Macau Business Daily, February 14, 2013 by Business Daily

Crossing chaos Govt ‘unprepared’ claims academic

erious public safety questions were being raised yesterday about Macau’s drive to boost tourism numbers without further significant expansion of the border crossings and their opening times. On Tuesday night police intervened as thousands attempting to leave at around 6pm via Gongbei began pushing and scuffling. In January Beijing officials appeared non-committal over the Macau government’s suggestion of a 24-

Year I Number 219 Thursday February 14, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00 www.macaubusinessdaily.com

hour crossing point. By the first quarter of 2012 the daily capacity on the Macau side of Gongbei was increased to half a million. Since then there’s been extension of the Individual Visit Scheme, a relaxation on visa rules for some Guangdong non-residents, and the opening of the high speed rail link from Guangzhou. In 1993, 21 died and 71 were injured during a New Year crush in Hong Kong.

Golden Week brings nearly 1 million visitors 25,000 hotel rooms in pipeline, says DSSOPT More on page 3, 16

I SSN 2226-8294

Most addicts ‘no idea’ how much they gamble

HANG SENG INDEX 23260

23220

23180

23140

23100

February 8

HSI - MOVERS Name

The majority of people registered on the government’s problem gambling database had “no idea” how much they spend at casinos each month, the Social Affairs Bureau revealed. The database depends on self-referral to community organisations. It pre-dates the recent legislation allowing

families to seek exclusion of relatives from casinos. The data from the bureau’s 2011 annual report raise concerns particularly because nearly a fifth of the selfconfessed gambling addicts are unemployed or with below-average income. Page 2

%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

Creative industries, govt needs tough love Page 4

First LRT carriage test ‘before year end’ Page 6

Junket investor Amax changes auditor again Page 7

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business daily February 14, 2013

macau Consensus but no timeframe for Barra crossing The Land, Public Works and Transport Bureau said they have “gradually reached a consensus” with the Guangdong provincial government on the budget and work allocation for the pedestrian tunnel connecting Macau’s Barra district and the Wan Chai district of Zhuhai. But bureau director Jaime Carion wrote in a reply to legislator Angela Leong On Kei that there is still no timetable for the project as they had to consider other factors like traffic and land usage before laying out “a practical proposal”. The crossing is aimed at diverting traffic from the Gongbei border gate.

Most addicts have ‘no idea’ how much they gamble Problem gambling hits low-income, casino staff groups the most, data show Vítor Quintã

vitorquinta@macaubusinessdaily.com

ost of the people registered on the government’s problem gambling database had “no idea” how much they spend at casinos each month, the Social Affairs Bureau revealed. The database depends on selfreferral to community organisations. It pre-dates the recent legislation allowing families to seek exclusion of relatives from casinos. The data from the bureau’s 2011 annual report raise concerns particularly because nearly a fifth of the self-confessed gambling addicts are unemployed or with belowaverage income. In January 2011 the administration introduced a central registration system for compulsive gamblers with the goal of “getting a more reliable portrait” of the social problems caused by the casino business. The database gathers information from 15 local non-profit organisations that give assistance to problem and pathological gamblers. During the first year of the new system 144 cases were registered, the report released last week says, of which an overwhelming majority (135) are residents. The majority of those asking for help (53.5 percent) were unable to

estimate how much they gamble away every month, and “they are not aware of the amount they bet,” the bureau stressed. A further 13.9 percent said they would spend between 5,000 patacas (US$630) and 10,000 patacas each month. Tourists spend much more, with an average casino gambling budget of 15,257 patacas for each trip to the city, according to a survey of 7,300 visitors carried out by the Institute for the Study of Commercial Gaming at the University of Macau in 2011.

Piling debt Worryingly, it seems the ones who can least afford it are those that gamble the most. Over 16 percent of the problem gamblers included in the database were unemployed and an even bigger slice, 19.4 percent, claimed to have no steady income. In fact, one in four said they gamble most to solve financial problems. A further 23.1 percent use casinos as a relief against “boredom or sadness,” the report adds. The odds favour the casinos, however, with operators usually achieving a gross margin of 27 to

31 percent of all money bet in massmarket table games. Far from solving financial problems, gambling created even bigger difficulties for the problem players. Close to a third admitted they had significant debts of between 10,000 patacas and 100,000 patacas. Another reason for concern notes the report, is that gambling addicts only call for help when the situation is already very serious. “According to the assessment criteria, it is obvious that 122 cases are classified as pathological gamblers, which represents 84.72 percent of the total,” the report says.

opinion

Slippery budgets

José I. Duarte Economist

Profile of gambling addict Male (40 to 49 years old)

Married

High school graduate

Has been a gambler for 5 to 7 years

Plays baccarat

The document also confirms that casino staff is a high-risk group when it comes to problem gambling. Over a quarter of all database members are industry employees, with particular focus on those who work directly on the gaming floor; the dealers (9.7 percent). Some legislators had called for casino staff to be banned from gambling as part of a new law that increased the minimum age for casino entry from 18 to 21 and took effect in November. The proposed change failed however as the Legislative Assembly failed to reach a consensus.

ecently, not for the first time, we were told by someone in public office, who felt the need to press the point, that a budget is an estimate. Indeed it is, by definition! There is universal agreement on the matter. A budget is an estimate. A budget is always an estimate of revenue and expenditure. But budgets have a purpose. Before people jump into new, significant and costly endeavours, they are all wise to take some time to plan ahead. How much will it cost? Will I have the required resources? What is the likelihood of something going wrong, or even awfully wrong? How would one cope with that? Failure to do so usually ends in disaster. We can make budgets for our grocery shopping, our holidays or to buy a new house. If our budget is out of touch with reality, we may well have to sacrifice much more than we hoped or can afford to – and end up poorer or even bankrupted. A company may make budgets for a new investment, an acquisition or any other activity it decides to carry on. If the budget is incompetently made, the outcome may be serious losses – or even the end of its existence. In either case, serious punishment awaits those that fail to budget their activities properly. But there are, it seems, exceptions. Some entities appear immune to the bounds that life imposes on most mortals. Certainly, nobody has ever disputed that budgets are estimates. Certainly, reality never turns out to be exactly what we expect. Certainly, there are events and risks that can be anticipated and those that cannot.

Having said that, estimates are like everything in life. There are good and bad ones. There are reasonable expectations and those that are unreasonable. Some errors or deviations from what is expected cannot be avoided, and some are made for lack of something else – and many things can be lacking, so leading to bad budgets. Yes, in the real world there is something called a bad budget – or worse. Someone will usually suffer the consequences, but not necessarily everyone.

Dreamland It is sometimes said, half tongue-in-cheek, half seriously, that when something happens once, it is an accident; when it happens twice, it is a coincidence; but when it happens a third time, it seems to be starting a trend. This aphorism of sorts has never been elaborated on, to my knowledge. But when an event keeps recurring, one may be led to conclude that a regular pattern – or even some kind of addiction – has set in. If such a place existed where budgets were boundless, those in charge carefree and their overseers complacent; if the abstract considerations put forward above had any relationship to real facts or persons, present or past, a conclusion might be extracted as inevitable, like the moral lessons we expect kids to take from fables: that those that fail to discharge their duties of diligence or oversight do a disservice to them, to the organisations they represent and ultimately to the communities they are bound to serve. In due time, nobody will take them seriously. But that conclusion may not apply universally, it has to be conceded. P.S. For those that may be entertaining the idea that these loosely aligned thoughts are related to some recent news here, please do not! The event you may be thinking about was held under the banner of ”reinforcing transparency” and concluded, if we can put our faith in the reports in the news media, that the budget slid but the costs did not slip ... apparently nothing more than a matter of calculation ... or something like that... difficult to follow... maybe it is Newspeak? Is anyone out there fluent enough to comment?

February 14, 2013 business daily | 3

MACAU

Gongbei chaos sparked by parade, inflated hotel costs Wild scenes at an overloaded border crossing lead to demands for immediate measures to beat peak season crush Tony Lai

tony.lai@macaubusinessdaily.com

Public Security Police commissioner Lei Siu Peng told journalists it was the first time in years that exiting crowds had been restricted from moving freely through the checkpoint. He blamed a surge in tourists during the holidays for the incident. “There is limited room in the lobby [of the border gate] and there were too many people choosing to leave after 7 pm,” the police spokesman said.

