Macau Business Daily, February 1, 2013 by Business Daily

Hope for blue cards seeking new jobs

Year I Number 212 Friday February 1, 2013 Editor-in-chief Tiago Azevedo Deputy editor-in-chief Vitor Quintã MOP 6.00

Only 250 new gaming tables in 2013 – Tam

Sands China’s Q4 profits jump 52 percent

www.macaubusinessdaily.com

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Small local banks face tough competition: Fitch W

ith Chinese demand for loans growing slower, Macau’s smaller banks will find it harder to compete unless they find a niche market, Fitch Ratings says. “A big part of the finance transactions of Hong Kong and Macau banks [in 2012] were based on helping the Chinese banks that did not have the necessary liquidity,” Sabina Bauer, senior director of Financial Institutions at Fitch Ratings told Business Daily. A good strategy would be “to focus on developing very strong customer relationship in niche markets,” she said. Ms Bauer singled out small-volume customers that “might not be very attractive to bigger banks” such as small and medium enterprises (SMEs), start-ups and entrepreneurs.

‘Fair’ waste tender

Peninsula flat prices higher than ever Housing prices in the Macau peninsula last month were the highest since the authorities began collecting data in 2004, despite a new round of curbs enacted in end-October. The average transaction prices of 725 flats in the peninsula peaked at 71,159 patacas (US$8,894.90) per square metre, increasing by 8.4 percent from the previous month and nearly doubling from December 2011.

Macau’s waste tender was handled in a ‘fair, just’ manner, the authorities said, while rejecting all criticism. Page 6 I SSN 2226-8294

HANG SENG INDEX 23799.00

23767.75

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More on page 3

23736.50

23705.25

New budget rooms on way: eventually

23674.00

January 31

HSI - MOVERS

Defunct airline Viva Macau loses appeal

Name

The Court of Second Instance has rejected an appeal from now-defunct low-cost airline Viva Macau against its grounding in 2010. The judgement has yet to be made public but the lawyer representing Viva Macau confirmed to Business Daily that the decision was unfavourable to the carrier. The airline claimed Secretary for Transport and Public Works, Lau Si Io, acted illegally by revoking the budget carrier’s sub-concession contract. Page 5

The Macau Government Tourist Office is reviewing five applications for new budget hotel facilities that would offer 337 rooms. But there is no timetable on when they will be built and added to the market. The five proposals include three new hotels and the expansion of two existing ones, Helena de Senna Fernandes, the director of MGTO told media after a press conference yesterday. Page 7

%Day

COSCO PACIFIC LTD

2.44

CHINA UNICOM HON

1.63

CHINA RES ENTERP

1.09

POWER ASSETS HOL

0.67

BANK OF COMMUN-H

0.61

SINO LAND CO

-2.55

HENDERSON LAND D

-2.7

CITIC PACIFIC

-2.8

BELLE INTERNATIO

-3.03

LI & FUNG LTD

-3.71

Source: Bloomberg

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business daily February 1, 2013

macau Over 29,500 homes await approval

opinion

A total of 243 private dwelling projects, comprising 29,527 residential units, were waiting for construction approval at the end of last month, the Lands, Public Works and Transport Bureau revealed. According to data released on Wednesday, most of the planned projects – 190 projects offering 18,892 homes – are located on the Macau peninsula. By December-end, there were 17 projects comprising 198 residential units that were already built but waiting for occupancy permit approval, the very last step. Some other 68 projects, or over 7,000 homes, were being built.

Souring milk José I. Duarte Economist

here has been an interesting development in the saga of supplies of infant formula. The government will create a register of Macau babies, with the objective of guaranteeing formula for infants here. It was an enormous step for a government that just a week ago had essentially denied there was even a shortage of supplies. This is an issue that can become highly emotionally charged and touches on multiple interests. It is not the purpose of this column to re-constitute the full and accurate story from what has been made public, but rather to collect some thoughts on the political management of the process. Let us remember that at no moment since the infant formula issue was raised earlier this month, did anyone quantify, even in the most vague terms, the size of the shortage. All we know is that mainland tourists are buying big amounts of formula and that demand seems to be peaking in anticipation of the Lunar New Year break. As a result, parents have had limits imposed on their purchases or found it difficult to buy their usual brand. No one has said what market conditions, either at the domestic level or in the international supply chain, have prevented the adjustments needed to meet rising demand. That is, we were given little understanding of the economics behind these developments. In any case, the main driver of sales, demand from mainlanders, is not going to decrease. The population’s mistrust and fear of products available in the mainland is unlikely to subside any time soon. There is no reason to think that parents in the mainland are or should be less demanding about what they feed to their babies than parents in Macau. Macau – and Hong Kong, which faces similar issues – is likely to increasingly become a major supplier to the mainland market for certain products, and particularly to nearby provinces. Any restrictions on trade would be politically sensitive, legally questionable and practically unenforceable. But let us leave that discussion for another time. What about the short-term politics?

Temporary fix For a while, the government’s position was, essentially, that there was no overall shortage. At most, specific brands were in short supply and, if necessary, parents could easily switch to other brands. Was that accurate? Probably. But the anticipation that things might take a turn for the worse as Lunar New Year approached has increased concerns. Government nonchalance also seems to have added to anxiety levels. Parents can be over-sensitive and picky with what they feed their children. But glossing over the issue did little to ease concerns that may have been overstated but were legitimate and strongly felt. The subject did not disappear from the public agenda and the public began venting their frustration. The government then decided to focus on the problem, realising that a public relations disaster was brewing. Then, hey presto, a solution: a registration system for babies with suppliers and guaranteed quotas. Direct market intervention in the name of public health is a smart way of side-stepping more contentious issues and cooling things down. Under the circumstances, the government’s actions have at least that merit. But it is doubtful they will address the underlying causes of the problem or provide a long-term, sustainable solution. Instead of a policy grounded in facts and a solid understanding of the problem, we have one fix meant to shut up the critics and indulge the masses. If that is it, it is not enough. This projects the image of a government technically unprepared and politically fragile. If such a trend continued, one of these days the city could become ungovernable.

Peninsula flat prices reach record peak The average price of housing rebounds in December, but the number of homes sold continues to fall Tony Lai

tony.lai@macaubusinessdaily.com

he price of housing on the peninsula last month was the highest since records began in 2004, even though the government imposed new curbs on the property market in October. The average price of the 725 flats on the peninsula sold last month was 71,159 patacas (US$8,894.90) per square metre, 8.4 percent more than the average in November and nearly double the average a year before. The average price last month was even higher than the average of nearly 71,000 patacas in October, when buyers rushed to buy before the new curbs, which are meant to deter property speculation, came into force. The Financial Services Bureau said yesterday that the average price of housing throughout the city rebounded last month to 70,407 patacas per square metre, 6.7 percent more than in November but less than the record peak of over 72,700 patacas reached in October. A written statement from the bureau attributed last month’s increase mainly to the sale of high-end homes in the vicinity of Areia Preta. Over 270 such homes were sold for an average price of nearly 94,000 patacas per square metre. The sale of these homes

accounted for 40 percent of all sales on the peninsula. Centaline (Macau) Property Agency Ltd’s transaction records for last month indicate that the homes in question are in the Pearl Horizon development, which will contain nearly 700 flats when finished in 2015.

Hoards of homes The sale of 12 homes in the NAPE district for an average of over 106,000 patacas per square metre also pushed up prices generally. Although the price of housing rebounded last month, the number of homes sold continued to decline, to 834. Nearly 1,300 homes were sold in November. Many estate agents expect the price of housing to continue to rise this year because interest rates are low the supply of new homes is insufficient to meet demand. “People are hoarding homes as if they were water because they are afraid there won’t be any available in a year’s time,” Midland Realty (Macau) Ltd managing director Ronald Cheung Yat Fai told Business Daily last week. In its review of 2012, released last month, real estate agency Jones Lang

LaSalle (Macau) Ltd says it expects prices of mass-market and mid-range housing to increase by 10 percent to 15 percent this year. The average price of housing on Taipa was 64,138 patacas per square metre last month – about what it was in November. The average price of housing on Coloane fell to about 79,000 patacas per square metre, 5 percent less than in November.

2012 numbers Homes sold: 15,310, down 159 from 2011 Average price: MOP60,064, per square metre, up 33.4 pct from 2011 Highest price: MOP138,929 per square metre, on Coloane

Twelve flats in the NAPE district were sold for over 106,000 patacas per square metre last month

February 1, 2013 business daily | 3

MACAU Fewer Macau-Hong Kong ferry trips Passenger ferry trips between Macau and Hong Kong went down by 7 percent yearon-year in 2012, the Statistics and Census Service announced on Wednesday. Ferry trips between Macau and Hong Kong totalled 112,691 last year. Operator Hong Kong North West Express Ltd suspended its services to Hong Kong’s Tuen Mun pier in July. Macau is now served by only two ferry operators to Hong Kong: Shun Tak Holdings Ltd and Cotai Water Jet. On the other hand, passenger ferry trips to mainland China increased by 9 percent year-on-year to 27,264 ferry trips.

Small banks face tough competition – Fitch The ratings agency says China’s economic slowdown means intense competition among banks for borrowers Vítor Quintã

vitorquinta@macaubusinessdaily.com

Fitch Ratings urged banks to focus on loans to SMEs (Photo: Manuel Cardoso)

s growth in mainland Chinese demand for loans slows, Macau’s smaller banks will find it harder to compete with bigger rivals unless they can tap into niche markets, Fitch Ratings says. The ratings agency says in a report released this week that it believes the mainland’s economic slowdown will lead to slower growth in the volume of trade. For banks in Hong Kong, this means that annual growth in traderelated lending could stabilise around 20 percent this year and last, having more than doubled in the preceding two years, Fitch says. “Competition is likely to intensify as demand weakens, but banks’ appetite for further growth will remain strong because of attractive margins and effects of diversification,” it says. Fitch says small banks here found it harder to compete with subsidiaries of mainland banks and large global banks in the first half of last year. The senior director of financial institutions for Fitch Ratings, Sabina Bauer, told Business Daily that the subsidiaries were better prepared to cater to mainland businesses that wished to grow abroad. Size mattered, Ms Bauer said, because even for large international banks “it is expensive to maintain a global infrastructure that complies with regulatory requirements in all countries”. She said expertise in niche markets could be the key for smaller Macau banks to thrive. A good strategy in this new market climate would be “a

focus on developing very strong customer relationships in niche markets”, she said. Ms Bauer singles out small-volume customers that “might not be very attractive to bigger banks”, such as small and medium enterprises, startups and entrepreneurs.

Small but terrible In the first half of last year new lending to smaller enterprises in Macau dropped by over 50 percent to under 7 billion patacas (US$876 million), having reached a record peak in the preceding six months, official data show. Ms Bauer said that in a “more fragmented” market, interest by banks in lending to smaller enterprises “could be a good thing” for companies seeking financing. The vice-chairman of the Indian Institute of Finance, Aman Agarwal, said here in October: “Most SMEs cannot fulfil [bank loan] requirements. They may not have big assets, big offices or strong balance sheets.” But Ms Bauer warns that such small corporate loans are riskier. In the first half of last year 1.4 percent of loans to smaller enterprises were non-performing, more than the proportion of other bank loans that had not been serviced for over three months. There are other perils on the banking horizon here, Fitch says. Its report says that as the economies of the mainland, Macau and Hong Kong become further integrated, banks here will

continue their “robust trade” with mainland customers. It says that in the first half of last year much of the exposure of banks here to the mainland was probably in the form of direct lending to mainland borrowers. Ms Bauer said: “A big part of the finance transactions of Hong Kong and Macau banks were based on stepping in for the Chinese banks that did not have the necessary liquidity.” The Fitch report says: “A large fo cu s o n C h i n a a n d a s h i f t t o potentially riskier non-trade business could weaken risk profiles … unless managed prudently.”

