Future Bright to keep growing: Chan Chak Mo
Year I Number 216 Thursday February 7, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00
Philippines costs hurt Melco profit
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www.macaubusinessdaily.com
All smoke, no fire on junket crackdown A
ll Macau casino companies slumped in Hong Kong trading yesterday after the British newspaper The Times said Beijing plans to crack down on VIP gaming promoters, known as junkets. The Secretary for Economy and Finance Francis Tam Pak Yuen did not comment directly on the report but pledged to tighten up the junket supervision.
Analysts have downplayed the report, saying that signs actually point towards a recovery in VIP gaming revenue before the Lunar New Year, typically a peak season for casinos. The report might be a message from Beijing, as part of an anti-corruption drive, but a crackdown before the March double congress is unlikely, analysts say. More on page 3
I SSN 2226-8294
HANG SENG INDEX 23342
23314
23286
23258
Airport services inching Yellow taxis saved closer to liberalisation by second extension
23230
February 6
HSI - MOVERS Name
With the ground handling and business aviation contracts at the Macau International Airport set to expire this year, the Civil Aviation Authority of Macau will soon launch a tender. The current operators will stay on and the goal is to attract other companies in order to create competition, the regulator said. The tender is being prepared but it does not mean there will be new firms interested. With the Chinese New Year driving extra flights, Air Macau launched another route yesterday.
The concession of yellow taxi operator Vang Iek Radio Taxi Co was set to expire yesterday but the Transport Bureau decided to extend the service contract for an extra year. But the authorities warned they would not renew the concession again if Vang Iek failed to meet the new requirements, which include increasing taxis for the disabled and on-call services for old neighbourhoods. Meanwhile the bureau said it would assess the possibility of introducing more yellow taxi operators.
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%Day
AIA GROUP LTD
2.66
WHARF HLDG
2.09
HANG SENG BK
2.01
POWER ASSETS HOL
1.63
SWIRE PACIFIC-A
1.52
CHINA RES LAND
-2.46
NEW WORLD DEV
-2.60
CHINA OVERSEAS
-2.83
CHINA RES ENTERP
-2.97
SANDS CHINA LTD
-5.22
Source: Bloomberg
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Employers, labour still at odds over social security
Lau could not decide on Viva Macau grounding: court Page 2
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PYE acquires Cotai land for luxury hotel Page 6
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business daily February 7, 2013
macau Resident deposits soared in 2012 Resident deposits rose by a staggering 25.8 percent in 2012, to 366.8 billion patacas (US$45.9 billion) in December, data released on Tuesday by the Monetary Authority of Macau show. But the increase rate was even faster for non-resident deposits, which hit 128.1 billion patacas in December 2012, up by 38.0 percent year-on-year. Domestic loans to the private sector went up by 18.2 percent for the whole of 2012, reaching 198.1 billion patacas, according to the city’s de-facto central bank.
No common ground on social security payment Contribution ratio for social security remains deeply divisive for the employers, workers Stephanie Lai
sw.lai@macaubusinessdaily.com
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nly the workers’ representatives have been able to submit their opinions on the Social Security Fund contribution on time, said Vong Chi Hong, director of the Labour Affairs Bureau. Both employers and workers were scheduled to deliver their opinions by Tuesday but the employers’ side will only do so at the end of March. The labour party insisted on maintaining the existing 2:1 ratio (employer to worker) for the monthly contribution, representative Tam Pou Iong told Business Daily yesterday. Currently the monthly contributions to the system stand at 45 patacas (US$5.63) – 15 patacas for workers and 30 patacas for bosses. Social Security Fund president Ip Peng Kun said in December that the government hoped to reach a 1:1 ratio in four years’ time. Mr Ip also noted that the government would like to enhance the contribution from the original 45 patacas to 100 patacas, and eventually reaching 270 patacas across four years. However, the 100-patacas contribution would only be able to cover 15 percent of the retirement pension, currently set at 3,000 patacas, according to Mr Ip’s calculations.
Both the employer and labour parties did not have a proposal on the contribution amount for yesterday’s meeting of the Standing Committee for the Coordination of Social Affairs, Business Daily learnt. “We will only be able to submit
our opinions by March 28, since everyone is quite busy around Chinese New Year and the business sector would like more time to discuss the complex details,” Vong Kok Seng, the employers leading representative at the committee, told Business Daily.
The employer side agrees with the 1:1 contribution ratio suggested by the government, which it considers to be a “fair principle”, Mr Vong said. The labour party disagrees. “We have come across many examples where businesses shut down and the back-pay for employees was only covered by the social security fund,” said Ms Tam, from the workers side. “The higher ratio for employers is necessary as the security fund stands for bosses’ liability for unemployment benefits,” she added. The only consensus reached by employers and workers was on a 50 percent rise to the retirement pension, and disability and social relief benefits, which are all covered by the Social Security Fund. Starting January 1, the pension and disability subsidy was raised from 2,000 to 3,000 patacas. The social relief subsidy was raised from 1,310 to 1,965 patacas.
The retirement pension was raised to 3,000 patacas last month (Photo by Manuel Cardoso)
Fiscal reserve returns slow in December Returns in the government’s new fiscal reserve closed 2012 far below inflation Vítor Quintã
vitorquinta@macaubusinessdaily.com
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he rate of return of the government’s fiscal reserve continued to grow in December but slower than during the rest of last year, the Monetary Authority of Macau said yesterday. In the previous three months, the rate of return had almost doubled, from 0.65 percent to 1.28 percent. But in December the rate grew to less than 1.4 percent for the reserve’s first ten and a half months of existence, a summary published in the Official Gazette shows.
The reserve, which combines Macau’ public budget surpluses, was established in mid-February with an initial investment of about 98.86 billion patacas (US$12.38 billion). Since then it has earned 1.38 billion patacas to reach 100.24 billion patacas. While the gain appears impressive, the rate is far below the inflation rate in the same period of 4 percent. In real terms, the reserve is going backwards. In October, the Legislative
Assembly’s first standing committee expressed concern about the low return on investment of the city’s reserves. In December Anselmo Teng Lin Seng, chairman of the Monetary Authority of Macau, said the institution was considering putting more capital from the fiscal reserve into yuandenominated investment vehicles. With more capital available for investment, “the yuan-denominated investment already accounted for
over 25 percent of the total by the end of October,” Mr Teng explained. The goal of placing more investment in both the mainland Chinese market and yuan offshore markets was to get a higher return rate than the reserve is currently achieving, he told legislators. And the regulator reiterated this focus last month, after its Hong Kong’s counterpart announced new measures to support the growth of its offshore yuan market by boosting banks’ liquidity.
February 7, 2013 business daily | 3
MACAU
Casino insiders see no hint of crackdown Analysts reject speculation over a police shake down of junkets; predict strong Lunar New Year for casinos Vítor Quintã
vitorquinta@macaubusinessdaily.com
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hares in Macau’s casino companies slumped on the Hong Kong Stock Exchange yesterday after The Times of London reported that Beijing was planning a crackdown on VIP gaming promoters, known as junkets. But analysts spoken to by Business Daily have played down the report, saying that all signs point towards a recovery in VIP gaming revenue before Lunar New year, which is traditionally the peak season for casinos. Wynn Macau Ltd was hardest hit by the sell-off, with its stock plunging as much as 7.9 percent before closing down by 6.8 percent to HK$19.22 (US$2.50) – its biggest one-day fall since October 2011. The operator, led by billionaire Steve Wynn, is among the most dependent on high rollers. Its VIP gaming turnover fell by 6.6 percent last quarter in year-on-year terms. The city’s other four casino operators reached declines in their share price of between 5.8 percent and 7.5 percent during yesterday’s trading. The VIP segment accounts for almost 70 percent of gross gaming revenue in Macau’s casino industry. Junket operators bring high rollers from the mainland to the city and provide them with credit to gamble. In its report, The Times cited unidentified people in law enforcement as saying Beijing would launch a clamp down on the junkets in late February, after the Lunar New Year holiday. It detailed police operations in six Chinese cities, saying these were part of an anti-corruption campaign led by Xi Jinping, the Communist Party general secretary.
Timing wrong “The squeeze has already started on a small scale but the operators themselves believe that something bigger is coming within the next few weeks,” The Times quoted an unidentified Macau gaming industry source as saying. Secretary for Economy and Finance Francis Tam Pak Yuen did not comment directly on The Times’ report yesterday.
I’ve checked with my channels and everyone [casino operators] is gearing for a Chinese New Year of peak business Ben Lee, managing partner, IGamix Management and Consulting
The Lunar New Year holiday period is considered the peak season for VIP gaming in Macau
But he did pledge to “maintain a normal capital flow in order to have a cleaner gaming environment” and strengthen the powers of the Financial Intelligence Office. The government was planning “a more scrupulous check” on the junket registration system and to “crackdown” on any promoters involved in triad activities. IGamix Management and Consulting Ltd managing partner Ben Lee said there was “no chatter on the ground in Macau” about a crackdown on junkets. “I’ve checked with my channels and everyone [casino operators] is gearing for a Chinese New Year of peak business,” the gaming industry consultant told Business Daily. Union Gaming Research Macau analyst Grant Govertsen also does not believe a crackdown is planned, saying the timing would “not make sense”. In a note to industry subscribers, Mr Govertsen wrote it was “highly unlikely that such high-profile measures would be taken in advance” of meetings in March of the National People’s Congress and Chinese People’s Political Consultative Conference.
Hidden message It would be “odd” for Beijing to “be tipping its hand with respect to any potential upcoming actions”. Hoffman Ma, deputy chairman of Hong Kong-listed Success Universe Group Ltd, a joint venture partner in Ponte 16 casino resort, agrees with the analyst. “It is unlikely that they [the leadership] would announce such a move with advanced warning,” he told Business Daily. But Mr Ma did not dismiss the
report, saying Beijing “wants to send a message”. “With Chinese New Year coming, the government wants to alert the market and the people that they are watching Macau,” he said. Mr Ma said it was part of a longterm strategy by Beijing authorities to control outward flows of money from the mainland, one that it favours over imposing tighter visa restrictions that might hurt Macau’s gaming industry. “The government will, on and off, remind people of that,” he said. The Times’ report contradicts public statements given by officials of the central government liaison office in Macau, Mr Govertsen said. In December, the Liaison Office of the Central People’s Government in Macau director Bai Zhijian said anti-corruption measures in the mainland should not be seen as aimed at controlling the casino industry. “Measures against corruption and casinos are not the same matter,” Mr Bai said at the time. “Every place across the globe is talking about anti-corruption and there are casinos everywhere. These are two different matters.”
