Withdrawn: horsemeat food brand govt said wasn’t on sale here
Year I Number 225 MOP 6.00 Friday February 22, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã www.macaubusinessdaily.com
MGM Cotai ground breaking next week CEO tells analysts
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Protest mars day two of Wu Bangguo visit as activists arrested
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fails to halt shop staff turnover R
etail staff here can expect their bonuses to grow 12.4 percent this year, the fastest in the Asia Pacific region, a survey suggests. Most other regional markets are expected to see shop pay fall – some by 25 percent. The city’s economic development – coupled with a labour shortage – is the main reason for Macau’s increase, a scholar told Business Daily. Retail workers’ salaries are mostly calculated on a commission basis linked to sales. But even the temptation of a bigger bonus is failing to prevent many staff from looking for other jobs. The survey said last year’s average staff turnover rate was the highest in the 17 regions covered. More on page 4
Hotel rates leave little room for shopping trips
I SSN 2226-8294
HANG SENG INDEX 23030
With visitors spending more of their disposable income on expensive hotel rooms and restaurant meals, their appetite for shopping is becoming dulled, official data show. Tourist spending per head rose by 11 percent to 2,019 patacas, a new record but most of the increase was to pay for board and lodging. Visitors spent just three percent more on shopping.
22992
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Bigger down payment slices mortgage loans
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February 21
HSI - MOVERS
New, tighter restrictions introduced in October on mortgage loans – plus conservative valuations by banks on collateral assets – are forcing prospective homebuyers to make bigger down payments. As a result, the value of new mortgages signed by banks slumped at the end of last year, falling for three consecutive months in the fourth quarter. New mortgage lending to residents fell by 30 percent in December.
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Shun Tak to issue up to US$1 bln debt
Name
%Day
CHINA RES LAND
1.40
CHINA OVERSEAS
0.92
ESPRIT HLDGS
0.20
CHINA MOBILE
-0.06
CHINA RES ENTERP
-0.39
CITIC PACIFIC
-2.83
WANT WANT CHINA
-2.87
COSCO PAC LTD
-3.34
CHINA MERCHANT
-4.89
BELLE INTERNATIO
-16.78
Source: Bloomberg
One of Macau’s biggest private sector residential developers Shun Tak Holdings Ltd has announced a bond scheme to raise up to US$1 billion (7.9 billion patacas). The company, which also has real estate interests in Hong Kong as well as shipping assets including the TurboJET ferry fleet linking Macau and Hong Kong, says it will use the debt facilities for “general corporate purpose”.
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business daily February 22, 2013
macau Infant formula demand to grow The Year of the Dragon has translated into about 16.3 million new babies born in mainland China and the infant formula sector is set to benefit this year, Hong Kongbased Oriental Patron Financial Group Ltd said. A note to investors released this week forecasts milk powder sales to grow over 25 percent this year, after increasing about 20 percent last year. “In the foreseeable future, the foreign players will still dominate the market” but domestic producers with “clear operating history and enhanced retail channels” will be the big winners, analyst Tracy Sun wrote.
The spending gap between overnight tourists and day-trippers has never been wider
Visitors happier with restaurant service
Room rates leave tourists little extra for shopping While spending by visitors continues to set new records, almost half of their money goes on board and lodging Vítor Quintã
vitorquinta@macaubusinessdaily.com
V
isitors are spending so much money on expensive hotel rooms and meals in restaurants that they have little left for shopping sprees, official data show. Tourist spending, excluding gambling expenses, amounted to 14.6 billion patacas (US$1.8 billion) in the final quarter of last year, 9 percent more than a year before, the Statistics and Census Service announced yesterday. But the growth in spending by visitors was slower than it was over the course of last year as a whole, when it rose by 15 percent to 52.3 billion patacas. While visitor arrivals dropped by 1.7 percent in the fourth quarter, spending per head rose by 11 percent to 2,019 patacas, a new record.
Most of the increase in spending was due to greater outlays on things other than shopping. Spending per head on things other than shopping rose by 19 percent to 1,044 patacas, the most since the Statistics and Census Service began collecting data in 2010. But over half of that money was spent on accommodation, which cost each visitor 530 patacas, on average, 21 percent more than a year before. The increase is not surprising, considering that hotel room rates were 5.9 percent higher than a year before, according to the Macau Hotel Association. The average figure for spending on everything seems low because it includes spending by day-trippers, who make up over half of all tourists. Spending on food and drink
Biggest spender per capita
rose by almost one-quarter to 368 patacas per head. The annual rate of food price inflation was 8.5 percent last year. With board and lodging prices rising, it seems there was little money left for extra shopping in the fourth quarter, a peak season
About 89 percent of the 1,100 visitors surveyed by the Statistics and Census Service in the fourth quarter of last year found the service in Macau restaurants was good, 14 percentage points more than a year before. There was a similar improvement in the impression tourists had of public facilities, 75 percent praising them. On the other hand, only 55 percent of visitors classed the city’s tourist attractions as “good” – although this was 9 percentage points more than a year before. Hotels got the best score, 91 percent of visitors having approved of the service in hotels.
which includes the National Day and Christmas holidays. Tourists spent just 3 percent more on shopping, although this meant their average spending in the shops rose to 975 patacas, the most ever. Of that sum, 23 percent went on clothes and 19.5 percent on jewellery and watches. The gap between the spending of overnight visitors and that of daytrippers grew wider than ever. Visitors that stayed the night spent 12.6 billion patacas in the fourth quarter, while those that came and went the same day spent just 2 billion patacas. Spending per head by overnight visitors increased by 10 percent to 3,573 patacas but spending per head by day-trippers decreased by 17 percent to 534 patacas.
business as usual
Protect us from the truth Paulo A. Azevedo pazevedo@macaubusinessdaily.com
T Biggest spender, MOP2,574 food, hotel, MOP1,633 same-day, MOP369 transport, MOP127 entertainment, MOP92
he head of the Maritime Administration, Susana Wong Soi Man, has a tendency to surprise us with very interesting revelations. The latest was this week, during the bureau’s Spring Festival lunch with representatives of the news media. According to Ms Wong, the new Taipa ferry terminal, also known as the Pac On terminal, should be finished by the middle of this year, which is “within the schedule”. I would like to know which schedule, precisely, the Maritime Administration head is referring to: the first schedule, the second or the third? The construction of the Taipa ferry terminal seems to be a never-ending story. And the public does not have the slightest idea of what is going on there because there is this tendency in Macau to keep things as secret as possible. Bad habits die hard, I suppose. If more transparency was allowed and became a salutary habit, especially within government departments, then we would know why exactly the structure needed to be partly redone a couple of times and how much exactly the overall cost overrun of the project is. But I am sure the relevant authorities refrain from providing that information to the public because it is their way of protecting us. Ignorance is bliss.
February 22, 2013 business daily | 3
MACAU
Limits send home loans into three-month slump
Vítor Quintã
vitorquinta@macaubusinessdaily.com
Tighter limits on new mortgages mean heavier downpayments for overburdened residents
T
he value of new residential mortgages granted by banks finished last year in a slump, having fallen for the third consecutive month in December, the Monetary Authority of Macau said yesterday. The combined value of new home loans was 2.6 billion patacas (US$328.3 million) in December, 26.5 percent less than in November. The monthly total of new home loans has now fallen by 43.8 percent since September, which was the peak month for new mortgage lending this year, as homebuyers rushed to take out loans before the government introduced new curbs on the overheating property market. New lending for homes had been
expected to fall, said Noelle Cheung, sales director of Centaline (Macau) Property Agency Ltd. In October the government made yet another attempt to cool the property market, tightening restrictions on new mortgage lending. It reduced to 50 percent from 70 percent the maximum proportion of the value of a home that a bank is allowed to lend a resident if the home is worth more than 8 million patacas (US$1 million). It reduced to 60 percent from 70 percent the maximum proportion if the home is worth between 6 million patacas and 8 million patacas. Ms Cheung told Business Daily that the new rules, coupled with an increase in home prices, had pushed prospective homebuyers into a tricky corner. She said that now banks lent a smaller proportion of a home’s value, buyers had to make bigger downpayments.
Outsiders return
close” to the price being asked it. In December the average price of housing here reached 70,407 patacas per square metre, 6.8 percent more than the month before. “Many residents who don’t have enough money for the downpayment have just about given up on buying a home,” Ms Cheung said.
Many residents who don’t have enough money for the downpayment have just about given up on buying a home Noelle Cheung, sales director, Centaline (Macau) Property Agency Ltd
Ms Cheung said another headache for buyers was that often a bank’s valuation of a home “is not even
New mortgage lending to Macau residents fell to below 2.4 billion patacas in December, over 30 percent less than in November. The outstanding amount of home loans to residents rose by only 0.8 percent in December to nearly 88.9 billion patacas, growing at the slowest monthly rate for nine months. The government’s new curbs include even tighter restrictions on new mortgage lending to non-residents. However, the value of new mortgages granted to non-residents leapt by 59.6 percent to 242.8 million patacas in December, making up ground lost in the preceding two months. The value of new mortgages granted for unfinished housing fell by 59.3 percent in December to 89.8 million patacas, having almost tripled in November. But estate agents expect three or four developers to put homes in unfinished projects up for sale between March and April, before new legislation now going through the Legislative Assembly comes into effect. New mortgage lending for commercial property is also in a slump, having fallen by over half to 2.3 billion patacas in December.
Shun Tak to issue up to US$1 bln in debt Notes for ‘general corporate purpose’ says firm, one of Macau’s biggest developers Michael Grimes
michael.grimes@macaubusinessdaily.com
O
ne of Macau’s biggest private sector residential developers Shun Tak Holdings Ltd has announced a bond scheme to raise up to US$1 billion (7.9 billion patacas). The company, which also has real estate interests in Hong Kong as well as shipping assets including the TurboJET ferry fleet linking Macau and Hong Kong, says it will use the debt facilities for “general corporate purpose”. In a filing to the Hong Kong Stock Exchange the firm added that Joyous Glory Group Ltd – an indirect wholly owned subsidiary incorporated in the British Virgin Islands – would offer the notes to professional investors.
The paper will be unconditionally guaranteed by Shun Tak. The terms on the notes are still to be announced. The sole arranger for the notes is Hongkong and Shanghai Banking Corporation Ltd. HSBC and Crédit Agricole Corporate and Investment Bank will act as dealers. “It isn’t uncommon that a large piece of debt would be used for general corporate purpose,” one analyst told Business Daily yesterday. “In the case of Shun Tak I would not be surprised if they were looking to move forward with any number of Macau-related projects, including certain residential projects,” the person added. Shun Tak is presently working on
phase five of its Nova City residential development in Taipa and has other land in Taipa that it is yet to develop. “Shun Tak currently has a pipeline of around 1,000 residential units in Macau,” Gregory Ku Ka Ho, managing director in Macau for property services company Jones Lang LaSalle, told Business Daily. “It has probably the biggest land bank of any developer here. To my knowledge it could comfortably build an additional 1,000 to 2,000 residential units depending on the size of the units,” he added. According to Shun Tak’s annual report for 2011, the firm has 100 percent of Nova City. It also retains a 51 percent direct holding in the One
Central shopping complex attached to the MGM Macau casino resort and in the Mandarin Oriental Hotel inside One Central. Shun Tak developed One Central with Hongkong Land. One Central opened in phases from August 2009 at a capital cost of around HK$2 billion. The seven residential towers at One Central were sold to third parties – mainly institutional investors – and now attract some of the highest rental and sale prices in Macau. Shun Tak’s managing director Pansy Ho Chiu King also has a 27 percent interest in MGM Macau’s holding business MGM China Holdings Ltd.