Conversion risk Ms Bauer said lack of transparency was one problem. The research centre of Shanghai’s Economic Observer said this week that a symptom of lack transparency was that information published by mainland banks over the past two years was incomplete. Ms Bauer said there were also “cross-border risks, starting with the currency conversion risk, because the yuan is not yet convertible”. She said banks also ran the risk of being unable “in times of stress” to enforce claims to assets used as collateral for loans. “Chinese creditors could take priority just because they are closer,” she said. The Fitch report says that in Hong Kong guarantees and standbys meant to cover transactions involving mainland companies had a loss rate

of up to 9 percent, the highest among trade finance instruments last year and the year before. Still, with the small Macau market restricted to mortgage and property lending, the senior director admitted that “in order to grow, banks will naturally expand into China”. “There are currently more negative risks than opportunities,” she warned. She said financial institutions would have to learn how to navigate a safe but profitable course among them. Ms Bauer said more business in the mainland would also mean more lending in yuan, especially as she expected Beijing to take “a few more steps” towards internationalising the currency. These steps would be welcome in Hong Kong and Macau, where there were “excessive yuan deposits” looking for investment options, she said.

There are currently more risks than opportunities Sabina Bauer, senior director of financial institutions for Fitch Ratings

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business daily February 1, 2013

macau Stanley Ho out of China advisory body

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The 91-year-old gaming tycoon Stanley Ho Hung Sun is not on the list of candidates for the Standing Committee of the Chinese People’s Political Consultative Conference, China’s highest advisory body, the Chinese-language newspaper Jornal Va Kio reported. Another prominent figure stepping down is the 93-year-old Macau’s industrialist Ma Man Kei, the incumbent vice-chairman of the committee. Mr Ho’s son Lawrence Ho Yau Lung, co-chairman and chief executive of Melco Crown Entertainment Ltd, is likely to become a Macau delegate for the committee this year, Va Kio said, quoting sources.

HOSPITALITY Tourism’s symmetry One remarkable feature about tourism arrival statistics is their consistency throughout the year. The graph of monthly data over the past three years shows how consistent these have been. There was a clear increase in arrivals between 2010 and 2011. From one year to the other, the total number of tourists rose by about 253,000 people. The rise in arrivals between 2011 and last year was small – an average of about 6,700 people a month – and, for most of the year, the plot lines of both graphs almost overlap. Especially in the second half of both years, the similarity of the plots seems uncanny.

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Non-residents could have six months to get new job

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Leaving aside the two months at the beginning of last year, the data are consistent over the year. The smallest number of arrivals are in June and September. June is followed by two months of steep rises, culminating with the annual peak in August. There are two smaller peaks in December and April. Some instability in earlier months may be related to winter and the changing schedule of the Lunar New Year holiday. Even the intensity of the swings, especially around the summer months, is oddly symmetrical. After the April peak, two months follow when visitors drop in each by values between 5 and 10 percent. Then, after the June trough, the number of visitors jumps by around 15 percent and 8 percent in July and August. A sharp drop of 20 percent in September follows. The highest and lowest values always fall within a band of 15 percent around the monthly average.

2.34 mln

Average monthly tourist arrivals last year J.I.D.

The government has promised to review the rules for imported workers Stephanie Lai

sw.lai@macaubusinessdaily.com

he government is mulling changing its rules to allow a non-resident worker that is voluntarily laid off to stay in Macau for six months to look for a new job. At present, permits issued to nonresident workers expire as soon as their employment ends, and they are usually given only 10 days to leave the city. They then must remain outside Macau for six months before they can get new work permits. Proposed amendments to the labour law would no longer oblige a non-resident employee to stay away for six months if he and his employer ended his contract prematurely by mutual consent, or if the government cut his employer’s quota of imported labour. The ex-employee, while being

allowed to remain here, would have to find a new job of the same kind as his old aone within six months, or be kicked out. But the government’s present rules would not allow this. The Legislative Assembly’s third standing committee discussed the amendments yesterday with Secretary of the Economy and Finance Francis Tam Pak Yuen and officials of the Labour Affairs Bureau. They met behind closed doors. Officials deny that the meeting discussed changes to immigration policy or temporary stay permits along with the proposed amendments to the labour law. “Regarding the exit procedures for non-resident workers, it is not really a part of our current labour law amendment,” said the chairman

of the committee, Cheang Chi Keong. “But during the meeting the government promised it would review the status of imported labour and improve exit procedures for them,” Mr Cheang said. He said the provision of the bill of amendment that would restrict a worker that was voluntarily laid off to taking the same kind job if he wished to remain was meant to “stabilise the local human resource market” by preventing “job swapping”. The government will fine-tune the amendments and submit its final version of the bill to the assembly after Lunar New Year. Committee member Paul Chan Wai Chi told Business Daily that the assembly could pass the bill as soon as late February.

February 1, 2013 business daily | 5

MACAU

Court throws out Viva Macau appeal

New legal blow for defunct low-cost airline over demise of sub-concession Vítor Quintã

vitorquinta@macaubusinessdaily.com

he Court of Second Instance has yesterday morning thrown out an appeal from nowdefunct low-cost airline Viva Macau against its grounding in 2010. The judgement has yet to be made public but the lawyer representing Viva Macau, Henrique Saldanha, confirmed to Business Daily that the decision was unfavourable to the carrier. The airline claimed Secretary for Transport and Public Works, Lau Si Io, issued an illegal administrative act telling flagship-carrier Air Macau Co Ltd to revoke the budget carrier’s

sub-concession contract in 2010. Viva Macau’s sub-concession was revoked on the weekend of March 26-28, 2010, after repeated flight cancellation left thousands of people stranded. The carrier was allegedly unable to settle its jet fuel bills with jet fuel supplier Nam Kwong Group Co Ltd. Air Macau representatives rejected this accusation in a June court session, saying a letter sent by Mr Lau was only taken as a sign of support to their decision to end the sub-concession. But the court did not even fully

Airport operator eyes end to cargo bleed

he Macau International Airport will see an increase in cargo handled this year, for the first time since 2005, according to the airport operator’s targets for 2013. Last year the infrastructure handled less than 27,800 tonnes of cargo, the lowest figure since 1996, its first full year of operations, below the company’s target of 30,000 tonnes. After seven consecutive years on the slide, the airport’s cargo now represents just 12.2 percent of the record 227,300 tonnes recorded in 2005. But the Macau International Airport Co Ltd has set a more modest target of 28,200 tonnes of cargo for this year, which would show a growth of 1.5 percent, it said in a statement released late Wednesday. The operator posted its first annual profit last year, 14.4 million patacas (US$1.8 million), mostly

thanks to a capital injection used to pay back a syndicated loan to finance the airport’s construction. In addition the company saw its revenue grow to 760 million patacas in 2012. The biggest reason for that increase was a 23 percent hike in non-core activities, including dutyfree sales and advertising revenues. This year the company expects its revenue to jump by 5 percent to 798 million patacas. A similar growth from 2012 is targeted for the passenger volume, which could reach 4.7 million, and for aircraft movements, which could hit 44,000. That would represent a slowdown from last year’s growth, which hit 11 percent and 8 percent for passenger volume and aircraft movements respectively. V.Q.

analyse Viva Macau’s claim, rejecting the appeal due to a “technical issue,” Mr Saldanha said. He declined to make any further comments, stressing that both sides are yet to be officially notified of the decision. For the same reason, it is far too early to decide what should be the next step for the carrier, the lawyer said. “I first have to speak with the bankruptcy administrator,” he said. Viva Macau was declared bankrupt in September 2010. At the time, a report prepared by the court-appointed administrator

estimated the airline’s debts at about US$38 million (303.6 million patacas) and could not identify any assets. Still, the government’s Industrial and Commercial Development Fund announced in November it had sued the major shareholder in Viva Macau, Eagle Airways Holdings Ltd, at the Court of First Instance. The Hong Kong-based company was the guarantor of unpaid loans of 212 million patacas that the fund granted to the airline between 2008 and 2009.

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business daily February 1, 2013

macau

Total 250 new gaming tables given out this year: Tam

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Twin tales Almost all components of the consumer price index increased last year and in 2011. The increases were not uniform, revealing a dichotomy. The cost of goods and services associated with basic needs, including food, shelter and clothing, all rose by more than 10 percent in the two-year period. With the exception of clothing and footwear, these cornerstone components of the index increased at a faster rate last year than in 2011.

Allocations based on requests made in the past, not this year, finance secretary said Stephanie Lai

sw.lai@macaubusinessdaily.com

Price rises for food and non-alcoholic beverages were modest in both 12-month periods, at less than 0.5 percentage points. That was not the case for two other categories: housing and fuel, and household goods and furnishings. Prices in both increased noticeably. Prices in the former category doubled from 3.4 percent to 6.8 percent, while in the latter they grew from 4.5 percent to 6.9 percent. These increases notwithstanding, food-related expenses hit the hardest, representing the biggest cumulative rise in the two years covered by this analysis. The second fastest rising component of the index was miscellaneous, a residual category. The other leading categories took an opposing trajectory, that is, the rate of growth in prices last year was lower than 12 months earlier. Aside from the communications category, which saw a decline, prices in the remaining categories rose more slowly last year than in 2011. These are categories where the government, either directly or by means of concession contracts, can have a stronger direct influence on prices.

he government will assign a total of 250 new-to-market gaming tables this year, the Secretary of Economy and Finance Francis Tam Pak Yuen told media yesterday. Most of them, 200 tables, will be going to Sands Cotai Central’s second phase and the remaining 50 tables to Galaxy Macau resort. Both resorts are on Cotai. “When Galaxy [Macau] completed its first phase [in 2011], we said at the time that we were giving them 450 tables altogether,” said Mr Tam. “At the opening of Galaxy [Macau]’s phase one, we gave them 400 tables already.” “So this year, we will be giving them the remaining 50 tables,” Mr Tam said on the sidelines of a Legislative Assembly meeting. “With the opening of the Sands Cotai Central’s new phase this week, which is the new Sheraton Tower with about 2,000 rooms, we have given them 200 fresh tables,” he noted. For the whole Sands Cotai Central project, the government assigned a total of 400 gaming tables. The secretary stressed there will be no more new gaming tables to be assigned to existing casinos this year. “We will be sticking to a cap of three percent average yearly growth for gaming tables, from 2013 to 2023, where the gaming concessions expire,” Mr Tam stressed.

The content of this column is the work of Business Daily’s journalists. J.I.D.

Within this year, the government will request the casino operators to deliver their investment plans on the five developing casino projects in Cotai.

The projects’ non-gaming elements will be a key consideration factor in deciding how many gaming tables would be assigned to each, Mr Tam reiterated.

