Macau Business Daily, July 15, 2013 by Business Daily

Vitor Quintã

MOP 6.00

April 19, 2013

Year II

Number 326

Monday July 15, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Interest rate hike is ‘some time’ off says banker Page 5

Jiangmen US$6bln uranium plant scrapped Page 8

Growth to slow in second half: Tam T

Franchise expo is a super sized success story Page 16

Mr Tam, implying significant slowing in the second half. He was speaking on the sidelines of an event to promote Macau held in the mainland’s Guizhou province. Gross domestic product expanded by 10.8 percent year-on-year in the first three months according to data released in May by the city’s Statistics and Census Service. It was the fastest annual rate for four quarters, assisted by a pick up in gaming revenue seen in March. More on page 2

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Hengqin to launch trial New bus route awards tax, imports scheme based on track record Hengqin Island is to pilot a set of new policies, including rules on imports, tax management and immigration. The experiment starts from August 1, while the island’s customs facilities are still being expanded, the Administrative Committee of Hengqin New Area told Business Daily. Officials from the mainland body will be in Macau on Wednesday to explain more about the policies and the plans for Hengqin.

The evaluation scheme for the city’s bus service – a crucial hurdle for local operators bidding for new routes and improved subsidies – was officially launched this month. Lo Seng Chi, head of the traffic management department of the Transport Bureau, told reporters so on Friday. The scheme is being run by external contractors, including UMTEC Lda, the commercial arm of the University of Macau.

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Interview Russian casino plan no threat to Macau Neither Lawrence Ho’s newly-announced casino venture in the Russian Far East nor Singapore’s existing casino duopoly is likely to offer serious competition to Macau’s gaming market, suggests industry consultant Steve Gallaway. The principal with United States-based Gaming Market Advisors told Business Daily real competition would only come if China were to authorise casino gaming elsewhere inside her borders. He thinks the Vladivostok scheme would attract mostly northeastern Chinese. Pages 6 & 7

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July 12

HSI - Movers Name

%Day

HENDERSON LAND D

1.55

KUNLUN ENERGY CO

0.90

SUN HUNG KAI PRO

0.59

LENOVO GROUP LTD

0.56

HENGAN INTL

0.44

POWER ASSETS HOL

-2.05

PING AN INSURA-H

-2.48

HANG LUNG PROPER

-2.87

TINGYI HLDG CO

-2.97

CHINA COAL ENE-H

-3.36

Source: Bloomberg

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July 15, 2013

Macau

Growth to slow in second half: Tam Macau to remain investment haven despite ‘complicated and unstable’ global outlook Michael Grimes

michael.grimes@macaubusinessdaily.com

Steady does it – Francis Tam

he city’s economy is likely to grow by a single-digit figure this year says Francis Tam Pak Yuen, Secretary for Economy and Finance. “For the whole year economic growth, there will be a middle singledigit growth,” said Mr Tam on the sidelines of an event promoting the city in Guizhou province on the mainland. He implied significant slowing in the second half. Gross domestic product expanded by 10.8 percent year-on-year in the first three months – with gambling revenue growth picking up speed in March – according to data released in May by the city’s Statistics and Census Service. It was the fastest annual rate of economic growth for four quarters. Macau is to report GDP data for the second quarter on August 30. But Mr Tam stressed Macau

would in 2013 remain a stable destination for investment, generally tracking the performance of the mainland economy. In June the World Bank cut China’s growth forecast from earlier 8.4 percent estimates, but it still stands at an

KEY POINTS Mid-single digit growth for year Gaming revenue likely up 10 pct Jobless rate to remain stable Govt revenues ‘up slightly’

impressive 7.7 percent. The central government recently signalled it were willing to trade headline growth in the mainland’s GDP – and the inflation that often accompanies such expansion – for improvement in the population’s general quality of life. President Xi Jinping said in a speech two weeks ago: “...we should look at welfare improvement, social development and environmental indicators to evaluate leaders”. On Friday Mr Tam signalled – both to overseas investors and for the benefit of domestic listeners – that stability was Macau’s goal. “Even though the international economic environment is complicated and unstable, several economic indicators – based on the data we have in the first half this year – can reflect the Macau economy is pretty stable,” he stated, in comments reported by Chineselanguage media. Mr Tam also said the gross gaming revenues this year will have “a 10-percent growth or close to 10 percent”. Accumlated gambling revenue growth for the first half of 2013 was 15.3 percent according to figures from the regulator, the Gaming Inspection and Coordination Bureau.