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business daily February 22, 2013
macau Brought to you by
HOSPITALITY Caught in traffic There are three land borders in Macau that serve both people and vehicles. Between 2008 and the end of last year, the number of vehicles entering the city increased by 17.4 percent, an average annual growth of 4.1 percent. In isolation, that statistic may not seem alarming. However, if it is framed in the context of a continuously growing vehicle fleet based here that jostles for limited space on the roads, it helps explain the traffic congestion seen daily around the city. The biggest growth in vehicle traffic has been in the number of buses using the border crossings. This category of vehicles tends to operate day and night. The number of buses entering the city at each of the three border crossings has increased by an average of 68.5 percent since 2008, representing an annual growth of almost 14 percent. There has been a reduction in the number of trucks entering the city, with their numbers falling by almost 42 percent. But the total number of trucks on the roads is only about 10 percent of the size of the bus fleet.
Fast bonus rise in store for shop staff this year The economic boom and labour shortage mean retailing employees here will have fastest-rising bonuses in the Asia-Pacific region in 2013 Tony Lai
tony.lai@macaubusinessdaily.com
Retail has a high staff turnover due to its commission-based wages
T The Border Gate checkpoint is the busiest entry point for vehicles. About 84 percent of all vehicle crossings occurred there. By contrast, the checkpoint at the ZhuhaiMacau Cross-Border Industrial Park handled about 1 percent of crossings. It is not able to be used by buses and most trucks, about 90 percent of the fleet, used the crossing in Cotai. Light vehicles account for most of the cross-border traffic. They accounted for about 72 percent of all crossings made last year, compared to 21 percent for buses and 7 percent for trucks. J.I.D.
68.5%
Increase in the number of buses entering Macau since 2008
his year may turn out to be a good one for retailing staff in Macau, who can expect their bonuses to be the fastest-growing in the Asia-Pacific region, the results of a survey by Hong Kong’s HR Business Solutions Asia Ltd suggest. The average bonus paid this year by the 27 Macau companies surveyed, most of them retailers, will be 136 percent of monthly pay. Last year the average bonus was 121 percent of monthly pay. The average bonus this year will be 11.3 percent of each employee’s annual basic pay salary. HR Business Solutions Asia surveyed in November 1,213 multinational enterprises operating in the Asia-Pacific region, including enterprises in Macau, Hong Kong and mainland China. The bonuses paid in Macau this year will be only the 14th-highest in the region, but they will be the fastest-rising. Bonuses will rise only in Macau, Thailand and Japan. Everywhere else in the AsiaPacific region they will fall, by between 2 percent and 25 percent. Bonuses in Singapore will be the biggest, at 170 percent of monthly pay, but this will be over 17 percent smaller than last year. Mainland employees can look forward to bonuses of 154 percent
of monthly pay and Hong Kong employees to bonuses of 148 percent.
Employee churn Davis Fong Ka Chio, a specialist in gaming studies at the University of Macau, said the improving economy here was the main cause of the surge in bonuses. “Macau is at a better stage in the economic cycle, having higher growth compared to other regions,” said Mr Fong, who is also the head of a public human resources policy research group. “The gaming industry is the main driver of Macau’s economic growth and it directly brings better business to related industries like tourism and retail, on which most of the survey samples are based,” he said. Official data show gross domestic
5.6 %
Average pay increase predicted for 2013
product expanded by 10 percent in the first three quarters of last year. The Economist Intelligence Unit has tipped Macau to have had the world’s fastest-growing economy for the second year in a row last year, predicting growth of 14.3 percent. The HR Business Solutions Asia survey said average rate of staff turnover here was 23.5 percent last year, less than the rate of 24.2 percent in 2011. But this rate was the highest in the Asia-Pacific region. “This survey only shows an industry-specific phenomenon – in this case of the retail industry – as the turnover rate of the entire employed population here should be within 10 percent,” said Mr Fong. “The retail business has had a relatively high turnover rate in the past eight or nine years, as workers’ salaries are mostly calculated on a commission basis,” he said. He said many retailing employees were willing to leave their jobs if offered more predictable remuneration. “Of course, this high turnover rate also reflects a relatively severe labour shortage in Macau,” he said. Macau’s labour force is the 11thhighest-paid in the Asia-Pacific region. Companies here are thinking about giving employees pay increases this year that would average 5.6 percent.
February 22, 2013 business daily | 5
MACAU
Brand linked to horsemeat scandal withdrawn: ParknShop Findus Beef Lasagne sold in Europe contained horse Stephanie Lai
sw.lai@macaubusinessdaily.com
F
indus Beef Lasagne – a brand of frozen meal found to contain horsemeat in European tests – has been removed from local shelves said stockist ParknShop. The 360-gramme packs had been on sale in some of the 13 ParknShop outlets in Macau, a spokesperson confirmed to Business Daily. They were withdrawn last week. Earlier this week the city’s Food Safety Coordination Group said it had found no evidence that Findus Beef Lasagne was sold in the territory, after contacts with importers and retailers and inspections at several sales points. The ParknShop spokesperson declined to specify the total amount of the product that had been originally imported and how
many boxes have been recalled. ParknShop, owned by Hong Kong tycoon Li Ka Shing, has a total of 280 outlets in Hong Kong and Macau. The Hong Kong Centre for Food Safety warned last week there was a potential public health issue not just a fraud issue linked to product mislabelling. This was because of the possibility that products with horsemeat the veterinary painkilling drug phenylbutazone, known as ‘bute’ and commonly used on horses. Findus Beef Lasagne was imported from the United Kingdom. The product is made by French foodprocessing company Comigel in a Luxembourg factory. Comigel said earlier in February that it had stopped importing meat from Spanghero, the French firm
accused by the authorities there of passing off 750 tonnes of horsemeat as beef. The material found its way into 4.5 million batches of human food sold mainly in Europe. Investigators on Wednesday conducted a second day of raids on
welcome
Spanghero’s headquarters in Castelnaudary in southern France. Royal Supermarket, a Macau-based retail grocery chain, told Business Daily it did not import any products from frozen food giant Findus. So far, the Food Safety
Coordination Group has not found any other retail outlets in Macau selling Findus Beef Lasagne. “The task force is still paying a close attention to the incident and it is in constant contact with the European and Hong Kong food safety authorities,” a spokesperson from the Civic and Municipal Affairs Bureau told Business Daily. The bureau also said it did not receive information on any other brands that might contain horsemeat-tainted meat products. A host of top manufacturers have been caught up in the spiralling horsemeat scandal, including Nestle, the world’s biggest food company, top beef producer JBS of Brazil and British supermarket chain Tesco.
Local ParknShop outlets removed some frozen meals over horsemeat scare (Photo: Manuel Cardoso)
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business daily February 22, 2013
macau
Ground breaking for MGM Cotai next Wednesday
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Accelerated decay In 2009, the volume of Macau’s exports dropped by more than half compared to 2008, from 16 billion patacas (US$2 billion) to less than 7.7 billion patacas. It was a sharp tumble in what has otherwise been a long-term slide for the city’s exports. The casino-led economic boom has only accentuated the decline. Moreover exports are now largely propped up by re-exports and re-exports continue to grow, a trend that is reflected in data for last year. Even as re-exports increased, total exports last year were just half of what they were in 2008. The balance between domestic exports and re-exports has also altered significantly. Domestic exports accounted for 60 percent of all exports in 2008. But by the end of last year, this had fallen to less than one-third – less than half the value five years earlier.
MGM China considering formal dividend policy, adds Jim Murren during Q4 earnings call Michael Grimes
michael.grimes@macaubusinessdaily.com
MGM Cotai cost now US$2.6 bln
M
The growth rates for these variables from 2008 onwards highlights the dynamics of the changes. Both 2009 and 2010 saw a contraction of exports. The change was pronounced in 2009 but less dramatic in 2010. In that two-year period, exports fell 47 percent, pulled down by a decline of more than 75 percent in domestic exports. A year of stabilisation was enjoyed in 2011 and the variables remained almost unchanged. Last year saw a recovery, with an overall growth of just over 17 percent. However, re-exports are now the main driver of exports, with domestic exports taking another knock, dropping more than 4.4 percent. J.I.D. The content of this column is the work of Business Daily’s journalists.
76.2%
Slide in domestic exports since 2008
GM’s Cotai project will have a ground breaking ceremony on February 27, says Grant Bowie, chief executive of MGM China Holdings Ltd. He gave the news during a conference call with analysts early yesterday Macau time to discuss fourth quarter earnings. Daniel J. D’Arrigo, chief financial officer of MGM’s 51 percent owner MGM Resorts International, added that the Cotai project costs had risen from US$2.5 billion to US$2.6 billion. “…the number there in Cotai is approximately US$2.6 billion, excluding land and capitalised interest,” he stated. “It is up a little bit, mostly as it relates to the tenders we received to date, as well as we’ve added some scope to the project in terms of our general foundation work in some of the basements to allow for future expansion,” added Mr D’Arrigo. It was also revealed on the call that an MGM China board meeting next week will consider introducing a formal policy for dividends – in the manner of market rival Sands China Ltd. Late on Wednesday MGM China announced to the Hong Kong Stock Exchange a special dividend of HK$1.02 per share, or about US$500 million in total. “…MGM Resorts International, as a 51 percent owner, will receive approximately US$255 million from this dividend,” said Jim Murren, chairman of MGM Resorts during the conference call.
“I expect MGM China will be able to continue to pay distributions to shareholders while investing in its second property in Cotai. In fact, we have a board meeting next week where we will discuss putting in place a formal dividend policy,” added Mr Murren, who is also co-chairperson [sic] of MGM China. MGM China reported a one percent year-on-year rise in fourth quarter earnings. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) increased to US$176 million from US$174 million in the equivalent period in 2011. Net revenue at MGM China rose two percent to US$731 million.
Mass earnings In recent months much of the talk among analysts and investors has been about the strong growth of mass market gambling revenues in Macau as a whole compared to a flatter performance for VIP; albeit that the latter is coming from a high base. Mr Bowie said yesterday MGM China – 27 percent owned by Pansy Ho Chiu King, a daughter of former Macau casino monopolist Stanley Ho Hung Sun – was building via a single property, its proportion of earnings from the higher margin mass market. In January while the market as a whole grew by 7.3 percent year-onyear, mass-market table gaming in Macau grew 29.3 percent.
“Our main floor table games and slot business now accounts for approximately 60 percent of our EBITDA, and that’s up from 50 percent in 2011,” Mr Bowie told analysts. “This transition of mix has also driven an increase in our pre-branding fee EBITDA margins by 60 basis points. We expect this positive trend of increasing main floor mix to continue, driven by upgrades to our main gaming floor product, marketing efforts and, of course, the strong growth in the Macau mass market revenues,” he added. Kenneth Fong of J.P. Morgan in Hong Kong described MGM China’s special dividend as “a pleasant surprise”. “MGM’s margin and market share continues to stay healthy despite increased competition from Cotai competitors,” he added in a note to investors. “MGM China’s US$176 million in Q4 EBITDA was in line with consensus but missed our estimate by eight percent on lower margin,” said Cameron McKnight of Wells Fargo in New York, noting that VIP betting volumes were up six percent year-onyear and that the newly announced special dividend of US$500 million was 25 percent up on that declared in March last year. MGM’s Cotai scheme is “on track” for “an early to mid-2016 opening” said Mr Murren on yesterday’s earnings call. The government has not yet confirmed an exact table allocation.
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February 22, 2013 business daily | 7
SmarTone profit takes roaming hit
S
marTone Mobile Communications (Macau) Ltd has seen its operating profit for the second half of last year fall by over a third, the firm’s parent company announced. The venture reported an operating profit of HK$27.4 million (US$3.5 million), down by 35.2 percent year-on-year, SmarTone Telecommunications Holdings Ltd told the Hong Kong Stock Exchange.
The profit drop in its operation here was affected by a “lower contribution from roaming business,” the company said in the filing. Roaming is the most profitable segment for telecommunications operators. As a result, SmarTone Macau’s earnings before interest, taxes, depreciation and amortisation – or operational performance – fell by 17.6 percent to HK$58.9 million.