Waste tender ‘fair, just’: govt

17.4% T

Increase in food prices over the past two years

Non-gaming elements will be key for new resorts to get more tables, said Mr Tam

he Environmental Protection Bureau claimed they handled the tender on the management of Macau’s solid waste in a “fair, just, open and rigorous” manner. Lack of anti-corruption safeguards in the tender rules and the ban on consortiums from bidding for the contract had raised eyebrows in the industry. The bureau released a statement yesterday saying all bidders “must promise to abide with provisions on honest and integrity set in the tender

rules” during the tender period and in case they win the contract. The statement also stressed the bureau welcomed “non-local companies to join this bidding as well as local companies”, but all enterprises must have over 10-year experience in handling solid waste. Industry insiders told Business Daily the tender rules gives the impression the administration is favouring the present operator, Macau Waste Systems Co Ltd, a Macau-Hong Kong joint

venture whose former directors were convicted in a corruption case linked to ex-secretary for Transport and Public Works Ao Man Long. The bidding period – from December 26 to February 18 coinciding with Christmas and Lunar New Year holidays – complies with the time required by law, the bureau wrote. The 10-year contract could be worth at least 2 billion patacas (US$250 million), according to the tender programme.

Stay in the finest hotels in Macau and read Business Daily

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February 1, 2013 business daily | 7

MACAU

Sands China sees 52 pct hike in Q4 profit Considering building 800,000 sq. ft ‘standalone’ shopping mall on Cotai Michael Grimes

michael.grimes@macaubusinessdaily.com

ands China Ltd posted a 52 percent jump in fourthquarter profit year-on-year thanks in part to its newest resort Sands Cotai Central ramping up operations after opening a second casino and second hotel tower at the end of the third quarter. Net income for the Hong Kong-listed gaming operator rose to US$467 million (3.7 billion patacas) from US$306.7 million a year ago, according to yesterday’s earnings statement. The Macau unit’s parent Las Vegas Sands Corp. raised its quarterly dividend by 40 percent to 35 U.S. cents a share, from 25 cents previously. In November the company declared a US$2.75 special

dividend that pleased public stock holders and netted Sheldon Adelson – chairman and chief executive as well as the largest shareholder, about US$1.2 billion. “The results in Macau were particularly robust and we remain bullish on the market, particularly on the company’s mass exposure,” said Bill Lerner of Union Gaming Research, in a note to clients. Kenneth Fong of J.P. Morgan Securities (Asia Pacific) Ltd in Hong Kong said Sands China’s property EBITDA (earnings before interest, taxation, depreciation and insurance) for the quarter – US$622 million – had been even better than his estimates and beat market consensus by seven percent. “The full quarter contribution of

Sands Cotai Central (SCC Phase IIA); market share improvement (fourth quarter 20.4 percent versus third quarter 19.1 percent) on a growing market; better VIP luck factor (3.1 percent versus theoretical 2.85 percent); continued improving margin of Sands Cotai Central and seasonally stronger non-gaming business (up 29 percent quarter-on-quarter) helped,” said Mr Fong in a note. On the earnings conference call yesterday Macau time, Michael Leven, president and chief operating officer of parent company Las Vegas Sands Corp., said the company might build a new standalone shopping centre on Cotai “subject to government approval”. Mr A d el s o n h a d p r e v i o u s l y

52%

Rise in Q4 profit

mentioned the possibility of the new mall at the time of SCC’s Phase IIA opening in September. Mr Adelson told analysts yesterday it was possible the standalone mall – with a net 800,000 square feet of space – might be financed quickly if global capital costs proved favourable. With Bloomberg News

Only 300 budget hotel rooms in pipeline Macau to rely on current hotels to cope with ‘low single-digit’ growth on tourist arrivals Tony Lai

tony.lai@macaubusinessdaily.com

The director pledged they would “strengthen their efforts” in carrying out inspections against illegal accommodation during the holidays. She also announced in the press conference that the government would spend about 8.4 million patacas (US$1.05 million) for the city’s first float parades on February 12 and 16. The parade featuring 10 floats and the performance of over 1,000 artists would be held at the Nam Van district on the first day and at Iao Hon district the second day. Ms Senna Fernandes said these

he Macau Government Tourist Office is reviewing five applications of budget hotels that would offer 337 rooms but there is no timetable on when they could be ready. These five proposals include three new hotels and the expansion of two existing ones, Helena de Senna Fernandes told media after a press conference yesterday. The issuing of licences to the five applicants depended on the progress of their construction works, she added. Ms Senna Fernandes also said: “Not all the new budget hotels mentioned are ready to enter the final procedures of issuing licences [by the tourist office]. Some are still at the stage of land usage or the conceptual stage.” “As such in the short term there will not be much new input in the budget hotel area and we have to rely on the current 1,400 rooms,” the director said. But she expects the completion of over 2,000 new rooms in Sands Cotai Central to help ease the demand brought by the influx of tourists this year. Ms Senna Fernandes said they were “cautiously optimistic” towards this year’s growth in number of tourists after a 0.3-percent growth last year. “This year we hope we can keep visitors arrivals around the over 28 million [recorded] last year and

Helena de Senna Fernandes (Photo: Manuel Cardoso)

there may be a low single-digit growth,” she said. “But I believe there is no room for a large-scale jump.” She added her forecast was based on the gloomy outlook for the global economy mentioned by many international tourism organisations.

Stay longer For the coming Lunar New Year holidays starting on February 10, Ms Senna Fernandes holds a similar no-growth forecast. Last year, Macau welcomed over 860,000 tourists in the seven days period – increasing by 6.9 percent from a year ago – with over 62 percent coming from mainland China.

two parades aim to provide more activities for tourists and the public during the holidays, when many stores are closed, as well as diverting tourists to the Northern district. “We are not aiming to attract more tourists but to attract them into staying longer in Macau,” she said. A fireworks display costing 1.6 million patacas will also feature at the first-day parade. The director also said a tourist representative office opened two weeks ago in Russia capital Moscow, the tourist market Macau aimes to explore this year.

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business daily February 1, 2013

GREATER CHINA

Taiwan’s economic growth hits three-year low Government raises 2013 outlook after better than forecast Q4 growth

aiwan’s economy grew 1.25 percent in 2012, its slowest pace in three years owing to shrinking exports, preliminary official figures showed yesterday. The figures mark the worst performance since a 1.81 percent contraction in 2009 when the economy was buffeted by the global financial crisis, the Directorate General of Budget, Accounting and Statistics said. However, it was higher than the 1.13 percent forecast made in November, with foreign trade and domestic spending picking up towards the end of the year, it said in a statement. Taiwan also raised its economic growth forecast for 2013 yesterday, after the fourth quarter expanded faster than expected and posted its best growth in five quarters on improved demand for the island’s electronics exports and stronger consumption. The government raised its growth forecast for the full year to 3.53 percent from a previous 3.15 percent, but it warned that global economic growth momentum remained weak. “All economic indicators point

to a strong recovery [for Taiwan],” the agency said, adding that global economic growth momentum remains weak. The trade-reliant island’s growth has been steadily picking up and largely propelled by improving demand for technology goods globally and exports to China, its largest trading partner. China this month reported economic growth accelerated for the first time in two years, and the U.S. this week said orders for durable goods rose in December for a fourth consecutive month, signalling a recovery in the world’s biggest economies is gathering pace. Taiwan’s central bank held borrowing costs for a sixth meeting last month, even as it imposed selective credit controls and took action to slow the currency’s appreciation.

Quicker inflation “Chinese demand is past its trough and U.S. consumer demand for Taiwan’s tech products is gradually rising,” Katrina Ell, an economist at Moody’s Analytics in Sydney, said before the release. “We are cautiously

optimistic Taiwan’s economic recovery will continue through 2013. As long as the global economic recovery stays on track, we expect rate hikes in the fourth quarter.” The economy grew a preliminary 3.42 percent in the fourth quarter of 2012 year on year, the statistics agency said. The last time the island’s economy expanded at a faster pace was in the third quarter of 2011, when GDP growth was 3.53 percent, according

KEY POINTS Taiwan’s GDP rose 3.42 pct in Q4 2012 Full-year growth at 1.25 pct, the lowest in three years Govt raises 2013 GDP forecast to 3.53 pct Raises forecast for price gains this year to 1.31 pct

to previously announced data. The statistics office raised its inflation forecast for 2013 to 1.31 percent, from a previously forecast 1.27 percent. But analysts said inflation was mild and unlikely to prompt a change in interest rates. “We don’t expect the central bank to put forward any monetary policy changes until Q4 at the earliest; the economy is not good enough to raise rates yet,” said Scott Chen, an economist with Sinopac Commercial Bank in Taipei. “There will be more uncertainties in H2 though, if China pushes out reforms to regulate the over-heating property market.” The central bank left its benchmark discount rate unchanged at 1.875 percent at its last meeting in December, saying economic growth was expected to be mild in 2013 and inflationary pressures were easing. Taiwanese firms are the main suppliers to most of the world’s top tech brands, including Apple Inc., Dell Inc. and Nokia OYJ. The heavy reliance on electronics exports makes the island’s economy especially vulnerable to swings in external demand. Reuters/Bloomberg News

Inflation quickened to 1.61 percent in December

Lenovo profits rise further PC maker boosts income 34 pct supported by China, U.S. sales

enovo Group Ltd, the world’s second-biggest maker of personal computers, reported a 34 percent jump in third-quarter profit after increasing its market share and boosting smartphone sales. Net income climbed to US$204.9 million in the three months ended December 31, from US$153.5 million a year earlier, the company said in a statement yesterday. Excluding a US$20 million one-time gain, the figure was in line with analysts’ estimates. Sales climbed 12 percent to US$9.36 billion. Lenovo’s PC shipments rose

8 percent in the period, the only increase among the world’s four biggest suppliers, as it boosted North American consumer sales amid slowing global demand. The company has also developed mobile devices including smartp h o n es a n d ta b l ets th a t have helped it lure customers from Apple Inc. and Samsung Electronics Co. in China. “Positive surprises came largely from the mobile Internet and digital home unit,” said Jonathan Ng, a Singapore-based analyst at CIMB-GK Pte, who rates Lenovo outperform. The company continues to see “strong

momentum” in these areas, he said. Revenue from China, Lenovo’s biggest market, rose 17 percent to US$4.1 billion in the quarter and accounted for 43 percent of total sales. North America revenue climbed 8 percent to US$1.3 billion, or about 14 percent of its global tally. Net income was boosted by the one-time gain, which was related to the elimination of an accounting provision following the completion of a takeover. That let Lenovo surpass the US$184 million average of 12 analysts’ profit estimates compiled by Bloomberg. Excluding that gain, earnings

were “pretty much in line” with expectations, CIMB’s Mr Ng said. Lenovo chief executive Yang Yuanqing reiterated that the company intends to boost pretax margins by 1 percentage point over three years. In the three months ended December 31, Lenovo had a pre-tax profit margin of 2.6 percent. “Our PC business is healthy and will continue to get stronger,” Mr Yang said on a conference call yesterday. “Beyond the PC, we have built a strong foundation for the PC-plus business, which is growing even faster.” Bloomberg News

February 1, 2013 business daily | 9

GREATER CHINA

Profits at large steelmakers Cnooc may extend Nexen deadline fell 98 pct in 2012 C

rofits at China’s large steel mills slumped 98 percent in 2012, as slower economic growth hit steel demand in the world’s largest consumer, the China Iron & Steel Association (CISA) said yesterday, but it reiterated a slightly improved outlook this year. In a statement, the industry association said 2012 profits reported by its members, which include more than 70 large steel mills, fell to 1.6 billion yuan (US$257.2 million). The largest firms account for about 80 percent of the total steel output in China, which is also the world’s largest steel producer. A few large Chinese steelmakers suffered big losses last year as slower demand growth and a rapid decline in steel prices hurt their business. Angang Steel Co Ltd, the listed unit of China’s second-largest steelmaker, Anshan Iron & Steel Group Corp, posted a loss of 4.16 billion yuan in 2012, after losing 2.15 billion yuan in 2011, it said in an exchange filing late on Wednesday.