Budget surplus Unsurprisingly – given economic expansion coupled with tight controls on labour importation – Mr Tam expects the unemployment rate to stay at around the current very low level of 1.8 percent. He added there was likely to be a “slight rise” in government revenues compared to last year. The Macau government typically takes a very cautious approach to

forecasts on its public finances, consistently underestimating revenues from direct gambling tax and indirect taxes. It also typically underspends on budgets for both current expenditure – day-to-day government costs including public workers’ salaries – and capital expenditure on projects such as infrastructure. The latter can however be affected by practical delays to major multi-year schemes such as the Light Rapid Transit railway system currently under construction. The Financial Services Bureau revealed in data released late on Thursday that in the first half of 2013 the government’s budget surplus was already more than 40 percent higher than had been budgeted for the whole of the year. It stood at approximately 56.78 billion patacas (US$7.11 billion) as of June 30, compared to the projected whole-year surplus of 40.45 billion patacas anticipated by the administration. The size of the actual surplus was due in large part to income from gaming taxes, which by end-June had already reached more than 60 percent of the budgeted estimate for 2013. But income from indirect taxes – including the special stamp duty of ten to 20 percent levied on re-sales of residential property under a law effective from June 14, 2011 – also exceeded government expectations, raising in just six months 71 percent of the income budgeted by government for the year. In terms of outgoings, by June 30 the government had spent only 6.3 percent of the 19.17 billion patacas it has budgeted for capital expenditure this year, and only 28.6 percent of the 55.46 billion patacas set aside for current spending in 2013.

July April15, 19,2013 2013

Macau

Hengqin to begin trial tax, imports scheme New rules to speed up border formalities and reduce taxes Stephanie Lai

sw.lai@macaubusinessdaily.com

opinion

I can’t explain myself… I’m not myself you see Michael Grimes

michael.grimes@macaubusinessdaily.com

Pilot scheme includes faster border clearance

engqin Island will begin trying out new import, tax and immigration rules on August 1, while the island’s customs post is being expanded, the Administrative Committee of Hengqin New Area has said. The new rules are aimed at speeding up formalities at the border between Hengqin and Macau, and

Trade symposium beckons Hengqin Administrative Committee members will be in Macau from Wednesday to explain their pilot scheme for tax and immigration rules, while organising a trade symposium. Macau Trade and Investment Promotion Institute director Jackson Chang said on Friday the Hengqin delegates would also announce the industries the island would like to develop, and the respective incentives for those industries. Mr Chang, a member of the evaluation committee for Macau investment projects on Hengqin, said the island would begin to register Macau investment project initiatives within three months of the end of the trade symposium. He said the committee had received about 50 applications so far. The evaluation committee might need two months to process the successful applications for projects, he said.

include tax benefits for some imports into Hengqin, according to the mainland’s General Administration of Customs and State Administration of Taxation. Machinery and equipment imported for use in Hengqin infrastructure and manufacturing plants will be exempt from tax, the taxation administration says in an official instruction. Consumer goods and construction materials imported from Macau will not be exempt from tax. Companies will still have to pay import and sales tax on products sold in the mainland that are manufactured and processed on Hengqin. “For the pilot policy, we did see the outline in the instructions written by the state customs, though the exact products that can be covered by these taxation benefits have yet to be detailed by the Hengqin administration,” National People’s Congress Macau delegate Lau Ngai Leong told Business Daily. “A major task that the Hengqin administration would like to achieve in tandem with the pilot policy is that they can electronically manage all the customs checks and quarantine work so that logistics can go smoothly.”