Still, the local service revenues continued to grow, with revenue increasing by 54.5 percent to HK$277 million. Despite the growth, SmartTone Macau has still been unable fully to challenge former monopoly holder Companhia de Telecomunicações de Macau SARL, better known as CTM. Last year, CTM raked in record revenue of 4.92 billion patacas, up by 23.6
comment
Another alphabet soup Rose Neng Lai Associate Professor of Finance, University of Macau
I
wanted to write this article half a year ago, but time constraints delayed the task and I had thought the topic was by now obsolete. However, earlier this month while teaching a finance course for undergraduates, I realised how incomplete their picture about the global financial crisis was. Hence, I have decided to give readers a small quiz. What do ABS, MBS, CMBS, CDO, ABS CDO, CDO-CDO, CDS, REIT, LTRO, ECB, ESFS, AAA rating, CFC, ETF, CLOs, CLN, OTC contracts, ISDA, to name a few, stand for? If you know the meanings of all these acronyms, you probably know what I am talking about in this article. Without noticing, we have entered a new age – the alphabet era. It was formed during the most recent man-made financial disaster and created by the alphabet countries: the U.S. and U.K. I am going to walk you through this era from a financial angle. Bon voyage! We all know that the global financial crisis started in the United States or U.S., the first alphabet country in this article, in 2007 after the housing market deteriorated for about 18 months. It reached its disastrous climax following the collapse of Lehman Brothers Holdings Inc on September 15, 2008. Interestingly, unlike other banks that also experienced trouble, such as HSBC Holdings Inc (the Hong Kong
and Shanghai Bank Corporation) or UBS AG (based on the former Union Bank of Switzerland) or BNP Paribas SA (formed from the Banque Nationale de Paris), Lehman Brothers did not have an abbreviated name. So why did a deteriorating housing market have such a tremendous effect on the global economy? The story begins with more alphabets, although the cause is best summed up by one simple word “greed”.
Unfolding crisis In the late 1990s and the early 2000s, the government in the U.S. decided that more people should own their own homes. To make it possible, interest rates were reduced and mortgages were made readily available. Coupled with this was an unbundling of the mortgage underwriting process. Lenders were small individual investors who did not know anything about the mortgagors but trusted the financial institutions (FI) in between. To complicate the issue, the FIs, often through spin-off separate entities called Special Purpose Vehicles (SPV), rebundled the different mortgages into new securities with various grades. These were assessed by rating agents such as Moody’s Investors Service Inc and Standard & Poor’s from AAA (the top investment grade) “senior tranche”, to the middle
“mezzanine tranche”, and to the lowest grade “equity tranche”. These are called mortgage-backed securities (MBS) or commercial mortgage-backed securities (CMBS) if the underlying assets are commercial properties. Because there are underlying assets to back up these securities, they are also called assetbacked securities (ABS). Notice that the majority of each securitisation is made up of the mezzanine tranche. What is hard to believe is that the SPVs of the FIs then bundled several mezzanine tranches and then re-rated them in the top AAA senior tranche, and so on. The securities from this
Markets with better investment policies but less affected by the financial crisis are now targets for hot money, Macau included
p er cen t f r o m 2 0 1 1 a n d posted a profit of 969.3 million patacas, a year-onyear increase of 3.2 percent. The MSAR operations account for less than 4.6 percent of SmarTone’s overall revenues, which mostly come from neighbouring Hong Kong. The Hong Kong-based group posted a net profit of HK$459 million, down by 3 percent year-on-year, and proposed a dividend of
HK$0.44 per share. SmarTone’s average revenue per user fell by 2 percent to HK$272, “lower than we expected,” Hong Kong-based Oriental Patron Financial Group Ltd said in a note to investors released yesterday. Still, Oriental Patron analyst Yuji Fung expects the revenue to rebound thanks to “better than expected subscription addition [and] … operating leverage”.
second securitisation were then called ABS CDOs to stand for “ABS collateralised debt obligations”. The securitisation process can be replicated endlessly by bundling similar securities together to form CDOs of CDOs and so on. Any investor worried that the CDOs he or she bought would default could always hedge the risk, that is, offset the amount of risk-taking, similar to buying car insurance to protect against accidents. They did so by buying credit default swaps (CDS) which swap the risk with another FI. In an attempt to insure against defaults of SPVs, AIG (the American International Group Inc) sold too many of these CDS and that created the need for the major bailout by the U.S. government.
the Quantitative Easing programmes, dubbed the QE1, QE2 and QE3.
Debt bubble What went wrong during the crisis? Because of interest rate increases in the mid-2000s, mortgagors could no longer pay mortgages. Many of them became NINJAs or mortgagors with “no income, no job and assets”. The chain effect then spread to the SPVs not able to pay periodic returns to the investors in securities. The equity tranche of the last CDO-CDO in the securitisation series defaulted first, followed by the mezzanine tranche, on to the second last CDOCDO and so on. This is why the mini-bond case after the collapse of the Lehman Brothers included various levels of compensation according to the tranches the investors held. When the SPVs collapsed, the FIs that sold CDS also collapsed because they could not afford to pay the huge debts on behalf of the parties that defaulted. And because the SPVs belonged to the FIs, such as the big banks, these big banks also failed. Finally AIG, which sold a lot of CDS but like other big banks was seen as “too big to fail” (TBTF), was bailed out by the U.S. government through various funding channels such as TARP or Troubled Asset Relief Programme. Many of us are more familiar with the aftermath, when the U.S. started
V.Q.
Money inflows When the problem spread to Europe, the European Central Bank (ECB) started long-term refinancing operations (LTRO), and the European Financial Stability Facility (EFSF), a short-term programme which will be replaced by the longer-term European Stability Mechanism (ESM), to help ailing EU countries. The International Monetary Fund (IMF) and the Bank for International Settlement (BIS) also worked hard to try to find solutions. To extend the list of abbreviations, here are some more commonly heard terms: REIT for real estate investment trust, CFC for currency forward contracts, ETF for exchange-traded fund, CLOs for collateralised loan obligations, CMOs for collateralised mortgage obligations, CLN for credit-linked notes, OTC contracts for over-the-counter contracts and ISDA for the International Swaps and Derivatives Association. The list may continue to grow, depending on how innovative the financial engineers are. So how does this story affect Macau? For better or for worse, Macau does not have a financial market. Less income sources, less risk. Yet, the local micro-economy is easily prone to impacts from whatever happens around the globe. Our property market is a very good example because it is often a major destination for foreign investment. No doubt the Macau government, via the Monetary Authority of Macau (AMCM), has expressed the intention to curb any growing bubble caused by hot money. Yet we all know that markets with better investment policies but less affected by the financial crisis are now targets for hot money, Macau included. I hope each of these bubbles, wherever they exist, leak air slowly rather than burst suddenly, and never all at the same time, and hopefully do not hit our SAR hard!
8 |
business daily February 22, 2013
GREATER CHINA
Chinese stocks post hefty losses Shares end sharply lower on tightening worry, property curbs
C
hina’s stocks fell, sending the benchmark index to its biggest loss since November 2011, on speculation more restrictions on the property industry will hurt demand for bank loans and construction materials. A gauge of Shanghai developers slid 2.1 percent, poised for the biggest weekly drop since July, after the government told local authorities to halt real-estate speculation using measures such as home-price control targets and the expansion of a property tax. Anhui Conch Cement Co. slumped 5.4 percent. China Construction Bank Corp., the largest mortgage lender, lost 2.9 percent. Jiangxi Copper Co. and PetroChina Co. led declines for metal and energy stocks after minutes from the Federal Reserve’s last meeting showed debate over further stimulus action. The Shanghai Composite Index retreated 3 percent to 2,325.95 at the close. The CSI 300 tumbled 3.4 percent to 2,610.55, the most since August 2011. The Hang Seng China Enterprises Index in Hong Kong slumped 3.2 percent. “There are expectations of more details on property measures today or tomorrow,” Huang Cendong, an analyst at Tebon Securities Co., said yesterday in Shanghai. “If the property curbs extend to second- and third-tier cities, economic growth may be impacted.” The Shanghai index has fallen about 5 percent after gaining as much as 24 percent during a bull-market rally that started on December 3. The measure’s valuation of 9.68 times
If the property curbs extend to secondand third-tier cities, economic growth may be impacted Huang Cendong, Tebon Securities Co.
projected 12-month earnings was the lowest in a month. Trading volumes were 9 percent above the 30-day average yesterday. Hong Kong shares also closed lower yesterday dampened by fresh worries about monetary tightening and expansion of property sector curbs. Property and financial stocks led the slide. The Hang Seng Index closed down 1.7 percent at 22,906.67. The China Enterprises Index of the top Chinese listings in Hong Kong fell 2.2 percent.
Home purchases The Shanghai measure has lost 4.4 percent this week, heading for the biggest drop since September 12, amid concerns about tighter liquidity. China’s one-year interest-rate swaps
climbed to the highest level in two weeks. The central bank drained 910 billion yuan (US$146 billion) from the financial system this week, according to Dariusz Kowalczyk, a Credit Agricole CIB strategist in Hong Kong. That was the biggest withdrawal since Bloomberg started compiling the data in 2008. Chinese cities that have had “excessively fast” price gains should promptly impose home-purchase restrictions if they’ve not done so already, according to a statement released on Wednesday after a State Council meeting headed by Premier Wen Jiabao. Provincial capitals and municipalities reporting directly to the central government should also publish annual price-control targets to keep new-home costs “basically
stable,” according to the statement. Mr Wen also said China will expand property-tax trials, the Xinhua News Agency said.