Maanshan Iron & Steel Co Ltd, the listed unit of Magang Group, reported a preliminary loss of 3.7 billion to 4 billion yuan last year. Baoshan Iron & Steel Co Ltd (Baosteel), China’s largest listed steelmaker, said earlier this month that its 2012 net profit likely rose by about 40 percent to 10.3 billion yuan (US$1.65 billion), helped by the sale of some assets. However, it said operating profit before one-off items was likely to show a decline of 33 percent to 6.2 billion yuan. CISA expects an improved outlook for the country’s steel sector this year, although that will be tempered by an oversupply of built-up inventory, high raw materials costs and a likely slow pickup in consumption. The industry body previously said it expected Chinese steel demand to rise by 3.1 percent in 2013, 0.6 percentage point higher than last year as the economy recovers.

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Reuters

nooc Ltd said it may extend beyond March the deadline for its purchase of Nexen Inc., China’s largest foreign takeover, even as the company expects production growth to come from overseas. China’s biggest offshore energy explorer, which received the Canadian government’s approval to buy Nexen for US$15.1 billion in December, said it plans to increase crude and natural gas production by as much as 2.1 percent this year, after meeting its 2012 output target. Cnooc’s purchase of Nexen is awaiting U.S. regulatory clearance and the company may have to extend the deadline for closing the deal if approvals aren’t obtained in time, chief financial officer Zhong Hua said in Hong Kong yesterday. The explorer will focus its capital expenditure on developing domestic production, which will be little changed in 2013, he said. Cnooc’s stalled domestic output growth follows Chinese oil companies spending US$25 billion in 2012 to acquire oil and gas assets globally to meet the demands of the world’s largest energy consumer, according to data compiled by Bloomberg. Cnooc’s growth in output, domestic and foreign, declined to about 3.6 percent in 2012 from a peak of 40 percent in 2010. “For Cnooc, China offshore production growth has been flat for the third year in a row and has lagged the management’s target of 4 percent to 5 percent annual growth,” said Sonia Song, a Hong Kong-based analyst at Nomura Holdings Inc. who has a neutral rating on Cnooc shares. “This year offshore production may be even lower.” Bloomberg News

10 |

business daily February 1, 2013

ASIA Honda sees big jump in income Honda Motor Co., Japan’s third-largest carmaker, has reported a jump in third-quarter profits as U.S. sales recover, but cut its annual forecast as sales in China and Europe drop. Honda’s profits hit 77.4 billion yen (US$851 million) in the last quarter of 2012, up from 47.6 billion yen a year earlier. The firm said profits had also been boosted by a continued recovery from the floods in Thailand in 2011. However, it cut its full-year profit forecast to 370 billion yen, compared with its previous projection of 375 billion yen.

SK Group’s Chey gets 4 years in prison Chey Tae Won, the former chairman of South Korea’s third-largest industrial conglomerate SK Group, was sentenced to four years in prison for embezzling corporate funds to cover personal investment losses. A three-judge panel which convicted Mr Chey of misusing about 50 billion won (US$46 million) in corporate funds from SK Telecom Co. and other units of SK Group, also cleared his younger brother, Judge Lee Won Beom said yesterday. Mr Chey, granted a presidential pardon in 2008 after being convicted of accounting fraud, stepped down as chairman of SK Group in December and remains chief executive of SK Holdings Co., the group’s de facto parent.

Philippines beats growth target Boosted by the strong performance of the country’s services sector Karen Lema

he Philippine economy grew faster than expected in the last quarter of 2012 on robust domestic demand, bolstering expectations that the country’s key policy interest rate will stay at a record low in the early part of the year. The central bank said that strong economic growth supported the view the domestic economy needed “very little support” via monetary policy to sustain its momentum. But Manila is concerned about the impact of a strong peso, particularly on the competitiveness of its exports and the growing outsourcing sector, as well as on remittances of overseas Filipinos that fuel domestic consumption. Gross domestic product rose 1.5 percent in the December quarter from the previous three months, compared with a market forecast of 0.6 percent and after revised 1.7 growth in the third quarter.

to one that is more industry and investment driven, he added. Mr Balisacan also said economic managers were discussing ways to address the impact of a strong peso on the economy. But he said there was no need to resort to drastic measures such as capital controls with the absence of major currency swings. The peso has risen more than 1 percent against the dollar so far this year after surging nearly 7 percent in 2012. From a year earlier, the economy rose a faster-than-expected 6.8 percent and against revised 7.2 percent annual growth in the September quarter, the economic planning agency said. For the full year 2012, the economy grew 6.6 percent, surpassing the government’s 5-6 percent forecast and market expectations of 6.4 percent. After China, the Philippines

through public-private partnerships. “The pace of Philippine growth has consistently surprised on the upside in the past year as the economy displays resilience against global headwinds and driven primarily by domestic engines,” said Radhika Rao, economist at Forecast PTE in Singapore. “However, one cannot downplay the need for domestic investments, public and private sector, to translate the cyclical upturn into a more structural-driven recovery,” she said. Robust growth may push up inflation later, although any rate increase will not come soon because of strong capital inflows, said Enrico Tanuwidjaja, economist at RBS in Singapore. Diwa Guinigundo, central bank deputy governor, said the economy was beginning to show dividends from various policies put in place.

Toshiba posts weaker gains Japan’s Toshiba Corp posted a rise in quarterly operating profit yesterday but missed forecasts as a weak global economy and a drop in sales of televisions and personal computers offset buoyant orders for new thermal power stations. Toshiba posted an operating profit of 29.3 billion yen (US$322 million) in the October-December quarter, up from 8.67 billion yen last year, boosted by large infrastructure orders. However Toshiba, which cited the weak global economy as a drag on earnings, stuck to its full-year forecast for operating profit of 260 billion yen for the year ending March 31, helped by recovering prices for NAND memory chips.

Nomura profit misses estimates Nomura Holdings Inc., Japan’s biggest brokerage, posted third-quarter profit that missed analysts’ estimates as a drop in investment banking fees overshadowed gains from brokerage commissions. Net income rose 13 percent to 20.1 billion yen (US$221 million) for the three months ended December 31, compared with 17.8 billion yen a year earlier, the Tokyo-based company said in a statement yesterday. Revenue fell 4.7 percent in the quarter from a year earlier to 459 billion yen, Nomura said. Investment banking fees dropped 24 percent to 13 billion yen. Brokerage commissions climbed 13 percent to 83.7 billion yen.

The Philippines manufacturing sector saw a sharp recovery in the second half of 2012

Increases in private and public spending helped offset sluggish demand for exports, keeping the Philippines, like many of its neighbours in Southeast Asia, resilient in 2012 despite global headwinds. “It is our immediate task to put in place policies and implement programmes that will sustain our economy’s growth over the medium term,” Arsenio Balisacan, economic planning secretary, told reporters. The government will continue to work on transforming the economy

has reported the fastest growth in 2012 so far. Government expenditure jumped nearly 12 percent in 2012 while private spending, boosted by remittances from Filipinos working overseas, was up 6.1 percent.

Momentum to sustain The government expects the Philippines’ growth momentum to be sustained this year as the government pursues investment in infrastructure

That includes rate cuts totalling one percentage point last year. The International Monetary Fund has raised its 2013 economic growth forecast for the Philippines to 6 percent, and it expects the economy to grow at a healthy pace of 5.5 percent in 2014. The central bank has trimmed its forecast for average inflation in 2013 to 3.0 percent from 3.1 percent but raised its 2014 forecast to 3.2 percent from 2.9 percent. Reuters

Central bank weighs inflow curbs

hilippine central bank Governor Amando Tetangco said he’s studying more measures to counter excessive capital inflows lured by growth, joining South Korea and Singapore in warning that policy makers need to consider more steps to reduce the impact of such funds. “Capital flows and the impact

of these on the local economy and local financial markets” would be among the biggest challenges this year, Mr Tetangco said in an interview with Bloomberg. “We continue to study what other measures can be implemented just in case there’s a need to adopt more measures in the future.” Monetary easing in developed nations from Japan to the U.S.

and Europe has spurred flows to faster growing emerging markets as investors seek higher returns, boosting Asian stocks to the highest in 17 months this week. Bangko Sentral ng Pilipinas can’t rule out further reductions on the rate it pays on funds placed in its special deposit accounts after a cut last week, Mr Tetangco said.

February 1, 2013 business daily | 11

ASIA

Japan factory output up Manufacturers expect production to rise in coming months Kaori Kaneko

apan’s December factory output rose at the fastest pace in a year and a half and firms expect further gains, raising hopes that stabilising global demand and exports will help pull the economy from its slump. The data should encourage Prime Minister Shinzo Abe’s government, which is gambling that its “Abenomics” policy of big fiscal spending and open-ended monetary easing by the Bank of Japan can energise the economy after decades of stop-start growth and intermittent deflation. The 2.5 percent rise in production was below the median market forecast for a 4.5 percent gain and followed a 1.4 percent decline in November, data from the Ministry of Economy, Trade and Industry showed yesterday. “The results are not that bad and the forecasts show that production could continue to grow at a good pace,” said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities. “We can say that production is bottoming out. Overseas economies

are not likely to deteriorate any further, so this will support Japanese production and the overall economy.” The ministry raised its assessment of industrial output for the first time since January last year, saying it is showing signs of halting its declines. Previously, it had said production was on a downward trend. “Positive effects from a weak yen and the government’s economic measure are expected to appear,” a trade ministry official said. Manufacturers surveyed by the ministry raised their forecast for January to a 2.6 percent rise from an earlier forecast for a 2.4 percent gain. Firms expect production to increase 2.3 percent in February, indicating a moderate recovery in coming months. Separate data published yesterday showed Japanese manufacturing activity contracted in January, but the pace of contraction slowed for the first time in four months as the country slowly recovers from an export-led slump. Japanese wage earners’ total cash earnings fell 1.4 percent in December from a year earlier, taking average monthly earnings in 2012 to

their lowest level since comparable data became available in 1990, government data showed. Analysts expect Japan’s economy will grow moderately this year as exports recover, led by a rebound in the global economy, while Mr Abe’s aggressive monetary and fiscal policy may also help boost the economy.

The Bank of Japan may ease monetary policy further if needed, its deputy governor said, offering the strongest signal to date by a central bank policy maker that more stimulus may be on the way to achieve the bank’s new 2 percent inflation target. Deputy Governor Hirohide Yamaguchi said that policymakers should not miss a “window of opportunity” to beat deflation now opening up as Japan’s economy heads for

Airline cancelled 830 flights between mid-January and February 18

unchanged at 40 billion yen. All Nippon, Japan Airlines Co., and six other operators stopped flying 787s after the U.S. Federal Aviation Administration ordered the suspension of all flights following a lithium-ion battery fire, and an emergency landing by an ANA plane on January 16. Chicago-based Boeing on Wednesday forecast profit that met estimates, assuming no drag from the grounding of the marquee jet while investigators examine battery faults. “I think all the airlines are stuck with what they’ve ordered,” said

Reuters

BOJ could add further easing

All Nippon says Dreamliner grounding to cut sales ll Nippon Airways Co., the world’s biggest operator of Boeing Co. 787s, said the grounding of the Dreamliner fleet cut sales by 1.4 billion yen (US$15.4 million) last month. ANA, which has 17 Dreamliners in its fleet and became the first operator of the plane in late 2011, isn’t sure when normal service with the aircraft will resume, according to a statement the airline released in Tokyo yesterday. All Nippon, which ordered 66 Dreamliners, kept its full-year profit forecast

His ambitious “Abenomics” strategy has sent the yen to a 2-1/2 year low against the dollar. Under relentless pressure, the BOJ last week doubled its inflation target to 2 percent and pledged an open-ended commitment to buying assets next year to help beat deflation.

