggest any restriction at the current stage”. The scheme allows mainland tourists visas to visit Macau as individuals rather than as members of tour groups, who travel on collective visas. The director of the Liaison Office of the Central People’s Government here, Bai Zhijian, said this month that the government should review Macau’s tourist capacity.

The Zhuhai government has been using buses during Chinese New Year to move mainland visitors to Macau to alternative and less busy entry points suggests Union Gaming Research Macau. “We believe that the local level government in Zhuhai has put into place a network of shuttle buses to take patrons from the Border Gate [Gongbei], which will be operating above maximum capacity through the end of this week, to alternative points of entry to help control overflow crowds,” said the research house in a note to clients. The paper added there has been a “notable day-over-day inflection [upward movement]” in mainland visitors arriving via the Lotus Bridge on Cotai and the Taipa Temporary Ferry Terminal. Visitors to Macau from the mainland exceeded 83,000 on Monday – the second day of the Lunar New Year holiday – said Union Gaming. That’s a 30 percent yearon-year rise compared to the second day of the 2012 holiday, which was in January and on a Tuesday, it added. “We expect today, Tuesday Chinese New Year day three, to be the day that casino players start descending on Macau in earnest, with a concurrent positive GGR [gross gaming revenue] inflection,” added Union Gaming yesterday. “We would look for this trend to continue through this coming Sunday (CNY day eight) and possibly through early next week,” stated the note. Over the past five days, total visitor numbers to Macau increased 17 percent to 515,493 persons, added Union Gaming yesterday. M.G.

“The central government’s decision to relax or restrict the individual travel scheme for mainlanders all depends on Macau’s own needs,” Mr Bai said. Mrs Senna Fernandes acknowledges that the city can no longer cope with high growth in the number of visitors and should focus on high-spending travellers. “Our focus is really on attracting tourists to stay longer, to stay in hotels and spend more money in Macau,” she said.

10 |

business daily February 13, 2013

GREATER CHINA

China becomes biggest trading nation in goods Beijing to boost transport investment

Mainland’s 2012 trade surplus, measured in goods, totalled US$231.1 billion

The Chinese government plans to allocate 120 billion yuan (US$19.11 billion) to fund local transport infrastructure construction in 2013, the Ministry of Finance has announced. According to the budget target set by the central government, the fund will be allocated from vehicle purchase tax incomes and mainly used to improve highway networks of trunk lines and rural roads, official Xinhua news agency reported. Authorities have increased efforts to boost infrastructure investment over the past few months in a bid to bolster the slowing economy. They approved massive construction projects worth about a trillion yuan in the second half of last year. External economic woes and domestic tightening to tame inflation have bit into the world’s second-largest economy, which last year saw growth drop below 8 percent for the first time since 1999.

HK’s Tsang expects ‘better’ economy Hong Kong’s economy should perform “slightly better” in 2013 than last year, Financial Secretary John Tsang wrote in a blog post dated yesterday. Mainland China’s economic growth is showing signs of accelerating while markets in Europe and the U.S. “seem to be more stabilised” than in 2012, Mr Tsang wrote. The remarks contrast with Mr Tsang’s warning in November that Hong Kong’s trade-reliant economy may enter recession if its major partners show a loss of growth momentum or signs of contraction. The city’s gross domestic product will expand 3.7 percent this year, up from an expected 1.5 percent in 2012, according to economists surveyed by Bloomberg. Mr Tsang pledged in the post, published on the government’s website, to do more for the city’s middle class, especially the younger generation which is under “significant” pressure to pay housing mortgages and children’s education expenses.

Renault recalls over 60,000 Koleos Renault SA recalled more than 60,000 Koleos sport-utility vehicles in China because of a faulty fuel sensor, according to China’s General Administration of Quality Supervision, Inspection and Quarantine. The 61,508 affected imported cars are models from 2009 through 2012, the agency said in a statement on its website. Renault will provide free replacement sensors for the vehicles, which may show faulty fuel-level readings and could pose a safety risk. Renault is looking to replicate the success of other foreign carmakers in China, the world’s largest automobile market. Passenger-vehicle sales in the country surged 49 percent to a monthly record in January, as demand for SUVs almost doubled, the state-backed China Association of Automobile Manufacturers said in an e-mail on February 7. Renault faces competition from rivals such as General Motors Co. and Volkswagen AG. This latest recall for Renault comes after the agency said on January 25 that the company would recall 5,097 Koleos vehicles in China because of a welding flaw.

China may overtake the U.S. as the top trading nation by 2016, says HSBC

hina surpassed the U.S. to become the world’s biggest trading nation last year as measured by the sum of exports and imports of goods, official figures from both countries show. U.S. exports and imports of goods last year totalled US$3.82 trillion, the U.S. Commerce Department said last week. China’s customs administration reported last month that the country’s trade in goods in 2012 amounted to US$3.87 trillion. China’s growing influence in global commerce threatens to disrupt regional trading blocs as it becomes the most important commercial partner for some countries. Germany may export twice as much to China by the end of the decade as it does to France, estimated Goldman Sachs Group Inc.’s Jim O’Neill. “For so many countries around the world, China is becoming rapidly the most important bilateral trade partner,” Mr O’Neill, chairman of Goldman Sachs’s asset management division and the economist who bound Brazil to Russia, India and China to form the BRIC investing strategy, said in a telephone interview. “At this kind of pace by the end of the decade many European countries will be doing more individual trade with China than with bilateral partners in Europe.”

U.S. leadership When taking into account services, U.S. total trade amounted to US$4.93 trillion in 2012, according to the U.S. Bureau of Economic Analysis. The U.S. recorded a surplus in services

of US$195.3 billion last year and a goods deficit of more than US$700 billion, according to BEA figures released on February 8. China’s 2012 trade surplus, measured in goods, totaled US$231.1 billion. The U.S. economy is also double the size of China’s, according to the World Bank. In 2011, the U.S. gross domestic product reached US$15 trillion while China’s totalled US$7.3 trillion. China’s National Bureau of Statistics reported last month that the country’s nominal gross domestic product in 2012 totalled 51.93 trillion yuan (US$8.3 trillion). “It is remarkable that an economy that is only a fraction of the size of the U.S. economy has a larger trading volume,” Nicholas Lardy, a senior fellow at the Peterson Institute

US$3.87 trillion

Value of China’s trade in goods in 2012

for International Economics in Washington, said in an e-mail. The increase isn’t all the result of an undervalued yuan fuelling an export boom, as Chinese imports have grown more rapidly than exports since 2007, he said.

Biggest exporter China became the world’s biggest exporter in 2009, while the U.S. remains the biggest importer, taking in US$2.28 trillion in goods last year compared with China’s US$1.82 trillion of imports. HSBC Holdings Plc forecast last year that China would overtake the U.S. as the top trading nation by 2016. While China is the biggest energy user, has the world’s biggest new car market and the largest foreign currency reserves, a significant portion of China’s trade involves importing raw materials and parts to be assembled into finished products and re-exported, an activity that provides “only modest value added,” Eswar Prasad, a former International Monetary Fund official who is now a professor at Cornell University in Ithaca, New York, said in an e-mail. Last month China’s trade expanded more than estimated, with exports rising 25 percent from a year earlier and imports increasing 28.8 percent, government data released last week showed. China’s trade figures in January and February are distorted by the week-long Lunar New Year holiday that fell in January of last year and started on February 9 this year. Bloomberg News

February 13, 2013 business daily | 11

ASIA Sri Lanka not to pursue IMF loan Sri Lanka has decided not to pursue a new loan from the International Monetary Fund after the global lender indicated the government had made considerable progress in stabilising its finances, the central bank said yesterday. “Sri Lankan authorities have decided not to pursue a new programme with the IMF, but to continue maintaining the close relationship with the Fund under standard consultation processes similar to many other member countries,” the bank said. Sri Lanka agreed to a US$2.6 billion IMF loan programme in 2009.