Soaring prices

Waves of tourists leaving after the Lunar New Year holiday jostled and pushed at the Gongbei border

hectic end to the Lunar New Year holidays had been predicted, but the chaotic scenes witnessed at the overcrowded Gongbei border gate on Tuesday night have left officials concerned for safety and led to calls for better crowd-control measures. The border crossing into Zhuhai yesterday had to process about 260,000 people entering and leaving Macau, according to the Public Security Police. Crowd safety issues began flaring at about 6pm on Tuesday night, when throngs of tourists gathered outside

the border crossing. At its peak, a crowd of more than 1,000 people were jostling and pushing within the immigration checkpoint. The police were forced to step in at 7.30pm and introduced crowd control measures that restricted people to entering the facility in smaller groups. A spokesman told Business Daily the size of the crowd trying to head back to the mainland meant it presented “an imminent danger” to public safety. No injuries were reported to police and regular border operations were resumed after 10pm.

A Macau Polytechnic Institute academic that specialises in tourism and gaming, Edmund Loi Hoi Ngan, told Business Daily the city’s first Lunar New Year parade organised by the by the Macau Government Tourist Office had exacerbated the problem. “There were some big events held last night so many tourists chose to leave Macau at the same time, causing chaos,” Mr Loi said. “This shows that the government had not carried out enough preparation for peak times.” He said the nature of the city’s tourism industry, including its reliance on same-day mainland visitors, likely contributed to the rowdy scenes. “Tourists do not tend to stay for long in Macau. They usually come in the morning and leave at night,” he said.

“The high price of accommodation here, particularly during holidays, discourages them from staying overnight.” According to statistics compiled by the tourism bureau, the average room rate peaked between Tuesday and yesterday at 2,600 patacas (US$325) to 2,700 patacas a night. The price of a room in a three-star hotel almost tripled to more than 2,650 patacas during the Lunar New Year holiday. Macau Government Tourist Office director Helena de Senna Fernandes said hotels were within their rights to adjust their prices because “Macau is a free market”. Both Mr Loi and Legislative Assembly member Lee Chong Cheng called for immediate action to relieve congestion at the Gongbei border before the completion of a new border crossing in Ilha Verde, which has stalled while Beijing finalises its approval. Mr Lee told Business Daily the government could consider expanding the Gongbei crossing, as well as extending the opening hours of the crossing between Cotai and Hengqin Island to divert traffic. “These measures have been discussed for some time. The government should quicken their work and strengthen communications with the mainland authorities, reflecting the urgency of this problem,” he said.

Lunar New Year rush brings nearly one million Tuesday year-on-year visitor growth tops Sunday and Monday Michael Grimes

michael.grimes@macaubusinessdaily.com

early a million people visited Macau in the eight days from February 5 to February 12 inclusive – a 15.64 percent increase from a year earlier according to figures published by Macau Government Tourist Office. The data include Sunday, Monday and Tuesday of this week – the first three official public holiday days of the Lunar New Year 2013. Around 70 percent of the visitors were from mainland China, suggest the figures gathered from the Public Security Police, the body responsible for immigration control. During the period there were 893,569 arrivals. A total of 609,162 were from mainland China, a 23.14 percent improvement on the same period a year earlier, and 68 percent of the total. Year-on-year comparisons are likely to be skewed however by the fact that in 2012 the Lunar New Year holiday was in January. MGTO also points out the arrival

figures include non-resident workers and students. Some of those people exit and re-enter Macau during the holiday period to visit friends and relatives. As of December 31 2012, there were 110,552 non-resident workers registered with the Human Resources Office according to statistics published on its website. Seasoned observers of the Macau gaming market note that Chinese consumers typically reserve the first two days of the Lunar New Year holiday for visiting family and friends, with trips to Macau and its casinos ramping up on the third holiday day.

Third day That appears to be supported by this year’s data, which show 166,581 arrivals on the Tuesday holiday – a 28.4 percent increase year-on-year – compared to a 20.4 percent rise on Monday, and a 20.8

percent rise on Sunday. “As we had anticipated, Tuesday was an exceptional day with respect to mass market visitation,” said Union Gaming Research Macau in a note. “As reported by the Macau Government Tourism Office, the number of mainland visitors to Macau on Chinese New Year day three (Tuesday this year versus a Wednesday last year), was 114,363, which represented 36 percent year-onyear growth,” added Union Gaming. MGTO statistics also show however that average room rates for hotel bookings peaked on Tuesday. Five-star hotels achieved on average 2,728.99 patacas (US$342) per room and four-star establishments 2,615.92 patacas. Market wide in Macau, the average room rate that day was 1,980 patacas. While not a direct comparison, in Las Vegas in December, including the Christmas holiday period, the average daily room rate was just US$102.34

Here we come – mainlanders’ appetite for Macau undimmed

according to data from the Las Vegas Convention and Visitors Authority. But factors influencing the lower Las Vegas room rate include much greater supply (150,481 rooms compared to just 26,719 in Macau) as well as macroeconomic factors (in the fourth quarter 2012, United States GDP contracted by 0.10 percent compared to the 7.9 percent growth experienced in China). In Macau on Tuesday threestar hotels managed to command a premium on average four-star prices – a phenomenon noted at peak periods last year – recording 2,637.67 patacas. Two-star hotels managed a healthy 1,196.30 patacas per room, and only hostels failed to peak on Tuesday, recording 721.14 patacas average rates.

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business daily February 14, 2013

macau

A touch of strategy would spark creative sector Developing the city’s creative industries is more than a question of funding. Changing Macau’s image overseas and offering strategic subsidies for projects would inspire the sector, says the founder of Macau Creations, Wilson Lam Chi Ian Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

business model developed by design firm Macau Creations might be one of the best ways to promote the development of a creative sector, but the government needs a firm strategy and to target subsidies correctly, says its founder, Wilson Lam Chi Ian. Mr Lam returned to the city from Canada after studying to become a graphic designer, driven by a desire to do something for his hometown. He opened the first Macau Creations shop in 2010. He had not heard of the “creative industries” at that time, but in an interview with Business Daily he admits opening the shop was “good timing”, given the buzz surrounding the sector. With three shops across the city, Macau Creations tries to combine creativity with a financially responsible approach to business. Mr Lam did not receive a government subsidy when he set up his first shop, instead preferring finance from private investors. “I think this is a good strategy” to promote the development of the creative industries, he said.

They should give the money to the right targets, those that can really influence others

Macau Creations works closely with artists and designers to develop designer products and souvenirs. Mr Lam’s expertise as a graphic designer is indispensable. The shop also promotes the development of the graphic design industry. The Cultural and Creative Industries Committee recently decided on the key industries within the creative sector that should be supported, with graphic design among them.

Big players Mr Lam says the graphic design industry has suffered internationally because of changing consumer habits. “The Internet is changing graphic design. People don’t go shopping, they [now] do it from home, online,” he said. There are also issues specific to Macau that make it difficult for graphic design firms to thrive. For instance, there are just two major sources of work, the government and casinos, and work at the city’s casinos is restrictively similar. He said there was too little advertising or branding work coming from big or small companies, so there is “not much growth” elsewhere in the business community. Through Macau Creations, Mr Lam uses graphic design to build exposure and present firms’ products, and he aims to extend the company’s services into new areas such as marketing. Considering the government first opened the discussion about developing the creative industries in 2010, Mr Lam says efforts to promote it have not run overtime. He is optimistic for the

industries’ prospects, saying the government is working on a strategy that should improve their development. “We need to give them [the government] more time. We have so many sectors, such as film, music, fashion. All of these, when they succeed, will need graphic design”, he said. Mr Lam said he has seen signs that the government is trying to improve the quality of the sector’s disciplines. If the government markets Macau as a fun, interesting and creative city, then tourists will not just visit casinos and may stay longer to see the sights. “Then everything we try to sell here will go much easier,” he said. He sees the government working to change Macau’s international image bit by bit.

Gaming springboard Creative sector companies could do more to help themselves, considering the benefits Macau gets from taxes on casino revenues, says Mr Lam. He insists that simply handing out subsidies to shops and creative businesses is not the solution. “They should give the money to the right targets, those that can really influence others,” he said. Finding the right professionals that can judge if proposals will succeed in promoting the creative industries is essential, he said. Their judgement should guide any subsidies. Mr Lam warned that government missteps could harm the very people who invest in their own businesses, such as himself. “They have to get it right,” he said.