US$15.4 million

ANA says it lost in revenue from having to cancel flights

a moderate recovery helped by an expected pick-up in overseas growth. “The BOJ may pursue further monetary easing if deemed necessary, while carefully scrutinising economic and price developments,” he said in a speech to business executives in Nagasaki yesterday. “We’re ready to take a decisive policy response as ever,” said Mr Yamaguchi, one of the central bank’s two deputy governors.

Sash Tusa, an analyst at Echelon Research & Advisory LLP. “We’re talking now about months rather than weeks” for the problem to be fixed. The airline hasn’t asked Boeing for compensation on 787 and will discuss the issue when it knows the total impact, executive vice president Kiyoshi Tonomoto told reporters in Tokyo yesterday. Shares of the carrier fell 0.6 percent to 179 yen in Tokyo trading yesterday. The stock has dropped 1.1 percent this year. ANA cancelled 830 Dreamliner flights from January 16 through February 18, affecting 81,820 people, the carrier said last week. The Dreamliners make up about 7 percent of ANA’s fleet and the carrier had to set up an emergency team to minimise disruption to a network of more than 1,000 daily flights and 175 routes. Bloomberg News

12 |

business daily February 1, 2013

MARKETS Hang SENG INDEX PRICE

DAY %

VOLUME

PRICE

DAY %

Volume

PRICE

DAY %

Volume

30.85

-0.1618123

25306680

CHINA UNICOM HON

12.46

1.631321

49434760

POWER ASSETS HOL

67.2

0.6741573

3761592

ALUMINUM CORP-H

3.74

-0.5319149

20904167

CITIC PACIFIC

12.48

-2.803738

11604280

SANDS CHINA LTD

39.1

0.2564103

6750033

BANK OF CHINA-H

3.82

0.2624672

356579914

CLP HLDGS LTD

65.95

-0.1514005

3876843

SINO LAND CO

14.5

-2.553763

11319989

BANK OF COMMUN-H

6.58

0.6116208

35588178

CNOOC LTD

16.02

-2.317073

102837629

SUN HUNG KAI PRO

127.3

-0.6245121

4335920

BANK EAST ASIA

31.9

-0.1564945

1098087

COSCO PAC LTD

12.58

2.442997

7613532

SWIRE PACIFIC-A

99.55

-0.1504514

1732712

17.24

-3.03712

12109686

ESPRIT HLDGS

10.78

-0.9191176

6761196

TENCENT HOLDINGS

271.4

0.2215657

2956210

HANG LUNG PROPER

NAME AIA GROUP LTD

BELLE INTERNATIO

NAME

BOC HONG KONG HO

26.75

0.1872659

11364636

29.25

-1.015228

7601755

TINGYI HLDG CO

21.8

-2.242152

13005810

CATHAY PAC AIR

15.06

-0.3968254

3045929

HANG SENG BK

127

0.3159558

1812525

WANT WANT CHINA

10.3

-0.3868472

21886757

CHEUNG KONG

127.2

-1.011673

2704699

HENDERSON LAND D

55.8

-2.702703

8277763

WHARF HLDG

68.5

-1.862464

6005971

CHINA COAL ENE-H

8.65

-1.142857

25148864

HENGAN INTL

77.8

0.3870968

3201448

CHINA CONST BA-H

6.69

0.1497006

275316903

-0.1919386

25220395

27.5

0.1821494

3773501

CHINA MOBILE

85.25

-0.5250875

CHINA OVERSEAS

24.05

-2.235772

9.41

-0.1061571

53727984

CHINA LIFE INS-H CHINA MERCHANT

CHINA PETROLEU-H

HONG KG CHINA GS

-0.4524887

4672525

147.1

-0.6752194

2593590

HSBC HLDGS PLC

88.3

0.2839296

16420425

21833467

HUTCHISON WHAMPO

86.7

-0.4020678

4814736

31081037

IND & COMM BK-H

5.84

-0.1709402

345926510

LI & FUNG LTD

10.9

-3.710247

83575038

0.1564945

2518334

HONG KONG EXCHNG

CHINA RES ENTERP

27.8

1.090909

3038616

MTR CORP

CHINA RES LAND

23.6

-2.479339

7865780

NEW WORLD DEV

14.26

-1.519337

16749560

CHINA RES POWER

21.45

6506227

PETROCHINA CO-H

11.06

-0.7181329

67160825

CHINA SHENHUA-H

33.35

-0.4477612

13651799

PING AN INSURA-H

69.55

-0.571837

9502636

MOVERS

1 23905

INDEX 23729.53 HIGH

23905.2

LOW

23626.54

52W (H) 23916.16016 (L) 18056.4

23626

29-January

31-January

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

Volume

CHINA PACIFIC-H

30.3

-2.415459

15256200

YANZHOU COAL-H

18972000

CHINA PETROLEU-H

9.41

-0.1061571

53727984

ZIJIN MINING-H

-0.5319149

20904167

CHINA RAIL CN-H

8.38

-0.7109005

17773672

ZOOMLION HEAVY-H

30.45

-0.9756098

10016041

CHINA RAIL GR-H

4.42

-1.339286

18350493

ZTE CORP-H

3.82

0.2624672

356579914

CHINA SHENHUA-H

33.35

-0.4477612

13651799

CHINA TELECOM-H

PRICE

DAY %

VOLUME

AGRICULTURAL-H

4.22

0.4761905

154076005

AIR CHINA LTD-H

6.64

-0.3003003

ALUMINUM CORP-H

3.74

ANHUI CONCH-H BANK OF CHINA-H

NAME

6.58

0.6116208

35588178

4.22

74184824

25.95

-0.3838772

2748100

DONGFENG MOTOR-H

12.66

-0.9389671

21388261

CHINA CITIC BK-H

5.29

-2.218115

57135926

GUANGZHOU AUTO-H

6.49

-3.278689

7901205

CHINA COAL ENE-H

8.65

-1.142857

25148864

HUANENG POWER-H

2.30179

41074606

CHINA COM CONS-H

7.87

26425884

IND & COMM BK-H

5.84

-0.1709402

345926510

CHINA CONST BA-H

6.69

0.1497006

275316903

JIANGXI COPPER-H

21.05

0.477327

11047477

CHINA COSCO HO-H

BANK OF COMMUN-H BYD CO LTD-H

4.03

-1.946472

18359424

PETROCHINA CO-H

11.06

-0.7181329

67160825

CHINA LIFE INS-H

-0.1919386

25220395

PICC PROPERTY &

11.8

-0.1692047

17289226

CHINA LONGYUAN-H

6.5

-0.7633588

17358000

PING AN INSURA-H

69.55

-0.571837

9502636

18.58

-0.2148228

18224236

SHANDONG WEIG-H

7.48

-1.83727

13902900

CHINA MERCH BK-H CHINA MINSHENG-H

11.14

-1.415929

49849700

SINOPHARM-H

23.75

-1.859504

6480437

CHINA NATL BDG-H

12.38

0.1618123

33584100

TSINGTAO BREW-H

44.8

-0.6651885

1888450

16.8

-4

11957126

WEICHAI POWER-H

-2.140673

4804637

CHINA OILFIELD-H

NAME

MOVERS

PRICE

DAY %

Volume

13.26

-0.748503

21379935

2.99

46537592

10.54

1.151631

13614020

1.214575

8463550

4 12221

INDEX 12130.59 HIGH

12221.72

LOW

12016.21

52W (H) 12244.15 (L) 8987.76

12016

29-January

31-January

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

Volume

PRICE

DAY %

Volume

8.4

-1.176471

32226442

QINGHAI SALT-A

27.62

3.445693

12532074

CITIC SECURITI-A

15.18

-0.3937008

123862396

SAIC MOTOR-A

16.88

-1.574344

19833231

25080289

CSR CORP LTD -A

4.85

-0.8179959

28980512

SANY HEAVY INDUS

11.51

1.768347

54666333

-2.149487

24317976

DAQIN RAILWAY -A

7.19

-0.2773925

29873587

SHANDONG DONG-A

46.75

-1.888772

4415892

10.16

0.1972387

54190008

DATANG INTL PO-A

4.32

3.349282

45936190

SHANDONG GOLD-MI

37.36

1.027582

16556245

3.12

0.3215434

158084284

EVERBRIG SEC -A

15.11

0.06622517

16053532

SHANG PHARM -A

11.98

0.7569386

7966410

5.4

2.079395

170253743

GD POWER DEVEL-A

2.8

3.321033

137950659

SHANG PUDONG-A

11.48

2.135231

181147190

12.26

-0.2441009

25159906

GEMDALE CORP-A

7.4

-5.612245

148280970

SHANGHAI ELECT-A

4.21

-0.7075472

6133531

15.33

-0.5191434

64355302

SHANXI LU'AN -A

22.67

0.4875887

25234506

14.26

0.7773852

29171514

6.69

-4.564907

97164305

PRICE

DAY %

VOLUME

AGRICULTURAL-A

3.08

2.325581

502788908

AIR CHINA LTD-A

5.96

-0.9966777

34703988

ALUMINUM CORP-A

5.17

0.5836576

ANHUI CONCH-A

20.03

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

NAME CHONGQING CHAN-A

5.01

-0.3976143

39249697

GF SECURITIES-A

NAME

7.94

-1.975309

27505614

GREE ELECTRIC

29.27

-0.3404835

17227328

SHANXI XISHAN-A

23.47

2.983765

5682925

GUANGHUI ENERG-A

17.62

-0.2829655

17825105

SHENZEN OVERSE-A

CHINA CITIC BK-A

5.03

-0.1984127

27755828

HAITONG SECURI-A

11.9

0.5067568

90378444

SICHUAN KELUN-A

-1.386749

1493157

CHINA CNR CORP-A

4.55

-1.939655

36684568

HANGZHOU HIKVI-A

30.3

-3.16395

5577847

SUNING APPLIAN-A

7.12

-2.063274

85062617 1167406

BBMG CORPORATI-A BYD CO LTD -A

CHINA COAL ENE-A

8.09

0.9987516

18737615

1.040119

2875187

TSINGTAO BREW-A

32.52

0.1539883

CHINA CONST BA-A

4.97

1.428571

129682269

HONG YUAN SEC-A