Indonesia holds key rate Indonesia kept its benchmark interest rate unchanged for a 12th meeting as a depreciating currency and inflationary pressures reduce scope for an addition of monetary stimulus to spur a slowing economy. Bank Indonesia Governor Darmin Nasution and his board held the reference rate at a record-low 5.75 percent, the central bank said in Jakarta yesterday. Southeast Asia’s largest economy is facing rising price pressures from higher power tariffs, an increase in minimum wages and as a weakening rupiah raises the cost of imported goods.

Australia business sentiment ticks up Australian business confidence maintained gains in January as a better outlook in China and central bank interest-rate reductions at home helped boost sentiment, a private survey showed. The confidence index for January rose to 3 from a revised 2 in the month prior, according to a National Australia Bank Ltd survey released yesterday of more than 400 companies taken January 25 to February 4. The business conditions gauge, a measure of hiring, sales and profits, improved to minus 2 from a revised minus 5.

India recovery hopes dashed as output shrinks As demand falters in an economy expanding at the weakest pace in a decade Arup Roychoudhury

New exchange starts trading

Production at factories fell 0.6 percent in December from a year earlier

ndia’s industrial production unexpectedly shrank for a second straight month in December, weighed down by weak investment and consumer demand, casting doubt on Finance Minister P. Chidambaram’s view that Asia’sthird largest economy is showing signs of recovery. The index of industrial production fell 0.6 percent annually in December, data released by the Central Statistics Office showed yesterday. A Reuters poll of 24 economists had expected growth of 1.1 percent, after output shrank 0.8 percent in November. Manufacturing output, which accounts for the bulk of industrial production and contributes about 15 percent to overall gross domestic product (GDP), fell 0.7 percent in December from a year earlier. “What is clear is that any meaningful industrial recovery is eluding us. Demand destruction is far more well entrenched than we thought,” said Sujan Hajra, chief economist at brokerage firm Anand

Rathi in Mumbai, who said he now sees GDP growth next year of 5-6 percent. Preliminary data from India’s statistics office last week predicted growth of 5 percent for the fiscal year ending in March 2013. That was worse than anticipated and triggered an angry response from Mr Chidambaram, who said the Central Statistical Organisation had used “dated data” and argued that GDP growth was following an upward trend in a sign of revival. He reiterated his view that 5.5 percent growth was possible. “We can recapture the magic of 2004-08. The average growth was 8.5 per cent during that period,” he said on Saturday. Mr Chidambaram is under political pressure to unveil a growthoriented budget on February 28 for the next fiscal year, as the government of Prime Minister Manmohan Singh gears up for an election due by early 2014 at the latest. But he is also faced with the arduous task of trimming a swollen fiscal deficit that has put India’s

India’s new stock exchange MCX-SX attracted thin volumes as it started trading shares on Monday, taking up the challenge of winning market share from dominant players National Stock Exchange (NSE) and BSE Ltd. The value of shares traded on the MCX-SX in its first day was just 6.9 million rupees (US$128,900), its website showed, compared with 94.57 billion on the NSE, the larger of the two established bourses. Some brokers are cheering on MCX-SX, which quickly built one of the country’s top commodity bourses, in the hope it will push down trading costs and drive development of trading products. “[The] earliest we can know whether MCX has made a mark in equities is five years from now,” said Phani Sekhar, a fund manager at Angel Broking.

investment-grade credit rating in peril. He has already ordered spending cuts in welfare, defence and road projects for this financial year. The Reserve Bank of India reduced its policy interest rates by a widely expected 25 basis points on January 29 to spur the economy, and investors hope slower price rises will lead to another cut. “Despite incremental efforts we are still staring at a weak growth print,” said Jyotinder Kaur, economist at HDFC Bank. “We expect a rate cut in March as growth is consistently surprising on the downside while the pace of CPI [consumer price inflation] has stabilised.” Reuters

N.Korea defies world with nuclear test China calls on Pyongyang not to increase tension Renesas falls on loss forecast Renesas Electronics Corp., the Japanese chipmaker getting a bailout from a state-backed fund, plunged the most in more than four months in Tokyo trading after it widened its full-year loss forecast. The stock tumbled as much as 13 percent, the most since September 25. It closed down 8.4 percent at 262 yen (US$2.8). The chipmaker on Friday widened its annual loss forecast to 176 billion yen (US$1.9 billion) amid a slowdown in TV sales hitting demand for system LSI chips and weaker-than-expected sales to automakers.

orth Korea conducted its third nuclear test yesterday in defiance of U.N. resolutions, angering the United States and Japan and prompting its only major ally, China, to call for calm. The North said the test had “greater explosive force” than the 2006 and 2009 tests that were widely seen as small-scale. Its KCNA news agency said it had used a “miniaturised” and lighter nuclear device, indicating that it had again used plutonium which is more suitable for use as a missile warhead. U.S. President Barack Obama termed the test a “highly provocative act” that hurt regional stability. “The danger posed by North Korea’s threatening activities

warrants further swift and credible action by the international community. The United States will also continue to take steps necessary to defend ourselves and our allies,” Mr Obama said in a statement. Japanese Prime Minister Shinzo Abe said the test was a “grave threat” that could not be tolerated. U.N. Secretary-General Ban Kimoon said the test was a “clear and grave violation” of U.N. Security Council resolutions, while the European Union said the test was a “blatant challenge” to non-proliferation. China, which has shown signs of increasing exasperation with its neighbour, repeated calls for the “denuclearisation” of the Korean peninsula and urged its client state

and others to react calmly, while pressing Pyongyang not to ramp up tension further, something the North had threatened in the run-up to the test. “We strongly urge North Korea to abide by its non-nuclear commitment and not to take any further actions that would worsen the situation”, Beijing said in a statement. South Korea said the size of the seismic activity indicated a nuclear explosion slightly larger than the North’s two previous tests at 6-7 kilotons, although that is still relatively small. The test prompted the U.N. Security Council to call for an emergency meeting yesterday. Reuters