Macau Creations now has three shops, with one located at The Venetian Macao resort-hotel. But, contrary to expectations, he says it is not necessarily as profitable to set up business in a casino as it is elsewhere. “People will go shopping in a hotel-casino and sometimes they cannot make up their mind, as they have so many choices,” he says. He wants the government to maintain cooperation with the hotel-casino resorts and build links that help to promote the creative industries. “The casino could give a percentage [of its revenue] to the creative industries or, at least, give out [a venue] to open businesses related to that industry. The government could help by encouraging them to do so.” At the moment, Mr Lam’s shop at The Venetian does not benefit from any special treatment. He has plans to develop the business and expanding to other markets, namely along the Pearl River Delta region. But there are legal and financial obstacles. “First, it is a question of money. Secondly, we have to cover legal aspects. There is intellectual property to protect,” he said. He is currently receiving advice on how to protect copyright in the mainland and Mr Lam says he believes his own brand, Soda Panda, will be the first he launches there, probably online. Still, he faces other challenges before taking that path, the first of which is a lack of manpower. ”It’s very hard to find the right people,” he said. Rent and other costs of business are increasingly very high.

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business daily February 14, 2013

macau Birmingham could be sold An English football club bought with money underwritten by a Macau casino owner said it was approached by a potential buyer. Birmingham International Holdings Ltd said last week that an unidentified sports management company indicated on January 23 and 31 it would be able to lead an acquisition. “The company’s lawyers are currently in contact with the interested party with the view to clarifying matters of this approach,” it said in a statement. Carson Yeung Ka Sing (pictured) bought the club in a deal underwritten by a unit of Kingston Financial Group Ltd, which runs Rio and Casa Real casinos here.

Senior note holders agree Melco Crown offer M

due to receive US$1,170.87 per US$1,000 loaned, including a US$30 consent payment said the filing. That represents a one-off interest payment of 17.08 percent. The general tender offer will expire at midnight New York City time, on February 25, “unless extended or earlier terminated” added the document. As part of a refinancing scheme MCE is to issue US$1 billion in new three-year bonds at five percent interest according to a January filing. The refinancing exercise could release up to US$40 million in free cash flow suggested a note from David Bain of independent brokerage Sterne Agee also in January. M.G.

Confirming trials of rolling stock for the elevated railway system from this year, the government says it still studying proposed route extensions in Cotai Stephanie Lai

sw.lai@macaubusinessdaily.com

rials of carriages destined to run on the Light Rapid Transit elevated railway system will commence before the end of the year, according to Lei Chan Tong, coordinator of the Transportation Infrastructure Office. The trial will take place at the railway depot’s test track in Cotai, Mr Lei told Chinese-language Radio Macau. “LRT construction works are fully underway in the Taipa section, where foundations are being laid. Soon we will put up pillars for the elevated railway,” he said on Tuesday. Mr Lei said the Japanese company supplying the rolling stock, Mitsubishi Heavy Industries Ltd, had commenced manufacturing. The first phase of the railway’s Cotai section, scheduled to be complete by 2015, is being built by Taiwanese contractor Continental Engineering Corp. Continental Engineering bid more than 800 million patacas (US$100 million) to win the tender for the Cotai section last year. “This year we will study the

possibility of extending the Cotai LRT route to the Seac Pai Van area, as we expect demand for transport from the public housing in the area and from Taipa hospital,” he said. The first phase will include four stations in Cotai: Cotai West, next to The Venetian Macao; the border crossing at the Lotus Bridge; the Macau East Asian Games Dome; and Cotai East, next to City of Dreams. Mr Lei said there had been no decision made on changing the railway’s route through the NAPE area. After a vocal campaign by residents against the proposed route, the Commission Against Corruption published a report in September that was critical of the NAPE route. The report suggested that, rather than running through the area’s narrow streets, the railway should follow the coast to meet safety and technical standards. “The government is still analysing the commission’s report,” said Mr Lei. “At the moment we are not certain on the railway route in Macau peninsula and will fully focus on the Taipa route first.”

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ost holders of Macau Crown Entertainment Ltd senior notes that were subject to a buy back offer from the company agreed to the deal within 11 days according to a Hong Kong regulatory filing. MCE Finance Ltd, a whollyowned subsidiary of casino operator and developer MCE, made the cash tender offer on January 28 to purchase US$600 million (4.79 billion patacas) of notes that had originally offered 10.25 percent interest and had been due in 2018. By February 7 – the deadline for early consent offering the most favourable terms – agreement had been received for 99.8 percent of the paper, said MCE. The early consent lenders were

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The first phase of the elevated railway’s Cotai section should be completed by 2015

February 14, 2013 business daily | 7

MACAU Junket moves gaming room to Sands Cotai Central Asia Entertainment & Resources Ltd, a Nasdaq-listed Macau VIP gaming promoter, announced last week it has moved one of its rooms from the Venetian MacaoResort-Hotel to the Sands Cotai Central – both of which are operated by Sands China Ltd. The new VIP room has three tables plus a private room for a total of four tables, the junket said in a statement. The “exciting” move will “enhance our ability to better serve our existing customers, and ultimately providing our shareholders with long-term value,” chairman Lam Man Pou said in the statement.

Amax changes auditor again Junket investor’s shareholders dismiss auditor that washed hands of 2012 annual report Vítor Quintã

vitorquinta@macaubusinessdaily.com

ong Kong-listed Macau junket investor Amax Holdings Ltd will change its auditor for the second time in

twelve months, after the incumbent declined to give an opinion on Amax’s annual results. Amax plans to re-hire another auditor that it previously

Doubts over the accounts of Greek Mythology continue to haunt Amax (Photo: Manuel Cardoso)

Corporate

MGM Resorts earns CSR award

Acerinox to supply steel for Delta Bridge

Gaming operator MGM Resorts International was named among the winners of a corporate social responsibility (CSR) award granted by PR News in the category of ‘Overall Leader in CSR Practices – more than 10,000 employees’, the company announced on Tuesday. MGM Resorts, the parent company of MGM Macau casino, is the first company in the gaming industry to earn a PR News CSR Award, while competing alongside Coca-Cola Enterprises, Disney and UPS. The award seeks to recognise corporate social responsibility campaigns executed in the past 12 months in the United States. A panel of experts evaluated entries submitted according to factors such as creativity, innovation, sound planning, implementation and outcome. Jim Murren, MGM Resorts chairman, said it was “truly an honour” to receive the award. “The health of our company is directly linked to the welfare of the communities in which we operate,” he stressed in a statement.

Spain-based stainless steel producer Acerinox, SA announced last week that it will supply stainless reinforcing bars worth US$15 million (120 million patacas) for the construction of the Hong Kong-Macau-Zhuhai Bridge. The operation is “part of the Asian strategy” of the group, whose flagship in the area is a factory operated through its Malaysian subsidiary Bahru Stainless Sdn Bhd. The bridge project will have about 50 kilometres and will span the Pearl River Delta, consisting of several bridges and tunnels. It is due for completion by 2015 and could be open to traffic by the end of 2016, according to the website of Hong Kong’s Highways Department. The cost of the project, estimated at over 70 billion yuan (87.5 billion patacas), is shared by the administrations of Macau, Hong Kong and Zhuhai prefecture. The bridge has been conceived primarily as a freight, bus and coach route.

sacked for similar reasons. The Amax board of directors last week proposed to re-appoint Hong Kong-based accountancy firm CCIF CPA Ltd as auditor, replacing Baker Tilly Hong Kong Ltd. Amax Holdings had previously dispensed with CCIF CPA’s services when it declined to give an opinion on Amax’s results for the year ended March 31, 2011. Shareholders, including Macau junket room boss and Amax chairman Ng Man Sun, will vote on the planned change at a special general meeting yet to be scheduled. In the annual general meeting

held in September, the shareholders voted down a proposal to continue with Baker Tilly as Amax’s auditor. The decision came after Baker Tilly declined to provide an audit opinion on Amax’s 2012 annual report due to lack of “sufficient appropriate audit evidence”. Amax’s interim annual report for 2012 says Baker Tilly has reservations about the capitalisation of Amax’s associate company Greek Mythology (Macau) Entertainment Group Corp Ltd. The auditor said financial statements for the latter company, the holding vehicle for Greek Mythology casino located inside Taipa’s New Century hotel, were unavailable. Amax previously dispensed with CCIF’s services in February 2012, claiming it had been unable to come to terms with CCIF on fees. The VIP gaming promoter told the Hong Kong Stock Exchange in a regulatory filing last week “it was not aware of any matters that should be brought to the attention of the shareholders and creditors of the company in relation to the retirement of Baker Tilly”.