VIP rebound Mr Govertsen said any crackdown would focus on junkets that have fallen out of favour with Beijing. Newspapers reported last November that junket operators with ties to disgraced politician Bo Xilai had been arrested. Beijing’s message could have an impact on junkets’ willingness to bring government officials and directors of state-owned companies to Macau, Mr Ma said. “They will be wary of bringing in high-profile gamblers, so they will likely seek more smaller customers,
[Junkets] will be wary of bringing in high-profile gamblers, so they will likely seek more smaller customers Hoffman Ma, deputy chairman, Success Universe Group
to sustain their network,” he said. Mr Govertsen said that as gamblers turn towards “favoured” junkets, gross casino revenue would “reflect a positive inflection in VIP business”. Business Daily asked several gaming operators for a response. Sands China Ltd said it was “optimistic” over its financial performance during Chinese New Year and the “whole of 2013”. In step with most analysts, Mr Ma said VIP gaming would grow at a slower rate than mass market gaming this year, continuing a trend that started last year. But Mr Lee said that was a “politically correct view currently being expanded by a few people”. With the Chinese economy again picking up steam, he said Macau was “in a rebounding market and in that situation VIP gaming will grow faster than mass market [gambling]”. Stephanie Lai/Bloomberg News
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business daily February 7, 2013
macau Universal falls on results delay Universal Entertainment Corp. fell the most in two months after the Japanese pachinko company postponed its earnings report amid an internal investigation of transactions in its Philippines business. The stock fell 6.1 percent to close at 1,675 yen (US$17.9) in Tokyo. Universal will report on February 14 instead of tomorrow after a third-party committee found the “possibility of inappropriate accounting procedures” related to the Philippines, according to a company statement. Universal chairman Kazuo Okada had been an investor in Wynn Resorts Ltd before the board voted to redeem his investment after finding his company paid US$110,000 to entertain gaming regulators from South Korea and the Philippines.
Govt pledge to open up airport contracts this year Tenders currently under preparation will introduce competition for ground handling and business jet operations, Civil Aviation Authority says Tony Lai
tony.lai@macaubusinessdaily.com
Several existing concessions to provide services at the Macau airport will end this year
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ompanies will be invited to bid for ground handling and business aviation contracts at Macau International Airport later this year, the Civil Aviation Authority of Macau said yesterday. But aviation authority president Simon Chan Weng Hong said an open tender for the services does not
guarantee that new firms will take over the contracts. Mr Chan told reporters yesterday that a tender proposal was currently being finalised by Macau International Airport Co Ltd. “The whole plan will be ready this year as the contract ... of the [current] ground handling services
company will end,” Mr Chan said. Menzies Macau Airport Services Ltd has been the sole provider of ground handling and airplane maintenance services for more than 15 years, although it lost exclusive rights to the services in 2010. The airport company had previously said it would ask firms to bid for the services last year or early this year. Mr Chan said the operator had “submitted a first version of the plan but we have given them some suggestions so they are now refining it”, said Mr Chan. He did not outline any details on their recommendations or on overall plans. Any proposals, he said, would require the aviation authority’s approval. Aside from ground handling services, the aviation authority also said they would open up business aviation services this year when the current operator’s contract expires. Macau Business Aviation Centre Ltd is the sole agent handling general and business aviation at the airport. “Government policy [on opening up services] is simple, to maintain the original operator while opening up the market for new players for
Air Macau opens Wenzhou flights
Lau’s call for Viva Macau grounding ‘just an opinion’ Court says appeal should have focused on Air Macau
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he Secretary for Transport and Public Works, Lau Si Io, was simply giving his opinion when sending a letter to Air Macau Co Ltd over the termination of Viva Macau’s sub-concession, the court has ruled. In a judgement released yesterday, the Court of Second Instance denied that Mr Lau issued an illegal administrative act resulting in the 2010 grounding of the budget airline. There is no evidence that the secretary issued a legally binding order to Air Macau, the judges wrote, even though they admitted that “within a certain culture or mentality
the boss’ dream is law”. Mr Lau “did not have power” to do so, because the sub-concession was granted by Air Macau, the judgement adds. Anyappealshouldhavefocusedonthe flagship carrier instead, the court ruled. Viva Macau’s sub-concession was revoked in March 2010, after repeated flight cancellation left thousands of passengers stranded. The situation was “a unfavourable scenario when it comes to upholding public interest,” the judgement says, while slamming Viva Macau for not keeping up with
added competition,” Mr Chan said. He would not guarantee that new companies will handle future contracts. “How many companies will join the services and how much they should invest? These all depend on the needs of the market,” Mr Chan said. He said that despite opening up the contract to deliver in-flight catering services in 2006, no companies had shown an interest aside from the incumbent, Macau Catering Services Co Ltd, which is also known as Servair Macau. The authority has not received any applications for new airlines seeking to fly to Macau so far this year and there has been no progress on a launch of direct flights to India. Low-cost carrier Spice Jet Airlines Ltd is reportedly interested in running the first direct flight between Macau and the Indian capital, New Delhi. Mr Chan said the aviation authority had approved 36 additional flights connecting Macau to the mainland, Taiwan and Singapore to handle higher-thanusual demand during the Lunar New Year holiday period.
the sub-concession requirements. For instance, the verdict reveals that Air Macau was already suing the low-cost for refusing to provide data on its operations or to pay its sub-concession fees. Viva Macau was declared bankrupt in September 2010 and the court-appointed administrator admitted that resuming its operations “was likely not an option”. The airline, which had debts of about US$38 million (303.6 million patacas), was seeking compensation from the government. V.Q.
Air Macau Co Ltd launched yesterday a new route flying three times a week to Wenzhou, capital of Zhejiang province. It’s the second new mainland China route launched by the city’s sole carrier this year, after flights to Liaoning province’s Shenyang started last month. Chairman Zheng Yan said last month the company was eyeing two or three routes on the mainland market. Chief executive officer Zhu Songyan told the media yesterday that a new aircraft – an Airbus A321 with capacity for 178 passengers – was arriving and would become operational today. Another plane of the same model would come into service next month, Mr Zhu said, with two more new planes slated for next year. He also confirmed that Air Macau’s last year profits reached new heights, surpassing the 250 million patacas (US$31.25 million) recorded in 2011 T.L.
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business daily February 7, 2013
macau Developer eyes China Star exit Eternity Investment Ltd, a Hong Kong-listed real estate developer, is interested in selling its 8.7 percent stake in China Star Entertainment Ltd, the owner of Macau hotel-casino Lan Kwai Fong. In a filing to the Hong Kong Stock Exchange, China Star said Eternity was also interested in selling its convertible bonds, which, if converted, could more than double the company’s shares. The China Star board say Eternity has the right to convert its bonds as long as it doesn’t push the company beyond the threshold that would trigger a mandatory takeover.
PYE clinches Cotai land deal Developer says it is ready to start building five-star hotel on the Cotai-Coloane border but gaming still ‘subject to approval’ Vítor Quintã
vitorquinta@macaubusinessdaily.com
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aul Y. Engineering Group Ltd (PYE) has bought a company that holds a Macau plot that the company wants to turn into a US$800 million (6.4 billion patacas) hotel and boutique casino. The acquisition of Falloncroft Investments Ltd, the entity holding a piece of land next to the One Oasis residential project, was completed on Tuesday, the company told the Hong Kong Stock Exchange. The amount paid by Paul Y. Engineering for the 65,000 square feet (6,038 sq. metres) plot located on the Cotai-Coloane border was not disclosed but an earlier filing mentioned a cost of US$250 million. Falloncroft “has been granted the POA [power of attorney] … to construct and operate a five-star hotel with ancillary retail and entertainment facilities,” said the filing. The project currently known as ‘Casino Louis XIII’ could include gaming, “subject to the approval of the Macau Government,” it added.
A boutique casino is set to rise next to One Oasis (Photo: Manuel Cardoso)
Paul Y. Engineering is investing in Falloncroft “as a service provider to a [Macau gaming] concessionaire/ sub-concessionaire, taking account of the risks on whether gaming approval is granted to that concessionaire/ sub-concessionaire or not,” deputy
chairman Tom Lau Ko Yuen told Business Daily last month. A person with knowledge of the process told Business Daily also last month that the government is yet to give out any permission for gaming facilities on the plot.
government that Coloane is the city’s lung, meaning that no housing should be built there. One may say that it is much more important to find land where people can live than to preserve the countryside. Fair enough! But then, is this doing any good? Well, think about those one-room flats that are so little in demand. Why are there so many one-bedroom flats to begin with? Perhaps it is because small households have waited for so long that they have expanded and therefore cannot all fit in one-bedroom flats. Is it because the planning assumptions have become obsolete? This is probably not the case, as we are talking about only a couple years of building work, which would have allowed changes in design, if necessary, even as late as three years ago. This means there is a strong possibility that the government did not have a well-thoughtout plan when it decided to undertake the housing project – another example of hasty decision-making. Now that all the old waiting lists to buy subsidised housing have been cleared (some households lost their place because they could not find suitable flats that they could afford), the remaining one-bedroom apartments become available for new applicants. The question is whether there will be new demand for those same flats that had no takers before.
lot from their relatives. There is another group of potential buyers. You must be at least 18 years of age to be eligible for subsidised housing. Given the relatively low price, the one-bedroom flats may be attractive to young people that wish to live alone. An immediate effect would be that young people would be encouraged to live apart from their parents. This is probably acceptable to some households as long as the youngsters have joined the labour force and are able to support themselves. However, the minimum age for eligibility means fresh graduates from high school can apply. The consequences of this are hard to predict. If the youngster does not even have a job yet, or decides to study further, then his or her family are likely to end up paying for the flat. So would the purpose of the purchase really be to meet a need for housing? Or would purpose the purchase be investment, or to claim a “fair share” of social provision? The society as a whole would be worse off if this became a disincentive to move up the social ladder. With the unprecedented, overwhelming economic development of Macau, finding a job is easy. A typical young person can have a job with decent pay and get decent housing from the government without much effort, and can easily lose the sense of competitiveness. So we had better wish that Macau continues to prosper in the coming decades.
Falloncroft, a British Virgin Islands-incorporated private firm, is chaired by Stephen Hung, who has now become executive director and joint chairman of Paul Y. Engineering. A company indirectly owned by Mr Hung’s son bought 19.91 percent of the company’s shares as part of a placement of shares worth almost HK$2 billion completed on Tuesday. The operation, which also included the issuing of HK$1.2 billion in convertible bonds, allowed Paul Y. Engineering to raise HK$3.2 billion. But only HK$778 million will be used to “commence construction of the hotel and other aspects of the project,” the company said. As a result of the placement of shares, port and infrastructure group PYI Corporation Ltd, which was PYE’s parent company, has seen its stake fall from 61.92 percent to just 10.6 percent. But even that stake is “availablefor-sale,” the company told the Hong Kong Stock Exchange.
comment
The future of public housing
Rose Neng Lai
Associate Professor of Finance, University of Macau
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acau, particularly its government, used to be famous for its pace of life – its “take your time” attitude. That contrasted remarkably with the highly competitive rush in Hong Kong. So much has changed, though. Look at the new public housing projects. A couple of years ago we could still see a hill, even though it was just like a façade, at the Coloane end of the Cotai Strip. That hill has now become a public housing estate of unprecedented size. This is perhaps evidence of the determination of the government to help the community by reacting promptly to its needs. Another recent deed of merit was its swift reaction to the shortage of baby formula, rationing the supply among mothers rather than allowing it to be sold freely to any and all purchasers. So what is there to complain about? Well, think about how we once heard from the
Emptying the nest One source of new demand may be young couples that were not on the old waiting lists. A new supply of small flats could solve part of the housing problem here, by serving as homes for young couples or newlyweds that cannot afford private housing, given the very high downpayments, even after borrowing a
Swift but thorough The government has promised to reach its goal of 19,000 new homes in public housing in stages. This is somewhat like starting from scratch, giving the government a valuable opportunity to plan well.