12 |

business daily February 13, 2013

MARKETS Hang SENG INDEX NAME

NAME

PRICE

DAY %

VOLUME

31.65

1.605136

48241340

CHINA UNICOM HON

ALUMINUM CORP-H

3.53

21263468

CITIC PACIFIC

BANK OF CHINA-H

3.74

-0.795756

393979461

BANK OF COMMUN-H

6.16

-0.6451613

43179413

BANK EAST ASIA

31.75

0.3159558

2050539

BELLE INTERNATIO

17.78

1.252847

AIA GROUP LTD

CLP HLDGS LTD

PRICE

DAY %

Volume

11.7

-3.940887

78597562

12.24

0.1636661

5535636

66.6

0.3767898

3477915

CNOOC LTD

15.58

-0.1282051

49865306

COSCO PAC LTD

12.92

3.030303

14873255

ESPRIT HLDGS

10.34

2.376238

HANG LUNG PROPER

NAME

PRICE

POWER ASSETS HOL SANDS CHINA LTD SINO LAND CO

DAY %

Volume

69.55

0.6512301

2980221

36.4

0.8310249

24984744

14.2

-0.2808989

6398767

SUN HUNG KAI PRO

122.4

0.5751849

3973519

8182744

SWIRE PACIFIC-A

100.9

0.09920635

705000

7004344

TENCENT HOLDINGS

270.6

-0.5147059

3324504

BOC HONG KONG HO

26.85

0.9398496

10936136

30.4

1.164725

8049394

CATHAY PAC AIR

15.02

-0.6613757

4489732

TINGYI HLDG CO

22.05

-2.217295

11319900

HANG SENG BK

126.9

0.9546539

1058714

CHEUNG KONG

124

0.4862237

3390105

WANT WANT CHINA

11.02

2.607076

27891751

HENDERSON LAND D

54.55

2.153558

4549403

CHINA COAL ENE-H

8.19

0.4907975

31350085

WHARF HLDG

66.7

-1.477105

5744697

HENGAN INTL

80.9

1.569366

3514672

CHINA CONST BA-H

6.42

-0.155521

179573077

HONG KG CHINA GS

21.4

-0.4651163

12673067

CHINA LIFE INS-H

24.5

0.6160164

33150329

HONG KONG EXCHNG

146

1.388889

4169451

CHINA MERCHANT

27.9

0.5405405

2673775

86.35

0.2321532

10286073

CHINA MOBILE

85.45

0.2346041

13499985

HUTCHISON WHAMPO

CHINA OVERSEAS

22.05

0.6849315

32031116

IND & COMM BK-H

8.61

-0.4624277

155309436

CHINA PETROLEU-H CHINA RES ENTERP

HSBC HLDGS PLC

-1.118305

7744173

5.63

300081307

LI & FUNG LTD

10.26

1.383399

56844877

MTR CORP

31.85

0.6319115

1915952

25.7

0.5870841

3847137

CHINA RES LAND

21.25

0.4728132

10178904

NEW WORLD DEV

13.7

-0.5805515

21021505

CHINA RES POWER

22.85

2.696629

4162164

PETROCHINA CO-H

10.58

-1.30597

91710310

CHINA SHENHUA-H

30.75

21457789

PING AN INSURA-H

67.4

0.5219985

20539162

MOVERS

3 23345

INDEX 23215.16 HIGH

23341.42

LOW

23101.09

52W (H) 23944.74 (L) 18056.4

23100

6-February

8-February

Hang SENG CHINA ENTErPRISE INDEX PRICE

DAY %

Volume

CHINA PACIFIC-H

29.3

-1.013514

10241496

19244010

CHINA PETROLEU-H

8.61

-0.4624277

155309436

21263468

CHINA RAIL CN-H

8.3

0.1206273

29.65

-1.001669

12675344

CHINA RAIL GR-H

4.39

BANK OF CHINA-H

3.74

-0.795756

393979461

CHINA SHENHUA-H

BANK OF COMMUN-H

6.16

-0.6451613

43179413

CHINA TELECOM-H

BYD CO LTD-H

28.9

-0.5163511

3937340

DONGFENG MOTOR-H

CHINA CITIC BK-H

5.11

-0.3898635

53320687

GUANGZHOU AUTO-H

CHINA COAL ENE-H

8.19

0.4907975

31350085

CHINA COM CONS-H

7.56

-0.5263158

CHINA CONST BA-H

6.42

CHINA COSCO HO-H

4.08

CHINA LIFE INS-H

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

4.1

0.2444988

132240897

AIR CHINA LTD-H

6.84

2.242152

ALUMINUM CORP-H

3.53

ANHUI CONCH-H

CHINA LONGYUAN-H CHINA MERCH BK-H

NAME

PRICE

DAY %

Volume

12.86

0.1557632

11396149

ZIJIN MINING-H

2.82

-1.398601

43103498

15382372

ZOOMLION HEAVY-H

10.3

-0.5791506

12330228

-0.4535147

23047574

ZTE CORP-H

13.94

-0.1432665

6665504

30.75

21457789

4.09

-0.968523

94745493

11.92

-1.487603

18915054

6.63

1.843318

11132039

HUANENG POWER-H

7.63

0.6596306

18745415

13905996

IND & COMM BK-H

5.63

300081307

-0.155521

179573077

JIANGXI COPPER-H

19.7

-0.1014199

9940872

5.426357

20371144

PETROCHINA CO-H

10.58

-1.30597

91710310

24.5

0.6160164

33150329

PICC PROPERTY &

11.52

-1.030928

10019227

7.1

-1.933702

20782300

PING AN INSURA-H

67.4

0.5219985

20539162

17.62

17692719

SHANDONG WEIG-H

7.49

-0.5312085

11282232

CHINA MINSHENG-H

10.72

-2.545455

74252056

SINOPHARM-H

23.65

0.8528785

2528575

CHINA NATL BDG-H

12.18

26456512

TSINGTAO BREW-H

46.65

1.967213

2134746

16.8

-2.325581

12234673

WEICHAI POWER-H

32.2

-2.719033

4972996

CHINA OILFIELD-H

NAME YANZHOU COAL-H

MOVERS

5 11930

INDEX 11649.78 HIGH

11927.78

LOW

11619.48

52W (H) 12354.22 11610

(L) 8987.76 6-February

8-February

Shanghai Shenzhen CSI 300 PRICE

DAY %

Volume

PRICE

DAY %

Volume

CHONGQING CHAN-A

9.41

9.929907

60944497

QINGHAI SALT-A

29.02

3.939828

12547624

16877927

CITIC SECURITI-A

15.5

1.108937

122611504

SAIC MOTOR-A

18.46

7.388016

66364496

-0.1883239

22470692

CSR CORP LTD -A

5.08

0.1972387

50326083

SANY HEAVY INDUS