20.73

0.04826255

19231412

WEICHAI POWER-A

24.51

-0.7692308

7392103

CHINA COSCO HO-A

4.26

-1.160093

17137828

HUATAI SECURIT-A

10.49

0.09541985

52927667

WULIANGYE YIBIN

25.5

-1.162791

39091267

CHINA CSSC HOL-A

23.12

-1.99237

11493926

HUAXIA BANK CO

11.65

0.9532062

54137084

YANGQUAN COAL -A

15.68

2.685003

30963673

CHINA EAST AIR-A

3.72

1.917808

29996990

IND & COMM BK-A

4.4

0.2277904

251651319

YANTAI WANHUA-A

16.59

0.2416918

13016296

CHINA EVERBRIG-A

3.48

0.5780347

224152701

INDUSTRIAL BAN-A

19.92

0.1005025

72755913

YANZHOU COAL-A

18.41

0.7662835

10205094

CHINA INTL MAR-A

14.08

-1.054111

10005954

INNER MONG BAO-A

35.18

0.1138304

36076317

YUNNAN BAIYAO-A

76.5

0.5256242

1896261

CHINA LIFE INS-A

20.61

1.128557

26260626

INNER MONG YIL-A

25.62

-1.042874

5243960

ZHONGJIN GOLD

16.28

1.180858

36179351

14.3

-0.5563282

116264671

INNER MONGOLIA-A

5.32

1.333333

55531261

ZIJIN MINING-A

3.87

1.574803

126606133

85085335

JIANGSU HENGRU-A

32.65

-0.1223616

7757762

ZOOMLION HEAVY-A

9.25

0.87241

71463090

JIANGSU YANGHE-A

78.75

-2.933563

7503884

ZTE CORP-A

10.89

-1

20109259

JIANGXI COPPER-A

26.62

5.17582

52752736

JINDUICHENG -A

13.08

3.317536

33725109

16.6

-1.48368

22373535

15.64

2.894737

27381587 3781623

CHINA MERCH BK-A CHINA MERCHANT-A

12.82

0.3915427

CHINA MERCHANT-A

28.58

-5.955907

25660475

CHINA MINSHENG-A

10.31

-0.4826255

172906784

7.68

1.856764

33752349

17.58

0.3424658

7697978

CHINA NATIONAL-A CHINA OILFIELD-A

HENAN SHUAN-A

JIZHONG ENERGY-A

21.65

0.6040892

37788346

KANGMEI PHARMA-A

CHINA PETROLEU-A

7.07

-0.5625879

39477608

KWEICHOW MOUTA-A

178.9

-0.6773262

CHINA RAILWAY-A

5.83

-0.3418803

25194465

LUZHOU LAOJIAO-A

30.66

-0.9369952

9148954

2.16

-2.702703

111003953 24610221

CHINA PACIFIC-A

CHINA RAILWAY-A

3.18

0.3154574

26886825

METALLURGICAL-A

CHINA SHENHUA-A

24.55

1.112026

25790318

NINGBO PORT CO-A

2.61

3.99

0.2512563

MOVERS 152

136

12 2695

INDEX 2686.882

CHINA SHIPBUIL-A

4.94

-0.8032129

29681223

PANGANG GROUP -A

67328624

HIGH

2695.59

CHINA SOUTHERN-A

4.21

1.937046

46907563

PETROCHINA CO-A

9.26

-0.9625668

55937691

LOW

2655.38

CHINA STATE -A

3.65

-1.88172

157554521

PING AN BANK-A

21.1

-1.078293

41588420

CHINA UNITED-A

3.6

1.408451

237141226

PING AN INSURA-A

48.22

1.345103

54176028

CHINA VANKE CO-A

12.01

-5.209155

151307795

POLY REAL ESTA-A

13.22

-6.174592

132631417

CHINA YANGTZE-A

7.55

3.708791

46499469

QINGDAO HAIER-A

13.96

-1.342756

13491451

PRICE DAY %

Volume

PRICE DAY %

Volume

52W (H) 2717.825 (L) 2102.135

2655

29-January

31-January

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

NAME

PRICE DAY %

0.7736944

19351241

FORMOSA PLASTIC

80.2

0.25

6355928

TAIWAN MOBILE CO

105

-1.408451

23.9

-2.845528

49211478

FOXCONN TECHNOLO

86.3 -0.6904488

5806350

TPK HOLDING CO L

508

0.1972387

4547448

37.55

1.486486

5420817

FUBON FINANCIAL

101.5

39761565

37.75

28589382

TSMC UNI-PRESIDENT

51.8

0.1934236

6827841

UNITED MICROELEC

11.5

-1.287554

33537904

WISTRON CORP

34.2

-1.440922

20669080

0.6289308

53894205

54.8 -0.1821494

2854872

338

0.7451565

2514479

HON HAI PRECISIO

84.4 -0.5889282

20701301

1.260504

69275790

HOTAI MOTOR CO

235.5 -0.2118644

590040

CATCHER TECH

132

0.3802281

3729204

HTC CORP

291.5

0.5172414

13189885

CATHAY FINANCIAL

32.9

1.230769

19226661

HUA NAN FINANCIA

17.05

1.186944

9958697

YUANTA FINANCIAL

CHANG HWA BANK

16.3

1.242236

15168570

LARGAN PRECISION

773

-1.150895

2178735

YULON MOTOR CO

77 -0.6451613

4372861

LITE-ON TECHNOLO

42.5

5.067985

20540319

CHENG SHIN RUBBE CHIMEI INNOLUX C

15.35

147169650

8.16

1.36646

74231297

MEGA FINANCIAL H

CHINA STEEL CORP

27.85

0.9057971

18634500

CHINATRUST FINAN

16.9

0.5952381

41112396

0.2132196

9502011

QUANTA COMPUTER

21.45 -0.2325581

CHINA DEVELOPMEN

CHUNGHWA TELECOM COMPAL ELECTRON

MEDIATEK INC

323 -0.6153846

9488193

24.15

1.898734

26760607

NAN YA PLASTICS

1.010101

6782865

PRESIDENT CHAIN

159.5

-1.54321

1416325

68.9

2.225519

20085845

15702904

SILICONWARE PREC

31.05

-0.64

10055966

DELTA ELECT INC

107

0.4694836

4089203

SINOPAC FINANCIA

1.167315

16902326

FAR EASTERN NEW

34.2

0.2932551

6311741

SYNNEX TECH INTL

59.9

-1.803279

6183805

FAR EASTONE TELE

75.1

1.623816

7285127

TAIWAN CEMENT

39.9

0.2512563

7139650

16.45

7858692

73.2

0.9655172

2313839

28.95 -0.1724138

1226582

0.5586592

17915618

FORMOSA CHEM & F

FIRST FINANCIAL

80.2

0.6273526

7104552

TAIWAN FERTILIZE

FORMOSA PETROCHE

85.1

1.67264

2108492

TAIWAN GLASS IND

TAIWAN COOPERATI

5666647

1.478495

12.05

AU OPTRONICS COR

Volume

26.05

MOVERS

3 5486

INDEX 5486.98 HIGH

5486.98

LOW

5411.56

52W (H) 5621.53 (L) 4719.96

5411

29-January

31-January

February 1, 2013 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) 35.10

53.0

18.700

34.99

52.8

18.585

52.6

18.470

52.4

18.355

34.88 34.76 34.66 Max 35.1

average 34.902

Min 34.55

Last 34.95

34.55

Max 53

average 52.6

Min 52.2

Last 53

39.30 39.08

52.2

Max 18.7

average 18.413

Min 18.24

Last 18.36

18.240

21.35

22.10

21.23

21.95

21.11

21.80

38.87 38.66

Max 39.3

average 38.885

Min 38.45

Last 39.1

38.45

Max 21.35

average 21.218

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Mar13

97.63

-0.316510141

5.809038691

108.9899979

80.48000336

BRENT CRUDE FUTR Mar13

114.6

-0.261096606

4.286104286

118.7999954

90.58999634

GASOLINE RBOB FUT Feb13

302.66

-0.398196597

9.591918022

304.9999952

220.3500032

GAS OIL FUT (ICE) Mar13

979.75

-0.076491586

6.004868813

1026.25

800.5

3.301

-1.019490255

-1.901931649

4.049000263

3.052000046

311.79

0.019247426

2.839896017

333.4599972

255.6599855

1675.67

0.5684

0.6735

1796.08

1527.21

NATURAL GAS FUTR Mar13 HEATING OIL FUTR Feb13 METALS

Gold Spot $/Oz Silver Spot $/Oz

31.955

1.6342

6.1275

37.4775

26.1513

1677.15

-0.4659

10.5024

1736

1379.05

Palladium Spot $/Oz

741.6

-1.9242

5.9943

759.5

553.75

LME ALUMINUM 3MO ($)

2104

2.13592233

1.49541727

2361.5

1827.25

LME COPPER 3MO ($)

8226

1.517956312

3.719581389

8765

7219.5

LME ZINC

2155

2.863961814

3.605769231

2187.25

1745

Platinum Spot $/Oz

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Mar13 CORN FUTURE

Last 21.15

18365

3.006337989

7.64947245

22150

15236

15.43

0.194805195

1.680395387

16.84000015

14.89999962

744

0.506585613

6.552094522

846.25

511

Mar13

WHEAT FUTURE(CBT) Mar13

Max 22.1

average 21.775

Min 21.65

Last 22.75

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

PRICE

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

DAY %

1.0412 1.5822 0.9106 1.3552 90.9 7.9899 7.7572 6.219 53.2775 29.82 1.2376 29.55 40.665 9744 94.656 1.23404 0.85656 8.4325 10.8279 123.2 1.03

-0.2968 0.3234 0.6699 -0.0295 0.451 0.0125 0.018 0.0225 0.0516 -0.2347 -0.1454 -0.1421 -0.0984 -0.5747 0.7374 0.7009 0.3467 -0.3688 0.0397 0.4627 -0.0097

YTD %

(H) 52W

0.3276 -2.1884 0.5271 2.7445 -5.2805 -0.0839 -0.0851 0.1865 3.2237 2.5486 -1.309 -1.7496 0.8361 0.5029 -5.6299 -2.1523 -4.8029 -2.5497 -2.7475 -7.8166 -0.0097

1.0857 1.6381 0.9972 1.3587 91.41 8.0039 7.7713 6.3964 57.3275 32 1.2971 30.203 43.975 9904 95.468 1.25692 0.86066 8.4894 10.8544 123.86 1.0314

0.9582 1.5269 0.8931 1.2043 76.03 7.9823 7.7498 6.2105 48.6088 29.63 1.2152 28.913 40.54 8878 74.482 1.19995 0.77553 7.7018 9.6245 94.12 1.029