Property bubble The Shanghai property index has fallen 6 percent this week. Poly Real Estate Group Co. dropped 0.7 percent to 12.30 yuan yesterday, while China Vanke Co. slid 1.1 percent to 11.31 yuan. In an almost three-year effort to tighten the property market, the government has raised down-payment and mortgage requirements, imposed a property tax for the first time in Shanghai and Chongqing, and enacted home-purchase restrictions in about 40 cities. Home prices rose 1 percent last month from December, the most since January 2011, according to data from SouFun Holdings Ltd, the nation’s biggest property website. Anhui Conch, the biggest cement producer, slid 5.4 percent to 18.72 yuan. Huaxin Cement Co. declined 6 percent to 15.21 yuan. SAIC Motor Corp., the largest automaker, plunged 5 percent to 17.14 yuan. China Construction Bank, the nation’s second-biggest lender, declined 2.9 percent to 4.67 yuan. Its mortgage loans accounted for 20 percent of the total loan portfolio at the end of June, according to earnings reports. Industrial and Commercial Bank of China Ltd, the second largest mortgage lender with a ratio about 14 percent, slumped 1.4 percent to 4.18 yuan. Bloomberg News/Reuters
Li’s hotel room sale spurs govt warning Authorities to probe whether Cheung Kong violated land lease rules by selling hotel units Simon Lee and Kelvin Wong
A
s Hong Kong’s government scrambles for measures to rein in rising property prices, Asia’s richest man has turned to selling hotel rooms in the city, a move that may spark further regulation. Li Ka Shing’s Cheung Kong Holdings Ltd this week raised HK$1.4 billion (US$181 million) selling all 360 rooms at its Apex Horizon project in Hong Kong’s northwest. Foreign buyers are required to pay a 15 percent extra tax on purchases of residential properties, one of the measures imposed in October to stem a doubling in housing prices in the past four years. The measures so far haven’t been extended to other real estate, such as hotel rooms, offices, shops and parking spaces. The move challenges efforts by Hong Kong Chief Executive Leung Chun Ying, whose attempts since taking over in July to rein in home prices amid a widening wealth gap in the city have been stymied by low interest rates and a stream of buyers from mainland China. The government said it will inspect
the development where Cheung Kong is selling the hotel rooms to ensure they aren’t being used as residences. Cheung Kong’s sale “is a smart move, but it’ll probably be a one-time move,” said Lee Wee Liat, a Hong Kong-based analyst at BNP Paribas SA. “We’re a bit concerned this will trigger a government push to extend curbs to other property asset class. I doubt they’ll let this happen again.” The city’s second-largest builder sold all the rooms, ranging from 656 square feet to 909 square feet in size, on February 20 and 21, spokeswoman Anita Tsui said yesterday. Other curbs introduced by the government since 2009 include higher mortgage down-payment requirements and extra taxes when buyers resell homes within two years of purchases. Hong Kong’s Development Secretary Paul Chan said on Wednesday the government has sent inspectors to make sure the rooms aren’t used as residential apartments. Officials visited The Apex Horizon project to make sure the suites
are operating under guesthouse licensing rules, Mr Chan said, according to a transcript published on the government website. B u y e r s should be aware of the uses of the units, he added. The government reserves the right to take back the property if the terms of the land grant are violated, he said. Shares of Cheung Kong fell 2.4 percent to HK$119.30 at the close of trading in Hong Kong, the biggest decline since February 5. Bloomberg News
February 22, 2013 business daily | 9
GREATER CHINA
Zhou stay seen as aid to financial overhaul Beijing trying to provide stability amid rising economic risks
C
hina’s plans to make its financial system more market-based and expand the yuan’s role as a global currency are incentives to extend the tenure of the nation’s longest-serving central bank governor, analysts said. Zhou Xiaochuan, who turned 65 last month, will probably become a vice chairman of parliament’s top advisory body, an appointment that exempts him from mandatory retirement, two people with partyleadership ties and two people in the financial industry told Reuters. Mr Zhou will remain governor for an indefinite time to help enact changes including easing restraints on the yuan, the people said. Under Mr Zhou, China ended a decade-old currency peg to the dollar, expanded the bond market and gave banks more freedom to set lending and deposit rates. With a new government leadership set to take office next month, retaining Mr Zhou would provide stability at a time when the People’s Bank of China is grappling with rising risks from shadow banking and changing how it conducts monetary policy. “With a wealth of experience,
Governor Zhou is a well-seasoned policy maker who can help push forward China’s financial sector reform,” said Liu Li-Gang, head of Greater China economics for Australia & New Zealand Banking Group Ltd in Hong Kong, who previously worked for the World Bank. “His stay will provide policy continuity, consistency, and confidence to China’s financial system.” An official with the PBOC’s news department, who asked not to be identified because of the institution’s rules, said the central bank won’t comment on the Reuters report.
Gaining experience The Communist Party’s omission of Mr Zhou from its new 205-member Central Committee in November and a February 2 profile by the official China Securities Journal that said he’d step down in March had signalled the governor, who took office in 2002, would leave as part of a once-a-decade leadership change. Mr Zhou understands global markets and has contacts among the world’s financial leaders, said David
Zhou Xiaochuan took office in 2002
Loevinger, former senior coordinator for China affairs at the U.S. Treasury Department, now an analyst in Los Angeles at TCW Group Inc. “He represents the country well,” said Chen Zhiwu, a finance professor at Yale University in New Haven, Connecticut, and former adviser to China’s State Council. “My understanding is that they want to keep him on so that others can have
more time to gain experience on the international stage.” Xiao Gang, chairman of Bank of China Ltd, will be appointed PBOC party secretary, setting him up to succeed Mr Zhou eventually, Reuters reported. Other potential candidates include Shang Fulin, the nation’s banking regulator, and Guo Shuqing, head of the securities regulator. Bloomberg News/Reuters
10 |
business daily February 22, 2013
ASIA CapitaLand profit drops Singapore’s CapitaLand Ltd, Southeast Asia’s largest property developer, reported a 45 percent fall in fourthquarter net profit, dragged down by lower fair-value gains of properties. Net profit of S$262.7 million (US$212.4 million) for the three months ended in December was down from S$476.6 million a year earlier, CapitaLand said yesterday. Operating profits in the fourth quarter fell largely due to lower contributions from several projects that were completed a year earlier, the company added.
S.Lanka mulls stock float rule Sri Lanka’s stock exchange is considering introducing a rule by the end of the year ensuring companies have a minimum amount of stock available for trade to lure foreign investors. The bourse is discussing the minimum free-float requirement with regulators, investors and companies, Krishan Balendra, chairman of the Colombo Stock Exchange, said. The exchange is also talking to the government about listing stateowned enterprises. “We need more companies and more liquidity to attract foreign participation in the markets,” Mr Balendra said.
Fairfax looking to digital Australian media group Fairfax Media Ltd reported a 39 percent fall in halfyear profit yesterday and said it would continue to invest in its digital business and cut costs to cope with tough market conditions. Last year, the media company sold its profitable online venture, New Zealand’s Trade Me, and its agricultural publishing unit in the United States, to pay down debt. Excluding the profit from business sales, Fairfax posted net profit of A$83 million (US$85.1 million) in the six months to December 2012, compared with A$135.7 million a year earlier.
Sony unveils PlayStation 4 Sony Corp. unveiled the PlayStation 4, its first video-game console in seven years, introducing new cloud and social-media features as chief executive Kazuo Hirai seeks to reignite sales. The console will go on sale for the year-end holiday season, Sony said, without announcing prices. Sony is working to combat mobile devices with hardware and software that will make games available to play or share at the press of a button on a console, the PlayStation Vita portable player or even a smartphone.
S.Korean trade data underscores weak demand Holidays hit exports, imports in February
S
outh Korea posted almost no export growth for the year to date, latest official data showed yesterday, as the country’s next president pledged action on the rapid rise of its currency. South Korean exports for the February 1-20 period fell 11.4 percent over the comparable period of last year while imports dropped 7.7 percent, Reuters calculations on data published by the country’s customs agency showed. Exports for the 20-day period totalled US$25.8 billion and imports reached US$28.6 billion, data that Korea Customs Service published on its website showed, bringing in the trade balance at a US$2.8 billion deficit. The sharp pace of annual decline was largely attributable to the fact that the Lunar New Year’s Day fell in January last year and February this year because many factories closed for several days to celebrate the major traditional holiday. Reuters calculations show exports for the year to February 20 were 1.4 percent more than that for the comparable 2012 period while imports were 0.8 percent less, dashing hopes among policymakers that global trade may be recovering. South Korea is home to some of the top global suppliers of smartphones, cars and ships such as Samsung Electronics Co Ltd and Hyundai Motor Co. and sends one-quarter of its exports to neighbouring China. The data came a day after President-elect Park Geun-hye said her administration, due for inauguration next week, would pre-emptively act to limit the impact of the fast-rising won on
Data for year to Feb 20 shows no sign of recovery
local companies. Ms Park, from the ruling conservative party, did not elaborate on possible measures but currency traders took the unusually direct comment as indicating the next government may seek to slow the won’s appreciation. The won was trading down 1 percent against the dollar versus the end of 2012 but has jumped more than 6 percent against the yen so far this year on top of a whopping 23 percent gain last year, mainly due to Japan’s policy easing. South Korea and Japan compete head-on in key export markets for cars, ships and electronics goods and changes in the value of their currencies affect the pricing power or profits at export companies, or both.
US$2.8 billion
South Korea’s trade deficit for the year to Feb 20
Reuters
Singapore companies brace for labour curbs Finance Minister to present annual budget next week
S
ingapore will probably force companies to further reduce their reliance on foreign labour in the 2013 budget, after a public backlash against the influx of workers led to the biggest demonstration in more than a decade. Finance Minister Tharman Shanmugaratnam may cut the ratio of overseas workers companies are allowed to hire, according to Credit Suisse Group AG. To counter any labour shortfall, there may also be incentives to boost productivity, economists at Citigroup Inc. and Oversea-Chinese Banking Corp. said ahead of the February 25 budget presentation. Thousands gathered in a rare political protest last Saturday, signalling concerns that foreigners are taking jobs from locals and driving up housing costs haven’t abated even after Prime Minister Lee Hsien Loong tightened hiring rules in recent years. Mr Lee has warned that the labour curbs will slow
economic growth, while rising costs are bedevilling businesses such as The King Louis restaurant, where all the full-time waiters are foreigners. “I’m worried every time the budget comes around,” said Sebastian Teow, marketing manager at the medievalthemed restaurant. Mr Teow is already struggling to fill positions at the outlet and coping with higher taxes for hiring overseas workers in recent years, he said. “We are really hoping there won’t be higher levies as they are eating into the profits.”
Growth slows Singapore’s economy grew 1.2 percent in 2012, the least in three years. The island is in a “new phase” of growth where it must adjust to a smaller pace of expansion, and hiring constraints are among the reasons for last year’s slowdown, the prime minister has said. The government forecasts growth of 1 percent to 3 percent this year.
“The ongoing challenge of sluggish growth coupled with a highcost environment remains a hurdle to both businesses and workers alike,” said Selena Ling, an economist at Oversea-Chinese Banking in Singapore. The budget “needs to strike a balance between economic restructuring vis-a-vis manpower constraints and cost issues on the ground,” she said. A report today may show the economy grew an annualised 2 percent in the fourth quarter of 2012 from the previous three months, faster than an initial estimate of 1.8 percent, according to the median of 11 estimates in a Bloomberg survey. “The likely continued pressure on wage costs will be negative for offshore and marine companies, domestic transport operators and exporters,” Sanjay Mookim and Kwee Hong Ching, research analysts at Credit Suisse, said in a research note. Bloomberg News
February 22, 2013 business daily | 11
ASIA
Fernandes lures Tata into air with low fares
First-half profit more than doubled on cash from cancelling orders for Boeing jets
Joint venture targeting to launch AirAsia India in September
T
ata Group, which started India’s first airline in 1932, is set to return to the industry as new chairman Cyrus Mistry plans a budget carrier with Tony Fernandes’s AirAsia Bhd. Southeast Asia’s biggest low-cost airline will own 49 percent of the venture. Tata Sons Ltd, the holding company of India’s biggest business group, will control 30 percent, while the balance will be owned by Arun Bhatia, whose son is married to the daughter of billionaire Lakshmi Mittal. Mr Fernandes and Mr Mittal own Queens Park Rangers Football Club. Partnering with the US$100 billion conglomerate, which controls Corus Plc and Jaguar Land Rover, will help AirAsia gain a foothold in a market that’s set to triple to 159 million passengers annually by 2021. The venture is the first to be announced after the government allowed foreign carriers to buy stakes in local airlines in September. “We couldn’t have picked a better partner,” AirAsia Group chief executive Tony Fernandes said in an interview after the venture was announced. “We have a product which will have extremely low costs, have extremely low fares and will stimulate the market.” The new airline plans to operate from Chennai in south India and will provide services to smaller cities in the country, AirAsia said in the statement. A carrier must complete five years of domestic operations before it can start overseas flights, according to Indian aviation rules.