12.55

0.1596169

32242010

21.28

0.3773585

20874299

DAQIN RAILWAY -A

7.28

1.675978

42277406

SHANDONG DONG-A

49.4

1.89769

5766037

9.79

-0.1020408

68574024

DATANG INTL PO-A

4.31

0.7009346

12222662

SHANDONG GOLD-MI

38.4

-0.4149378

15187212

BANK OF CHINA-A

3.09

0.3246753

50345382

EVERBRIG SEC -A

15.98

-0.3740648

23490974

SHANG PHARM -A

12.64

4.722452

27399756

BANK OF COMMUN-A

5.28

81492446

GD POWER DEVEL-A

2.8

0.7194245

48613245

SHANG PUDONG-A

11.34

-0.7874016

195904902

11.79

1.550388

23326543

GEMDALE CORP-A

7.93

-1.122195

62507849

SHANGHAI ELECT-A

4.24

0.952381

8623122

0.5825243

30516787

GF SECURITIES-A

16.76

-0.7109005

68562950

SHANXI LU'AN -A

24.09

0.6265664

11193084

GREE ELECTRIC

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

3.1

-1.273885

233158698

AIR CHINA LTD-A

6.06

-0.4926108

5.3

ANHUI CONCH-A BANK OF BEIJIN-A

ALUMINUM CORP-A

BANK OF NINGBO-A BAOSHAN IRON & S

5.18

NAME

8.92

3.72093

27982611

29.71

2.166437

21572403

SHANXI XISHAN-A

14.24

-0.07017544

24570769

25.43

3.965658

7096605

GUANGHUI ENERG-A

17.5

16448129

SHENZEN OVERSE-A

7.03

2.03193

36310264

CHINA CITIC BK-A

4.92

41770820

HAITONG SECURI-A

13.27

-0.1504891

129688144

SICHUAN KELUN-A

68.3

0.618739

1471350

CHINA CNR CORP-A

4.93

74199227

HANGZHOU HIKVI-A

31.12

0.2900419

7377375

SUNING APPLIAN-A

7.28

0.4137931

46540960

CHINA COAL ENE-A

8.23

0.8578431

11052078

HENAN SHUAN-A

72.3

0.6963788

2531466

TSINGTAO BREW-A

35.01

2.910053

3076699

CHINA CONST BA-A

4.9

0.204499

50909089

HONG YUAN SEC-A

21.42

1.276596

18409454

WEICHAI POWER-A

28.26

4.357459

16113597

BBMG CORPORATI-A BYD CO LTD -A

CHINA COSCO HO-A

4.33

0.6976744

21956318

HUATAI SECURIT-A

11.78

-2.402651

55491284

WULIANGYE YIBIN

25.91

0.03861004

37003686

CHINA CSSC HOL-A

23.82

-0.75

13389819

HUAXIA BANK CO

11.82

0.9393681

55368790

YANGQUAN COAL -A

16.37

0.3678725

11561229

CHINA EAST AIR-A

3.67

-0.2717391

16499316

IND & COMM BK-A

4.35

0.4618938

129047409

YANTAI WANHUA-A

17.77

0.05630631

10731775

CHINA EVERBRIG-A

3.58

-1.917808

174233127

INDUSTRIAL BAN-A

19.6

-1.010101

109392195

YANZHOU COAL-A

19.37

-0.05159959

6498235

CHINA INTL MAR-A

14.34

3.091301

14515383

INNER MONG BAO-A

34.23

0.9436744

23877070

YUNNAN BAIYAO-A

77.59

2.768212

2624689

CHINA LIFE INS-A

20.12

0.09950249

14463028

INNER MONG YIL-A

28.8

0.0694927

8966297

ZHONGJIN GOLD

16.74

-0.652819

28617489

CHINA MERCH BK-A

14.04

-0.7072136

93929728

INNER MONGOLIA-A

5.22

0.7722008

30579946

ZIJIN MINING-A

3.91

0.2564103

59003344

38383736

JIANGSU HENGRU-A

32.78

0.7685214

5295330

ZOOMLION HEAVY-A

10.12

-0.686948

59146404

JIANGSU YANGHE-A

82.74

-0.6126126

4496773

ZTE CORP-A

10.62

4.527559

32069377

JIANGXI COPPER-A

27.19

2.218045

17734551

JINDUICHENG -A

12.95

0.7782101

8723181

JIZHONG ENERGY-A

17.38

1.696899

11659526

CHINA MERCHANT-A

13.6

CHINA MERCHANT-A

27.26

0.183756

14574242

CHINA MINSHENG-A

10.52

-4.363636

574655950

CHINA NATIONAL-A

8.45

4.968944

56155267

CHINA OILFIELD-A

17.34

0.6968641

6655400

CHINA PACIFIC-A

22.19

-0.7158837

24187140

KANGMEI PHARMA-A

3.975535

29335757

CHINA PETROLEU-A

7.03

1.884058

58215993

KWEICHOW MOUTA-A

187.86

1.452719

4157253

CHINA RAILWAY-A

6.05

28623951

LUZHOU LAOJIAO-A

31.77

0.2208202

9298908

2.24

0.9009009

52983514

CHINA RAILWAY-A

3.28

-0.6060606

58542086

METALLURGICAL-A

CHINA SHENHUA-A

24.84

0.4448039

14177475

NINGBO PORT CO-A

2.65

0.3787879

19646390

4.13

1.22549

MOVERS 212

12 2790

INDEX 2771.725

CHINA SHIPBUIL-A

5.29

0.9541985

76769176

PANGANG GROUP -A

39621321

HIGH

2789.18

CHINA SOUTHERN-A

4.14

-0.2409639

27788044

PETROCHINA CO-A

9.33

0.7559395

37965924

LOW

2733.63

CHINA STATE -A

4.06

1.5

217909321

PING AN BANK-A

20.75

-0.4796163

46202466

CHINA UNITED-A

3.74

0.5376344

90494974

PING AN INSURA-A

51.89

-1.124238

30815640

CHINA VANKE CO-A

12.03

1.262626

79113930

POLY REAL ESTA-A

13.03

0.07680492

78835088

CHINA YANGTZE-A

7.65

0.6578947

21579729

QINGDAO HAIER-A

13.98

2.417582

18351897

PRICE DAY %

Volume

PRICE DAY %

Volume

52W (H) 2791.303 (L) 2102.135

2730

6-February

8-February

FTSE TAIWAN 50 INDEX NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP

NAME

25.1

15257378

FORMOSA PLASTIC

1.052632

19359617

37.2

104

-0.952381

FOXCONN TECHNOLO

84.5 -0.3537736

6214332

TPK HOLDING CO L

516

0.5847953

5465848

4447451

FUBON FINANCIAL

39.8

105

1.941748

32330330

0.5050505

36084241