MACAU RELATED STOCKS (H) 52W

(L) 52W

3.055556

17.77777

3.71

2.27

2393045

CROWN LTD

11.59

-1.193521

8.622305

12.04

8.06

1894138

18.05999947

AMAX HOLDINGS LT

0.077

4.054054

0.119

0.055

7578044

66.84999847

BOC HONG KONG HO

26.75

0.1872659

10.99585

20.25

11364636

CENTURY LEGEND

0.285

7.547176

0.34

0.215

6.2

0.9771987

3.505847

6.25

2.8

439500

CHINA OVERSEAS

24.05

-2.235772

4.112552

25.6

14.124

31081037

CHINESE ESTATES

13.34

1.987768

13.7

8.3

203674

CHOW TAI FOOK JE

12.36

-0.9615385

-0.6430835

14.9

8.4

4325444

-1.477833

5.820107

2.09

0.99

1175000

1.75

43.44262

1.77

0.465

6348000

34.95

15.15651

35.35

16.62

6042505

127

0.3159558

6.992421

127

99.2

1812525

-0.466563

-3.759398

34.4

19.049

1076464

88.3

0.2839296

8.610082

88.4

59.8

16420425

HUTCHISON TELE H

3.51

-1.955307

-1.404493

3.88

2.98

4784127

LUK FOOK HLDGS I

27.2

-3.030303

11.47541

30.05

14.7

2186000

MELCO INTL DEVEL

12.5

-3.549383

38.73474

5.12

9891000 4971512

0.444726811

1.606683805

948.25

652

1472.25

-0.43956044

4.45193331

1728.25

1209.25

COFFEE 'C' FUTURE Mar13

147.95

0.169262018

2.885952712

237.5

141.25

SUGAR #11 (WORLD) Mar13

18.68

-0.160342063

-4.254228601

25.12999916

COTTON NO.2 FUTR Mar13

82.33

-0.759402122

9.568804898

98.5

NAME ARISTOCRAT LEISU

CHEUK NANG HLDGS

World Stock MarketS - Indices

EMPEROR ENTERTAI

PRICE

DAY % YTD %

VOLUME CRNCY

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

13910.42

-0.3153123

6.152867

13969.99

12035.08984

NASDAQ COMPOSITE INDEX

3142.308

-0.3599311

4.066696

3196.932

2726.68

HANG SENG BK

FTSE 100 INDEX

6301.01

-0.3495116

6.836431

6354.46

5229.76

HOPEWELL HLDGS

DAX INDEX

7794.77

-0.2117443

2.395829

7871.79

5914.43

HSBC HLDGS PLC

NIKKEI 225

11138.66

0.2223332

7.152165

11145.38

8238.96

HANG SENG INDEX

23729.53

-0.3884215

4.734136

23916.16016

18056.4

CSI 300 INDEX

2686.882

-0.06802516

6.497554

2717.825

2102.135

MGM CHINA HOLDIN

18.36

-0.3257329

30.95577

18.76

10.04

TAIWAN TAIEX INDEX

7850.02

0.2175417

1.954932

8170.72

6857.35

MIDLAND HOLDINGS

3.95

2.331606

6.756755

5.217

3.249

3813000

NEPTUNE GROUP

0.182

-10.78431

19.73685

0.226

0.084

1109890000

NEW WORLD DEV

14.26

-1.519337

18.6356

15.12

7.95

16749560

SANDS CHINA LTD

39.1

0.2564103

15.16936

39.35

20.65

6750033

SHUN HO RESOURCE

1.49

1.360544

6.428573

1.59

1.03

66000

0.9546526

4.65

2.56

7331001

FUTURE BRIGHT GALAXY ENTERTAIN

KOSPI INDEX

1961.94

-0.1267543

-1.758099

2057.28

1758.99

S&P/ASX 200 INDEX

4878.781

-0.3657979

4.943709

4906.2

3985

4453.703

0.01634862

3.174103

4472.108

3635.283

FTSE Bursa Malaysia KLCI

1627.55

-0.01105835

-3.635389

1699.68

1509.49

SHUN TAK HOLDING

4.23

0.2369668

JAKARTA COMPOSITE INDEX

21.65

(L) 52W

3.71

790.5

SOYBEAN FUTURE Mar13

NAME

21.00

CURRENCY EXCHANGE RATES

NAME ENERGY

Min 21

NZX ALL INDEX

922.948

0.162896

4.636345

923.193

738.153

SJM HOLDINGS LTD

21.15

-0.9367681

17.5

21.9

12.34

4766213

PHILIPPINES ALL SHARE IX

3937.54

-0.3035804

6.449347

3978.23

3146.44

SMARTONE TELECOM

13.84

1.317716

-1.704545

17.5

13.1

4024882

HSBC Dragon 300 Index Singapor

638.5

0.8

2.8

STOCK EXCH OF THAI INDEX

1480.88

-0.6667472

6.390404

1492.72

1073.69

HO CHI MINH STOCK INDEX

479.79

-1.601723

15.96693

492.44

Laos Composite Index

1433.43

-0.1421137

18.00012

1455.82

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

WYNN MACAU LTD

21.75

-1.58371

3.818612

25.5

14.62

7099322

ASIA ENTERTAINME

4.62

-3.144654

50.98039

7.24

2.4

284649

BALLY TECHNOLOGI

45.52

-1.279549

1.811677

51.16

41.74

453891

372.39

BOC HONG KONG HO

3.47

0.2890173

13.02932

3.47

2.58

10929

880.65

GALAXY ENTERTAIN

4.54

1.565996

14.35768

4.54

2.21

11260

INTL GAME TECH

15.03

0.2668446

6.06916

17.37

10.92

3314235

JONES LANG LASAL

91.99

0.1633275

9.59018

92.87

61.39

632060

LAS VEGAS SANDS

51.56

0.9397024

11.69844

58.3216

32.6127

9761024

MELCO CROWN-ADR

20.17

-0.7870143

19.77435

20.59

9.13

2648695

MGM CHINA HOLDIN

2.2

18.91892

2.3

1.36

2000

MGM RESORTS INTE

12.57

-0.3961965

7.989688

14.9401

8.83

10478467

SHFL ENTERTAINME

14.14

-2.077562

-2.482759

18.77

11.75

396521

SJM HOLDINGS LTD

2.79

3.333333

20.77922

2.85

1.65

1300

123.49

0.8987662

9.778649

129.6589

84.4902

1225856

WYNN RESORTS LTD

AUD HKD

USD

14 |

business daily February 1, 2013

Opinion

National drift or global mastery Gordon Brown

Former Prime Minister and Chancellor of the Exchequer of the United Kingdom

s world business leaders gathered in Davos, a long-overdue paradigm shift in monetary policy – subordinating the targeting of inflation to the targeting of growth – is slowly taking shape. In what some call a “reverse Volcker moment,” U.S. Federal Reserve chairman Ben Bernanke has specified a target of 6.5 percent unemployment alongside his inflation target; Japan’s new government has proposed a minimum inflation target; and Mark Carney, the next governor of the Bank of England, has argued that “there could not be a more favourable case for nominal GDP targeting”. Meanwhile, China has pledged to double average domestic per capita income by 2020. Sadly, it has taken four years of gross underestimation of the impact of fiscal austerity and a chronic shortage of demand (with the economy’s supply potential beginning to decline accordingly) for us to agree to target growth – which the G-20 called for in 2009. So why, with change

Today, for the first time in decades, no single economy can drive the global economy forward

materialising, is there so little optimism about growth as we enter 2013, and why is there so much talk of a “lost decade”? The answer is that the problem of low growth requires more than a shift in national monetary policies: it also requires an agreement to coordinate global growth – a solution that has not been forthcoming. Of course, some of the pessimism arises from the weakness of Europe, which

has agreed only that the European Central Bank be lender of last resort; and some stems from recognition of the limits of quantitative easing. In part, we are victims of a self-fulfilling pessimism – the view that a debt overhang dooms us to unemployment and stagnation, with nothing to be gained by attempting to use fiscal expansion or monetary innovation to counter it. But I believe that we have failed to grow faster for a more fundamental reason. Put simply, ten years ago, America could deliver a global recovery. Perhaps ten years from now, Asian consumer spending will fill this void. But today, for the first time in decades, no single economy can drive the global economy forward.

Stuck in a rut For 150 years, until 2010, the West (America and Europe) was responsible for the majority of global output, manufacturing, trade, investment, and consumption. Now we are in a transitional era, with the rest of the world out-producing, outmanufacturing, out-trading, and out-investing Europe and America – but not yet outconsuming them. This imbalance means that producers of most goods and services are outside the West, but rely on Western consumers to absorb their output. Until the transition is complete, we depend on each other: no one can succeed alone. But, in the absence of global coordination, the world is stuck in a rut, acting out its own global version of the “prisoner’s dilemma” – a universe in which no major economy can succeed on its own, yet none trusts any other enough to attempt cooperation and coordination. Nominal-GDP targets may be a necessary way forward, but they are not a sufficient response to slow global growth. Even the boldest of national initiatives may fail – not because targeting economic growth is the wrong approach, but because there is no way to sustain the higher levels of growth that we need without better global coordination. In the absence of a favourable global context, any change in economic policy that is purely national, like

employment targeting, will have limited benefits (and may discredit the pursuit of a national employment goal). So today’s fundamental policy void – yet to be addressed – lies in national governments’ unwillingness to contemplate global leadership. Cynics might argue that this is dysfunctional national decision-making replicated at a global level. But there is a more compelling explanation: nobody will confront pervasive protectionism. Of course, economic nationalism is obvious in America, with its nervousness about China and hostility to global agreements; but Europe, too, is now witnessing both a wave of anti-immigrant sentiment and rising resistance to helping poorer countries. Indeed, it is safer for politicians to offer the opposite of a global vision: to renationalise every economic problem and attribute all of them to the mistakes of domestic opponents. So, for four years, budget deficits – which do, of course, have to be addressed by long-term debtreduction plans – have virtually monopolised economic-policy debate in Europe and America, at the expense of sensible discussions about growth, employment, and trade.

Protectionism Put crudely, it is more beneficial politically for an opposition politician to claim

that his country’s problems are self-induced, caused by domestic profligacy, and have little to do with global financial failures. Citizens would be excused for concluding that the 2008 global financial crisis had nothing to do with a global banking collapse and was entirely caused by a few spendthrift national governments racking up deficits. As a result, millions of people are unemployed unnecessarily, and millions more face reductions in their living standards. Economics is now global, but politics remains local. Global challenges grow, while the agendas of international summits contract, reinforcing the myth that they are mere talking shops. But, even as protectionist sentiment frustrates cooperation, there is a global growth deal waiting to be done. It starts from the recognition that large surplus savings and much unused capacity are waiting to be mobilised, and that expanding consumer demand among Asia’s rising middle class holds the key to expansion. Yet China, whose consumers are perfectly able to absorb imports from the West, will remain wary of boosting middle-class demand while it is in fear of losing some of its Western export markets. India’s government wants to open

up its economy to Western imports, but the rest of the world is not addressing its fears of over-exposure to global volatility. Only a coordinated policy response covering all of the G-20 economies can break this vicious cycle of low confidence and slow trade growth. If China could be confident that its export markets will not falter, it could expand domestic consumer demand and take in Western goods. Likewise, if America were confident that it could sell in Asia, Western consumer confidence would rise. Three years ago, the International Monetary Fund showed that by coordinating the expansion of Asian demand and investment in Western infrastructure, we could mobilise private funds for big private-public partnership projects. Global output would rise 3 percent, employment would grow by 25-30 million, and 100 million people would escape poverty. Global economic coordination is no longer a luxury. Winston Churchill’s gibe about the policies of the 1930’s haunts us as well. Governments, Churchill said then, were “resolved to be irresolute, adamant for drift, solid for fluidity, and allpowerful for impotence”. In 2013, it is irresolution, drift, and the resulting impotence that we, too, must address. © Project Syndicate

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February 1, 2013 business daily | 15

OPINION Business

The Asian sleepwalkers

Leading reports from Asia’s best business newspapers

Yoon Young-kwan

wires Wall Street Journal

South Korea’s foreign minister from 2003 to 2004, is currently Professor of International Relations at Seoul National University

War-style confrontation in Asia, it must try harder to engage China in shaping a viable regional security structure. A confrontational U.S. approach toward China, moreover, would imply an additional destabilising factor: Japan might become much bolder than necessary in its foreign policy. After Wilhelm II stopped engaging Russia in the 1890’s, bilateral relations worsened, which provided his ally, Austria, diplomatic carte blanche in dealing with Serbia – and, more important, Serbia’s Russian patron. Thus, Wilhelm unintentionally contributed to the outbreak of war in 1914.

Cnooc Ltd has set a conservative output target for this year, but it is sharply increasing its capital expenditure budget as it seeks to expand both overseas and domestically. China’s biggest offshore oil and gas producer, which said it would increase its capital spending to between US$12 billion and US$14 billion this year from US$9.2 billion last year, said on Wednesday it is maintaining its ambitious 2011-2015 compound annual growth projection of 6 percent to 10 percent despite slow growth in 2011 and 2012, in part due to the anticipated completion of its US$15.1 billion acquisition of Canadian energy firm Nexen Inc.