‘Smart move’ “Partnering with Tata is a very smart move by AirAsia,” said Mahantesh Sabarad, an analyst with Fortune Equity Brokers India Ltd. “India is poised to drive a lot of international traffic and can be a hub in the future. That interests carriers like AirAsia” and Etihad Airways PJSC, he said. AirAsia India will compete with billionaire Kalanithi Maran’s budget carrier SpiceJet Ltd, IndiGo, Go Airlines India Pvt. and Jet Airways (India) Ltd’s JetKonnect. IndiGo, the low- cost carrier that placed an order for 180 Airbus SAS A320 planes, has grown to become India’s biggest airline, with a 27.3 percent market share in November. “Life will become very competitive for Indigo and SpiceJet,” said Mr Sabarad. The plan to allow foreign carriers to buy stakes in local airlines was revived and implemented by Prime Minister Manmohan Singh’s government to help an industry mired in debt and losses, prompting Jet Airways to start discussions with the Middle East’s Etihad Airways. Liquor baron Vijay Mallya’s Kingfisher Airlines Ltd was forced to ground his carrier in October because of widening losses and debt. Bloomberg News
Qantas profit rises on Boeing cash Result includes A$125 mln in Dreamliner compensation
Q
antas Airways Ltd, Australia’s largest carrier, said first-half profit more than doubled after it received cash from cancelling orders for Boeing Co. 787 jets and cut losses on long-haul routes. The flagship carrier also announced a fleet upgrade, after last year posting its first annual loss since privatisation in 1995 amid tough regional competition, damaging industrial action and high fuel costs. Over July-December 2012, Qantas said its overall net profit jumped 164 percent from the same period of 2011 to Aus$111 million (US$114 million), and it reaffirmed its strategic focus on Asia under a new alliance with Emirates. The company offered no profit guidance “due to the high degree of volatility and uncertainty in the competitive environment, global economic conditions, fuel prices and foreign exchange rates”. Nevertheless the stock market welcomed the earnings news, driving Qantas’s enfeebled share price up 4.15 percent in Sydney trade to Aus$1.68. Peter Borkovec, a fund manager at White Funds Management, said investors expected a long-awaited recovery in Qantas’s fortunes. “It’s about where the company is coming from and whether its strategy is heading in the right direction,” he said. “Investors can see it’s working, and given Qantas’s low valuation you can understand why the market is taking this positively.” Overall, underlying profit before tax – the airline’s preferred measure of financial performance – rose 10 percent to Aus$223 million. The group’s ailing division Qantas International reported an underlying pre-tax loss in the six months of Aus$91 million, an improvement of Aus$171 million. “Qantas International is well
advanced in its turnaround plan,” group chief executive Alan Joyce told a news conference, crediting a round of cost-cutting including the closure of loss-making routes.
Boeing agreement But that improvement included Aus$125 million from the August restructuring of the group’s B787 Dreamliner order, with the troubled Boeing plane suffering lengthy production delays. It is now grounded worldwide over a safety scare.
Growing with Asia is a major priority for the Qantas Group and this investment underpins our commitment to the region Alan Joyce, chief executive, Qantas Airways
It also included Aus$30 million from the sale of a local unit. And underlying pre-tax profit for the domestic service was halved to Aus$110 million, in what Mr Joyce called a highly competitive field where rivals have pumped up capacity to claim market share from Qantas. The carrier’s chief executive forecast capacity growth of five to seven percent for the airline in the first six months of 2013. Qantas also announced an order for five new Boeing 737-800s and the upgrade of 20 Airbus A330-200s and 10 A330-300s. The new Boeings are for domestic service and delivery during 2014, the company said in a statement, adding that leases on two existing B737-800s would be extended this year. “The refurbished aircraft will give Qantas International a truly worldclass product in global aviation’s most dynamic and competitive market,” Mr Joyce said. “Growing with Asia is a major priority for the Qantas Group and this investment underpins our commitment to the region.” The upgrade will not affect planned capital expenditure of Aus$1.6 billion in 2012-13 and Aus$1.5 billion in 2013-14. The Asia expansion is a consequence of Qantas’s alliance with Dubai-based Emirates, freeing services to Asia from onward links to Europe. The pact was cleared by Australia’s competition watchdog last month. Macquarie Equities analysts say the deal could bring in Aus$240 million for Qantas. New direct destinations from Australia being considered include Beijing, Seoul, Mumbai, Delhi and Tokyo-Haneda at the same time as increasing capacity and frequency of flights to Hong Kong and Singapore. AFP
12 |
business daily February 22, 2013
MARKETS Hang SENG INDEX PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AIA GROUP LTD
32.1
-0.4651163
43064252
CHINA UNICOM HON
11.18
-1.584507
38062970
ALUMINUM CORP-H
3.46
-2.535211
20554600
CITIC PACIFIC
11.66
-2.833333
10423842
BANK OF CHINA-H
3.71
-2.368421
432699615
CLP HLDGS LTD
66.65
-0.4480956
3547236
BANK OF COMMUN-H
6.06
-2.415459
45112314
CNOOC LTD
15.54
-1.145038
51693549
BANK EAST ASIA
31.15
-0.4792332
2652310
COSCO PAC LTD
12.16
-3.338633
BELLE INTERNATIO
15.28
-16.7756
132278372
ESPRIT HLDGS
10.06
NAME
BOC HONG KONG HO
26
-1.701323
15112052
CATHAY PAC AIR
14.54
-0.5471956
6608769
CHEUNG KONG
119.3
-2.373159
8473346
7.6
-1.426719
29964638
CHINA COAL ENE-H CHINA CONST BA-H
6.34
-2.461538
324149892
CHINA LIFE INS-H
23.25
-2.310924
46395776
CHINA MERCHANT
27.25
-4.886562
3276734
CHINA MOBILE
85.9 -0.05817336
22611688
CHINA OVERSEAS
21.9
0.921659
40009941
8.8
-0.9009009
110901973
CHINA PETROLEU-H CHINA RES ENTERP
NAME
NAME
PRICE
DAY %
POWER ASSETS HOL
69.9
-1.894737
2330407
SANDS CHINA LTD
35.3
-1.944444
11676853
SINO LAND CO
13.74
-1.716738
10390603
SUN HUNG KAI PRO
120.6
-1.470588
5647943
10416366
SWIRE PACIFIC-A
99.75
-0.9433962
1407001
0.1992032
10196545
TENCENT HOLDINGS
271.8
-1.735358
3829655
HANG LUNG PROPER
29.95
-1.803279
6324455
TINGYI HLDG CO
HANG SENG BK
125.8
-1.178319
1388458
WANT WANT CHINA WHARF HLDG
HENDERSON LAND D
53.5
-1.109057
3142006
HENGAN INTL
79.7
-0.6853583
2703770
HONG KG CHINA GS
21.55
-2.267574
8790078
HONG KONG EXCHNG
142.5
-1.656315
6321268
85.1
-1.618497
16653098
HUTCHISON WHAMPO
85.3
-1.728111
6330060
IND & COMM BK-H
5.55
-2.116402
316927498
LI & FUNG LTD
10.4
-1.515152
22711471
-2.457757
3041629
HSBC HLDGS PLC
25.3
-0.3937008
2610219
MTR CORP
31.75
CHINA RES LAND
21.75
1.398601
11647452
NEW WORLD DEV
13.38
-2.478134
19444826
CHINA RES POWER
21.35
-1.385681
6511425
PETROCHINA CO-H
10.66
-0.744879
94654444
CHINA SHENHUA-H
29.35
-2.166667
18424937
PING AN INSURA-H
64.95
-1.739788
19307952
PRICE
DAY %
VOLUME
28.8
-2.372881
16460842
8.8
-0.9009009
110901973
MOVERS
3
VOLUME
20.9
-2.107728
5826896
10.14
-2.873563
18216617
64.4
-2.719033
5904336
47
0 23420
INDEX 22906.67 HIGH
23416.08
LOW
22842.84
52W (H) 23944.74 22840
(L) 18056.4 19-February
21-February
Hang SENG CHINA ENTErPRISE INDEX NAME
NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
4.06
-3.102625
195369865
AIR CHINA LTD-H
6.55
-4.657933
11885629
CHINA PETROLEU-H
ALUMINUM CORP-H
3.46
-2.535211
20554600
CHINA RAIL CN-H
8.08
-3.117506
17142800
ZOOMLION HEAVY-H
ANHUI CONCH-H
28.35
-3.242321
20506090
CHINA RAIL GR-H
4.24
-2.304147
21401000
ZTE CORP-H
BANK OF CHINA-H
3.71
-2.368421
432699615
CHINA SHENHUA-H
29.35
-2.166667
18424937
BANK OF COMMUN-H
6.06
-2.415459
45112314
CHINA TELECOM-H
3.95
-2.70936
79568070
30
-3.225806
4010830
DONGFENG MOTOR-H
11.82
-0.1689189
15313927
4.91
-3.536346
73187616
GUANGZHOU AUTO-H
6.6
-2.366864
7341472
CHINA COAL ENE-H
7.6
-1.426719
29964638
HUANENG POWER-H
7.61
-4.035309
10912329
CHINA COM CONS-H
7.42
-1.981506
18240610
IND & COMM BK-H
5.55
-2.116402
316927498
CHINA CONST BA-H
6.34
-2.461538
324149892
JIANGXI COPPER-H
18.74
-3.202479
20370600
CHINA COSCO HO-H
4.1
-1.442308
10210986
PETROCHINA CO-H
10.66
-0.744879
94654444
23.25
-2.310924
46395776
PICC PROPERTY &
10.96
-0.9041591
18507013
CHINA LONGYUAN-H
6.97
-1.830986
10538950
PING AN INSURA-H
64.95
-1.739788
19307952
CHINA MERCH BK-H
17.26
-3.467562
17228004
SHANDONG WEIG-H
7.24
-1.630435
8670488
BYD CO LTD-H CHINA CITIC BK-H
CHINA LIFE INS-H
CHINA PACIFIC-H
CHINA MINSHENG-H
10.3
-5.330882
77430765
SINOPHARM-H
24.2
1.467505
4610372
CHINA NATL BDG-H
11.66
-2.833333
36749175
TSINGTAO BREW-H
47.7
0
1809000
CHINA OILFIELD-H
16.14
-3.814064
5870458
WEICHAI POWER-H
30.55
-0.6504065
3428420
NAME YANZHOU COAL-H ZIJIN MINING-H
MOVERS
1
38
PRICE
DAY %
VOLUME
12.02
-2.907916
40488679
2.64
-3.296703
75753715
10.24
-2.10325
10051002
13.7
-1.862464
3398560
1 11760
INDEX 11426.22 HIGH
11752.75
LOW
11366.85
52W (H) 12354.22 11360
(L) 8987.76 19-February
21-February
Shanghai Shenzhen CSI 300 PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.95
-3.278689
304538788
CITIC SECURITI-A
13.91
-5.309735
170309431
AIR CHINA LTD-A
5.55
-3.979239
37445464
CSR CORP LTD -A
4.89
-3.359684
ALUMINUM CORP-A
4.99
-3.667954
28712367
DAQIN RAILWAY -A
7.62
ANHUI CONCH-A
18.72
-5.406771
48793643
DATANG INTL PO-A
BANK OF BEIJIN-A
9.29
-3.530633
68339785
EVERBRIG SEC -A
BANK OF CHINA-A
2.97
-2.302632
81415478
GD POWER DEVEL-A
NAME
NAME
NAME
PRICE
DAY %
VOLUME
SAIC MOTOR-A
17.14
-5.041551
46748339
47807911
SANY HEAVY INDUS
11.17
-5.338983
69704078
-3.787879
176882427
SHANDONG DONG-A
49.45
-3.0202
7973997
4.14
-2.588235
19137721
SHANDONG GOLD-MI
34.86
-4.414587
27238887
14.15
-3.937542
27608024
SHANG PHARM -A
13.85
-0.6456241
34903592
2.67
-2.909091
72788289
SHANG PUDONG-A
10.22
-5.457909
290791316