What is most needed is not to find or reclaim land, but to study what kind of quality and quantity of housing the community actually needs. It is good to see that a study of Macau’s demographic development has started. Ideally, there should be a better idea of how many flats of various sizes are needed and, more important, of what the ratio of public housing to private housing should be. Without this information, uncertainty about how much public housing the government will provide, when the next application period will be, what would-be applicants should do if they miss the period and whether the price will continue to rise will persist within the community. Related to this are questions about how much more housing developers will build and how much longer they will continue building. When people are uncertain but have some extra cash, they are inclined to take advantage of low interest rates to join the struggle to buy private housing, thereby pushing up prices. Therefore it is good to see that the government is legislating on the sale of unfinished housing, changing the procedure for obtaining permits for housing developments and taking other measures to curb speculation and unreasonable obstruction of development. The key is to plan cautiously and coordinate all these measures, because their effects are all interlinked. In a nutshell, the government should draw up its housing programme swiftly, but thoroughly and systematically, and be open about it. Forget about any lengthy consultation period (constructive opinions will always be expressed in a short time). Once a reasonable plan is available, the market will react accordingly. Who ever said being a government decisionmaker was easy? But at least we now have some examples for Hong Kong to learn from.
February 7, 2013 business daily | 7
MACAU
Future Bright seeking to prove it’s the meal deal While restaurant chain’s performance last year was below expectations, it posted a ‘satisfactory’ 18 percent rise in revenue Stephanie Lai
sw.lai@macaubusinessdaily.com
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xpansion created higher revenue at restaurant operator Future Bright Holdings Ltd last year but growth was less than managing director Chan Chak Mo had forecast. Last year’s unaudited revenue reached HK$646 million (US$83 million), the company said in a filing to the Hong Kong Stock Exchange on Monday. While that represents an annual increase of 18.2 percent, it was below the 720 million pataca prediction Mr Chan gave Business Daily last November. “Last year, we had a satisfactory performance and a general uplift in business,” Mr Chan told Business Daily yesterday. Mr Chan said last year’s final results would be released next month.
The company opened four new restaurants in the first half of last year, including two Pacific Coffee Company outlets. While the results were likely influenced by greater tourist numbers, the appreciation in value of a sixstorey commercial building owned by the company also contributed to last year’s “remarkable increase in profit”, the filing said. Located near the St Paul Ruins, Centro Comercial e Turístico São Paulo is currently leased to the government. Its fair value gain had reached HK$125 million by the end of last December, 11.5 times higher than in 2011. The firm plans to launch a Macau-themed tea restaurant this year, the filing read. The company’s biggest
business category is Japanese restaurants. Future Bright is also interested in expanding into souvenir sales after it completes construction of a new foodprocessing centre in the Zhuhai-Macau Cross-Border Industrial Park next year. The company raised HK$86.25 million last year through an issue of 75 million shares, with HK$34 million of the capital to be spent on the food-processing centre. A further HK$30 million will be spent on opening seven new food and drink outlets in Macau and the mainland this year, taking to 47 the total number of restaurants in the company’s portfolio.
The company plans to open two Chinese restaurants here, a staff canteen at Macau International Airport and a Pacific Coffee shop at the Macau University of Science and Technology. The company has also won a three-year contract to operate three restaurants and a coffee shop at the new University of Macau campus on Hengqin Island.
A growth phase for Future Bright is only just starting, says managing director Chan Chak Mo
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business daily February 7, 2013
GREATER CHINA
Beijing approves income plan Leaders promise rise in minimum wage to close income gap
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hina’s State Council approved an income-distribution plan intended to tackle the nation’s wealth gap, with the government describing the task as huge, complicated and unable to be completed in a single step. The 35-point blueprint targets boosting minimum wages to at least 40 percent of average salaries, loosening controls on lending and deposit rates and increasing spending on education and affordable housing. State-owned enterprises should contribute more to the treasury, according to a statement yesterday on the government’s website. The gap between rich and poor poses risks for a new Communist Party leadership, headed by Xi Jinping, that’s seeking to maintain a six-decade-long grip on power and sustain the nation’s expansion by boosting domestic demand. The key question is how effectively the government implements the policies, according to analysts at Nomura Holdings Inc., Societe Generale SA and Bank of America Corp. “It’s a good plan that came a little bit late,” Yuan Gangming, a researcher with the government’s Chinese Academy of Social Sciences in Beijing, said in a telephone interview. “The income gap in China is so big now that it brings huge risks of derailing China from its growth path.”
The nation’s Gini coefficient was 0.474 in 2012, statistics bureau data showed last month, above the 0.4 level used by analysts as a gauge of the potential for social unrest. “The plan suggests the government puts more weight on income growth than on income distribution,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc.
Maintaining growth Increasing consumption may be key for maintaining growth as JPMorgan Chase & Co. forecasts that
The income gap in China is so big now that it brings huge risks of derailing China from its growth path Yuan Gangming, researcher, Chinese Academy of Social Sciences
the pace of the nation’s expansion may slip to 6.5 percent by 2020 compared with 10.5 percent over the past decade. The plan, under development for several years, was most recently due to be released by the end of 2012. Caijing magazine reported in December that the government couldn’t reach a consensus on a draft by the National Development and Reform Commission. The Communist Party next month will complete the second phase of a once-a-decade power transfer that is forecast to see Mr Xi succeed Hu Jintao as president and Li Keqiang replace Premier Wen Jiabao. “Deepening reform of income distribution is a very huge and complicated project, and it can’t be done in one step,” the government said. Policy makers aim to raise pay for the poor and rural residents and tackle hidden and illegal income, according to the statement.
Boost contribution The guidelines include directives such as calling for state-owned companies under the central government to boost their contribution of returns on equity to the treasury by 5 percentage points in the five years through 2015, the plan said. That’s a “very disappointing” increase because it’s too small and will only partly be used
Yuan trade starts in Taiwan
GM consider to reach 5 m
Island set to sell its first yuan-denominated bonds
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ffshore yuan trade kicked off yesterday in Taiwan, which counts China as its largest export market, as part of moves by the Chinese government to internationalise the currency and smoothen economic ties with its onetime political foe. Taiwan is a latecomer in developing offshore yuan business as such trade has been expanding in Hong Kong and London. The Chinese yuan was quoted at 6.2145/6.2155 to the U.S. dollar in Taiwan, in line with the rate in Hong Kong at 6.2135/6.2165. Onshore spot yuan stood at 6.2319 at midday. “I’m very busy now as many clients are buying renminbi in the market. The trading is quite active in the morning since it is the first day,” said a trader at a Taiwan bank. Another trader said prices in Taiwan matched those in Hong Kong. “The price so far is similar to Hong Kong’s, but I’m not sure how it will perform going forward,” the trader said. The much-anticipated trading comes as Taiwan seeks to play a key role in the globalisation of the yuan, also known as the renminbi (RMB), as the Chinese currency moves toward becoming fully convertible. Analysts said Taiwan has natural demand for the yuan and has potential to accumulate funds quickly. “We see promising prospects for the RMB business in Taiwan, given Taiwan’s trade surplus with China [a source of RMB] and Taiwan’s outward FDI [foreign direct
Spot yuan trade in Taiwan nears that of Hong Kong
investment] to China, among other cross-strait flows,” said Frances Cheung, a senior strategist of Credit Agricole CIB, in a research report.
Next step Taiwan’s monetary authority said 46 lenders have opened accounts with the island’s yuan-clearing bank and that yuan deposits would be accepted from yesterday. Chinese currency deposits held by Taiwanese lenders’ offshore units totalled 21.5 billion yuan (US$3.5 billion) at the end of November. That compares with the 603 billion yuan of deposits held in Hong Kong as of December, official data shows. The yuan clearing rate offered by the Taipei branch of Bank of China Ltd opened at 6.2265/6.2325 to the U.S. dollar on its first trading day in Taiwan, similar to what was offered
for the general public, said Wang Tao, chief China economist at UBS AG in Hong Kong and a former International Monetary Fund researcher. The blueprint also calls for capping salaries of senior managers at stateowned enterprises and says their pay growth should be lower than that of the average wage of workers. The plan reiterated previously announced goals including doubling per-capita income from 2010 to
by Bank of China Hong Kong. Taiwan’s central bank said it would allow the island’s banks to start conducting yuan currency business on the island from yesterday. Previously, only offshore banking units of Taiwan banks could take yuan deposits from overseas individuals and companies, suggesting a vast potential to expand the pool once local residents can do so. Taiwan and China have been moving to bolster their ties in the financial sector, which have lagged the closer cooperation in manufacturing and other areas due to Taiwanese concerns over influence by China. Bank of China’s Taipei branch also said it was offering an interest rate of 0.648 percent for yuan deposits in current accounts. That was slightly higher than the 0.629 percent it offered in Hong Kong. Taiwan was also poised to sell its first Chinese yuandenominated bonds, following Hong Kong and London. Chinatrust Commercial Bank, a unit of Taipei-based Chinatrust Financial Holding Co., plans to raise about US$169 million from two- to five-year notes that will be traded locally, the island’s Financial Supervisory Commission said on Tuesday. Statistics from the City of London last April showed that London’s spot yuan trading represented 26 percent of the global offshore yuan spot market, following Hong Kong’s 56 percent. Reuters
Company aims to acquir
GM wants to increase sales to 5 million vehicles by 2
T
he Chinese auto industry is overdue for consolidation and General Motors Co., with local partner SAIC Motor Corp., is interested in acquiring ailing automakers, according to four people
February 7, 2013 business daily | 9
GREATER CHINA
China bans ads for pricey gifts In anti-corruption push after repeated calls from Xi Jinping
C
Minimum wage to increase to 40 pct of average urban salaries by 2015
2020 and expanding a property-tax trial. HSBC Holdings Plc estimates the income target would signal real growth of about 7 percent a year. The property tax “is indeed a very important way to redistribute from the wealthier to low income families,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd in Hong Kong. At the same time, “the resistance to this new property tax is furious, so how it will be designed and
ring deals million goal
re ailing automakers
2015
familiar with the companies’ thinking. GM, already the top foreign carmaker in China, aims to increase sales by about 75 percent by 2015 to 5 million, and a deal with another automaker is one possible way its
implemented is a big question mark.” Mr Yuan said state companies need to contribute more to the treasury, the government should intensify a crackdown on illegal income and poor people must receive more social welfare coverage after three decades of rapid development in China. “At the same time, I am not very optimistic about the implementation of the plan,” he added. Bloomberg News
ventures can expand, said the people, who didn’t want to be identified because the plans are private. China’s government wants to preserve jobs even as it encourages consolidation that echoes the auto industry’s contraction a century ago that made the Detroit-based carmaker the world’s largest for eight decades. Expanding in China isn’t as simple as going out and buying another plant. Foreign companies face restrictions on the number of partners they can have or how much of a factory they can own. Last year, China said it wouldn’t give incentives for further foreign-owned auto plants. That started raising the value of underused auto plants, of which there are plenty: 10 of China’s 71 automakers didn’t sell a vehicle last year. “It is much easier to get the government to sign off on their acquisition than to approve new capacity,” said Han Weiqi, an analyst with CSC International Holdings Ltd in Shanghai. “It is in line with the government’s mandate of consolidating the industry and reducing the number of players.” GM and SAIC have plans to open two assembly plants in China in 2014. Even then, their joint ventures may be capable of making only about 4 million cars, sport-utility vehicles and microvans a year. One way to stay on track with the 5 million target set when growth was more exuberant would be by taking over assembly plants that aren’t operating at full production. China has the world’s most overcapacity. Factories in China are able to produce about 10 million more vehicles than they currently make, according to LMC Automotive. That’s more than the number of autos made in any country other than China or the U.S. Bloomberg News
hinese radio and television stations are to ban advertisements for expensive gifts such as watches, rare stamps and gold coins, the Xinhua state news agency said yesterday, as part of a push by the government to crack down on extravagance and waste. Such advertisements had “publicised incorrect values and helped create a bad social ethos”, the State Administration of Radio, Film and Television (SARFT) said in a release quoted by Xinhua. The ban comes after repeated calls from Xi Jinping, China’s president-inwaiting, for a renewed fight against graft. But it could take a toll on luxury product manufacturers who advertise on Chinese television and radio. Makers of expensive Chinese liquors including Kweichow Moutai Co Ltd and Wuliangye Yibin Co Ltd routinely dominate the annual ad auction at China’s official television network, CCTV. Producers of the fiery Chinese liquor known as baijiu, which once flowed freely at government banquets, were hit in December by an official ban on alcohol at military events. High-end bottles
of the grain-based liquor can cost thousands of yuan. The crackdown on corruption has also hit jewellery retailers hard, especially after high-end watches became a symbol of graft. Hengdeli Holdings Ltd, the Chinese retail partner of Swatch Group AG, and Emperor Watch and Jewellery Ltd are the among the biggest watch retailers in China and both of their shares were down yesterday. Hengdeli lost 1.5 percent in Hong Kong trading yesterday while Emperor dropped 2 percent. “Watches and liquor have been influenced by government policies and have been pulled down by a change in leadership,” Rupert Hoogewerf, the founder of Hurun Report, told Reuters last month. Mr Xi said in a speech on January 22 that targeting the “flies”, or lowly people involved in corruption, was just as important as going after the “tigers”, or top officials. “As important cultural and ideological strongholds, radio and television channels should fully exert their role of educating the people,” a spokesman for SARFT told Xinhua. Reuters
10 |
business daily February 7, 2013
ASIA BOJ tools sufficient says Japan official A Japanese finance official said the Bank of Japan’s policy tools are sufficient for now as a central bank board member said a new level of action is needed to counter deflation. “The BOJ, for the time being, should stick to policy measures it has taken so far,” Vice Finance Minister Shunichi Yamaguchi said in Tokyo. Board member Takehiro Sato said in a speech yesterday that reaching a 2 percent inflation goal will be difficult without new initiatives. Mr Yamaguchi’s comments on monetary policy suggest no quick push for the foreign bond purchases previously suggested by the ruling party.