TSMC UNI-PRESIDENT

356

2.59366

5353953

HON HAI PRECISIO

83.6

0.6016847

29124117

11.3

1.801802

59990921

HOTAI MOTOR CO

237.5

0.2109705

234866

134.5

1.509434

15951394

HTC CORP

271.5

2.067669

CATHAY FINANCIAL

35.3

4.43787

86042879

HUA NAN FINANCIA

17.25

CHANG HWA BANK

16.65

0.3012048

20882216

LARGAN PRECISION

78.2 -0.1277139

7243650

LITE-ON TECHNOLO

CHIMEI INNOLUX C

51.5 -0.1937984

13368286

11.35 -0.4385965

26463556

33272200

WISTRON CORP

33.45 -0.7418398

11397506

0.2906977

15711402

YUANTA FINANCIAL

16.2 -0.6134969

43004766

805

-1.105651

2441678

YULON MOTOR CO

53.8 -0.9208103

4642833

42.5

-1.162791

8193148

15.05

-0.660066

72444447

MEDIATEK INC

325 -0.3067485

8.79

-1.897321

188827894

MEGA FINANCIAL H

25.4

0.7936508

52554778

CHINA STEEL CORP

27.6 -0.7194245

14673548

NAN YA PLASTICS

58.8 -0.8431703

8906206

119787659

PRESIDENT CHAIN

162.5 -0.3067485

1043607

CHUNGHWA TELECOM COMPAL ELECTRON

6117153

18.05

1.977401

93.9

5473912

QUANTA COMPUTER

0.2949853

5760131

20.75 -0.9546539

13370205

SILICONWARE PREC

30.2

-3.049759

18903365

DELTA ELECT INC

108

2.857143

6767863

SINOPAC FINANCIA

13.6

0.7407407

61141898

FAR EASTERN NEW

34.5

5182720

SYNNEX TECH INTL

61.1

-1.926164

8130246

FAR EASTONE TELE

73.7

-0.270636

8398309

TAIWAN CEMENT

39.15

-1.509434

9161149

18.85

1.344086

44189967

TAIWAN COOPERATI

17.05

7220023

TAIWAN FERTILIZE

84.7 -0.3529412

9927936

TAIWAN GLASS IND

FIRST FINANCIAL FORMOSA CHEM & F FORMOSA PETROCHE

6913090

UNITED MICROELEC

CHINA DEVELOPMEN CHINATRUST FINAN

Volume

TAIWAN MOBILE CO

AU OPTRONICS COR

CHENG SHIN RUBBE

PRICE DAY %

7597826

ASUSTEK COMPUTER CATCHER TECH

NAME

-1.112485

21265109

72.8 -0.4103967

3206400

29 -0.6849315

804610

MOVERS

6 5570

INDEX 5546.28 HIGH

5564.56

LOW

5496.5

52W (H) 5621.53 5490

(L) 4719.96 4-February

6-February

February 13, 2013 business daily | 13

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

Max 33.55

Average 33.181

Max 36.7

Average 36.418

Min 32.1

51.8

17.8

33.2

51.5

17.5

32.8

51.2

17.2

32.4

50.9

16.9

32.0

Last 33.55

Min 36.05

33.6

Last 36.4

Max 51.65

Average 51.185

PRICE

Average 17.425

Min 16.74

Last 17.56

20.4

36.6

20.2

36.40

19.8

20.0

36.2

19.4

19.8

36.0

Max 20.55

Average 20.040

DAY %

YTD %

(H) 52W

(L) 52W

96.86

-0.175203545

4.974531267

108.9899979

80.48000336

BRENT CRUDE FUTR Mar13

118.2

0.059256751

7.562107562

119.1699982

90.58999634

GASOLINE RBOB FUT Mar13

302.71

0.195286641

9.53466493

306.97999

222.4999905

GAS OIL FUT (ICE) Mar13

1012

-0.295566502

9.494184474

1026.25

800.5

NATURAL GAS FUTR Mar13

3.288

0.274473925

-2.288261516

4.049000263

3.052000046

322.95

-0.061890763

7.050519703

331.3199997

254.9000025

Gold Spot $/Oz

HEATING OIL FUTR Mar13

1645.07

-0.9352

-1.1649

1796.08

1527.21

Silver Spot $/Oz

30.8241

-1.6737

2.3716

37.4775

26.1513

Platinum Spot $/Oz

1696.75

-0.8473

11.7938

1742.8

1379.05

758.1

0.7803

8.3526

772.08

553.75

Palladium Spot $/Oz LME ALUMINUM 3MO ($)

2103

-0.755073148

1.447178003

2361.5

1827.25

LME COPPER 3MO ($)

8199

-1.145406318

3.379145127

8702.75

7219.5

LME ZINC

2191

-0.634920635

5.336538462

2218

1745

3MO ($)

LME NICKEL 3MO ($)

18165

-0.846069869

6.477139508

21097

15236

15.845

4.415156507

16.84000015

14.89999962

700.75

-0.213599146

0.358037952

846.25

511

WHEAT FUTURE(CBT) Mar13

741

-0.067430883

-4.755784062

948.25

652

SOYBEAN FUTURE May13

1419

0.123478568

1.411470431

1639.5

1218.75

142.95

-0.866851595

-2.556237219

229.5499878

142.5999908

AGRICULTURE ROUGH RICE (CBOT) Mar13 Mar13

COFFEE 'C' FUTURE May13

Min 19.2

Last 20.5

19.0

Max 20.35

Average 20.104

Min 19.4

Last 20.3

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

PRICE

DAY %

1.0247 1.5652 0.9206 1.3389 94.29 7.9882 7.7556 6.2331 53.8775 29.89 1.2441 29.76 40.702 9625 96.617 1.23259 0.85543 8.3461 10.6962 126.25 1.03

-0.2142 -0.3502 -0.2607 0.0299 -0.9545 0.0013 0.0013 -0.0112 -0.0418 -0.2007 -0.3778 -0.1075 -0.0025 -0.0519 -0.7442 -0.2937 -0.3776 -0.1869 -0.0318 -0.9822 0

YTD %

(H) 52W

-1.2623 -3.2394 -0.5648 1.5087 -8.686 -0.0626 -0.0645 -0.0401 2.0741 2.3085 -1.8246 -2.4429 0.7444 1.7455 -7.5453 -2.0372 -4.6772 -1.5408 -1.5501 -10.0436 -0.0097

1.0857 1.6381 0.9972 1.3711 94.46 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 97.439 1.25692 0.87169 8.4957 10.9254 127.71 1.0314

0.9582 1.5269 0.8931 1.2043 77.13 7.9823 7.7498 6.2105 48.8525 29.63 1.2152 28.913 40.54 8958 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS NAME