SHANGHAI ELECT-A
4.95
-4.440154
137030241
GEMDALE CORP-A
7.06
-0.8426966
111753060
4.07
-3.554502
9689859
BANK OF NINGBO-A
11.04
-4.827586
25677428
GF SECURITIES-A
14.86
-3.631647
54382739
SHANXI LU'AN -A
21.31
-5.916115
27994576
BAOSHAN IRON & S
4.95
-1.980198
48806705
GREE ELECTRIC
BANK OF COMMUN-A
28
-2.473006
22187625
SHANXI XISHAN-A
13.03
-5.236364
37099109
17.39
-0.2294894
19607323
SHENZEN OVERSE-A
6.52
-3.120357
80761772
25.33
-4.415094
6281396
GUANGHUI ENERG-A
CHINA CITIC BK-A
4.55
-4.008439
57548883
HAITONG SECURI-A
11.5
-6.122449
218141832
SICHUAN KELUN-A
69.7
-0.7829181
2009885
CHINA CNR CORP-A
4.81
-3.413655
65076747
HANGZHOU HIKVI-A
32.1
0.8799497
7821667
SUNING APPLIAN-A
6.94
-1.699717
67569500
CHINA COAL ENE-A
7.7
-3.266332
17766123
HENAN SHUAN-A
73.37
-1.131923
3510218
TASLY PHARMAC-A
60.97
0.6271662
4683399
19.12
-6.320431
27086601
TSINGTAO BREW-A
35.44
-2.369146
2483341
51883929
WEICHAI POWER-A
24.85
-5.369383
18889948
BYD CO LTD -A
CHINA CONST BA-A
4.67
-2.910603
82539062
HONG YUAN SEC-A
CHINA COSCO HO-A
4.2
-1.869159
23178492
HUATAI SECURIT-A
10.44
-5.177112
CHINA CSSC HOL-A
22.87
-2.639421
8006589
HUAXIA BANK CO
10.66
-4.394619
58656592
WULIANGYE YIBIN
25.12
1.413
52271925
CHINA EAST AIR-A
3.45
-3.631285
30170556
IND & COMM BK-A
4.18
-1.415094
121054930
YANGQUAN COAL -A
14.44
-5.435494
35994277
CHINA EVERBRIG-A
3.28
-4.651163
245397214
INDUSTRIAL BAN-A
18.03
-5.700837
180058850
YANTAI WANHUA-A
16.77
-2.272727
15291060
CHINA INTL MAR-A
13.41
-6.615599
16379836
INNER MONG BAO-A
32.24
-3.183183
33140606
YANZHOU COAL-A
17.72
-3.904555
8071740
18.7
-3.707518
29566318
INNER MONG YIL-A
28.33
-0.6661992
13480596
YUNNAN BAIYAO-A
77.9
-1.392405
2104000
CHINA MERCH BK-A
13.38
-3.323699
130621607
INNER MONGOLIA-A
5.02
-2.901354
52667841
ZHONGJIN GOLD
15.16
-4.773869
46726211
CHINA MERCHANT-A
12.31
-6.60091
60271639
JIANGSU HENGRU-A
33.48
-2.133879
8339666
ZIJIN MINING-A
3.68
-2.902375
96146978
CHINA MERCHANT-A
26.34
-0.1137656
28679412
JIANGSU YANGHE-A
80.69
1.331157
6503526
ZOOMLION HEAVY-A
9.19
-4.865424
99151315
JIANGXI COPPER-A
24.32
-5.918762
36986293
10.56
-0.8450704
27008046
JINDUICHENG -A
11.96
-4.32
14003921
CHINA LIFE INS-A
CHINA MINSHENG-A
9.77
-5.967276
585360981
CHINA NATIONAL-A
8.54
0
59586580
CHINA OILFIELD-A
17.25
-3.577418
9436074
JIZHONG ENERGY-A
14.85
-7.476636
44220526
CHINA PACIFIC-A
20.19
-3.811339
34104371
KANGMEI PHARMA-A
17.55
-1.182432
29140536
180.02
1.191681
5383287
CHINA PETROLEU-A
7.08
-2.747253
59995827
KWEICHOW MOUTA-A
CHINA RAILWAY-A
5.63
-4.576271
34129313
LUZHOU LAOJIAO-A
31.64
2.196382
23097661
CHINA RAILWAY-A
3.11
-3.416149
49125747
METALLURGICAL-A
2.17
-2.690583
46996133
NINGBO PORT CO-A
2.56
-2.290076
34593523
CHINA SHENHUA-A CHINA SHIPBUIL-A
ZTE CORP-A
MOVERS
19
-4.498126
36119412
5.1
-3.225806
50703120
PANGANG GROUP -A
3.76
-4.3257
67755399
9.05
-2.688172
35747741
HIGH
2735.04
19.6
-3.448276
74024478
LOW
2589.97
CHINA SOUTHERN-A
3.83
-4.010025
50250365
CHINA STATE -A
3.86
-3.258145
191838804
PING AN BANK-A
CHINA UNITED-A
3.57
-2.191781
107837418
PING AN INSURA-A
46.74
-4.182042
53822724
CHINA VANKE CO-A
11.31
-1.136364
146114229
POLY REAL ESTA-A
12.3
-0.7263923
86685153
CHINA YANGTZE-A
7.34
-3.038309
32759584
QINGDAO HAIER-A
13.24
-3.074671
21838754
CHONGQING CHAN-A
8.48
-4.072398
56509947
QINGHAI SALT-A
27.21
-4.45927
9699548
PRICE DAY %
Volume
8 2740
INDEX 2610.549
22.93
PETROCHINA CO-A
273
52W (H) 2791.303 (L) 2102.135
2580
19-February
21-February
FTSE TAIWAN 50 INDEX PRICE DAY %
VOLUME
ACER INC
25.8
0.9784736
28742935
FORMOSA PLASTIC
78.2 -0.5089059
7917588
TAIWAN MOBILE CO
ADVANCED SEMICON
24.8
-1.39165
24971321
FOXCONN TECHNOLO
84.3
-1.518692
5290251
TPK HOLDING CO L
558 -0.7117438
ASIA CEMENT CORP
36.35
0.137741
6015003
FUBON FINANCIAL
39
-2.5
19612112
TSMC
107
-1.834862
30351806
ASUSTEK COMPUTER
352.5 -0.8438819
UNI-PRESIDENT
53.8
1.12782
18405531
11.15 -0.8888889
27672141
NAME
NAME
NAME
3176129
HON HAI PRECISIO
83.2
-1.886792
33135606
AU OPTRONICS COR
12.8
0.3921569
91514624
HOTAI MOTOR CO
230
-0.862069
282121
CATCHER TECH
137
-2.142857
20201861
HTC CORP
279
0.5405405
8594157
CATHAY FINANCIAL
36.45
-1.752022
43979308
HUA NAN FINANCIA
17.3
-1.704545
10743122
YUANTA FINANCIAL
CHANG HWA BANK
16.9
-2.59366
28257377
LARGAN PRECISION
809
-2.294686
2115457
YULON MOTOR CO
CHENG SHIN RUBBE
77.3
0.3896104
7918372
LITE-ON TECHNOLO
44.35
0.9101251
9296032
CHIMEI INNOLUX C
16.15
1.572327
89429543
MEDIATEK INC
326
0
4411703
8.75
-2.015677
75481202
MEGA FINANCIAL H
24.9
-1.775148
16342896
CHINA STEEL CORP
27.85
0
25769049
NAN YA PLASTICS
59.9 -0.1666667
8262299
CHINATRUST FINAN
17.55
-1.680672
47418371
PRESIDENT CHAIN
161.5 -0.6153846
2185911
CHUNGHWA TELECOM
92.9
0.4324324
8759564
QUANTA COMPUTER
66.4
-1.190476
7156531
COMPAL ELECTRON
20.7 -0.2409639
17981865
SILICONWARE PREC
31
0.6493506
7526741
CHINA DEVELOPMEN
DELTA ELECT INC
114
1.333333
6109750
SINOPAC FINANCIA
13.5
-1.459854
18544935
FAR EASTERN NEW
33.8
-1.601164
5949630
SYNNEX TECH INTL
60
-1.639344
6221313
FAR EASTONE TELE
67.4
-2.318841
29308554
TAIWAN CEMENT
37.4
-2.222222
19660289
FIRST FINANCIAL
18.9
-1.305483
14960388
TAIWAN COOPERATI
17.25
FORMOSA CHEM & F
77.4 -0.5141388
6615226
FORMOSA PETROCHE
83.5
-1.066351
18489052
-0.862069
9684611
TAIWAN FERTILIZE
73.5 -0.9433962
2857340
TAIWAN GLASS IND
29.3
1.034483
781241
UNITED MICROELEC WISTRON CORP
MOVERS
11
37
PRICE DAY %
VOLUME
103.5 -0.4807692
4552653 4148725
33.4
-2.196193
11306628
15.65
-3.98773
27684598
54.6 -0.3649635
3319029
2 5645
INDEX 5578.4 HIGH
5638.77
LOW
5569.87
52W (H) 5639.93 5560
(L) 4719.96 18-February
20-February
February 22, 2013 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 32.8
50.20
17.60
32.6
49.85
17.45
49.50
17.30
49.15
17.15
32.4 32.2 32.0 Max 32.6
Average 32.110
Min 31.9
31.8
Last 32.15
Max 50
Average 49.475
Min 49
Last 49.85
35.7
35.4
35.1
Max 35.7
Average 35.381
Min 34.95
34.8
Last 35.3
Max 19.3
Average 18.92
Commodities PRICE
DAY %
YTD %
(H) 52W
(L) 52W
WTI CRUDE FUTURE Apr13
93.79
-1.501785339
1.143103634
108.4599991
81
BRENT CRUDE FUTR Apr13
114.33
-1.098615917
4.832202457
118.2900009
91
GASOLINE RBOB FUT Mar13
301.84
-1.343356758
9.219858156
316.9100046
222.4999905
980
-1.109989909
6.52173913
1010.5
800.25
3.257
-0.670936261
-3.209509658
4.049000263
3.052000046
GAS OIL FUT (ICE) Apr13 NATURAL GAS FUTR Mar13 HEATING OIL FUTR Mar13 METALS
Gold Spot $/Oz
312.75
-0.912460793
3.669453591
331.3199997
254.9000025
1565.56
-1.815
-5.9419
1796.08
1527.21
Silver Spot $/Oz Platinum Spot $/Oz Palladium Spot $/Oz
28.4
-3.0882
-5.6792
37.4775
26.1513
1608.05
-4.0428
5.9496
1742.8
1379.05
719.3
-5.4424
2.8071
777.38
553.75
LME ALUMINUM 3MO ($)
2103
-0.378967314
1.447178003
2361.5
1827.25
LME COPPER 3MO ($)
7960
-1.118012422
0.365653764
8702.75
7219.5
LME ZINC
2133
-1.020881671
2.548076923
2230
1745
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar13 CORN FUTURE
17170
-1.265094882
0.644783118
20519
15236
15.97
-0.343213729
5.238879736
16.84000015
14.89999962
694
-0.323159785
-0.892538379
838
520.25
May13
WHEAT FUTURE(CBT) May13
Average 17.371
Min 17.16
19.4
20.20
19.2
20.15
19.0
20.10
18.8
20.05
18.6
Max 20.15
Average 20.070
Min 20.05
Last 20.05
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 %
1.0238 1.5203 0.9305 1.3216 93.38 7.9881 7.7558 6.2398 54.5537 29.87 1.2406 29.63 40.767 9723 95.612 1.22985 0.86931 8.2606 10.5583 123.42 1.03
-0.8906 -0.6859 -1.0425 -1.3363 0.0535 -0.0125 -0.0168 -0.0304 -0.8912 -0.1339 -0.3144 -0.2767 -0.3606 -0.4011 0.9403 0.287 0.6591 1.3207 1.3392 1.3936 0
YTD %
(H) 52W
20.00
-1.349 -6.0151 -1.6228 0.1971 -7.7961 -0.0613 -0.067 -0.1474 0.8089 2.377 -1.5476 -2.0148 0.5838 0.7199 -6.5734 -1.8189 -6.1992 -0.5218 -0.2642 -7.9809 -0.0097
(L) 52W
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 0.87646 8.4957 10.9254 127.71 1.0314
0.9582 1.5132 0.8931 1.2043 77.13 7.9824 7.7498 6.2105 48.8525 29.63 1.2152 28.913 40.54 9020 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029
MACAU RELATED STOCKS (H) 52W
(L) 52W
-3.367876
18.41269
3.94
2.29
1252954
CROWN LTD
11.55
-0.9433962
8.247422
12.12
8.06
1527587
17.67000008
AMAX HOLDINGS LT
0.075
-2.597403
7.142857
0.106
0.055
16861000
68.18999481
BOC HONG KONG HO
26
-1.701323
7.883816
27.1
20.8
15112052 1572852
-0.50318685
-5.871152015
938
665
-0.357507661
4.573878864
1639.5
1218.75
COFFEE 'C' FUTURE May13
140.6
-0.741263678
-4.158145876
219.1999969
137.5999908
SUGAR #11 (WORLD) May13
17.99
-0.772200772
-8.214285714
24.56999969
COTTON NO.2 FUTR May13
83.87
-0.698555529
10.55892433
94.50999451
World Stock MarketS - Indices
NAME ARISTOCRAT LEISU
PRICE
DAY % YTD %
VOLUME CRNCY
CENTURY LEGEND
0.36
0
35.84906
0.42
0.215
CHEUK NANG HLDGS
6.38
-4.633782
6.510855
6.74
2.8
296000
CHINA OVERSEAS
21.9
0.921659
-5.194807
25.6
14.124
40009941
CHINESE ESTATES
11.6
-1.023891
-4.364747
12.964
7.697
60500
CHOW TAI FOOK JE
11.62
-2.842809
-6.591637
13.68
8.4
2668700
EMPEROR ENTERTAI
2.01
-1.470588
6.349207
2.15
1.1
1240000
FUTURE BRIGHT
1.86
0
52.45901
2.03
0.465
6102000
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
13927.54
-0.7703943
6.283514
14058.26953
12035.08984
GALAXY ENTERTAIN
32.15
-2.130898
5.930806
35.7
16.94
13589393
NASDAQ COMPOSITE INDEX
US
3164.41
-1.530529
4.798662
3213.595
2726.68
HANG SENG BK
125.8
-1.178319
5.981469
129
99.2
1388458
FTSE 100 INDEX
GB
6304.25
-1.424781
6.891371
6412.44
5229.76
HOPEWELL HLDGS
34
0.1472754
2.255639
35.3
19.049
1941300
DAX INDEX
GE
7604.81
-1.605532
-0.09957553
7871.79
5914.43
HSBC HLDGS PLC
85.1
-1.618497
4.674043
88.45
59.8
16653098
NIKKEI 225
JN
11309.13
-1.387741
8.792058
11510.51953
8238.96
HUTCHISON TELE H
3.57
-0.5571031
0.2809005
3.88
2.98
4413000
HANG SENG INDEX
HK
22906.67
-1.719367
1.102312
23944.74
18056.4
LUK FOOK HLDGS I
25.45
-2.676864
4.30328
30.05
14.7
2553335
MELCO INTL DEVEL
11.68
-3.311258
29.63374
13.96
5.12
7173500
CSI 300 INDEX
CH
2610.549
-3.407267
3.472011
2791.303
2102.135
MGM CHINA HOLDIN
17.38
2.840237
23.96576
18.86
10.04