Japan PM condemns China radar act Abe calls radar targeting of Japanese vessel provocative John Brinsley and Isabel Reynolds
J
apanese Prime Minister Shinzo Abe denounced China’s use of weapons-targeting radar on one of Japan’s naval vessels as provocative, saying the move will undermine efforts to ease tensions over a territorial dispute. “This was a dangerous action that could lead to unforeseen circumstances,” Abe said yesterday in parliament in Tokyo. “At a time when there were signs that there could be talks between China and Japan, it is extremely regrettable that China should carry out such a one-sided provocation.” A Chinese ship used fire-control radar on a Japanese destroyer on January 30, Defence Minister Itsunori Onodera told reporters on Tuesday in Tokyo. He declined to specify the location, which broadcaster NHK earlier reported was near islands in the East China Sea that are claimed
by both nations. The episode impairs recent efforts to ease strains that have damaged trade ties between Asia’s two biggest economies and brought calls from the U.S. for a diplomatic resolution. Jap a n o n Tu es d a y i s s u ed a separate protest after Chinese ships entered its waters on February 4.
Japan “immediately protested to China through diplomatic channels, calling strongly for the prevention of any further such incidents,” Mr Abe said of the radar targeting. China’s Foreign Ministry is “not aware of this matter,” spokeswoman Hua Chunying told reporters in Beijing, adding that her only knowledge of the incident came from press reports. She repeated Chinese claims of sovereignty over the islands, called Diaoyu in China and Senkaku in Japan and the surrounding waters.
This was a dangerous action that could lead to unforeseen circumstances
U.S. concern
Shinzo Abe, Japan Prime Minister
The U.S. is “concerned” about the latest incident, which may escalate tensions and raises risks of an “incident or miscalculation,” State Department spokeswoman Victoria Nuland said at a press conference in Washington on Tuesday.
Illuminating a ship with firecontrol radar is a “risky” move because it could invite retaliation, said James Hardy, a London-based Asia-Pacific editor at IHS Jane’s Defence Weekly. “It might be one of these situations where an individual captain on a ship said he was going to make a name for himself or act beyond his remit,” he said. Mr Onodera called the Chinese move “extremely unusual,” adding that a Japanese helicopter had been similarly targeted last month. Until now, most contact between Japanese and Chinese vessels has been between Coast Guard ships or other nonmilitary vessels that were either unarmed or lightly armed. Mr Abe took office as prime minister in December advocating a stronger stance asserting Japan’s claims on the uninhabited islands. The administration plans to increase
Myanmar lures foreign bank joint ventures Government may allow partnerships as early as April
Trying to attract foreign lenders to engage in partnerships
M
yanmar’s central bank may allow foreign lenders to form joint ventures with local banks as early as April in a further step to overhaul the financial system, according to an official who oversees regulatory issues. The central bank will set regulations for joint ventures in the financial year starting April 1, said Khin Saw Oo, head of the Financial Institutions Regulation and Anti-
Money Laundering Department. Officials are considering a requirement that local banks own at least 20 percent of the venture, she said. “We will allow them at least two years’ time to form the joint ventures,” Khin Saw Oo said in an interview in the central bank’s headquarters in Naypyidaw. “After that we will allow the establishment of the subsidiary.” The rule change would allow lenders such as Standard Chartered
Plc and Japan’s Mizuho Corporate Bank Ltd to expand in the Southeast Asian nation of 64 million people as it welcomes new investment. President Thein Sein’s moves to dismantle a fixed exchange rate and modernise the banking system are starting to boost the economy, the International Monetary Fund said in a report last month. Joint ventures for foreign banks will eventually be followed by wholly owned subsidiaries and then full
branches, Khin Saw Oo said. The central bank will look for “reputable banks” to engage in partnerships, checking for financial soundness and setting capital requirements, she said. “Those who are interested to form joint ventures, I told them that it depends on you,” she said. “This is not a forced marriage and you can try your best partners. And then you engage and after that you can get married.” Myanmar has 19 domestic banks, which recently started building ATM networks and establishing relationships with Visa Inc. and MasterCard Inc. to ease money transfers. Co-operative Bank plans to sign a “business alliance” next month with Bank of Tokyo-Mitsubishi UFJ Ltd for training and assistance, managing director Pe Myint said on January 22. About 20 foreign banks have set up representative offices in Myanmar since 1992. Myanmar’s parliament is considering a law that would give the central bank greater autonomy. The regulatory and licensing structure for foreign banks remains unclear, according to Anoop Singh, who heads the IMF’s Asia and Pacific Department. “There’s certainly no lack of interest from foreign banks coming in,” Mr Singh said yesterday in Naypyidaw. Reuters/Bloomberg News
February 7, 2013 business daily | 11
ASIA India to sell US$2.3 bln shares in NTPC India’s government plans to sell shares worth 120 billion rupees (US$2.3 billion) in utility NTPC Ltd, in the nation’s biggest asset sale in a year. Ministers yesterday approved the sale due to be priced today, Disinvestment Secretary Ravi Mathur said in New Delhi, where NTPC is based. The government, which owns 84.5 percent of India’s biggest power producer, will offer 783.3 million shares for sale, or a 9.5 percent stake, according to a statement. The share price being sought by the government works out to about 153.20 rupees. The government plans to raise 300 billion rupees this fiscal year through asset sales.
Australian retail sees longest decline for 13 years
A
Japan urged restraint in the territorial dispute, which has shaken bilateral ties
Japan’s defence budget for the first time in 11 years and boost Coast Guard spending to cope with mounting incursions by Chinese ships in waters near the islands. Tensions showed signs of easing last month after Chinese Communist Party General
Secretary Xi Jinping met with the head of Mr Abe’s junior coalition partner in Beijing. New Komeito Party leader Natsuo Yamaguchi handed over a personal letter from Mr Abe and told reporters Mr Xi said he would consider a summit. Bloomberg News
ustralian retail sales fell for a third straight month in December, an extremely rare run of weakness that strengthened the case for further cut in interest rates and knocked the local dollar lower. Yesterday’s data from the Australian Bureau of Statistics showed retail sales dipped 0.2 percent in December to A$21.42 billion (US$22.3 billion), upsetting forecasts of a 0.3 percent increase. The last time sales fell for three months in a row was in late 1999/early 2000. Annual growth in sales slowed to just 2.3 percent, less than half the pace that used to be considered normal, and came despite rate cuts in both October and December. The poor result nudged the local dollar down a quarter of a cent to US$1.0375 and sharpened speculation of further cuts in rates. The Reserve Bank of Australia (RBA) held its main cash rate steady at 3 percent on Tuesday, saying there were signs its past easing was starting
to work, albeit slowly. Yet it also left the door wide open for an easing should the economy disappoint in coming months. Investors think it will have to follow through and are priced for a quarterpoint cut in April or May “Weak data with downward revisions as well as a weaker-thanexpected monthly number and also very weak real retail sales growth,” was how Matthew Johnson, an interest rate strategist at UBS, summed up the sales report. He felt the figures raised the stakes ahead of employment data for January due to be released today. “We need to see jobs [data] tomorrow. I think there is a 50-50 chance for a cut in March, but if we see weak jobs with a 5.6 percent unemployment rate, that will do the trick.” Yesterday’s figures also showed that sales for the whole fourth quarter edged up by just 0.1 percent when adjusted for inflation, again under forecasts. Reuters
Philippines mega-casino set to open next month
Suzuki to begin production Solaire expected to focus initially on the mass market in May Suzuki Motor Corp will start manufacturing 100 small trucks a month in Myanmar in May, the Japanese automaker said yesterday, after it received approval from the Myanmar government to resume production in the Southeast Asian country. The move will make Suzuki the only Japanese automaker to be producing vehicles in Myanmar, where many foreign companies are seeking to expand as the country embarks on economic reforms. Suzuki used to build vehicles in Myanmar for 11 years, until 2010. “We plan to expand production and sales of four-wheel vehicles from now on in Myanmar, which is undergoing economic liberalisation and infrastructure development,” the company said in a statement. Suzuki, Japan’s No. 4 automaker by sales, will utilise its existing plant in Yangon, and about 80 to 90 employees will be involved in operations there, spokesman Hideki Taguchi said. The small trucks produced there will be sold in Myanmar, he added.