(H) 52W

(L) 52W

3.7

17.46031

3.89

2.27

315688

CROWN LTD

11.85

-0.08431703

11.05904

12.04

8.06

1058926

ARISTOCRAT LEISU

PRICE

DAY % YTD %

VOLUME CRNCY

SUGAR #11 (WORLD) May13

18.46

1.428571429

-5.816326531

24.56999969

18.05999947

AMAX HOLDINGS LT

0.078

2.631579

11.42857

0.108

0.055

4262000

82.76

-0.192957067

10.14107

95.54999542

66.84999847

BOC HONG KONG HO

26.85

0.9398496

11.41079

27.1

20.8

10936136

World Stock MarketS - Indices COUNTRY

PRICE

DOW JONES INDUS. AVG

NASDAQ COMPOSITE INDEX

FTSE 100 INDEX

CENTURY LEGEND

0.28

5.660383

0.34

0.215

CHEUK NANG HLDGS

6.28

0.3194888

4.841406

6.29

2.8

73058

CHINA OVERSEAS

22.05

0.6849315

-4.545456

25.6

14.124

32031116

CHINESE ESTATES

11.38

0.1760563

-6.178519

12.964

7.697

59500

CHOW TAI FOOK JE

11.64

-1.522843

-6.430865

13.76

8.4

6976200

EMPEROR ENTERTAI

2.04

0.990099

7.936509

2.15

1.1

855000

FUTURE BRIGHT

1.78

-1.657459

45.90164

2.03

0.465

7674000

DAY %

YTD %

(H) 52W

(L) 52W

13971.24

-0.1552923

6.616998

14022.62

12035.08984

GALAXY ENTERTAIN

33.55

3.869969

10.54366

35.7

16.94

18139901

3192.005

-0.05839311

5.712549

3196.932

2726.68

HANG SENG BK

126.9

0.9546539

6.908175

127.6

99.2

1058714

6277.06

0.2096128

6.430353

6354.46

5229.76

HOPEWELL HLDGS

33.15

0.4545455

-0.3007519

34.4

19.049

728900

DAX INDEX

7633.74

-0.2404556

0.2804651

7871.79

5914.43

HSBC HLDGS PLC

86.35

0.2321532

6.211558

88.45

59.8

10286073

NIKKEI 225

11404.28

2.251559

9.70739

11498.42

8238.96

HUTCHISON TELE H

3.49

-1.966292

-1.966291

3.88

2.98

2458000

HANG SENG INDEX

23215.16

0.164646

2.463884

23944.74

18056.4

LUK FOOK HLDGS I

26.15

2.750491

7.172133

30.05

14.7

1863000

MELCO INTL DEVEL

12.76

5.107084

41.62042

13.96

5.12

14812108

CSI 300 INDEX

2771.725

0.4295492

9.860401

2791.303

2102.135

MGM CHINA HOLDIN

17.56

2.810304

25.24964

18.86

10.04

7680766

TAIWAN TAIEX INDEX

7906.65

0.2499068

2.690433

8170.72

6857.35

MIDLAND HOLDINGS

3.71

2.203857

0.270269

5.217

3.249

2260000

NEPTUNE GROUP

0.179

3.468208

17.76316

0.226

0.084

47560000

NEW WORLD DEV

13.7

-0.5805515

13.9767

15.12

7.95

21021505

SANDS CHINA LTD

36.4

0.8310249

7.216492

39.95

20.65

24984744

SHUN HO RESOURCE

1.59

13.57143

1.6

1.03

44000

4.33

1.882353

3.341287

4.65

2.56

3907340 14331661

KOSPI INDEX

1949.45

-0.07432467

-2.38352

2057.28

1758.99

S&P/ASX 200 INDEX

4965.2

0.1148502

6.802611

4981.5

3985

4523.735

0.4549606

4.796453

4532.021

3635.283

FTSE Bursa Malaysia KLCI

1623.8

0.2611804

-3.85742

1699.68

1526.6

SHUN TAK HOLDING

NZX ALL INDEX

917.579

0.1352118

4.027649

924.705

740.345

SJM HOLDINGS LTD

PHILIPPINES ALL SHARE IX

4073.42

0.1214213

10.12279

4086.59

3224.53

SMARTONE TELECOM

JAKARTA COMPOSITE INDEX

19.6

(L) 52W

COTTON NO.2 FUTR Mar13

NAME

16.6

20.6

WTI CRUDE FUTURE Mar13

CORN FUTURE

Max 17.62

CURRENCY EXCHANGE RATES

NAME

METALS

50.6

Last 51.35

36.8

Commodities ENERGY

Min 50.7

HSBC Dragon 300 Index Singapor

634.4

0.48

2.14

STOCK EXCH OF THAI INDEX

1487.16

-0.1309507

6.841578

1511.95

1099.15

HO CHI MINH STOCK INDEX

494.03

0.6950389

19.40879

495.72

372.39

Laos Composite Index

1433.43

0.6424299

18.00012

1455.82

880.65

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

WYNN MACAU LTD

20.5

7.555089

13.88889

22.15

12.34

13.64

-0.5830904

-3.124999

17.5

13.16

723000

20.3

4.423868

-3.102629

25.5

14.62

25676412

ASIA ENTERTAINME

4.06

32.67974

7.24

2.4

154531

BALLY TECHNOLOGI

49.01

-0.7090762

9.617537

51.16

41.74

329998

BOC HONG KONG HO

3.5

14.00652

3.5

2.68

500

GALAXY ENTERTAIN

4.36

9.823677

4.57

2.25

2000 3690250

INTL GAME TECH

16.59

-1.191185

17.07833

17.37

10.92

JONES LANG LASAL

98.31

-0.1219141

17.11937

98.84

61.39

197436

LAS VEGAS SANDS

53.84

-1.482159

16.63778

58.3216

32.6127

5707935

MELCO CROWN-ADR

20.48

-1.915709

21.6152

21.475

9.13

4193846

MGM CHINA HOLDIN

2.22

2.33

1.36

1450

MGM RESORTS INTE

13.05

-3.404885

12.1134

14.9401

8.83

16176593

SHFL ENTERTAINME

16.02

-1.111111

10.48276

18.77

11.75

263139

SJM HOLDINGS LTD

2.62

13.41992

2.85

1.65

13743

WYNN RESORTS LTD

124.1

-1.912741

10.32092

129.6589

84.4902

1325558

AUD HKD

USD

14 |

business daily February 13, 2013

Opinion

Democracies need technocrats as well as politicians Clive Crook

Bloomberg View columnist

he London School of Economics Growth Commission, a panel of academics, former government officials and business leaders, has just published a report on how to improve Britain’s economic performance. “Investing for Prosperity” is a notable piece of work that deserves to be widely read, and not just in Britain. The report emphasises policies on human capital, investment and innovation, and the limits of standard measures of prosperity. The latter takes up a theme recently discussed by Bloomberg View – the failings of gross domestic product as a metric of economic success. The authors urge governments and the news media to pay as much attention to median household income as they do to GDP, arguing that it gives a better reading on living standards as experienced by most citizens. Good advice. I was especially struck, though, by the panel’s recommendations on infrastructure, because these draw attention to a broad and difficult issue that dwells just beneath the surface of many policy debates: What is the proper balance between democracy and technocracy?

Lamentable management On infrastructure, which the panel considers a high priority, it advises the U.K. to create a “new institutional architecture” that would “dramatically reduce the policy instability that arises from frequent changes in political personnel and priorities, particularly in transport and energy”. The commission suggests an Infrastructure Strategy Board to advise parliament on broad priorities; an independent Infrastructure Planning Commission with new planning powers; and an Infrastructure Bank to help provide finance and counsel on the management of risk. As the report documents, the management of publicinfrastructure projects has been lamentable. No private firm could survive the errors that governments have made with taxpayers’ money.

One multinational review of infrastructure projects, which I warmly recommend, is aptly called “Survival of the Unfittest”. The author, Bent Flyvbjerg, a professor of project management at the University of Oxford, found that nine out of 10 transport-infrastructure projects (across 20 countries and five continents) suffered cost overruns; benefits, on the other hand, were systematically exaggerated. Flyvbjerg concludes that project promoters and forecasters “intentionally use the following formula in order to secure approval and funding for their projects: Underestimated costs + overestimated benefits = funding”. In Britain, and still less in the U.S., nobody could look around and conclude that the problem is too much infrastructure investment. Rather, the problem is too many badly chosen and badly managed projects and too few well-chosen and wellmanaged ones. The U.S. suffers especially from the ageing of poorly maintained critical infrastructure that was built decades ago, when the country led the world in this kind of investment. According to the American Society of Civil Engineers, the cumulative gap between the U.S.’s vital infrastructure needs and likely investments will stand at US$1.1 trillion by 2020. Compounding that problem is the intensely political nature of the selection process for new infrastructure. The long tradition of earmarks – which institutionalises the principle, “You support my worthless project and I’ll support yours” – has produced impressively empty roads in many parts of the country, while vital aspects of the infrastructure network are crumbling and congested.