Catching up The customs post between Hengqin and the mainland at the southern end of the Hengqin Bridge is being expanded, according to Hengqin Administrative Committee policy group member Huang Jian Tuan. Mr Huang said state-owned Zhuhai Da Heng Qin Investment Co Ltd had invested 400 million yuan (US$64.9 million) in the expansion,

which is expected to give the post six vehicle lanes. “The gross floor area of the expanded checkpoint will cover around 28,000 square metres,” he said. “Hopefully the expansion can be completed by the year-end.” Although it is expected that Macau-registered vehicles will eventually be able to travel freely in and out of Hengqin, the rules have not yet been set. “Such a measure will require both the Guangdong and Macau governments to sign off on the policy details, so that state customs can inspect Macau-registered cars entering Hengqin,” said Mr Huang. “The security department, transport department and customs officials from Zhuhai and Guangdong are still discussing the details of the measure. There is no set agenda yet.”

RMB400 mln

Investment in the expansion of the customs post between Hengqin Island and the mainland

ewis Carroll’s day job was as a mathematics tutor at Oxford University. So the author of Alice’s Adventures in Wonderland put plenty of mathematical and logical jokes in his famously surreal story of a young girl’s adventures with the Mad Hatter, the Dormouse and the Queen of Hearts. In chapter five, titled ‘Advice from a Caterpillar’, the Pigeon asserts that little girls are some kind of serpent, as little girls and serpents both eat eggs. Let’s apply that principle to ‘Cablegate’, a recent decision by the Court of Second Instance. According to the government’s Wonderland logic, public antenna companies must be legal, because public antenna companies and Macau Cable Television Co Ltd both carry signals of legally copyrighted television channels. The Macau court decided, that in fact, under Macau law, public antenna companies were not operating legally, and hadn’t been doing so at the very least from the day in 1999 when the Macau government granted a citywide monopoly concession on pay-TV services to Macau Cable. But rather than upholding the rule of law, and the trampled rights of Macau Cable, the government appears to be choosing instead the politically expedient solution of keeping the viewing public happy. It’s proposed achieving that by subsidising Macau Cable to share its signals with the public antenna firms, thereby regulating the breach of Macau Cable’s own monopoly. Lewis Carroll would surely have appreciated the joke. Quite what the copyright owners of the pay-TV programmes involved in this bizarre custody battle make of all this has not so far been reported. Were it not for the fact that the Macau market is so small, we might by now have seen litigation on the matter in the United States – from where most of the English-language material originates – on the grounds of breach of contract and of piracy. There is a pattern here. It’s the failure by the Macau government to grasp administrative nettles in a timely manner and on its own initiative; only to be forced finally by either the courts or public opinion, to clean up the resulting mess. Supporters of the government’s position will probably call it pragmatism. But the message it sends out is potentially corrosive. It’s that the only thing rule breakers need to do is sit tight and hang on and eventually the government will retrospectively legitimise their actions. That’s hardly a message likely to appeal to a new generation of investors interested in diversifying the city’s economy.

Lewis Carroll would surely have appreciated the joke

July 15, 2013

Macau

Better performers to win bus routes

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HOSPITALITY Driving employment The industries more closely associated with tourism have driven the changes in the labour market. The published statistics usually put these industries into three categories: commerce, comprising wholesaling and retailing; lotteries and betting games – or, put more simply, gaming; and hotels and restaurants. These three categories of industry are the main employers, and their combined share of the employed labour force is rising. The number of people in employment has risen by 9.8 percent since the beginning of 2009. Employment in commerce, gaming, and hotels and restaurants, taken together, has risen by 22.9 percent – growing at more than double the average rate.