A
US$4 billion mega-casino complex is set to open in the Philippines in mid-March when the first of four franchiseholders starts commercial operations, the parent firm said in a disclosure released yesterday. The US$1.2 billion Solaire Resort & Casino Manila is one of four gaming operations licenced at Manila’s bayside Entertainment City, a government project designed to compete with Macau, Las Vegas and Singapore as a gaming hub. Boasting 500 hotel rooms set in modern resorts, Solaire will open its doors on March 16, parent company Bloomberry Resorts Corp. said in a disclosure to the Philippine Stock Exchange. “[We] confirm that [Bloomberry’s] Solaire Manila Resorts and Casino has collected the top former operating officers of world-renowned casinos in Las Vegas and other parts of the world,” it said in a letter to the exchange. The February 5 letter, released by the bourse yesterday, said these personnel include around 400 Filipinos who have worked in gaming and hotels across the world. The company has also recruited Macau
and Las Vegas know-how to manage the property. Solaire plans to add 300 more hotel rooms after two years, said Bloomberry, a listed firm controlled by Philippine shipping entrepreneur Enrique K. Razon Jr. Michael French, chief operating officer of Solaire and a veteran of Macau operations, told Business Daily in October that the resort will focus initially on the mass market. “We don’t yet have any junket partners, although we will be looking to work with some,” said Mr French. “The junkets, the VIPs, the international players, are definitely a key part of our marketing strategy. We’re going to take it a little slow at opening, but we definitely intend to increase that level of business. Two other franchise-holders – one involving Belle Corp, controlled by billionaire Henry Sy and his family, and Australian billionaire James Packer and Macau gaming tycoon Lawrence Ho Yau Lung and another with Japanese gambling tycoon Kazuo Okada, who until February 2012 was the largest individual shareholder in Wynn Resorts Ltd, – are also building at the complex. The 100-hectare (247-acre)
Solaire exterior rendering
Entertainment City, a project of the state-owned gaming regulator Philippine Amusement and Gaming Corp., required each of the franchiseholders to invest at least US$1 billion. A unit of global leisure and entertainment group Genting Hong Kong Ltd is a key investor in the fourth franchise. The Philippine casino market is set to expand into a US$3 billion (24 billion patacas) industry by 2015 from US$1.3 billion last year – driven in part by fresh supply – according to estimates by CLSA Asia-Pacific Markets, an independent brokerage. T.A./AFP
12 |
business daily February 7, 2013
MARKETS Hang SENG INDEX NAME
NAME
PRICE
DAY %
Volume
12.46
0.9724473
11147141
12.2
0.9933775
4307489
CLP HLDGS LTD
66.05
0.2276176
3533750
CNOOC LTD
15.62
0
71280919
12.5
0.4823151
4199755
ESPRIT HLDGS
10.24
-0.5825243
5968889
HANG LUNG PROPER
29.55
1.025641
11699714
PRICE
DAY %
VOLUME
30.85
2.66223
41487183
CHINA UNICOM HON
ALUMINUM CORP-H
3.63
0
15583033
CITIC PACIFIC
BANK OF CHINA-H
3.79
0
373580985
6.4
0.4709576
33311822
31.65
1.442308
2446086
COSCO PAC LTD
BELLE INTERNATIO
17.3
-0.1154734
4779030
BOC HONG KONG HO
26.6
0.9487666
12571538
AIA GROUP LTD
BANK OF COMMUN-H BANK EAST ASIA
CATHAY PAC AIR
NAME
PRICE
POWER ASSETS HOL SANDS CHINA LTD
0.286533
8503930 7227166
SWIRE PACIFIC-A
99.9
1.52439
1485198
TENCENT HOLDINGS
267
0.6028636
1898500
TINGYI HLDG CO
22.1
-1.55902
4889484
10.62
1.335878
11372857
68.4
2.089552
4836212
0.8086253
6442761
HANG SENG BK
126.6
2.014504
2004440
4767959
WANT WANT CHINA
HENDERSON LAND D
53.75
0.4672897
5330739
CHINA COAL ENE-H
8.4
0.1191895
15833211
WHARF HLDG
HENGAN INTL
78.75
1.416613
2534950
0.1538462
164553784
-0.4024145
30471036
CHINA MERCHANT
27.7
1.094891
2861734
CHINA MOBILE
HONG KG CHINA GS HONG KONG EXCHNG HSBC HLDGS PLC
21.7
0.2309469
4886516
145.2
-0.5479452
3430958
86.4
1.111761
8176724
85.35
0.9461857
13992004
HUTCHISON WHAMPO
85.7
1.120944
4967012
CHINA OVERSEAS
22.3
-2.832244
35940442
IND & COMM BK-H
5.71
-0.1748252
203615216
CHINA PETROLEU-H
8.87
1.487414
193027601
10.54
0.3809524
74486785
31.5
0.6389776
1602222
CHINA RES ENTERP
LI & FUNG LTD
26.1
-2.973978
4946482
MTR CORP
CHINA RES LAND
21.85
-2.455357
8824844
NEW WORLD DEV
13.48
-2.601156
51301994
CHINA RES POWER
22.35
0
3729580
PETROCHINA CO-H
10.62
-0.1879699
81514148
CHINA SHENHUA-H
31.7
0.4754358
18422422
PING AN INSURA-H
67.5
0.3717472
16532562
42941654
-0.4122012
0.8196721
6.51
4415260
-5.221932
14
123
24.75
1.626016
36.3 120.8
14.96
CHINA LIFE INS-H
Volume
68.75
SINO LAND CO SUN HUNG KAI PRO
CHEUNG KONG CHINA CONST BA-H
DAY %
MOVERS
33
13
4 23927
INDEX 23256.93 HIGH
23927.05
LOW
23139.5
52W (H) 23944.74 23139
(L) 18056.4 4-February
6-February
Hang SENG CHINA ENTErPRISE INDEX NAME
PRICE
DAY %
Volume
CHINA PACIFIC-H
29.8
1.360544
9713385
CHINA PETROLEU-H
8.87
1.487414
193027601
15583033
CHINA RAIL CN-H
8.43
0
-0.1623377
10096819
CHINA RAIL GR-H
4.43
3.79
0
373580985
CHINA SHENHUA-H
31.7
PRICE
DAY %
VOLUME
AGRICULTURAL-H
4.22
0.2375297
76838461
AIR CHINA LTD-H
6.68
1.365706
8971380
ALUMINUM CORP-H
3.63
0
ANHUI CONCH-H
30.75
BANK OF CHINA-H
NAME
PRICE
DAY %
Volume
13.06
0.7716049
13055971
ZIJIN MINING-H
2.91
-0.6825939
47287123
15443132
ZOOMLION HEAVY-H
10.3
0.7827789
18892043
0.2262443
15243535
ZTE CORP-H
14.16
1.870504
8591057
0.4754358
18422422
6.4
0.4709576
33311822
CHINA TELECOM-H
4.21
0.477327
49997195
27.25
5.212355
5464306
DONGFENG MOTOR-H
12.3
0.4901961
13983829
5.28
0.1897533
22406004
GUANGZHOU AUTO-H
6.47
2.21169
3915839
CHINA COAL ENE-H
8.4
0.1191895
15833211
HUANENG POWER-H
7.73
0
13272286
CHINA COM CONS-H
7.64
1.192053
11593990
IND & COMM BK-H
5.71
-0.1748252
203615216
CHINA CONST BA-H
6.51
0.1538462
164553784
JIANGXI COPPER-H
20.1
-1.228501
9801357
CHINA COSCO HO-H
3.98
1.272265
13506032
PETROCHINA CO-H
10.62
-0.1879699
81514148
BANK OF COMMUN-H BYD CO LTD-H CHINA CITIC BK-H
24.75
-0.4024145
30471036
PICC PROPERTY &
11.8
1.899827
11869831
CHINA LONGYUAN-H
6.87
3.153153
26297560
PING AN INSURA-H
67.5
0.3717472
16532562
CHINA MERCH BK-H
18.14
-0.3296703
15672154
SHANDONG WEIG-H
7.57
0.7989348
17177145
CHINA LIFE INS-H
CHINA MINSHENG-H
11.6
1.933216
49654744
SINOPHARM-H
23.35
0.6465517
1567403
CHINA NATL BDG-H
12.42
-0.1607717
22992428
TSINGTAO BREW-H
44.65
-3.040174
2585866
CHINA OILFIELD-H
17.18
2.997602
6258300
WEICHAI POWER-H
33.6
1.357466
3003503
NAME YANZHOU COAL-H
MOVERS
27
10
3 12340
INDEX 11849.25 HIGH
12337.08
LOW
11809.06
52W (H) 12354.22 11800
(L) 8987.76 4-February
6-February
Shanghai Shenzhen CSI 300 NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
3.2
0.3134796
233170779
AIR CHINA LTD-A
6.05
-0.4934211
14539436
NAME
PRICE
DAY %
Volume
PRICE
DAY %
8.51
1.309524
32770304
QINGHAI SALT-A
28.16
-1.366025
7211637
CITIC SECURITI-A
15.32
1.389808
123638812
SAIC MOTOR-A
17.11
-1.948424
26398707 44020410
CHONGQING CHAN-A
NAME
Volume
ALUMINUM CORP-A
5.27
-0.3780718
24953923
CSR CORP LTD -A
5.11
-2.480916
114853412
SANY HEAVY INDUS
12.73
-1.394268
ANHUI CONCH-A
21.4
-0.4651163
18934778
DAQIN RAILWAY -A
7.17
-0.4166667
35265803
SHANDONG DONG-A
47.81
1.078224
6172378
BANK OF BEIJIN-A
10.17
-0.2941176
62301516
DATANG INTL PO-A
4.3
-0.462963
25040430
SHANDONG GOLD-MI
37.79
-0.07932311
12625250
BANK OF CHINA-A
3.15
-0.3164557
102646066
BANK OF COMMUN-A
5.43
0.929368
96317804
GD POWER DEVEL-A
11.92
-0.251046
30977698
BANK OF NINGBO-A BAOSHAN IRON & S
EVERBRIG SEC -A
15.76
1.090443
23329905
SHANG PHARM -A
12.17
1.926298
11665703
2.79
-0.3571429
59730310
SHANG PUDONG-A
12
1.095198
133748186
GEMDALE CORP-A
7.98
-2.564103
98328464
SHANGHAI ELECT-A
4.23
0.4750594
8016089
16.59
5.333333
107135613
SHANXI LU'AN -A
24.51
-1.328502
19025943
5.12
-0.7751938
35047636
GF SECURITIES-A
8.48
0.8323424
17623863
GREE ELECTRIC
28.81
-1.335616
15880185
SHANXI XISHAN-A
14.63
-1.215395
24139723
23.94
2.046036
5869554
GUANGHUI ENERG-A
16.94
0
23083772
SHENZEN OVERSE-A
6.83
-0.5822416
33175768
CHINA CITIC BK-A
5.08
0.5940594
36095473
HAITONG SECURI-A
12.75
3.49026
131787467
SICHUAN KELUN-A
65.29
0.5544432
1660794
CHINA CNR CORP-A
4.95
-0.4024145
162783240
HANGZHOU HIKVI-A
30.03
-0.3649635
4556766
SUNING APPLIAN-A
7.25
0.2766252
47233259
BBMG CORPORATI-A BYD CO LTD -A
CHINA COAL ENE-A
8.2
-1.913876
19038306
HENAN SHUAN-A
69.5
-2.112676
2388096
TSINGTAO BREW-A
33.6
-2.834008
2198165
CHINA CONST BA-A
5.02
0.1996008
45503181
HONG YUAN SEC-A
20.75
0.7281553
17520299
WEICHAI POWER-A
26.7
0.1500375
15801988
CHINA COSCO HO-A
4.26
-0.4672897
12753847
HUATAI SECURIT-A
11.88
0
72459547
WULIANGYE YIBIN
26.09
-1.024279
43646065
CHINA CSSC HOL-A
23.81
-0.7503126
8852316
HUAXIA BANK CO
12.2
2.607233
57144236
YANGQUAN COAL -A
16.66
-1.420118
15598292
CHINA EAST AIR-A
3.73
-1.061008
17436426
IND & COMM BK-A
4.42
0.2267574
127359768
YANTAI WANHUA-A
17.33
0.755814
16868400
CHINA EVERBRIG-A
3.77
3.287671
277116538
INDUSTRIAL BAN-A
20.63
1.475652
79303575
YANZHOU COAL-A
19.38
-1.172871
10168418