Partisan pork The LSE commission’s proposal – put more control of infrastructure in the hands of non-political technocrats, subject to parliamentary oversight and strategic guidance – is an approach that might make even more sense in the U.S. than it would in

Britain. Why? Because public policy in the U.S. is far more politicised than in the U.K. Britain’s top civil servants aren’t political appointees. Its public-policy scholars aren’t generally associated with one or another political party. Civil society has a very large, nonaligned component. In the U.S., this isn’t so. Of course, the American tradition of political alignment and engagement makes the empowerment of a nonpartisan

In this new world, transitions of power are far more disruptive … A coherent strategy on infrastructure, an unavoidably longterm undertaking, is difficult to form

technocracy culturally impossible, even as, in certain areas such as infrastructure planning, it makes such empowerment more necessary. The breakdown of collaborative bipartisan politics in Washington only heightens the dilemma. When Democrats and Republicans were closer ideological neighbours, transitions of power didn’t call for wholesale reversals of policy. Since the mid-1990s, the distance between the parties has widened. In this new world, transitions of power are far more disruptive – despite the system’s many checks and balances. A coherent strategy on infrastructure, an unavoidably long-term undertaking, is difficult to form. This may be the biggest threat to the country’s success over time. The technocratic tendency can certainly be taken too far. This tradition is far more pronounced in continental Europe than in Britain, let alone the U.S. And the European Union – itself a technocratic project par excellence – underlines the drawbacks of letting the tendency go too far. When technocrats get too unmoored from popular opinion, the results are usually terrible, not just in the sense of being antidemocratic but also measured

against the technocrats’ preferred metric of efficiency. The creation of the euro is the classic instance. The challenge is to get the mix right. And the idea, please note, isn’t entirely alien even to the U.S. Consider central banking. Aside from Congress, the Federal Reserve might be the most powerful single institution in the country. It deals with intensely political questions. Yet it’s a technocratic outfit – non-partisan, subject to congressional oversight but with substantial de facto independence, a freedom it has used to the maximum in the past several years. And thank heavens for that. Who would want U.S. monetary policy to be run with the same sense of purpose, intelligence and decisiveness that Congress brings to fiscal policy? Yet the powers granted to the Fed are a glaring anomaly in the American political tradition. As desirable as a measured step toward nonpartisan technocracy might be in fiscal policy, and especially on infrastructure investment and other long-term strategic priorities, I don’t see it happening in the U.S. This is a country too much in love with politics. Let’s hope that won’t stand as the nation’s economic epitaph. Bloomberg View

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

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

February 13, 2013 business daily | 15

OPINION

Why man returns to Japan wires when others want to flee Business

Leading reports from Asia’s best business newspapers

Yomiuri Shimbun Japan’s current account surplus last year plunged 50.8 percent from the previous year to a record low of 4.7 trillion yen (US$50 million), Finance Ministry data showed. The 2012 figure was the smallest since comparable data became available in 1985, falling below the surplus of 6.47 trillion yen in 1990, when tensions in the Middle East rose on the brink of the Gulf War. Hit by an export slump and increased imports of liquefied natural gas, Japan saw the surplus in its current account balance fall for the second consecutive year.

Korea Herald South Korean households’ consumption fell in the third quarter of 2012 from a year earlier, data by Statistics Korea showed on Tuesday. The number marks the lowest rate since the agency started to compile such data in 2003. The country’s savings rates moved down 1.1 percentage point to 30.1 percent over the cited period, which implies the fall in the consumption is attributable to the country’s rising household debts. South Korea’s household debt stood at 937.5 trillion won (US$856.6 billion) as of the end of September last year.

Business Inquirer The Philippines is likely to outperform consensus growth forecasts this year with the political and reform environment looking ripe for the implementation of more changes and the world economy appearing to be on the mend, New York-based think tank Global Source said. Global Source projected Philippine gross domestic product growth at 6.1 percent this year, upgrading its previous forecast of 5 percent although slower than the actual 6.6-percent expansion last year. The slightly slower growth seen for this year factored in weak external growth and a strong local currency weighing down exports.

Jakarta Globe Consumer confidence in Indonesia has declined as the looming rise in electricity costs prompts consumers to delay the purchase of durable goods, a central bank survey has shown. Bank Indonesia’s report, released on Monday, showed that the Consumer Confidence Index slipped to 116.2 points in January from a record 116.4 in December. “[Consumer confidence] is being overshadowed by the electricity tariff rise,” the central bank said in a statement accompanying the survey results. Electricity prices are scheduled to rise 15 percent this year.

William Pesek

Bloomberg View columnist

y favourite Haruhiko Kuroda moment was on a Tokyo-bound flight on March 13, 2011, two days after a gigantic earthquake struck northeast Japan. I was in the Philippines when the quake precipitated a nuclear crisis. On the first available flight back, the president of the Manila-based Asian Development Bank sat near me on an almost-empty plane. Manila-to-Tokyo flights are rarely made with a single empty seat, but no one likes to fly into a potential Chernobyl, not with tens of thousands in Japan clamouring for the exits. “We seem to have the whole plane to ourselves,” Kuroda quipped, saying he was returning to “do what I can to help”. Those words come to mind as Kuroda may be about to return to offer help again, this time as Bank of Japan governor. It would be a timely reappearance for a respected economist who has spent the past eight years in Manila working to reduce poverty. As he spoke with Bloomberg News reporters in Tokyo last week, it occurred to me that this kind of selflessness might make Kuroda an inspired choice to end Japan’s 15-year bout with deflation. It was heartening that Kuroda said “some additional” monetary measures could be justified this year, while incumbent Bank of Japan Governor Masaaki Shirakawa had said he saw no need for monetary easing until 2014. Kuroda, a leading candidate to replace Shirakawa when he leaves office next month, said the central bank has many tools to achieve its 2 percent inflation target. That alone might set him apart from his predecessors. He also declared, in unambiguous terms, that falling consumer prices must be “eradicated”.

Haruhiko Kuroda, president of the Asian Development Bank

for central-bank head will be to fire huge amounts of liquidity into markets. Japan, of course, needs far more than that. Along with increased power, Bank of Japan policies need better aim and precision. This is where economic theory comes into play. The first reason Kuroda might succeed is because he isn’t a Bank of Japan lifer, but a former Finance Ministry official. That means he wasn’t steeped in decades of institutional paranoia that tends to defeat each new central-bank governor even before he presides over his first interest-rate meeting. There is a reason the Bank of Japan is keen to see that one of its own gets the job. Another career bureaucrat at the helm might deepen deflation, not end it. The bigger reason is what Kuroda has been doing since 2005, when he became president of the Asian Development Bank. The multiplier effect that makes monetary policy so potent has eluded Japan since the early 1990s.

Bazooka wielding Kuroda, 68, hasn’t been nominated so far, and his comments came with a disclaimer that he’s speaking as head of the Asian Development Bank, and not on behalf of the Bank of Japan. Nor has Prime Minister Shinzo Abe tipped his hand on whom he might choose. But Kuroda looks like he would come to the job with a unique ability to deliver stimulus to the economy. The standard line on Abe is that he wants to emulate a strategy that U.S. Treasury Secretary Henry Paulson in 2008 described as wielding a bazooka. The job of Abe’s candidate

The job of Abe’s candidate for central-bank head will be to fire huge amounts of liquidity into markets. Japan, of course, needs far more than that

Bankers are still reluctant to lend, traumatised by the bad-loan crisis that dragged on until the mid-2000s. Households have too little confidence in their job prospects and future earning potential to borrow. The key is to end a liquidity trap. Part of the onus is on the government. Penalising banks that are sitting on trillions of dollars of government securities might boost credit growth. Offering tax incentives to would-be consumer or corporate borrowers could increase lending. Yet two decades of political gridlock have lawmakers demanding more from the Bank of Japan while doing little on their end.