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business daily February 14, 2013

GREATER CHINA Government to promote green buildings The Chinese government will require new urban buildings to reach mandatory energy-saving standards, as well as renovate existing buildings, to make them more environmentally friendly by 2015, according to the country’s top economic planner. A “green” building code will be adopted for all government-invested buildings built from 2014 onward, the official Xinhua news agency quoted an official with the National Development and Reform Commission as saying. The standard will also be applied to affordable housing projects in provincial-level cities and provincial capitals, as well as to public construction projects with an area of more than 20,000 square metres per building, the official said.

U.S. approves Cnooc takeover of Nexen Deal expected to close the week of February 25, company says Roberta Rampton and Scott Haggett

KEY POINTS CFIUS approval was final barrier for US$15.1 bln deal Cnooc gets offshore production in the North Sea, Gulf of Mexico No indication that conditions were imposed Shares rise in New York to near the US$27.50 offer Cnooc is China’s biggest offshore oil and natural gas producer

.S. regulators have approved the US$15.1 billion takeover of Canadian oil and gas company Nexen Inc by China’s stateowned Cnooc Ltd, removing the final obstacle to the Asian country’s largest-

ever foreign takeover. The deal to buy Calgary, Albertabased Nexen had already passed regulatory muster in Canada and Europe. But approval from the Committee on Foreign Investment in the

Copper inches higher as outlook lends support Market expects Chinese consumers to restock after the Lunar New Year holiday

ondon copper was little changed yesterday, underpinned by growing hopes China’s consumers will restock after the Lunar New Year holiday, even as the extended break in the top consumer of the metal drained liquidity and momentum from the market. China, Taiwan and Hong Kong markets remain closed with LME turnover low across the board. “With Chinese New Year, we’re not going to see much activity,” said analyst Dominic Schnider, head of commodity research at UBS Wealth Management in Singapore. He noted that new loans by Chinese banks and rising profits at industrial companies at the end of 2012 could indicate what’s to come after the holiday. “That gives you a very good precondition for a pick up in activity,” he said. Three-month copper on the London Metal Exchange was up slightly at US$8,246.75 a tonne, after it climbed 0.45 percent in the

previous session. Copper has broken decisively above the US$8,000 mark this year, rising to trade in an $8,150-$8,350 band in February and up almost four percent year to date. Volumes remain low, with around 1,200 lots of turnover in the most liquid three-month contracts. China’s exports and imports surged and new lending soared in January as the first hard data of the year signalled not only a solid recovery in domestic and overseas demand, but also the risk that inflationary pressures are building. The country accounts for around 40 percent of refined copper demand. “We expect copper prices to rally steadily to end the year at US$8,930/t, supported by growing confidence in the global recovery and improving housing markets in the US and China,” said ANZ in a research note. Prices will average $8,530/t, up 7.2 percent from 2012, it said. Reuters

United States (CFIUS) was also needed because Nexen has U.S. interests. Nexen said late on Tuesday U.S. time that CFIUS had given the green light and that it expects the deal to close the week of February 25, seven months after China’s top offshore oil and gas producer made its bid of US$27.50 a share. The Nexen statement did not indicate whether CFIUS had imposed conditions on the approval, and company officials were not available for comment. Nexen’s shares climbed 2 percent to just below the offer price on Tuesday, closing at US$27.43, their highest level since Cnooc made its bid for Nexen on July 23 last year. The U.S. approval came even though widespread distrust of U.S. investments by Chinese companies has lingered since Cnooc’s 2005 attempt to buy Unocal Corp for US$18.5 billion, a deal that foundered on U.S. national security concerns. Late last month, CFIUS cleared a bid by the U.S. unit of China’s Wanxiang Group to buy bankrupt A123 Systems Inc., a maker of electric car batteries, although some lawmakers warned the deal would lead to the transfer of sensitive technology developed with U.S. government funding.

Offshore production Cnooc’s success in navigating the CFIUS approval process “is likely to be viewed as a positive development,” said Joshua Zive, senior counsel at Bracewell & Guiliani, a Washington law and lobbying firm. “That, in the current climate, is a moment of significance.” But a U.S. legislator said he planned to introduce legislation to block any future transactions that, like the Nexen deal, involve the transfer of royalty-free leases. “Chinese government-owned oil corporations should not be allowed

to drill for American oil in the Gulf of Mexico without paying a dime in royalties to U.S. taxpayers,” said Representative Edward Markey, the ranking Democrat of the House Natural Resources Committee. Senator John Hoeven, a Republican from North Dakota, said the CFIUS approval did not surprise him. But he was disappointed the Obama administration has not moved to secure Canadian oil supplies by approving TransCanada Corp’s Keystone XL pipeline. “It shows that time doesn’t stand still,” he said in an interview, noting that Canadian oil resources will go to other parts of the world if the United States keeps dragging its heels on pipelines. “We’ve got to move on projects like Keystone.” The Canadian government declined to comment on the U.S. approval. “That’s a U.S. decision,” Energy Minister Joe Oliver told reporters. “That company will, I’m sure, conduct themselves as good corporate citizens in Canada.” The Nexen acquisition gives Cnooc new offshore production in the North Sea, the Gulf of Mexico and off western Africa, as well as producing properties in the Middle East and Canada. In Canada, Cnooc gains control of Nexen’s Long Lake oil sands project in the oil-rich province of Alberta, as well as billions of barrels of reserves in the world’s third-largest crude storehouse. Canada approved the takeover late last year even though some members of the governing Conservative Party had misgivings about China’s human rights record. But the federal government also insisted that Cnooc-Nexen was the last deal of its kind that it would approve, drawing a line in the sand against state-controlled companies taking majority stakes in Alberta’s strategic oil sands. U.S. approvals took longer as legislators examined whether the deal would threaten U.S. national security. Reuters

February 14, 2013 business daily | 9

GREATER CHINA

Coca-Cola sees drop in China sales Sales in the mainland market dropped 4 percent in the three months to December 31

oca-Cola Co’s fourth-quarter revenue missed analysts’ estimates as lingering economic softness hurt results in Europe and China, sending its shares down 2.7 percent. The world’s largest soft drink maker, with brands such as Sprite, Fanta and Minute Maid, said worldwide sales volume climbed 3 percent, below some analysts’ estimates. Also disappointing were a 4 percent decline in China and a 5 percent drop in Europe, analysts said. “I think they’re diverse enough so that some things go up and some things go down and they manage OK,” said Bernstein Research analyst Ali Dibadj. “You certainly wish they were firing on all cylinders, but this environment doesn’t necessarily allow that to happen.” Revenue for the quarter rose 4 percent to US$11.46 billion, missing analysts’ average estimate of US$11.53 billion, according to Thomson Reuters I/B/E/S. In an interview, Coca-Cola chief executive Muhtar Kent said performance in China and Europe was not to his satisfaction, though he expects both regions to improve as 2013 unfolds. Still, he noted that the company’s overall performance was in line with its long-term goals, which call for growth of 3 percent to 4 percent for volume, 6 percent to 8 percent for operating earnings,

Coca-Cola – facing a range of problems in its global markets

and high single-digits for earnings per share. “In our opinion we haven’t missed any revenue targets. We said we would meet or exceed our long-term growth targets ... and we’ve met them, for the quarter and the year,” Kent said. He cited “prolonged uncertainty in Europe, the ongoing transition of the economy in China, the lukewarm recovery in the United States, and ongoing challenges for Japanese consumers”. He expects challenges in those markets to continue.

Coke did have some bright spots, reporting volume growth of 10 percent in the Eurasia and Africa segment, 5 percent in Latin America, 1 percent in North America, and 2 percent in the Pacific region. The company also reported profit slightly above Wall Street estimates, fuelled by better margins. Coca-Cola does not give quarterly financial forecasts but said that for the full year 2013 it expects US$100 million in increased commodity costs related to sweeteners, juices, metals and plastic.