CHINA INTL MAR-A
13.83
-0.8602151
10629921
INNER MONG BAO-A
34.34
1.929356
49131061
YUNNAN BAIYAO-A
75.3
0
7641528
CHINA LIFE INS-A
20.49
0.6385069
35390098
INNER MONG YIL-A
28.06
-0.2488446
9584494
ZHONGJIN GOLD
16.66
0
27876150
CHINA MERCH BK-A
14.37
-0.2083333
93528960
INNER MONGOLIA-A
5.24
0.1912046
49474713
ZIJIN MINING-A
3.87
-1.023018
60568482
63758153
JIANGSU HENGRU-A
32.53
2.8454
4459991
ZOOMLION HEAVY-A
9.99
-0.1998002
102570536
JIANGSU YANGHE-A
82.36
-1.187762
5710638
ZTE CORP-A
10.11
0
24186221
26.9
-0.4072566
16672161
CHINA MERCHANT-A
13.84
-0.2162942
CHINA MERCHANT-A
27.67
-2.741652
14577822
CHINA MINSHENG-A
11.7
-0.0853971
247862496
CHINA NATIONAL-A
8.05
-0.862069
28117752
CHINA OILFIELD-A
17.2
-1.714286
5822133
JIANGXI COPPER-A JINDUICHENG -A
12.9
0.2331002
13025721
JIZHONG ENERGY-A
17.51
-1.684447
11695175
16.18
2.405063
23886328
183.93
-0.2711056
4619517
22.33
0.8581752
32701643
KANGMEI PHARMA-A
CHINA PETROLEU-A
6.9
0
39659319
KWEICHOW MOUTA-A
CHINA RAILWAY-A
6.03
-2.269044
45011432
LUZHOU LAOJIAO-A
31.78
-1.640359
16568892
METALLURGICAL-A
2.21
-1.777778
76667080
CHINA PACIFIC-A
MOVERS 115
3.28
-1.204819
55735096
CHINA SHENHUA-A
24.87
-0.8768434
14534798
NINGBO PORT CO-A
2.64
-0.3773585
18007034
4.11
-1.438849
55228540
HIGH
2784
LOW
2727.93
CHINA SHIPBUIL-A
5.07
0.3960396
43006284
CHINA SOUTHERN-A
4.16
-1.187648
30889053
PETROCHINA CO-A
9.27
-0.5364807
33957409
CHINA STATE -A
3.96
-2.463054
276372267
PING AN BANK-A
21.86
0.3673095
38082657
CHINA UNITED-A
3.72
-1.587302
137640533
PING AN INSURA-A
52.78
4.205331
48598849
CHINA VANKE CO-A
12.16
-1.378751
74930071
POLY REAL ESTA-A
13.14
-2.086438
67839952
CHINA YANGTZE-A
7.59
-2.064516
31172180
QINGDAO HAIER-A
13.67
-0.07309942
25792741
PRICE DAY %
Volume
PRICE DAY %
Volume
15 2790
INDEX 2775.844
CHINA RAILWAY-A
PANGANG GROUP -A
170
52W (H) 2787.456 (L) 2102.135
2720
4-February
6-February
FTSE TAIWAN 50 INDEX NAME ACER INC ADVANCED SEMICON ASIA CEMENT CORP
NAME
25.1
0
15257378
FORMOSA PLASTIC
24
1.052632
19359617
37.2
0
80
104
-0.952381
FOXCONN TECHNOLO
84.5 -0.3537736
6214332
TPK HOLDING CO L
516
0.5847953
5465848
4447451
FUBON FINANCIAL
39.8
105
1.941748
30774330
0.5050505
36084241
TSMC UNI-PRESIDENT
356
2.59366
5353953
HON HAI PRECISIO
83.6
0.6016847
29124117
11.3
1.801802
59990921
HOTAI MOTOR CO
237.5
0.2109705
234866
134.5
1.509434
15951394
HTC CORP
271.5
2.067669
CATHAY FINANCIAL
35.3
4.43787
86042879
HUA NAN FINANCIA
17.25
CHANG HWA BANK
16.65
0.3012048
20882216
LARGAN PRECISION
78.2 -0.1277139
7243650
LITE-ON TECHNOLO
CHIMEI INNOLUX C
51.5 -0.1937984
13368286
11.35 -0.4385965
26463556
33272200
WISTRON CORP
33.45 -0.7418398
10442006
0.2906977
15711402
YUANTA FINANCIAL
16.2 -0.6134969
43004766
805
-1.105651
2413678
YULON MOTOR CO
53.8 -0.9208103
4642833
42.5
-1.162791
8193148
15.05
-0.660066
66614447
MEDIATEK INC
325 -0.3067485
8.79
-1.897321
188827894
MEGA FINANCIAL H
25.4
0.7936508
52554778
CHINA STEEL CORP
27.6 -0.7194245
14673548
NAN YA PLASTICS
58.8 -0.8431703
8906206
119787659
PRESIDENT CHAIN
162.5 -0.3067485
1043607
CHUNGHWA TELECOM COMPAL ELECTRON
6117153
18.05
1.977401
93.9
0
5473912
QUANTA COMPUTER
68
0.2949853
5760131
20.75 -0.9546539
13370205
SILICONWARE PREC
30.2
-3.049759
18903365
DELTA ELECT INC
108
2.857143
6767863
SINOPAC FINANCIA
13.6
0.7407407
61141898
FAR EASTERN NEW
34.5
0
5182720
SYNNEX TECH INTL
61.1
-1.926164
7630246
FAR EASTONE TELE
73.7
-0.270636
8398309
TAIWAN CEMENT
39.15
-1.509434
9161149
18.85
1.344086
44189967
TAIWAN COOPERATI
17.05
79
0
7220023
TAIWAN FERTILIZE
84.7 -0.3529412
9927936
TAIWAN GLASS IND
FIRST FINANCIAL FORMOSA CHEM & F FORMOSA PETROCHE
6913090
UNITED MICROELEC
CHINA DEVELOPMEN CHINATRUST FINAN
Volume
TAIWAN MOBILE CO
AU OPTRONICS COR
CHENG SHIN RUBBE
PRICE DAY %
7597826
ASUSTEK COMPUTER CATCHER TECH
NAME
-1.112485
0
21265109
72.8 -0.4103967
3206400
29 -0.6849315
804610
MOVERS
19
25
6 5570
INDEX 5546.28 HIGH
5564.56
LOW
5496.5
52W (H) 5621.53 5490
(L) 4719.96 4-February
6-February
February 7, 2013 business daily | 13
MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 54.2
34.4 33.9
17.8 17.4
53.1
33.4
17.0 52.0
32.9
Max 34.35
Average 33.020
Min 32.4
32.4
Last 33
16.6 Max 54.1
Average 51.881
Min 50.95
50.9
Last 51.4
37.8 37.3
Max 17.66
Average 16.922
Min 16.4
16.2
Last 17.62
20.9
20.8
20.4
20.2
19.9
19.6
36.8 36.3
Max 37.8
Average 36.322
Min 35.95
35.8
Last 36.3
Max 20.85
Average 20.047
Commodities PRICE
DAY %
YTD %
(H) 52W
(L) 52W
WTI CRUDE FUTURE Mar13
96.34
-0.310430464
4.410967812
108.9899979
80.48000336
BRENT CRUDE FUTR Mar13
116.52
0
6.033306033
118.7999954
90.58999634
GASOLINE RBOB FUT Mar13 GAS OIL FUT (ICE) Mar13 NATURAL GAS FUTR Mar13 HEATING OIL FUTR Mar13 METALS
303.92
0.05926121
9.972499638
306.6299915
222.4999905
1000.75
0.175175175
8.276981336
1026.25
800.5
3.426
0.79435128
1.812778603
4.049000263
3.052000046
319.57
0.137874847
5.930127207
331.3199997
254.9000025
Gold Spot $/Oz
1670.72
-0.441
0.3761
1796.08
1527.21
Silver Spot $/Oz
31.7082
-0.5741
5.3079
37.4775
26.1513
Platinum Spot $/Oz
1712.25
0.7176
12.815
1736
1379.05
Palladium Spot $/Oz
764.27
1.1073
9.2345
767.96
553.75
LME ALUMINUM 3MO ($)
2112.5
0.023674242
1.905451037
2361.5
1827.25
8270
-0.421432872
4.27436641
8765
7219.5
2176.5
-0.389016018
4.639423077
2190
1745
LME COPPER 3MO ($) LME ZINC
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar13 CORN FUTURE
Last 19.84
Mar13
18700
-0.133511348
9.613130129
22150
15236
16.175
0.154798762
6.589785832
16.84000015
14.89999962
725.25
-0.514403292
3.866809882
846.25
511
Max 20.65
Average 19.503
Min 19.18
Last 19.44
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 %
1.0321 1.5638 0.9133 1.354 93.72 7.9859 7.7533 6.232 53.0675 29.76 1.2377 29.575 40.67 9700 96.719 1.23649 0.86581 8.4328 10.8132 126.89 1.03
-0.731 -0.7993 -0.4708 -0.0517 -0.7682 0.0063 0.0052 -0.0144 0.1272 -0.1344 -0.0162 -0.2232 -0.0861 -0.3918 -0.0331 -0.4173 -0.7461 -0.1233 0.061 -0.7172 0
YTD %
(H) 52W
-0.5492 -3.3259 0.2299 2.6535 -8.1306 -0.0338 -0.0348 -0.0225 3.6322 2.7554 -1.317 -1.8326 0.8237 0.9588 -7.6428 -2.3462 -5.82 -2.5531 -2.6153 -10.4973 -0.0097
1.0857 1.6381 0.9972 1.3711 94.06 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 97.439 1.25692 0.87169 8.4957 10.9254 127.71 1.0314
0.9582 1.5269 0.8931 1.2043 76.69 7.9823 7.7498 6.2105 48.8525 29.63 1.2152 28.913 40.54 8903 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029
MACAU RELATED STOCKS (H) 52W
(L) 52W
-1.089918
15.23809
3.89
2.27
1966377
CROWN LTD
11.42
-1.039861
7.029053
12.04
8.06
4771197
18.05999947
AMAX HOLDINGS LT
0.079
2.597403
12.85714
0.119
0.055
16402000
66.84999847
BOC HONG KONG HO
26.6
0.9487666
10.37344
27.1
20.45
12571538
0.285
-1.724138
7.547176
0.34
0.215
376000
6.2
0
3.505847
6.25
2.8
44236
CHINA OVERSEAS
22.3
-2.832244
-3.463205
25.6
14.124
35940442
CHINESE ESTATES
11.86
-7.053292
-9.327217
13.98
8.3
421500
CHOW TAI FOOK JE
11.98
-1.480263
-3.697746
13.86
8.4
9694800
EMPEROR ENTERTAI
2.01
-4.285714
6.349207
2.15
1.1
5075827
FUTURE BRIGHT
1.89
-4.060914
54.91803
2.03
0.465
9048000
33
-5.444126
8.731465
35.7
16.94
55494224
754.75
-0.363036304
-2.988431877
948.25
652
SOYBEAN FUTURE Mar13
1489.25
-0.417920428
5.658034764
1728.25
1230
COFFEE 'C' FUTURE Mar13
144.2
0.10413051
0.278164117
237.5
141.25
SUGAR #11 (WORLD) Mar13
18.54
-0.107758621
-4.971809329
25.12999916
COTTON NO.2 FUTR Mar13
81.62
0.134965052
8.62390205
98.5
NAME ARISTOCRAT LEISU
CENTURY LEGEND CHEUK NANG HLDGS
World Stock MarketS - Indices
PRICE
DAY % YTD %
VOLUME CRNCY
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
13979.3
0.7148374
6.678502
14019.78
12035.08984
NASDAQ COMPOSITE INDEX
US
3171.581
1.290701
5.036155
3196.932
2726.68
HANG SENG BK
126.6
2.014504
6.655437
127.6
99.2
2004440
FTSE 100 INDEX
GB
6294.13
0.1809714
6.719779
6354.46
5229.76
HOPEWELL HLDGS
33.25
0.9104704
0
34.4
19.049
1453704
DAX INDEX
GE
7666.43
0.023093
0.7098958
7871.79
5914.43
HSBC HLDGS PLC
86.4
1.111761
6.273059
88.45
59.8
8176724
HUTCHISON TELE H
3.62
0.2770083
1.685395
3.88
2.98
3424905
LUK FOOK HLDGS I
26.95
-1.642336
10.45082
30.05
14.7
2307000
NIKKEI 225
JN
11463.75
HANG SENG INDEX
HK
23256.93
CSI 300 INDEX
CH
2775.844
TAIWAN TAIEX INDEX
TA
7906.65
0.2499068
3.773269
8238.96
GALAXY ENTERTAIN
10.27948
11498.42
0.4682803
2.648241
23944.74
18056.4
MELCO INTL DEVEL
12.28
-5.538462
36.293
13.96
5.12
28319000
0.1504145
10.02366
2787.456
2102.135
MGM CHINA HOLDIN
17.62
-0.3393665
25.6776
18.86
10.04
18989200
2.690433
8170.72
6857.35
MIDLAND HOLDINGS
3.68
-2.645503
-0.5405418
5.217
3.249
6768000
NEPTUNE GROUP
0.184
-2.12766
21.05264
0.226
0.084
25540000
NEW WORLD DEV
13.48
-2.601156
12.14642
15.12
7.95
51301994
SANDS CHINA LTD
36.3
-5.221932
6.921942
39.95
20.65
42941654
SHUN HO RESOURCE
1.52
0
8.57143
1.59
1.03
142000
-1.144165
3.102624
4.65
2.56
6914144 30839665
KOSPI INDEX
SK
1936.19
-0.1026736
-3.0475
2057.28
1758.99
S&P/ASX 200 INDEX
AU
4920.954
0.7830472
5.850867
4951.3
3985
ID
4492.764
0.2974255
4.078988
4519.459
3635.283
FTSE Bursa Malaysia KLCI
MA
1615.06
-1.119784
-4.374901
1699.68
1526.03
SHUN TAK HOLDING