Turf battles While officialdom in Japan has been fighting the same turf battles, Kuroda has been focusing on strengthening and broadening the benefits of growth in Asia, home to a crucial mass of the world’s extreme poor. He’s doing so with limited resources and an imperfect understanding of the often conflicting needs of a diverse region at disparate levels of development. That has meant experimenting with new

projects and initiatives to see what works and what doesn’t. This kind of risk taking and brainstorming is just what Japan needs. Japan’s unconventional policies are being pursued too conventionally. There are lots of things the Bank of Japan could do: boost purchases of longer-dated government debt, corporate bonds, exchange-traded funds and securitised loans to smaller companies. And then there are kitchen-sink steps, such as buying distressed real estate or monetising the debt of bankrupt towns. The central bank needs to think outside the confines of its current staff. Saying deflation must be ended “through whatever measures available” suggests that Kuroda could be stellar news for the world’s third-biggest economy. Few questions tantalise markets more than whether Japan’s long-awaited revival is afoot. Abe’s plans lack innovation and rely too much on the fossilised Liberal Democratic Party ideas of the past. Yet at the Bank of Japan, Abe has the opportunity to surprise the world with a radical personnel choice. All he needs to do is make Kuroda’s ticket one-way. Bloomberg View

16 |

business daily February 13, 2013

CLOSING Risks to economy ‘have abated’: Moody’s

EU considers reforms to cap banker bonuses

Moody’s Investor Services yesterday said downside risks for the global economy had receded in the past three months, though a number of dangers still remained. “While our central forecasts are little changed, the downside risks have definitely abated over the past three months,” said Colin Ellis, Moody’s Senior Vice President for Macro Financial Analysis. “However, we still expect a subdued global recovery with sub-trend growth in most advanced economies over the near term, alongside a relatively soft pace of expansion in emerging markets as well,” said the latest Global Macro Risk Scenarios report.

Bankers’ bonuses could be capped under plans examined by EU countries this week, as politicians attempt to tighten controls over the industry. The proposals would cap banker bonuses at the level of their salaries to stop huge payouts from encouraging excessive risk-taking. However, bigger bonuses – up to twice the banker’s salary – would be possible if shareholders agreed, according to an internal document obtained by Reuters. If agreed, the plan would see an unprecedented tightening of EU law to curb banker pay as soon as the beginning of next year.

Alcorcón preferred site World Bank chief for LVS Euro project economist urges G20 to coordinate policies

Community southwest of Spanish capital – and country’s economy – could see US$9 bln invested in first phase Emerging economies to resume Michael Grimes strong growth, says Basu michael.grimes@macaubusinessdaily.com

Alcorcón on the outskirts of Madrid

as Vegas Sands Corp. has – as previewed by Business Daily last week – chosen the town of Alcorcón southwest of the Spanish capital Madrid as the proposed site for a US$9 billion (70.2 billion patacas) first phase of a massive tourism and gaming resort. If it goes ahead it is likely to make the casino resort developer – which already has operations in Macau and Singapore as well as Las Vegas – by far the largest gaming operator in the world by EBITDA (earnings before interest, taxation, depreciation and amortisation). The Alcorcón project proposal comes during Spain’s second recession since 2008. The country’s unemployment rate reached 26 percent in the fourth quarter of 2012 according to the country’s National Statistics Institute. In January the Financial Times reported the European Union’s single currency had fallen to a 16-month low against the United States dollar. If the euro remains

weak relative to the U.S dollar it should give LVS strong purchasing power on a European project. The Madrid scheme is being presented by the company and by the Madrid regional government as a much-needed boost to the local economy. “For some time we have been working on an inspiring and extraordinary project whose goal is to make Madrid the international reference point for conventions, fairs, exhibitions and leisure in Southern Europe,” said Ignacio González, president of Madrid’s regional government at a press conference in the Spanish capital. The Madrid area was chosen by LVS in September after consultations with local politicians but with the specific location until now undetermined. Work on the first phase of the project in Alcorcón, which is 13 kilometres (8 miles) southwest of the city’s centre, will finish in 2017, said Mr González. Spain accounted for US$478 million (3.6 percent)of Western

Europe’s US$13.2 billion casino spending in 2010, according to a report by accounting firm PriceWaterhouseCoopers LLP. But many visitors are expected from overseas. If all three phases were completed, the megaresort would boost the region’s gross domestic product by 4.5 percent, according to Promomadrid, a government-owned company that tries to attract foreign investment to the Madrid area. It estimates the development could create 164,000 jobs directly and a further 97,000 indirectly, equal to about half the number of unemployed in the region.

Project funding Michael Leven, LVS’s president and chief operating officer, reiterated at a press conference in Madrid that the firm has US$3.6 billion in cash available to commence the first phase of the scheme. He added it would take 15 to 18 years to roll out the project in its entirety. Mr González said LVS would provide about 35 percent of financing for the project, which will occupy 750 hectares (1,850 acres). The multi-phase complex could include as many as six casinos with more than 1,000 gambling tables, 18,000 slot machines, nine theatres and three golf courses. It would cost as much as US$35 billion, Sheldon Adelson, chairman of LVS said in an April conference call with investors. LVS will build four resorts with 3,000 rooms on the site Mr Leven said. LVS fell 1.48 percent on Monday in New York to US$53.84. The shares have advanced 13.23 percent year-on-year. With Bloomberg News

he World Bank’s new chief economist yesterday urged Group of 20 finance leaders to better coordinate economic policies in order to prevent a possible global currency war. In an interview with Reuters, Kaushik Basu said G20 finance ministers, meeting in Moscow on Friday and Saturday, should act on a solution before escalating tensions spark another global economic crisis. While the risk of a sudden plummeting of the global economy had diminished because of measures adopted in Europe to ease its sovereign debt crisis, a rapid bounce-back in growth was unlikely, he said. “We are not in a currency war but could be inching towards one,” said Mr Basu, a former chief economic adviser to the Indian finance ministry. “Global leaders need to coordinate policy to prevent either [one] from happening or markets believing it is happening. Such coordination is entirely within the realm of the possible; all it needs is determination.” He said that, while unconventional monetary policy measures by central banks in the United States,

Japan and Europe to revive growth had proved valuable, the impact of those policies was “beginning to feed into the global situation”. “The need is for some global monetary and fiscal policy coordination and the G20 is the forum that could push on that, and I think it ought to take that task seriously,” he added. Advanced economies have ramped up debt and printed money, which has weakened some of their currencies and made them more competitive. Meanwhile, near-zero rates in the rich world have exacerbated the problem of hot money flows for emerging markets with high interest rates and driven up their exchange rates. The global crisis has reduced high rates of growth in emerging market economies like China, but the slowdown did not signal a “new normal,” Mr Basu said. “I do believe there is a shifting of global gear that is going on - and you won’t see it just now - but if you do prospecting for three to four years, a couple of emerging economies will come out as the growth drivers of the world,” he said.

Kaushik Basu, World Bank’s new chief economist

Reuters