Coke is also seeing tougher competition from PepsiCo Inc , which is working hard to improve its North American beverage business. Pepsi has increased marketing spending with a focus on core brands like PepsiCola, and analysts say the renewed effort is working. “Unfortunately, given that volumes aren’t that robust, the success of one player certainly has a negative impact on the success of the other,” Bernstein’s Mr Dibadj said. Reuters

10 |

business daily February 14, 2013

ASIA

India imports push trade deficit to US$20b Oil imports fuel 6 percent jump in January

ndia’s trade deficit rose to US$20 billion in January from US$17.7 billion in the previous month as imports surged while exports rose only slightly, adding pressure to a widening current account deficit and limiting the scope for further interest rate cuts by the central bank. India’s exports rose an annual 0.8 percent to US$25.59 billion in January, while imports for the month rose 6 percent to US$45.58 billion, a senior trade ministry official said yesterday, fuelled by oil imports. “The oil import bill is definitely a challenge, but for a growing economy, energy needs have to be met,” Commerce and Industry Minister Anand Sharma said at an event in Mumbai.

Oil imports rose 6.9 percent from a year ago to US$15.9 billion. India’s current account deficit touched a record high in September at 5.4 percent of GDP due to slowing exports and heavy oil and gold imports. Worried that India’s ability to fund the rising current

account deficit is becoming increasingly stretched, and will lead to fresh pressure on the rupee, the central bank warned after a 0.25 percentage point reduction in its policy interest rate last month that future rate cuts will depend upon the current account gap narrowing and inflation subsiding. Exports between April and January fell 4.9 percent to US$239.7 billion. India’s exports have fallen since last year as demand slowed from key markets. On Monday, Reserve Bank of India Governor Duvvuri Subbarao Value of India’s oil reiterated his concern about imports in January financing the

US$15.9 bln

Imports rose an annual 6 percent to US$45.58 billion last month

current account deficit with volatile capital flows, and he projected the deficit to touch a record high for fiscal year 2012/13, ending in March. Many analysts expect the current account deficit to be around 4.5-5.0 percent of GDP in 2012/13, higher than 4.2 percent previous year. “The high current account

Lower temperatures boost demand at clothing retailers

deficit is unsustainable as it can’t be funded for a long time with capital flows and it will get adjusted through the exchange rate,” said A Prasanna, economist at ICICI Securities Primary Dealership. “The exchange rate will depreciate when the correction happens.” The Indian rupee touched

in the coming months,” said Yuichi Kodama, Tokyobased chief economist at Meiji Yasuda Life Insurance Co., Japan’s third-largest life insurer. “Still, consumption may cool after the sales tax rise, and the new BOJ governor will probably have to show a stronger tone on easing.” Consumer spending probably rose 0.5 percent in the October- December period from the previous three months, according to the Bloomberg News survey. The Cabinet Office’s Synthetic Consumption Index, a gauge economists use to forecast private spending, rose in the quarter.

Winter clothing

Cold weather might snap Japan out of recession Economists expect GDP data to show an annualised 0.4 percent expansion Keiko Ujikane

apan’s economy probably emerged from its third recession in five years last quarter

as cold weather boosted consumption, bolstering Prime Minister Shinzo Abe’s campaign to revive growth.

Gross domestic product data due today will probably show an annualised 0.4 percent expansion in the

three months through December, according to the median forecast in a survey of 32 economists. Banks including JPMorgan Chase & Co. and Citigroup Inc. raised their forecasts from a contraction this month after a gauge of consumption rose. Mr Abe’s challenge is to induce a sustained economic recovery as he seeks to end deflation through more aggressive easing by the Bank of Japan. With current BOJ Governor Masaaki Shirakawa set to step down next month, the premier may increase pressure for more monetary stimulus this year as a planned sales tax rise in 2014 is predicted to drag on growth. “Japan’s economy will likely see a solid recovery

Domestic same-store sales at Uniqlo, Japan’s largest clothing retailer, rose 13.7 percent in November and 4.5 percent in December as lower temperatures boosted demand. Tokyo temperatures averaged below the 30-year median on 26 of 30 days in November and 24 of 31 days in December, according to data compiled by Bloomberg. Investors’ expectations for more monetary easing have pushed the Nikkei 225 Stock Average up by about 31 percent in the past three months, while the yen has fallen about 15 percent against the dollar in the same period. The yen strengthened for a second day after an unidentified Group of Seven official said Japan will be discussed at the Group of 20 meeting amid concern the currency’s moves had been excessive. Finance ministers and central bankers from the G-20, which includes the G-7 and emerging markets such as Brazil, China and India,

February 14, 2013 business daily | 11

ASIA

Malaysia lobbied Canada analysis on Petronas-Progress bid Australia mining tax working, despite teeth-gnashing M

its lowest in over a month in early January at 55.38 to the US dollar, but has since recovered on capital inflows. Portfolio inflows into India were robust in Asia’s third largest economy at US$31.41 billion in 2012 and US$8.34 billion so far in 2013. Reuters

meet in Moscow tomorrow and on Saturday. Mr Abe said in parliament last week that he would ask businesses that are benefiting from monetary easing to pass on profits in the form of higher wages for workers, and on Tuesday in a meeting with business leaders said companies with improving results should consider higher pay. The economy will grow 2 percent in the fiscal year from April and 0.3 percent in the year after that, according to the average forecast in a survey by the Japan Centre for Economic Research released yesterday. Additional easing could be justified for 2013, Haruhiko Kuroda, the head of the Asian Development Bank and a potential contender to replace Mr Shirakawa, said in an interview. The central bank could usher in a growth spurt unseen in a generation by stepping up stimulus and ending deflation, he said. Bloomberg News

Consumption may cool after the sales tax rise, and the new BOJ governor will probably have to show a stronger tone on easing Yuichi Kodama, Meiji Yasuda Life Insurance

alaysian Prime Minister Najib Razak asked his Canadian counterpart Stephen Harper to reverse the initial rejection of Petroliam Nasional Bhd.’s C$5.2 billion (US$5.2 billion) takeover of Progress Energy Resources Corp., correspondence between the two leaders shows. Mr Najib wrote to Harper promising that Petronas, as the country’s state-owned oil company is known, would invest C$68 billion to C$70 billion over 30 years to develop the natural gas reserves of Calgary-based Progress, according to a November 2 letter obtained by Bloomberg News under Canada’s freedom-ofinformation law. Mr Najib expressed concern about the rejection and reassured Harper that the Malaysian government “does not interfere with the commercial decisions and operation” of Petronas, the documents show. The diplomatic intervention shows the need for financial commitments and political hurdles facing

foreign companies looking to acquire energy assets in Canada, home to the world’s third largest oil reserves and the third-largest supply of natural gas. Canada initially blocked the Petronas offer on October 19, saying it didn’t provide the “net benefit” to the country that its foreign-takeover law requires. Mr Harper reversed the decision on December 7, at the same time he approved Beijing-based Cnooc Ltd’s US$15.1 billion acquisition of Nexen Inc. Petronas closed its acquisition of Progress on December 18. TheMalaysian government helped make the case that Petronas operates in a similar way to publicly traded companies, said Michael Culbert, chief executive of Progress Energy Canada Ltd. “What Petronas really put forward was that not all SOEs really are exactly the same,” Mr Culbert said in a telephone interview from Calgary yesterday. “Their plans for Progress Energy are to have Canadian management and a fair amount of autonomy.” Bloomberg News

Australia consumer confidence jumps to 26-month high A

measure of Australian consumer confidence surged to its highest in 26 months in February as people become more optimistic about the economy and their own finances. The poll of 1,200 people by the Melbourne Institute and Westpac Bank showed its index of consumer sentiment climbed 7.7 percent in February, from January when it edged up 0.6 percent. The index of 108.3 meant there were more optimists than pessimists in the poll. The monthly increase was the sharpest since September 2011 and left the index up 7.2 percent on February last year. “The report is welcome news with the solid gain in confidence the most promising sign yet that lower interest rates are starting to generate more positive traction with consumers,” said Westpac chief economist Bill Evans. The Reserve Bank of Australia (RBA) cut interest rates in both October and December, taking them to record-matching lows of 3 percent. It skipped a chance to ease at its February meeting but left the door wide open for a further move if the economy needed it. “Sentiment may have been buoyed by a strong start to the

year for financial markets,” said Mr Evans. “News from offshore has also been broadly supportive.” “That said, confidence is still well below the levels recorded during the last easing cycle in 2008-09 which saw sustained readings of around 120,” he added. Details of the survey showed a marked improvement in attitudes to the economy. The index of expectations for the economy in the next 12 months surged 14.7 percent, while that for the next five years increased by 10.8 percent. People were also feeling more confident about their finances. The index of family finances compared with a year ago rose 7.3 percent, while that for finances over the next 12 months increased by a more modest 1.5 percent. In a positive sign for retailers, the survey’s measure of whether it was a good time to buy a major household item rose 5.5 percent. Mr Evans, however, noted retail sales and home loan data remained disappointing and argued there was still a case for lower interest rates. He expects a further cut to a record low of 2.75 percent at the RBA’s March meeting. Reuters