16795056
TAIWAN TAIEX INDEX
TA
7957.46
-0.8922544
3.350347
8170.72
6857.35
KOSPI INDEX
SK
2015.22
-0.4652679
0.9098381
2057.28
1758.99
S&P/ASX 200 INDEX
AU
4980.091
-2.326528
7.122911
5106.6
3985
ID
4628.843
-0.1210068
7.231373
4656.128
3635.283
FTSE Bursa Malaysia KLCI
MA
1612.29
-0.06446294
-4.53891
1699.68
1526.6
NZX ALL INDEX
NZ
904.909
-0.8398232
2.59123
924.705
PHILIPPINES ALL SHARE IX
PH
4146.58
0.0272588
12.10064
4172.43
JAKARTA COMPOSITE INDEX
17.00
Last 17.38
3.73
741.5 1463.25
SOYBEAN FUTURE May13
NAME
Last 18.74
Max 17.54
CURRENCY EXCHANGE RATES
NAME ENERGY
Min 18.7
48.80
3.6
-1.639344
-2.702704
5.001
3.249
3973000
NEPTUNE GROUP
MIDLAND HOLDINGS
0.154
-0.6451613
1.315793
0.226
0.084
62720000
NEW WORLD DEV
13.38
-2.478134
11.31447
15.12
7.95
19444826
SANDS CHINA LTD
35.3
-1.944444
3.976434
39.95
20.65
11676853
SHUN HO RESOURCE
1.59
-0.625
13.57143
1.65
1.03
0
SHUN TAK HOLDING
4.19
-2.55814
0
4.65
2.56
12975978
745.911
SJM HOLDINGS LTD
18.74
-2.395833
4.111111
22.15
12.34
6961200
3238.77
SMARTONE TELECOM
13.6
1.040119
-3.40909
17.5
13.16
2691971
WYNN MACAU LTD
20.05
-0.2487562
-4.295946
25.5
14.62
22310163
ASIA ENTERTAINME
3.68
0.2724796
20.26144
6.9799
2.4
210290
BALLY TECHNOLOGI
49.3
-0.5847953
10.26616
51.16
41.74
367993 31190
HSBC Dragon 300 Index Singapor
SI
642.24
0.46
3.41
NA
NA
STOCK EXCH OF THAI INDEX
TH
1536.38
-0.6633735
10.37767
1547.33
1099.15
HO CHI MINH STOCK INDEX
VN
476.73
-3.657822
15.22732
497.87
372.39
BOC HONG KONG HO
3.37
0
9.771989
3.55
2.68
Laos Composite Index
LO
1443.61
0.6385723
18.83813
1455.82
891.55
GALAXY ENTERTAIN
4.25
-1.162791
7.052896
4.57
2.25
11108
INTL GAME TECH
16.21
-2.349398
14.39661
17.37
10.92
3934145
JONES LANG LASAL
96.84
-2.761321
15.36812
100.33
61.39
370648
LAS VEGAS SANDS
49.88
-2.673171
8.058926
58.3216
32.6127
8741198
MELCO CROWN-ADR
18.91
-2.82631
12.29216
21.475
9.13
5555823
MGM CHINA HOLDIN
2.21
0
19.45946
2.33
1.36
74000
MGM RESORTS INTE
12.54
-1.569859
7.731956
14.85
8.83
15965395
SHFL ENTERTAINME
16.09
-1.167076
10.96552
18.77
11.75
290449
SJM HOLDINGS LTD
2.43
-3.952569
5.194808
2.85
1.65
3000
116.56
-3.181327
3.618101
129.6589
84.4902
1651498
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
WYNN RESORTS LTD
AUD HKD
USD
14 |
business daily February 22, 2013
Opinion
Italy vote can’t produce both stability and reform Megan Greene
Bloomberg View columnist and chief economist at Maverick Intelligence
N
ext week’s parliamentary election in Italy is a make-or-break vote for the country, which for several years has been teetering on the brink of a fiscal crisis. If Italians choose a government that won’t push ahead with economic reform, or rolls back recent changes that were designed to make the economy more competitive, the country’s ability to repay its debt will be in question. That would be terrible news for Italy and the euro area as a whole, which might not be willing or able to bail out its third-largest economy. With days to go before the vote on February 24-25, only this much is certain about the outcome: The next government in Rome may be stable or reformist by Italian standards, but it will not be both. An average of the latest opinion polls, which weren’t permitted after the week up to February 8, put Pier Luigi Bersani’s centre-left coalition in the lead, its margin over the centre-right People of Freedom, led by Silvio Berlusconi, dwindling to fewer than five percentage points. Bersani should win the lower house, but you cannot rule out a Berlusconi upset – already a three-time prime minister, he seems to have the political lives of a cat.
Market backlash A Berlusconi-led victory in the Chamber of Deputies would result in an immediate market backlash. “Il Cavaliere” (the Knight), as Berlusconi is known, has a terrible track record for implementing the kinds of structural changes to the economy that Italy needs in order to boost growth and stabilise its mountain of public debt. Investors would immediately start to question whether Italy’s 127 percent debt-togross-domestic-product ratio is sustainable. They would dump Italian bonds, potentially forcing the government into a bailout. A centre-left victory in the Chamber of Deputies still looks more likely. Bersani’s coalition may have scored only an average 35 percent in the polls
before February 8, but under Italy’s election rules the party that attracts the most votes nationwide will get more than 50 percent of the seats in the lower house. The composition of the upper house – the Senate – is much less clear, because there the majority-securing bonus for the winner is distributed not nationwide, but by region. And who controls the Senate matters, because it holds as much power as the Chamber of Deputies. Any law other than the budget can be drawn up in either house, and must be passed by both. A failure to control both houses in Italy can therefore mean gridlock and has led to the downfall of some governments. Based on the (admittedly now out-of-date) polling data, it seems virtually impossible for the centre-right to win a majority in the Senate. There is a chance that Bersani will win an outright majority in the upper house, too, though much will hinge on results in the Lombardy region, where the two traditional political groupings appear to be in a dead heat. To put it in U.S. terms, Lombardy is the Ohio of Italy’s election. A victory for Bersani’s coalition in both chambers could make the process of making and implementing government decisions faster and easier. Italy has a history of political fragmentation and instability, averaging just less than a government a year since World War II. A coalition of a few like-minded parties could boost government effectiveness and stability.
Reform doubts However, even if a Bersaniled centre-left government proved long-lived, it probably wouldn’t pass the reforms that are needed to make Italy more competitive. Bersani’s Democratic Party has close links with the country’s biggest labour union, the Italian General Confederation of Labour, which opposes many efforts to open up Italy’s labour market. Furthermore, his biggest potential coalition partner on the left – Nichi Vendola’s Left Ecology Liberty party – has talked about reversing
Pier Luigi Bersan
the structural reforms that Prime Minister Mario Monti’s government of technocrats managed to pass. The new government’s commitment to reform will be heavily scrutinised by investors, who will start to worry as soon as it appears that the process has stalled. A half-hearted agenda of changes to Italy’s labour and product markets would bode poorly for the economy. Structural reforms undermine growth in the short run before
For the bond markets and Italy’s economy alike, the best available election outcome would see the centre-left … being forced to pair with Monti’s centrist coalition
they eventually boost it. If implementation is drip-fed, the pain will stretch over more years than necessary and the boost to growth will be delayed. For the bond markets and Italy’s economy alike, the best available election outcome would see the centre-left failing to win an outright majority in the Senate and being forced, as a result, to pair with Monti’s centrist coalition. Monti’s participation in the new government would help to reassure investors, Italy’s euro-area partners and the European Central Bank that structural reform will stay on the menu. Even a government with Monti won’t be cause for too much celebration, however, because it is only positive for Italy if the government can last. The more – and more diverse – parties there are in a governing coalition, the greater the opportunity for disagreement. Monti and Vendola have diametrically opposed views on labour-market reform, the most important area where Italy needs to change. At times during the election campaign, the two men have declared that they will not work with each other. Monti is also at odds with some of the Democratic Party’s more left-wing politicians. Infighting and horse trading
may result in a political impasse and topple the government.
Better Monti This is an election in which the most politically likely outcomes are suboptimal. Voters will have to choose between a potentially stable government with insufficient commitment to reform, and a more pro-reform coalition with a greater likelihood of collapsing. I don’t envy Italians their choice, but of the two options a broader coalition involving Monti is preferable. That’s because Italy has to change for its economy to grow, and there is a mechanism that might be able to keep the government together longer than the Italian average – fear of the bond market. At the first sign of a government collapse, investors would drive up Italy’s borrowing costs, forcing politicians either to risk pushing the country into a bailout program or to resolve their differences quickly. Snap elections are a euro cent a dozen in recent Italian history, but the potential cost of triggering one is much higher in the current environment. Fear of incurring that cost may just be enough to keep a fractious coalition government together for long enough to deliver the changes that Italy’s economy so badly needs. 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 22, 2013 business daily | 15
OPINION Business
wires Leading reports from Asia’s best business newspapers
Economic Times Even with India’s economy growing at its slowest pace in a decade, average salaries in the country are projected to jump by more than 10 percent this year, a new survey forecast on Wednesday. That is far below the blistering 15 percent wage growth pace set before the onset of the 2008 global financial crisis when India’s economy was expanding at near double digits. But India leads in forecast salary rises across key Asia-Pacific nations with its projected average 10.3-percent increase the highest followed by China, according to global staffing services company AonHewitt.