Worrying signs

Taipei Times President Ma Ying-jeou promised to protect Taiwan’s pension system from going bankrupt for the next 30 years as he unveiled the government’s pension reform proposals on Wednesday. The government plans to establish a threetier pension system for civil servants. The first tier would be a national pension with a 15 percent contribution from gross salary, the second a mandatory occupational scheme with a 30 percent contribution and the third a non-mandatory commercial pension, also with a 30 percent contribution. “The proposal is not perfect, but we’ve tried to make it a thorough one after gathering opinions,” Mr Ma said.

Jakarta Globe Indonesians are still pessimistic toward the current state of the economy but are more optimistic about its prospects for the next 12 months, according a report by a market research firm released on Wednesday. Consumers’ views of the current economy compared to last year hit a level of 74, but their views on the economy in the next 12 months compared to now was registered at 119, in a survey conducted last month by InsightAsia. A neutral level is 100. Consumer confidence in Indonesia increased by seven points, to 100, the secondbiggest increase among six Asian countries surveyed.

The Age Tony Abbott has confirmed plans to axe Australia’s Schoolkids Bonus, with the opposition leader including the decision in a set speech against the advice of a senior staffer. The A$1.23 billion government scheme provides families with A$410 for each child in primary school and US$820 for each child in high school. News Ltd reported the email trail showed that Mr Abbott was set to announce the axing of a major government programme, but a senior adviser urged him to drop it, describing it as ‘’a really bad idea’’.

hether East Asia’s politicians and pundits like it or not, the region’s current international relations are more akin to nineteenth-century European balance-of-power politics than to the stable Europe of today. Witness East Asia’s rising nationalism, territorial disputes, and lack of effective institutional mechanisms for security cooperation. While economic interdependence among China, Japan, South Korea, and the members of the Association of Southeast Asian Nations continues to deepen, their diplomatic relations are as burdened by rivalry and mistrust as relations among European countries were in the decades prior to World War I. One common characteristic, then and now, is a power shift. Back then, Great Britain’s relative power was in decline, while Germany’s had been rising since German unification in 1871. Similarly, at least in terms of economic, if not military, capability, the United States and Japan seem to have begun a process of decline relative to China. Of course, this process is not irreversible: Effective political leadership and successful domestic reforms in the U.S. and Japan, together with China’s failure to manage political pressure from below, could yet halt this seemingly inexorable power shift. Major power shifts define eras in which key political leaders are likely to make serious foreign-policy mistakes. Indeed, poor management of international relations at such critical junctures has often led to major wars. Rising powers tend to demand a greater role in international politics, declining powers tend

to be reluctant to adjust, and key policymakers are likely to misunderstand the intentions of other countries’ leaders and overreact to their actions. Historically, rising powers tend to become too confident too soon, leading them to behave imprudently, which frightens their neighbours. For example, Kaiser Wilhelm II dismissed Otto von Bismarck as chancellor in 1890, less than 20 years after the formation of the Second Reich, and began to destroy Bismarck’s carefully crafted alliance network. His rough diplomacy frightened France, Britain, and Russia, making it easier for them to unite against Germany.

Domestic insecurity China’s new diplomatic assertiveness in 2010 – closely following the eruption of the worst financial crisis since the 1930’s – recalled that of Wilhelmine Germany. In both cases, insecurity resulted not from an external threat, but from top policymakers’ own actions. In late 2010, I was relieved – somewhat – when a key Chinese leader, State Councillor Dai Bingguo, announced that China would adhere to the path of peaceful development. But the rhetoric of some Chinese, particularly in the military, concerning the South China Sea and other disputed Chinese sovereignty claims suggests that not everyone in the country’s leadership is committed wholeheartedly to such a path. The extent to which policymaking by the country’s new leader, Xi Jinping, takes into account the insecurity felt by China’s neighbours – and abandons a quest for absolute security for China –

will be one of the key variables influencing East Asia’s security environment in the years ahead. America’s foreign policy will be another key factor. If the U.S. pursues a predominantly confrontational approach, East Asian politics will inevitably become polarised, just as multipolar nineteenth-century Europe gave way to an increasingly bipolar order in lockstep with rising tensions

The question for the U.S. and East Asia’s leaders today is whether they will wake up and develop effective multilateral mechanisms for security cooperation before doing themselves serious harm

between Germany and Britain. America’s so-called “pivot to Asia” might have been necessary from its point of view, given the concerns of its Asian allies about China. But, unless the U.S. wants a Cold

There are already some worrying signs of a Japanese miscalculation. Japan’s new prime minister, Shinzo Abe, reportedly said that he is considering renouncing the Kono Statement of 1993, which acknowledged that the Japanese military had raped and enslaved Asian and European women during World War II. If Abe does so, Japan’s relations with South Korea and China will suffer serious damage. That is in no one’s interest, including Japan’s, given that the Japanese share many security concerns with South Korea. So U.S. diplomacy will need to be dexterous. It must ease Japan’s sense of insecurity in the wake of China’s rise, while persuading Japan’s new leaders to behave prudently and refrain from excessively nationalist behaviour. Frankly, with two decades of economic stagnation already behind it, Japan has more important matters to pursue. In contrast to its multilateral efforts in Europe, the U.S. created a hub-and-spoke security framework – formed by U.S.-centred bilateral alliances – in Asia following WWII. One result is that no direct channel for security cooperation among Asian countries was ever established, which has contributed to the low level of trust in East Asia, even among close U.S. allies like Japan and South Korea. And it is precisely here that South Korea, a medium-sized ally of the U.S., will be in a better position than Northeast Asia’s bigger powers to act as a facilitator. There is much to learn from the diplomatic failures that led to WWI. A new history, by Christopher Clark, of the diplomatic prelude to that war is called, fittingly, The Sleepwalkers. The question for the U.S. and East Asia’s leaders today is whether they will wake up and develop effective multilateral mechanisms for security cooperation before doing themselves serious harm. © Project Syndicate

16 |

business daily February 1, 2013

CLOSING Indonesia sees US$2 bln trade deficit

Deutsche Bank takes US$3.5 bln loss

Indonesia’s trade minister yesterday estimated the country’s 2012 trade deficit – probably the first in the country’s history – at US$2 billion. Southeast Asia’s biggest economy has faced a difficult global market for the vast array of natural resources on which it depends heavily. At the same time, imports have been pushed up by growing fuel consumption and purchases of machinery as the country tries to industrialise. Noting the 2012 deficit reached US$1.3 billion through November, Trade Minister Gita Wirjawan said “the deficit is likely to have widened up to the end of the year”.

Deutsche Bank AG plunged to a 2.6-billion-euro (US$3.5 billion) quarterly loss after it took charges aimed at drawing a line under a series of scandals and cleaning up its balance sheet without asking shareholders for cash. Germany’s biggest lender said yesterday the pre-tax loss was partly due to a 1-billion-euro hit to cover legal risks, including its potential exposure to an industry-wide scandal involving the fixing of benchmark interest rates. It also announced a 1.9-billion-euro impairment charge on underperforming assets, shifting them to a “non-core” division for potential run down or sale.

India faces less risk of rating downgrade Standard & Poor’s says government needs to assure reforms are not one-off

he possibility of India losing its investment-grade credit rating has receded somewhat as a result of economic reforms undertaken by the government since last September, an analyst with rating agency Standard & Poor’s told Reuters yesterday. “It is still at least a one in a three chance that we could downgrade. But the likelihood of it is less than when we first indicated the negative outlook last year,” Tan Kim Eng said in a telephone interview from Singapore. His comments reflect a softening of the stand by the rating agency just a few weeks after it reiterated a warning in December about cutting India’s rating to junk, citing a wide fiscal deficit and a heavy debt burden. India has a BBB- rating from S&P, the lowest investment grade among the BRIC group of large emerging economies and one notch above “junk” status. The threat of a rating downgrade along with electoral challenges posed by the worst economic slowdown in a decade has made Prime Minister Manmohan Singh’s government rediscover an appetite for politically unpalatable but vital reforms. It has opened the retail and aviation sectors to more foreign investment, hiked railway passenger fares, cut budget-busting fuel subsidies and slapped higher duties on gold imports that have widened its current account deficit. “We had no indication that they would be rolled out. So, to some extent, it is a positive surprise,” Mr Tan said. “Now, perhaps there are some indications that these reforms could bring India’s structural growth

Reform steps need to be implemented in full, says rating agency

back up again.” Economists polled by Reuters earlier this week forecast that the measures taken by New Delhi since late last year would be enough to stave off downgrade threats issued by both S&P and its rival Fitch last year. A majority of economists polled, 14 of 23, said steps taken thus far were enough to convince the rating agencies, even though the economists expected the government to miss its fiscal deficit target for the year.

Economic pains India’s economic growth, which was close to hitting double-digits

China to launch cleaner diesel fuel standards New rules to be applied across the country by the end of 2014

hina will soon publish cleaner standards for automotive diesel, spurred by weeks of smoggy skies in Beijing and other major cities, but the cleaner fuel won’t become compulsory for about two years, according to an emission expert and an industry newspaper. Once the new standards are

issued, oil firms will start producing diesel with a sulphur content of 50 parts per million (ppm) – similar to Euro IV standards – versus the prevailing national III with a sulphur content of 350 ppm, effectively reducing pollutants like sulphur dioxide and oxynitride. The new specifications won’t

before the global financial crisis in 2008, has been stuck below 6 percent for the past three quarters. In the fiscal year ending March 2013, the economy is expected to expand by about 5.5 percent, the worst pace since 2002/03. Growing economic pains are making it tougher for Prime Minister Singh to fund flagship welfare programmes ahead of a national election due by mid-2014. To revive investor sentiment, Finance Minister P. Chidambaram has delayed until April 2016 controversial tax changes meant to combat evasion, after the new rules slowed capital inflows. He has put

welfare, defence and road projects on the chopping block to hit a tough fiscal deficit target of 5.3 percent of GDP by March. “The key thing is that investors have to be reassured about is that this [the reform push] is not a oneoff thing, as in they are doing all this at this moment because things have turned negative and once things stabilise that’s the end of all new efforts,” Mr Tan said. “While we don’t see an urgent need to downgrade the rating, we also are not yet comfortable enough to think that the rating outlook should revert to stable.”

become a mandate across the country until the end of 2014, leaving a window of about two years, China Petrochemical News reported yesterday. The decision follows an emergency meeting last week of government agencies, including the Ministry of Environmental Protection, pricing authorities and oil firms. “The new diesel standards were drawn earlier but not published. The recent worsening of air pollution has quickened the release, which will be out very soon,” said Tang Dagang, a vehicle emission expert with China Research Academy of Environmental Science, which is affiliated with the environment ministry. The exact timing of the expected release of the new standards was

not clear. Diesel, a bellwether fuel of China’s manufacturing-focused economy, makes up about 37 percent of China’s oil market, the world’s largest after the United States. Automotive diesel, used by trucks and coaches, forms just over half of China’s total diesel market of about 3.6 million barrels per day. Emissions from lower-quality diesel are among the main culprits for urban air pollution. To motivate oil firms to quickly supply cleaner diesel to the market, the government will allow a price premium in China’s grade IV diesel versus III, said Mr Tang, adding that the government is also considering tax incentives for the next cleaner fuel, national standard V.

Reuters