Clyde Russell Reuters market analyst

he increasingly strident calls by some Australian politicians to either tighten or scrap the country’s controversial mining profits tax ignore that the measure is working as it is supposed to. The response to the Labor Party government’s somewhat sheepish announcement that the tax raised just A$126 million (US$129 million) in its first six months, nowhere near the budgeted A$2 billion, has been predictable and unimaginative. The government has engaged in shifting the blame to volatile commodity prices and the strong Australian dollar to cover its embarrassment that the budget surplus it promised on the back of the mining tax has evaporated. The left-of-centre Australian Greens, which along with three independents, support the Labor-led minority government, want to change the law so that it raises more revenue. Meanwhile, the main opposition Liberal-National coalition, which was never in favour of the tax and is leading the opinion polls ahead of the federal election scheduled for September, wants it scrapped. All of this fails to take into account that the Mineral Resource Rent Tax (MRRT) was designed to extract more money from the big coal and iron ore miners when they were making significant profits. While the design of the tax is by no means perfect, it was never meant to be a gouge, or an unfair burden, on resource companies. Rather, as they made more money from selling iron ore and coal, mainly to China, the miners would have to hand over some of the additional proceeds to the government, in addition to normal corporate taxes and mining royalties.

Controversial birth The MRRT was set at 30 percent of assessable profit of coal and iron ore miners once profits reached A$75 million, and it came into being on July 1, 2012. Companies are allowed to deduct an MRRT allowance of the long-term government bond rate plus 7 percent and there is also an extraction allowance, but the main concession is that royalties imposed by state governments are also deductible. The tax had a controversial birth, having originally been mooted as the Resource Super Profit Tax in 2010, and it was to be levied at a 40 percent rate and apply to all minerals. After a concerted campaign by mining companies and the Liberal opposition, the Labor Party dismissed former prime minister Kevin Rudd from his post and replaced him with current leader Julia Gillard, who appeased the mining lobby by negotiating the watered-down MRRT. Whether this was good politics or not is open to debate, but the Labor government’s mistake appears to have been to assume that the commodity price boom was an ongoing story that would deliver a revenue stream they could use to fund their social-spending programme.

However, it didn’t quite pan out that way, and the tax’s introduction coincided with a slowing of growth in China, Australia’s biggest customer for mineral exports, as well as renewed recession in Europe and concern in the United States about the looming “fiscal cliff”. Asian spot iron ore prices fell to a three-year low of US$86.90 by September 4 from around US$134 a tonne at the end of June, before recovering to reach US$144.90 by the end of the year. Regional benchmark coal prices at Newcastle port dropped to US$80.82 a tonne in mid-October from US$97.31 a tonne at the end of June, before recovering to US$92.25 by year-end. Both have improved further in 2013, with iron ore reaching US$155.10 by February 11 and coal US$96.09 by February 8, meaning the tax should raise more in the first half of 2013. But what the pricing shows is that there was a significant drop in both iron ore and coal in the second half of last year, and that would have all but eliminated the excess profits the MRRT was supposed to capture. It’s also worth noting that the MRRT was being put together in 2010, with iron ore above US$180 a tonne in April of that year, while coal hit US$136 a tonne in January 2011.

Tax policy fight Clearly the Labor government expected those sorts of prices to continue, or thought that if they did decline, it wouldn’t be to the extent that they actually did. The government wasn’t alone in expecting the boom prices to continue, but the error has severely dented their credibility in an election year and should be a warning to politicians not to spend money they don’t actually have. But the MRRT is not at fault, in fact, it would be more problematic if it was currently extracting more revenue from the mining sector, given the pressure on companies to contain costs in the face of lower commodity prices. The MRRT is meant to be a “good times” tax, not a permanent revenue collector such as a resource rent-type impost, which levies a charge on each tonne of ore mined regardless of what the producer can actually sell it for. Such a tax would have accelerated job losses, mine closures and a much bigger scaling back of investment plans than the MRRT has done. Fiddling with the MRRT to ensure it raises more money, even in bad times, would be a silly and self-defeating mistake for any government, while scrapping it altogether means forgoing revenue in good times. The risk for Australia is the seemingly never-ending adjusting of the tax system undertaken by both major parties, mainly based on ideology rather than good public policy. If the Liberal coalition does triumph in September’s vote, expect another bruising and counterproductive fight over tax policy, which can only serve to make Australia a less attractive place to do business. Reuters

12 |

business daily February 14, 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 14, 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

97.67

0.164096007

5.852389726

108.9899979

80.48000336

BRENT CRUDE FUTR Mar13

118.89

0.193831114

8.19000819

119.1699982

90.58999634

GASOLINE RBOB FUT Mar13

305.93

0.295052946

10.69981184

306.97999

222.4999905

GAS OIL FUT (ICE) Apr13

1007

0.649675162

9.456521739

1010.5

800.25

NATURAL GAS FUTR Mar13

3.252

0.681114551

-3.358098068

4.049000263

3.052000046

324.14

0.160682282

7.444977416

331.3199997

254.9000025

Gold Spot $/Oz

HEATING OIL FUTR Mar13

1647.41

0.3289

-1.0244

1796.08

1527.21

Silver Spot $/Oz

31.0425

0.986

3.097

37.4775

26.1513

Platinum Spot $/Oz

1724.4

1.4353

13.6155

1742.8

1379.05

Palladium Spot $/Oz

773.25

2.1223

10.518

775.26

553.75

LME ALUMINUM 3MO ($)

2120

0.808368997

2.267245538

2361.5

1827.25

LME COPPER 3MO ($)

8236

0.451274546

3.845668894

8702.75

7219.5

LME ZINC

2210

0.867183934

6.25

2223.25

1745

3MO ($)

LME NICKEL 3MO ($)

18365

1.101018442

7.64947245

21097

15236

15.76

0.638569604

3.855024712

16.84000015

14.89999962

694.75

-0.215439856

-0.501253133

846.25

511

WHEAT FUTURE(CBT) Mar13

730.25

-0.239071038

-6.137532134

948.25

652

SOYBEAN FUTURE May13

1404.5

-0.354735722

0.375201001

1639.5

1218.75

COFFEE 'C' FUTURE May13

143.7

0.314136126

-2.044989775

229.5499878

141.25

AGRICULTURE ROUGH RICE (CBOT) Mar13

Min 19.2

Last 20.5

19.0

Max 20.35

Average 20.104

Min 19.4

Last 20.3

Mar13

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 %

1.0347 1.565 0.9174 1.3481 93.36 7.9883 7.7557 6.2325 53.84 29.8 1.2385 29.711 40.673 9635 96.602 1.23666 0.86143 8.3867 10.7696 125.87 1.03

1.0548 0.3334 0.0218 0.3349 1.0069 0 0 -0.0032 0.0208 0.2685 0.4845 0.1481 0.0664 -0.1038 -0.0487 -0.3073 -0.0081 -0.6093 -0.3333 0.6594 0

YTD %

(H) 52W

-0.2987 -3.2517 -0.218 2.2062 -7.7763 -0.0638 -0.0658 -0.0305 2.1452 2.6174 -1.3807 -2.282 0.8163 1.6399 -7.5309 -2.3596 -5.3411 -2.0175 -2.2211 -9.772 -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

18.13

0.332042059

-7.5

24.56999969

18.03999901

AMAX HOLDINGS LT

0.078

2.631579

11.42857

0.108

0.055

4262000

82.63

-0.565583634

8.9243343

95.06999969

68.18999481

BOC HONG KONG HO

26.85

0.9398496

11.41079

27.1

20.8

10936136

World Stock MarketS - Indices COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