4.32
NZX ALL INDEX
NZ
914.706
0
3.701933
924.705
740.345
SJM HOLDINGS LTD
19.84
-6.415094
10.22222
22.15
12.34
PHILIPPINES ALL SHARE IX
PH
4037.95
-0.3796869
9.163877
4063.74
3208.24
SMARTONE TELECOM
13.76
-0.2898551
-2.272727
17.5
13.16
814500
WYNN MACAU LTD
19.44
-6.76259
-7.207641
25.5
14.62
46707969
JAKARTA COMPOSITE INDEX
19.0
(L) 52W
3.63
WHEAT FUTURE(CBT) Mar13
NAME
19.4
CURRENCY EXCHANGE RATES
NAME ENERGY
Min 19.6
HSBC Dragon 300 Index Singapor
SI
634.79
-0.7
2.21
NA
NA
STOCK EXCH OF THAI INDEX
TH
1503.26
-0.163377
7.998244
1511.95
1092.77
HO CHI MINH STOCK INDEX
VN
488.36
2.304341
18.03833
492.44
372.39
BOC HONG KONG HO
Laos Composite Index
LO
1424.28
0
17.24689
1455.82
880.65
GALAXY ENTERTAIN INTL GAME TECH
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
ASIA ENTERTAINME
4.61
4.772727
50.6536
7.24
2.4
234086
BALLY TECHNOLOGI
47.41
0.1478665
6.03892
51.16
41.74
450893
3.35
0
9.120524
3.47
2.68
39490
4.515
0.3333333
13.72796
4.57
2.22
3350
15.64
2.624672
10.37403
17.37
10.92
2995165
JONES LANG LASAL
95.15
0.5601353
13.35477
95.81
61.39
399049
LAS VEGAS SANDS
54.73
0.699172
18.56586
58.3216
32.6127
4364903
MELCO CROWN-ADR
20.65
-0.9592326
22.6247
21.475
9.13
5375198
MGM CHINA HOLDIN
2.33
5.909091
25.94594
2.33
1.36
10000
MGM RESORTS INTE
12.97
1.566171
11.42611
14.9401
8.83
7602627
SHFL ENTERTAINME
15.44
-0.8985879
6.482759
18.77
11.75
210258
SJM HOLDINGS LTD
2.78
-1.41844
20.34632
2.85
1.65
9200
125.75
0.7935236
11.78772
129.6589
84.4902
1040281
WYNN RESORTS LTD
AUD HKD
USD
14 |
business daily February 7, 2013
Opinion
Syria’s fate hinges on whom it hates most
Karim Sadjadpour, Senior associate at the Carnegie Endowment for International Peace Firas Maksad, Director of New Policy Advisors, a Washington advisory group
A
s Syria’s President Bashar Al-Assad clings mercilessly to power, hopes that his regime will be replaced by a stable, tolerant democracy are being dwarfed by fears of prolonged sectarian strife and Islamist radicalism. The outcome will hinge in part on a simple question: Whom do Syria’s diverse rebels hate more, the U.S. or Iran? The anomaly of power in modern Syria – where an Alawite minority rules over a Sunni Arab majority – was never sustainable, and few countries stand to lose more from the regime’s collapse than the Islamic Republic of Iran. Syria has been Iran’s only consistent ally since the 1979 revolution, providing the leadership in Tehran with a crucial thoroughfare to Iran’s most important regional asset, the Lebanese Shiite militant group Hezbollah. As a result, Iran has done its utmost to keep Assad afloat, providing billions of dollars of support as well as strategic aid to crush dissent. To relieve pressure on the Syrian military, Iran’s Islamic Revolutionary Guards Corps is reportedly training two paramilitary organisations, Jaysh al Sha’abi and the Shabiha, which boast 50,000 fighters and are modelled on the Bassij militia that violently quashed Iran’s 2009 popular uprisings.
Strategic choice This support can only delay, not prevent, Assad’s demise. Thereafter Iran will face a strategic decision: whether to continue supporting a predominantly Alawite militia that represents only a small fraction of Syrian society, or to engage the Sunni Islamists who are poised to wield power in Damascus once Assad falls. Iran’s leaders will try to embrace the Sunni radicals, and if that fails they will work with the Shabiha to prevent the formation of a stable, antiIranian order in Syria. What’s most important for Iran is not the sectarian makeup of Syria’s future rulers, but a likeminded ideological worldview premised on resistance to the U.S. and Israel. As Iranian Supreme Leader Ali Khamenei once said, “We
Syria’s haemorrhaging will continue to fuel radicalism until there is a change of political leadership in Damascus
will support and help any nations, any groups fighting against the Zionist regime across the world.” Iran’s Sunni allies Hamas and Palestinian Islamic Jihad are cases in point. Despite sharing common enemies with some Syrian rebels, there is no guarantee that Iran will be able to befriend the same forces it has helped to massacre over the past two years. Anti-Shiite, anti-Persian sentiment is rife among Syria’s rebels, and the attraction of Iranian petrolargesse is eclipsed by the deeper pockets of Saudi Arabia and Qatar. The question for the U.S. and allies such as Turkey is what can they do to ensure that
moderate factions in the Syrian opposition come to dominate in a post-Assad Syria, and that they will prefer to work with the U.S. and its friends in the region, rather than with Iran. That outcome isn’t guaranteed, either. Iranian influence tends to thrive in countries suffering power vacuums and tumult, which they can attribute to U.S. or Israeli policies. They helped create Hezbollah after the 1982 Israeli invasion of civilwar era Lebanon. And in the aftermath of the 2003 U.S. invasion of Iraq, they helped entrench an Iraqi political class that is closer to Iran than the U.S. As Israel’s minister of strategic affairs, Moshe Ya’alon, put it last year: “The Iranians know how to exploit every area and country that isn’t properly governed.”
Sordid history This sordid history has made the Barack Obama administration reluctant to decisively enter the Syria fray, fearful of being sucked into an Islamist brier patch or another costly but fruitless exercise in nation-building. Benign neglect, however, hasn’t been so benign. Syria’s humanitarian crisis has reached epic proportions, with more than 60,000 people killed and 2.5 million people displaced. The sense of abandonment and desperation felt by many Syrians has served
to strengthen the most radical elements of the rebel forces, some of whom are thought to be aligned with al-Qaeda. Syria’s haemorrhaging will continue to fuel radicalism until there is a change of political leadership in Damascus. In order to expedite this process, the U.S. administration must inhibit Iran’s ability to arm and finance Assad. This requires coercing the Iraqi government – the beneficiary of US$2 billion in annual U.S. military aid – to halt the steady transit of Iranian military hardware and personnel to Syria. It also means making clear to Lebanon that it must curtail Hezbollah’s crossborder operations into Syria, and ensure that Iran can’t use Lebanese banks to evade international sanctions. The U.S. and its allies should expose the governments of both countries as abettors to Assad’s criminal regime, should they continue to be complicit in Iran’s operations. Concurrently, the U.S. and like-minded allies such as Turkey should strengthen the competence and cohesiveness of the National Coalition for Syrian Revolutionary and Opposition Forces, the exiled body they helped shape. This might encourage reluctant fence sitters to abandon Assad’s ship, shortening the duration of what will otherwise be an increasingly sectarian conflict.
Aid channelled through the opposition council, in coordination with credible international non-profit organisations, should provide for millions who have been displaced. Not doing so risks leaving Iran and radical Sunni Islamists to exploit human suffering for recruitment purposes. A nascent rebel joint military command, working under the opposition council, would allow anti-regime forces to better coordinate operations and steer fighters away from jihadi ideology, and could lay the foundation for a future national army. Military assistance, direct from the U.S. or through regional allies, must flow through this joint command. Doing so will afford moderates a better chance to succeed against both the Iranian-backed militias and the growing numbers of Sunni jihadists who are fighting in Syria. A greater U.S. role won’t render Syria an American-allied democracy. That possibility, if it ever existed, has long been lost. But continued U.S. inaction risks leaving Syria at the mercy of Iran and Sunni extremists whose intolerance, and hatred of the U.S., dwarfs any concerns they may have for the well-being of Syria and its people. Such an outcome would haunt Syria, the Middle East and the U.S. for years to come. 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 7, 2013 business daily | 15
OPINION Business
wires
Leading reports from Asia’s best business newspapers
Jakarta Globe
Austerity in small places Daniel Gros
Director of the Centre for European Policy Studies
Indonesia’s rupiah forwards gained for a seventh day on Tuesday, the longest winning streak since July, after data showed economic growth exceeded 6 percent for a third year, bolstering demand for local assets. Gross domestic product increased 6.23 percent last year, compared with 6.49 percent in 2011, the government reported onTuesday,withFinanceMinister Agus Martowardojo predicting expansion of as much as 6.8 percent this year. Global funds added 2.41 trillion rupiah (US$248 million) to their local-currency sovereign debt holdings last week, the most in almost two months, government data show.