Business Inquirer Executives from various industries have criticised the Philippine government for sending mixed signals regarding the development of Clark International Airport, saying that no clear policy direction has emerged even after three years of studies. In a press conference on Wednesday, private sector officials said the government appeared to be dragging its feet on the issue of Clark, once considered to be a viable replacement to Manila’s congested Ninoy Aquino International Airport (Naia).
Asahi Shimbun A senior Boeing Co. executive will meet with the head of the U.S. Federal Aviation Administration on February 22 and present a series of measures aimed at preventing battery failures that grounded its 787 Dreamliner fleet for five weeks, according to a source familiar with the plans. Ray Conner, who heads Boeing’s commercial airplanes unit, will explain the proposed changes to FAA Administrator Michael Huerta today, but the plans have already been vetted with lower level U.S. government officials, the source was quoted as saying.
The Star Tony Fernandes’ dream of launching AirAsia India is beginning to fall into place after AirAsia Bhd sealed an agreement with two influential partners, India’s Tata Sons Ltd and Telestra Tradeplace Pvt Ltd. “Our next step is to get all the necessary approvals and we are targeting to launch AirAsia India some time in September,” Mr Fernandes was quoted as saying. “We can now solidify our base, as we have moved from being a South-East Asian player into a truly low-cost airline in Asia with our Japan and India ventures. With India, we would have covered almost 80 percent of Asia,” he added.
The saver’s dilemma Michael Pettis
Professor of Finance at Peking University and a senior associate at the Carnegie Endowment. This article is based on his recently published book ‘The Great Rebalancing’
M
ost of the international financial crises that have occurred over the last 200 years were the result of strains created by the recycling of capital from countries with high savings to those with low savings. The current European crisis is a case in point. For nearly a decade, capital from high-savings countries like Germany flowed to lowsavings countries like Spain. The resulting build-up in debt created its own constraints, and now Europe’s economy is forced to rebalance. If the rebalancing takes place only in Spain and other low-savings countries, the result, as John Maynard Keynes warned 80 years ago, must be much higher unemployment. Whether unemployment remains confined to countries like Spain, or eventually migrates to those like Germany, depends on whether the former remain in the euro. Although the relative savings positions of Germany and Spain seem to confirm cultural stereotypes, national savings rates have little to do with cultural proclivities. Instead, they largely reflect policies at home and abroad that determine household consumption rates. A country’s overall consumption rate is, of course, the flip side of its savings rate. Apart from demographics, which change slowly, three factors largely explain differences in national consumption rates. First and foremost is the share of national income that households retain. In countries like the United States, where households keep a large share of what they produce, consumption rates tend to be high relative to GDP. In countries like China and Germany, however, where businesses and the government retain a disproportionate share, household consumption rates may be correspondingly low.
Low-savings countries cannot easily adjust without an equivalent adjustment in high-savings countries
The second factor is income inequality. As people become richer, their consumption grows more slowly than their wealth. As inequality rises, consumption rates generally drop and savings rates generally rise. Finally, there is households’ willingness to borrow to increase consumption, which is usually driven by perceptions about trends in household wealth. In Spain, for example, as the value of stocks, bonds, and real estate soared prior to 2008, Spaniards took advantage of their growing wealth to borrow to increase consumption.
Single option But this is not the whole story. Consumption rates can also be driven by foreign policies that affect these three factors. For example, an agreement in the late 1990’s among the German government, corporations, and labour unions, which was aimed at generating domestic employment by restraining the wage share of GDP, automatically forced up the country’s savings rate. Germany’s large trade deficits in the decade before 2000 subsequently swung to large surpluses, which were balanced by corresponding deficits in countries like Spain. As Spain’s tradable-goods sector contracted in response to the expansion in Germany, it could respond in one of only three ways. First, Spain could refuse to accept the trade deficits, either by implementing protectionist measures or by devaluing its currency. Second, it could absorb excess German savings by letting unemployment rise as local manufacturers fired workers (because rising unemployment forces down the savings rate). Finally, Spaniards could borrow excess German savings and increase consumption and investment. Of course, Spain could not legally choose the first option, owing to its EU and euro zone membership, and, not surprisingly, was reluctant to choose the second. This left only the third option. Spaniards borrowed heavily prior to the crisis to increase both consumption and investment, with much of the latter channelled into wasteful real-estate and infrastructure projects. This continued until 20072008, when Spanish debt levels became excessive. But, as long as Germany does not absorb its excess savings and accommodate the desired rise in Spanish savings, Spain is still faced with the same options. Once borrowing is no longer possible, Spain must either intervene in trade – which implies leaving the euro zone – or accept many more
years of high unemployment until wages are driven down sufficiently to produce the equivalent of currency devaluation.
Global balance This is the key point. Lowsavings countries cannot easily adjust without an equivalent adjustment in high-savings countries, because their low savings rates may have been caused by high savings abroad. After all, savings and investment must be in balance globally, and if policy distortions cause savings in one country to rise faster than investment, the reverse must occur elsewhere in the world. In other words, savings rates in Spain and other deficit countries in Europe had to drop once policy distortions forced up Germany’s savings rate. In theory, excess German savings could have left Europe; but, given high Asian savings that already had to be absorbed, mainly by the U.S., and the constraints imposed
by the euro, it was almost inevitable that excess German savings would be exported to other European countries. Germany should care about Spain’s difficulty in adjusting, because the resulting rise in European unemployment will be absorbed mostly by Spain unless the Spanish government accelerates the adjustment process by leaving the euro zone and devaluing. In that case, Germany would bear the brunt of the rise in unemployment. There should be nothing surprising about this. Once deficit countries take aggressive measures, it is usually trade-surplus countries that suffer the most from international crises caused by trade and capital flow imbalances. As political tensions in lowsavings countries grow, so will the risk of these countries abandoning the euro, causing the price that Germany will pay for its distorted savings rate to rise. © Project Syndicate
16 |
business daily February 22, 2013
CLOSING City of Dreams hosts new PokerStars room
Euro zone recovery dealt a blow in Feb
PokerStars is launching a branded poker room at Melco Crown Entertainment Ltd’s City of Dreams resort on Cotai. ‘PokerStars LIVE at the City of Dreams’ will offer cash games and daily tournaments at 13 permanent tables. It will also host the Asia Championship of Poker, Macau Poker Cup series, Macau Millions and the Asia-Pacific Poker Tour Macau poker festival, replacing Poker Stars’ previous event home Grand Waldo Casino. “We’re very hopeful the new venue will help bring even more people to our special events,” Danny McDonagh, PokerStars’ director of live operations for Asia-Pacific told Business Daily.
Hopes the euro zone might emerge from recession soon were dealt a blow yesterday, as surveys showed the downturn in the region’s businesses worsened unexpectedly this month – especially in France. Yesterday’s Flash Eurozone Services PMI fell in February to 47.3 from 48.6, marking a year below the 50 threshold for growth and confounding expectations for a rise to 49.0 from more than 30 analysts polled by Reuters, none of whom forecast such a poor reading. PMI compiler Markit Economics said the schism between Germany and France is now at its widest since the survey started in 1998.
Pan-democrat protestors arrested
A protest marred Wu Bangguo’s visit yesterday (Photo: Ho Kong Daily)
Protect sovereignty,prosperity: Wu Bangguo Beijing will not intervene in affairs than can be handled by Macau, top official said
M
aintaining Macau’s prosperity and the nation’s sovereignty were the two main themes from the statements made by mainland China’s top legislator Wu Bangguo in the second day of his official visit to the city. “There are two main principles in each policy the central government enacts upon Macau: the first one is to safeguard the sovereignty, security and development interest of the country,” he said. “The second one is to maintain
the long-term prosperity and stability of Macau,” said Mr Wu, the departing chairman of the National People’s Congress. During a 15-minute speech at a ceremony for the 20th anniversary of Macau’s Basic Law, he repeated the expressions ‘mainland’s sovereignty’ and ‘Macau’s autonomy’ over 30 times. “The mainland has absolute sovereignty over Macau,” Mr Wu stressed. “Macau SAR’s high degree of autonomy is granted by the central government.”
But he quickly added, “The central government will not intervene in the affairs that can be handled [by Macau].” Mr Wu also praised the results the territory had achieved in the 13 years since the handover, and said he believes “there will be a better tomorrow for Macau”. In the same ceremony, Chief Executive Fernando Chui Sai On said they would respect the differences between the two sides’ political systems and would strictly abide by the ‘one-
Lei Kin Yun, a local grassroots activist, was dragged away by plain-clothes Judiciary Police officers yesterday afternoon, prior the visit of Wu Bangguo, chairman of the National People’s Congress to the Macau Tower. Mr Lei, who was carrying copies of a statement criticising the electoral methods for the National People’s Congress delegates, tossed the copies to media while being dragged by the security forces into a van. New Macau Association president Jason Chao Teng Hei, who tried to film Mr Lei’s protest, was also taken by police officers to the PJ headquarters in Cotai. A Judiciary Police spokesperson confirmed to Business Daily that the two protestors were taken away for a planned six-hour detention and questioning over “disturbance of public order”. During Mr Lei’s protest, plainclothes officers also snatched copies of the statement from the hands of reporters, while warning them against taking any photos of the incident.
country, two systems’ principle. Macau officials presented a vision of the city’s future to Mr Wu in the afternoon, pledging to hasten plans to speed visitor processing at border points, as well as keeping casinos out of the five new reclaimed areas. Mr Wu also visited two souvenir stores in Taipa’s Rua do Cunha and attended a banquet celebrating the 100th anniversary of the Macau Chamber of Commerce. His three-day trip, Mr Wu’s firstever official visit to Macau, ends today. S.L./T.L.
Pansy Ho faces Massachusetts checks Link with MGM Resorts brings yet another round of regulatory scrutiny in U.S.
P
ansy Ho Chiu King is likely to face yet another detailed background check by a United States-based gaming regulator. This time it’s in Massachusetts. Her Macau business partner MGM Resorts International would like to open a casino in the city of Springfield in that state. U.S. regulators routinely look at everyone connected with their would-be or existing licensees, whether they’re directly involved in Stateside operations or not. Ms Ho is not involved in the ownership structure of the proposed Springfield
project says MGM Resorts. “Anybody who is a significant influence in any of our bidders has to be qualified,” said Stephen P. Crosby, chairman of the Massachusetts Gaming Commission as quoted by the Boston Business Journal. “If Pansy Ho or anybody else is going to be a major player, we will have to make sure they are up to snuff,” he added. Ms Ho’s current record on background checks in the U.S. is ‘won one, lost one’. In 2007 Nevada’s Gaming
Control Board approved her 50:50 Macau joint venture with the then MGM MIRAGE. But in May 2009 a report by the New Jersey Division of Gaming Enforcement – a state where MGM Resorts had 50 percent of The Borgata in Atlantic City – found her “unsuitable” because of the influence of her father Stanley Ho Hung Sun and his alleged links to organised crime in Macau junket rooms. It was Mr Ho who supplied the gaming sub-concession for the MGM Macau casino. MGM Resorts chose Ms Ho over
New Jersey and its stake in The Borgata was put in trust pending disposal. But last year hurricane- and recession-hit Atlantic City had its worst-ever quarter for casino takings. Earlier this month MGM Resorts petitioned to be allowed to return to New Jersey. It pointed out that since 2010 MGM Resorts has taken a controlling interest in MGM Macau’s parent company MGM China Holdings Ltd and that the latter is now listed on the Hong Kong Stock Exchange. M.G.