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

DOW JONES INDUS. AVG

14018.7

0.3396978

6.979173

14038.97

12035.08984

GALAXY ENTERTAIN

33.55

3.869969

10.54366

35.7

16.94

18139901

NASDAQ COMPOSITE INDEX

3186.494

-0.1726501

5.530037

3196.932

2726.68

HANG SENG BK

126.9

0.9546539

6.908175

127.6

99.2

1058714

FTSE 100 INDEX

6318.58

-0.3123827

7.134344

6354.46

5229.76

HOPEWELL HLDGS

33.15

0.4545455

-0.3007519

34.4

19.049

728900

DAX INDEX

7656.52

-0.04791004

0.5797113

7871.79

5914.43

HSBC HLDGS PLC

86.35

0.2321532

6.211558

88.45

59.8

10286073

NIKKEI 225

11251.41

-1.035348

8.236803

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

1976.07

1.55618

-1.050555

2057.28

1758.99

S&P/ASX 200 INDEX

5003.657

0.9008295

7.62983

5013.6

3985

4571.568

0.5128354

5.904548

4586.98

3635.283

FTSE Bursa Malaysia KLCI

1631.16

0.4532578

-3.421648

1699.68

1526.6

SHUN TAK HOLDING

NZX ALL INDEX

916.594

-0.02770361

3.91598

924.705

740.345

SJM HOLDINGS LTD

PHILIPPINES ALL SHARE IX

4094.18

0.7044575

10.68402

4095.42

3226.73

SMARTONE TELECOM

JAKARTA COMPOSITE INDEX

19.6

(L) 52W

COTTON NO.2 FUTR May13

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

633.28

0.06

1.96

STOCK EXCH OF THAI INDEX

1512.07

1.552772

8.631173

1516.21

1099.15

HO CHI MINH STOCK INDEX

494.03

0.6950389

19.40879

495.72

372.39

Laos Composite Index

1424.28

-0.638329

17.24689

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 14, 2013

Opinion

U.S. endless political campaigns go bad overseas William Pesek

Bloomberg View columnist

Just as Abbott has the burden of laying out a credible plan, Gillard must convince voters that she will get more done in the next couple of years than she did in the past 2 1/2 Prime Minister Julia Gillard

ustralian Prime Minister Julia Gillard is going American in a big way by setting the next national election seven months from now. The record length of the campaign is bad news for her opponent, Tony Abbott, and may be even worse for the nation’s 23 million people. Turning to a permanent campaign like that of the U.S. is shrewd politics. It puts opposition leader Abbott on the defensive, forcing him to offer more than tired conservative nostrums about the magic of lower taxes, less regulation and vague paeans to freedom. Instead, Abbott must offer specifics on how he will increase competitiveness and prosperity and how to pay for it. Gillard’s gamble comes with some big risks. The most immediate is that this long election process descends into an endless series of photo opportunities, stunts, breathless horse-race calling and sexist obsessing over Gillard’s new glasses, haircut or hemline. Lost in the jostling will be a much-needed discussion about the huge challenges Australia faces as much of the rest of the world copes with anaemic or unbalanced growth.

Australia’s problems are great ones to have, all things considered. It’s the only major country to skirt the 2008-2009 financial crisis and its balanced federal budget is the envy of the developed world. Proximity to China and its voracious appetite for Australia’s raw materials continue to drive economic growth, which is forecast to increase 3.5 percent this year.

Changing world In a rapidly changing world, a nation such as Australia must constantly remake itself. It has to be devising ways to compete, create jobs, increase productivity, adapt to an overvalued currency and address the risks posed by climate change. Can Australia really afford another “Seinfeld Election,” meaning that it’s about nothing? That’s what happened the last time around, in August 2010. Then, Labor Party leader Gillard had been prime minister for only a few months, having wrested power from Kevin Rudd. Neither Gillard nor Abbott came to the election with novel ideas for stimulating the economy or preparing for an ageing population. There

were no specifics about how to harness China’s boom without falling prey to “Dutch disease,” whereby the benefits of exporting natural resources lead to the neglect and atrophy of other industries. It has led to a two-speed economy. There were no serious plans for boosting investment in infrastructure, education and training. No credible strategies for revamping a tax system that encourages many of the nation’s brightest and most productive people to seek jobs abroad. No palatable proposals get a bigger piece of the vast wealth being amassed by mining companies to spread the benefits of growth. The coming election and campaign should be of a different nature, and a new Standard & Poor’s report shows why. On January 31, S&P warned that Australia’s mining boom may be peaking and that the economy could stumble if the country’s huge bet on the resources sector goes wrong. It also said China has the highest risk of an economic slump among 32 of the world’s largest economies because so much of its growth depends on outsized investment spending. Australia is arguably the biggest leveraged bet on China

in the world. If Asia’s biggest economy slows, officials in Canberra can forget about achieving a sustained budget surplus. Politicians also will rue the day they put whatever chips they didn’t wager on China on the central bank, abdicating their own responsibility to recalibrate the economy.

Cheap politics The term of Reserve Bank of Australia Governor Glenn Stevens is up three days after the election, and Gillard has yet to re-nominate him. It smacks of cheap politics, considering Stevens’s standing among the world’s central bankers. In all likelihood, she is reserving the right to blame any troubles that may arise on the RBA. Investors looking for greater certainty about economic leadership will have to wait. Households, too. Smart monetary policy is critical in a nation in which about 90 percent of homeowners have adjustable-rate mortgages. Household indebtedness is an underplayed risk at a time when the cost of living may be advancing faster than official inflation figures indicate. Just ask the average Australian whether he or she believes

consumer prices are up only 2.2 percent in the past year. The government needs to do its part, too. That means true and visionary leadership of the kind Australia arguably hasn’t seen since the days of Bob Hawke and Paul Keating. During their terms in office in the 1980s and 1990s, Australia adopted a floating currency, reduced import tariffs, internationalised the financial sector that employs so many today, and created a compulsory national pension system. The achievements of leaders since then, from John Howard to Rudd to Gillard, pale by comparison. Just as Abbott has the burden of laying out a credible plan, Gillard must convince voters that she will get more done in the next couple of years than she did in the past 2 1/2. She has, on occasion, defied convention. Her taxes on carbon and mining profits, for example, were steps in the right direction. Yet her waning popularity shows electioneering won’t do. She needs to prove why she deserves more time. Australians want more than a never-ending campaign. They deserve it, too. 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.

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February 14, 2013 business daily | 15

OPINION

Japan confuses wires appearance and reality Business

Leading reports from Asia’s best business newspapers

Myanmar Times

James Saft

Reuters columnist

Energyinfrastructuredevelopment will be at the core of the World Bank’s programme to help expand Myanmar’s economy, create jobs and reduce poverty through accelerated reforms. “Connectingpeopleandbusinesses to a reliable electricity grid is critical for Myanmar to realise itsenormoussocialandeconomic potential,” Jin-Yong Cai, the executive vice president and chief executive of the World Bank’s International Finance Corporation, was quoted as saying. The World Bank is providing Myanmar with US$165 million in zero-interest loans for its priority needs.

Business Inquirer Philippine exports climbed 16.5 percent in December to US$3.97 billion, the biggest rise in three months, helped by sales of tropical fruits and some non-traditional items such as petroleum products, the National Statistics Office reported on Tuesday. Overall growth in exports in 2012 has been restrained, due largely to lacklustre global demand for the country’s main semiconductors and electronics shipments. The latest data brought exports for the whole of 2012 to US$52 billion, up 7.6 percent from a year ago.

Taipei Times Taiwan’s government is negotiating with Japan over the fishing rights in the waters surroundingthedisputedDiaoyutai Islands, President Ma Yingjeou said on Tuesday, adding that he hoped this could yield substantial results in the near future. “It is a nation’s obligation to guarantee the safety and rights of its fishermen, which is something the Coast Guard Administration has been doing through non-military means,” Mr Ma said. Ties between China and Japan have been repeatedly strained by a territorial row over the same group of islands, known as the Senkaku islands in Japan and the Diaoyu islands in China.