Business Inquirer Diversifying conglomerate San Miguel is taking its property unit San Miguel Properties Philippines Inc. (SMPI) back to private hands. The board of SMPI approved the filing of a voluntary petition to delist from the Philippine Stock Exchange, said a disclosure on Wednesday.Inlinewiththedelisting rules on PSE, the board has also approved SMPI’s conduct of a tender offer to buy out shares held by minority stockholders. SMPI was among the seven publicly companies on which trading was suspended at the start of the year due to failure to comply with the 10 percent minimum public float required by the PSE for continuing listing.
Korea Herald Major foreign investment banks’ average growth outlook for the South Korean economy this year has been downgraded to the 2 percent range as growth momentum remains weak amid the global downturn, a report showedonWednesday.Atotalof 10 investment banks forecast that Asia’s fourth-largest economy will grow an average of 2.9 percent as of the end of January, down from a 3 percent estimate made in the previous month, according to a report by the Korea Centre for International Finance. Their outlooks compare with the 2.8 percent estimate made by the centralbankandthegovernment’s 3 percent projection.
I
nterest in small countries’ economic policies is usually confined to a small number of specialists. But there are times when small countries’ experiences are interpreted around the world as proof that a certain policy approach works best. Nowadays, Greece, the Baltic states, and Iceland are often invoked to argue for or against austerity. For example, the Nobel laureate economist Paul Krugman argues that the fact that Latvian GDP is still more than 10 percent below its pre-crisis peak shows that the “austerity-cum-wage depression” approach does not work, and that Iceland, which was not subject to externally imposed austerity and devalued its currency, seems to be much better off.
Shunning austerity does not allow one to avoid the problem of achieving both fiscal and external sustainability
Myanmar Times Myanmar new investment rules include a provision that allows shares in entities that have been formedunderthenewframework to be transferred from Myanmar citizens to foreigners and vice versa if approval is granted by the Myanmar Investment Commission. The rules, clarified this week by the Ministry of National Planning and Economic Development, no longer set a minimum capital requirement for investments, except in mining ventures. It also drops the foreign ownership restrictions in joint ventures, except in restricted sectors, where they will be capped at 80 percent.
Others, however, have noted that Estonia pursued strict austerity in the wake of the crisis, avoided a financial crisis, and is now growing again vigorously, whereas Greece, which delayed its fiscal adjustment for too long, experienced a deep crisis and remains mired in recession. Both sides in these disputes usually omit to mention the key idiosyncratic characteristics and specific starting conditions that can make direct comparisons meaningless. For starters, Latvia, like the other Baltic states, was running an enormous current-
account deficit when the crisis started. This implies that the pre-crisis level of GDP simply was not sustainable, as it required capital inflows in excess of 20 percent of GDP to finance outsize consumption and construction booms. Thus, when the inflows stopped at the onset of the financial crisis, it became inevitable that GDP would contract by double-digit percentages. Seen in this light, it is not at all surprising that Latvia’s GDP is now still more than 10 percent below its pre-crisis peak; after all, no country can run a current-account deficit of 25 percent of GDP forever.
Output gap Any comparison of the Baltics with the Great Depression (or the United States today) is thus meaningless. The Baltics simply had to adjust to a sudden stop in external financing. That was not the problem of the U.S. during the 1930’s; nor is it America’s problem today. A better way to judge postcrisis performance is to look at the output gap – that is, actual GDP relative to potential GDP. According to a European Commission estimate, Latvian GDP was almost 14 percent above potential at the peak of the boom, then fell to 10 percent below potential when the boom went bust. The recovery, however, was equally rapid, with GDP now back to potential (albeit below the unsustainable peak of the boom). Latvia’s government increased taxes during the bust to keep revenues roughly constant as a share of GDP, but a sizeable fiscal deficit emerged nonetheless as social-security expenditure, such as unemployment benefits, soared while demand and output collapsed. With a V-shaped recovery, however, this expenditure fell again, reducing the deficit rapidly. The recovery could only be partial, because the previous level of output was unsustainable, but it was enough to allow the government to balance its books again.
Thus, Latvia today enjoys a sustainable fiscal position, with output close to its potential and growing. Austerity might have worsened the slump temporarily, but it did deliver fiscal sustainability without permanent damage to the economy. By contrast, output in Greece, which was slow to adopt austerity, is still 12 percent below its estimated potential and continues to fall. Does Iceland constitute a counter-example to Latvia? After all, its GDP fell much less, although it ran similarly large current-account deficits before the crisis – and ran much larger fiscal deficits for longer. In contrast to Latvia, Iceland let its currency, the krona, devalue massively. But, the devaluation was much less important than is widely assumed. While exports did indeed perform very well, Iceland’s main exports are natural resources (fish and aluminium), demand for which held up well during the post-2008 global crisis. That sustained demand provided an important stabiliser for the domestic economy, which the Baltic states did not have. Indeed, Latvia was particularly hard hit by the slump in global trade in 2008-2009, given its dependence on exports.
Debt sustainability Iceland’s superior economic performance should thus not be
attributed to the devaluation of the krona, but rather to global warming, which pushed the herring farther North, into Icelandic waters. Nor is Iceland a poster child for the claim that avoiding austerity works. In small, open economies, higher deficits are unlikely to sustain domestic output, because most additional expenditure goes toward imports. So it is not surprising that, despite its large devaluation, Iceland continues to run a high current-account deficit, adding to its alreadylarge foreign debt. Moreover, Iceland’s public debt/GDP ratio now stands at 100 percent, compared to only 42 percent in Latvia. Part of the difference, of course, reflects different starting conditions and the cost of bank rescues. But there can be no doubt that, by keeping deficits under control, Latvia’s public finances are in much better shape today, with debt sustainability no longer a problem. By contrast, Iceland’s debt has become so large that it is likely to constrain future growth. One must be careful when attempting to draw lessons from the experience of small countries that sometimes have very particular characteristics. The one conclusion that appears to hold generally is that shunning austerity does not allow one to avoid the problem of achieving both fiscal and external sustainability. © Project Syndicate
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business daily February 7, 2013
CLOSING All Nippon cancels more Dreamliner flights German bankers face prison sentences Japan’s All Nippon Airlines has cancelled an additional 368 flights in February, as the “no-fly” order on Boeing’s 787 Dreamliner continues. ANA has now cancelled over 1,200 flights since safety regulators grounded the entire fleet of Dreamliners on January 16. More than 100,000 of ANA’s passengers have been hit by the cancellations. January’s disruption alone has lost the company 1.4 billion yen (US$14.9 billion) in revenue. The 50-strong fleet of Dreamliners was grounded after a battery on a Japan Airlines 787 caught fire, and a malfunction forced an ANA flight to make an emergency landing.
German Chancellor Angela Merkel’s Cabinet approved a bill that would force some large retail banks to spin off proprietary trading and introduce jail terms of up to five years for managers who wilfully violate compliance rules. The bill, backed by ministers meeting in Berlin yesterday, would force deposit banks to separate proprietary trading, lending and guarantees to hedge funds as well as high-frequency trading when associated activities exceed 100 billion euros (US$136 billion), or 20 percent of the balance sheet. Germany’s BaFin financial regulator would get discretionary powers that affect lenders not covered by the limits.
Mass-market grows but Melco profit stands put Operator has rotten VIP gaming luck, Philippine costs to blame Vítor Quintã
vitorquinta@macaubusinessdaily.com
G
aming operator Melco Crown Entertainment Ltd saw its revenue rise in the fourth quarter, mostly due to a “substantially improved” mass market and a slot machine boom. Melco’s revenue reached US$1.1 billion (8.8 billion patacas), up by about 9 percent from the same period of 2011, the company told the Hong Kong Stock Exchange yesterday. The increase is below the 9.9 percent increase in Macau’s gaming market revenue during the last quarter. Still, flagship City of Dreams is drawing more mass-market gamblers to the Cotai strip, pushing the casino’s bet turnover up by 24 percent to US$1 billion. A similar amount was gambled on the property’s slot machines, which represents a whooping 82 percent increase year-on-year. It was “a stellar year” for
Melco, said co-chairman and chief executive Lawrence Ho Yau Lung, with “impressive results” in the “increasingly important premium mass segment”. On the other hand, even though the VIP gaming volume rose by 15 percent the revenue actually dropped slightly at City of Dreams thanks to an unlucky streak. The casino’s win rate was 2.6 percent in the fourth quarter versus 3 percent in the comparable period of 2011. The expected win rate range for VIP gaming is 2.7–3 percent. In addition, profit was little changed in the fourth quarter, rising to US$108 million from US$107.5 million, hurt by costs for a Philippines project. “We remain on track to open our unique integrated casino resort in mid-2014 [in Manila Bay],” Mr Ho said in a statement. Operational profit climbed 6.9 percent to a quarterly record of
US$247.5 million, he stressed, below a median estimate of US$250.5 million from six analysts surveyed by Bloomberg News. Melco recently issued US$1 billion three-year bonds with interest rates of 5.25 percent and used the proceeds to buy back some of its existing, higher interest debt. “The attractive rates and improved flexibility achieved in this new offering reflects the improvement in our operating fundamentals over the last three years,” Mr Ho said. The executive showed optimism over the Macau market, where Melco is building the 60-percent-owned Studio City, which “remains on track to open around the middle of 2015”. “Substantial improvements in infrastructure” will enable Macau “to cater to a wider spectrum of visitors and be a meaningful catalyst for future visitation growth,” he said. With Bloomberg News
Lawrence Ho
Yellow taxi services extended for a year T
he Transport Bureau decided to extend the service contract with the yellow taxi’s operator Vang Iek Radio Taxi Co for an extra year, it said in a statement. The previous concession expired yesterday. Vang Iek, which runs the city’s 100 yellow taxis, must implement all operating conditions spelled in the new contract, as well as “submit a proposal and working schedule as soon as possible” on how it intends to improve its service, the bureau said late yesterday. The government department warned it would not renew the concession again if Vang Iek failed to meet the new requirements. The statement said Vang
Hengqin campus budget capped: govt
Iek must introduce a number of improvements including increasing taxis for the disabled and strengthening its services in the old neighbourhood districts. The Transport Bureau also said it would start works for issuing new licences for conventional taxis – black taxis –, as well as carry out a study to assess the possibility of introducing more operators for yellow taxis. Vang Iek sued the government in 2011, asking the Court of Second Instance to extend its contract for longer than the extra 18 months that the Transport Bureau had given it in August that year. But the court rejected its appeal last month. T.L.
T
he cost of the new University of Macau’s Hengqin Island campus has already been capped at a maximum of 10.2 billion patacas (US$1.3 billion), the administration confirmed. The Commission of Audit released a report last month saying the campus budget had already grown from 9.8 billion patacas to over 10.2 billion patacas as the Infrastructure Development Office did not include the costs of numerous construction projects. “The government explained this is due to different understandings on whether the works should be counted as part of the budget,” legislator Au Kam San told Business Daily yesterday. Mr Au is a member of a Legislative
Assembly committee that met with Secretary for Transport and Public Works Lau Si Io yesterday. The officials pledged the project cost would increase no further, he said, while trying to justify the overrun from the original 5.8-billionpatacas budget. “They had no clear grasp on the budget as they had to start construction and design works at the same time,” Mr Au said. The committee thinks the government should have explained the budget increase “much earlier,” he added. The government provided no date for when the seabed tunnel connecting Macau and the campus would be ready. T.L.