Thanh Nien Daily Trung Nguyen Group Corp., Vietnam’s biggest coffee retailer, wants to buy bean roasters in the U.S. and open shops in Seattle, New York and Boston this year, just after Starbucks Corp. debuted in Ho Chi Minh City. The company plans to fund U.S. acquisitions by selling a stake of as much as 15 percent, Dang Le Nguyen Vu, founder of the coffee retailer, was quoted as saying. Trung Nguyen’s plan to enter the U.S. follows the company’s climb to become the biggest roaster and packaged-coffee retailer in Vietnam.

government which sees its role as driving stock market rallies is one suffering sad confusion about the difference between appearance and reality. Japan’s economy minister, Akira Amari, said on Saturday the government will increase economic efforts in order to drive Tokyo’s Nikkei index up another 17 percent by the end of March. “It will be important to show our mettle and see the Nikkei reach the 13,000 mark by the end of the fiscal year,” he was quoted by Japan Times as saying in a speech. Japan’s fiscal year ends March 31. “We want to continue taking steps to help stock prices rise.” The Nikkei has already skyrocketed 28 percent in the past three months, pushed along by an effective devaluation in the yen which itself was brought on by new policies advocated by the newly installed Liberal Democratic Party government, including a doubling in the Bank of Japan’s inflation target to 2 percent. The theory, and it is correct as far as it goes, is that higher stock prices may lend animal spirits to the economy, encouraging consumers to spend and businesses to invest. It is also, in some respects, like slapping a Bentley sticker on a Smart Car and thinking the trunk space will increase. First, let’s be clear: Japan’s government probably can and will make this happen, and very likely by driving down further the value of the yen, thereby improving the competitiveness of Japanese exporters. Other industrialised countries won’t be that happy about it, but other than talking down their own currencies and encouraging their own central banks into increased stimulus, there isn’t much they are likely to do. The LDP has been

outspoken in calling on the BoJ, to which Amari serves as a sort of liaison, to be more active in buying assets, and so we can probably expect more of that, which may include direct purchases of stocks or moves sufficient to drive down the yen further. “A weaker yen has been by far the most effective tool to generate Nikkei outperformance and it is very reasonable to ask the question how much further JPY weakness has to go to fully unwind the underperformance of the last few years,” Steven Englander, head of G10 foreign exchange strategy at Citigroup, wrote in a note to clients. “We stress the Nikkei both because of its wealth effects and because translation effects for Japanese firms make them far more profitable and on the margin are as good as fiscal policy to encourage them to invest. From a political perspective, the Nikkei-JPY relationship is too much a good thing for Japanese policymakers to give up.”

Appearance vs reality

money is demonstrated by the banking system, which still these many years down the line is loath to cut off credit from its weakest clients. Artificially driving the Nikkei up does nothing to make Japanese corporations and banks better at allocating capital. The products Japan already produces will be cheaper in dollars or euros,

Artificially driving the Nikkei up does nothing to make Japanese corporations and banks better at allocating capital

sure, but there are reasons to worry about the long term. A jump of 13 percent in the Nikkei will actually simply shelter Japanese corporations and their shareholders from the consequences of their decisions, allowing those that are among the walking dead to continue among us that much longer. Of course it is easier to magic up stock market gains through monetary alchemy than it is to reform the banking system, or to address demographic issues through immigration reform, so this is where we spend our time. And it has to be noted that this is exactly the same thing which is happening in the U.S., though perhaps in slightly less obvious ways. It is clearly the object of U.S. monetary policy to increase asset prices and thereby revive the economy. So, don’t bet against assetprice gains or currency moves, in the case of Japan a weaker yen. Just remember that the short-term gains seem pretty slight, to judge by the results globally, and the long-term costs are potentially high. Reuters

First, there is just something addle-pated about a senior government official calling for a specific and spectacular jump in a major global equity market. It comes across as either naive or cynical. Japan does have a series of problems having to do with deflation and balance-sheet recession, and yes, generating activity by generating paper wealth will, on the margin, do something to oppose those forces. Japan’s malaise is not simply the result of a deficit of animal spirits, it is driven by demographic issues and, to judge by the example of Sony, an inability to allocate money to the best ideas. This mal-allocation of

16 |

business daily February 14, 2013

CLOSING SJM happy with January market share

Kingfisher dives on bank loan recall plan

January was “undoubtedly a good start” of the year for gaming operator SJM Holdings Ltd, which got 26 percent of Macau’s casino revenue, chief executive Ambrose So Shu Fai said yesterday. Quoted by the Portuguese news agency Lusa, he said it was “important” for SJM to continue leading the market nine years after losing its monopoly. But Mr So declined to make any forecast for SJM’s performance this year: “I don’t have a crystal ball.” The operator “will always do its best to keep its market share and to present innovative services,” he said.

Shares in India’s debt-laden Kingfisher Airlines Ltd plunged as much as 5 percent yesterday after banks said they would start recalling loans worth US$1.5 billion, pushing it closer to collapse. Kingfisher, controlled by Indian liquor baron Vijay Mallya, slid 5 percent – the maximum daily limit – before clawing back some losses to trade down 4.58 percent at 10.62 rupees in early afternoon. “We have decided to recall [initiating the recovery process] the loans given to Kingfisher Airlines,” Shymal Acharya, a deputy managing director of state-run State Bank of India, which heads the consortium of bank lenders, said.

25,000 hotel rooms in pipeline: DSSOPT A quarter is planned for just three Cotai projects being built, official data show Stephanie Lai

sw.lai@macaubusinessdaily.com

y the end of last year, there were 11 hotel projects being built, with a potential supply of 7,200 hotel rooms, the Land, Public Works and Transport Bureau said in a press release yesterday. With a further 17,900 hotel rooms provided by 25 projects that the bureau is still reviewing, Macau can anticipate over 25,000 hotel rooms in the pipeline. Of the 11 hotel projects in construction during the last quarter of 2012, the bureau says 6,635 hotel

rooms will be provided by three projects in Cotai area. Even though the authorities do not identify the three hotels, they are likely to include the ones planned for the phase two of Galaxy Macau and for Melco Crown Entertainment Ltd’s Studio City resort. In contrast to the Cotai area, by the end of 2012 the Macau peninsula only had eight hotel projects in the construction stage. They are set to provide 653 hotel rooms. Of the 25 hotel projects

pending approval, there were five projects representing a potential supply of 14,000 hotel rooms for the Cotai area. The Macau peninsula has 17 hotel projects being reviewed, which involve more than 2,500 hotel rooms, the bureau said. While the luxury hotels in Cotai occupy a large portion of the overall hotel rooms in the pipeline, the proportion of budget hotel rooms is much smaller. The Macau Government Tourist

Office received six applications for budget hotel projects, in which four are applying to open a new project and two are asking to expand an existing hotel. In total, the six applications filed for budget hotel projects can provide just 452 rooms, the office told Business Daily in an e-mail reply. Currently there are only 1,400 budget hotel rooms available in Macau, Maria Helena de Senna Fernandes, head of the tourist office, told media earlier this month.

Obama eyes new EU trade deal U.S. president calls for manufacturing renaissance, minimum wage hike

nited States president Barack Obama vowed to begin talks on a trade agreement with the European Union (EU), expanding the world’s largest economic relationship, while at the same time finishing discussions for a Pacific-region accord. “Trade that is free and fair across the Atlantic supports millions of good-paying jobs,” Mr Obama said in his State of the Union speech Tuesday night. Talks with the 27-nation block could help Mr Obama meet his goal of doubling exports by the end of 2014 as global negotiations stall and China increases its role in global economy. Mr Obama’s administration also plans to complete negotiations on the Trans-Pacific Partnership with 10 nations in the region. While trade and investment between the U.S. and the EU was valued at US$4.5 trillion (36 trillion patacas) in 2011, the partners have been at odds over issues including farm subsidies, health protections and regulatory standards. Congressional support for an EU deal depends on issues including better market access for American agricultural goods, strong intellectual property protections and a means to settle disputes, leaders of the Senate Finance Committee said on Monday.

Mr Obama also laid a plan to bring manufacturing jobs back to the country, including a network of institutes that would teach new industrial skills. Investors said they supported the message: American workers need skills they currently lack and the economy will not improve until that changes. Those plans will require labour, which is where two other key elements of the speech came in: immigration reform and a hike in the minimum wage to US$9 an hour from US$7.25 an hour. Mr Obama made specific reference to changing the immigration laws to encourage highly skilled engineers and entrepreneurs to come to America and help expand the economy. There may be broad support for immigration reform, but the minimum wage hike is much more controversial. Last year the holiday season saw protests against McDonald’s and Wal-Mart Stores over wages, part of broader union efforts for higher worker pay. But the National Small Business Association and the National Retail Federation took issue with the wage proposal, stressing it could prevent job creation and boost inflation.

Mr Obama also used the speech to come back to a favoured theme: energy independence. While promising to speed new oil and gas permits, the president also suggested a “Energy Security Trust,” which would fund research into alternate fuel sources. Bloomberg News/Reuters