The main employer is the gaming industry. Gaming’s share of the employed labour force expanded from 20.2 percent in the first quarter of 2009 to 23.1 percent in the first quarter of this year. But employment is growing faster in hotels and restaurants than in any of the other main categories of industry. The number of people hotels and restaurants employ has risen by almost one-third since 2009, exceeding 55,000 for the first time in the first quarter this year. Employment in commerce has also grown, but more slowly – at a rate only marginally faster than the average. The proportion of the employed labour force working in commerce, gaming, and hotels and restaurants, taken together, has risen by 5.5 percentage points since 2009 to 51.8 percent in the first quarter of this year. They first employed more than 50 percent a year ago. Obviously, the proportion of the employed labour force working in all other industries combined has contracted accordingly. The number of people in employment in all industries is slightly lower now than it was three years ago.

The government puts to work its new system for evaluating the bus operators Stephanie Lai

sw.lai@macaubusinessdaily.com

he government has begun using its new system for evaluating the performance of the bus operators, according to the head of the Transport Bureau’s traffic management department, Lo Seng Chi. Mr Lo told reporters on Friday that the results of the evaluations would be references for the government in deciding whether to give the bus operators new routes, or to pay them more for running the buses. The government contracted an external panel to set up and run the evaluation system. The panel has members from UMTEC Lda, a commercial arm of the University of Macau, and from the Macau branch of THI Consultants Inc, and includes a professor at Taiwan’s National Chiao Tung University, William Jen Wei-Lien. The government is paying the panel 3.6 million patacas (US$450,510) for 13 months of work. Mr Lo said the budget for the evaluation system for next year “will have to be studied”. He said the results of the first evaluations would be released in the first quarter of next year. The system will be used to rate every six months the frequency of services, the safety equipment on the vehicles, the performance of drivers, the reaction of the operators to feedback from passengers, and passenger satisfaction. The management of its services, the accident rate among its vehicles and passenger satisfaction will

J.I.D.

31.7 %

Growth in Q1 employment in hospitality, 2009-2013

Reolian had the lowest score in a trial evaluation, the Transport Bureau says

account for 45 percent of a bus operator’s rating overall. The highest score possible will be 100.

Trial run “The higher the ratings, and the more positive the passenger feedback that a company gets for its services, the more likely it will be to get a new bus route to serve in the future,” Mr Lo said. He acknowledged that the evaluation results will be important references for the government in deciding whether to pay the bus operators more to run the buses. The three bus operators are Transportes Urbanos de Macau SARL (Transmac), Sociedade de Transportes Colectivos de Macau (TCM) and Reolian Public Transport Co Ltd. Reolian, the newest of the bus operators, will have to catch up with the others in the quality of its services. The Transport Bureau said a trial of the evaluation system this year had given Reolian a score of 59.78. The pass mark is 60. Reolian’s score was dragged down by its management of its services and shortcomings in its notification of passengers of changes in its services. TCM had a score of 70.53, being weakest in bus maintenance, in the accident rate among its vehicles and in dealing with passenger complaints. Transmac had a score of 70.81, being weakest in dealing with passenger complaints promptly. Reolian is suing the government, asking the courts to make the

government stump up an increase it announced last year in what it pays the company to run its services. In April the government approved an increase of 23.3 percent in what it pays Transmac and TCM to run their services, but left Reolian out in the cold.

Network grows Mr Lo did not say when the Transport Bureau would amend the contracts that the bus operators have with the government to allow for evaluations made using the new system. He said the only aspect of their contracts now under review was how the bus routes were shared out among them. In May, Transport Bureau director Wong Wan said the government would make a “full review” of the contracts. Mr Wong said the review would focus on the relationship between passenger volume and the bus services during peak and off-peak hours. He was speaking in response to criticism by the Commission of Audit of his bureau’s supervision of the bus services. On Friday, Mr Wong said in reply to an inquiry by Legislative Assembly member Chan Meng Kam that the bureau was considering classifying bus services as express, feeder and ordinary services. He said bus services would be extended to the public housing on Taipa and in Seac Pai Van in Coloane, and to the University of Macau’s new campus on Hengqin Island.

July 15, 2013

Macau

Interest rate hike ‘some time’ off But bank executive warns city should be prepared for potential impact on assets, investment Tony Lai

tony.lai@macaubusinessdaily.com

he prospect of the city being confronted with a rise in bank interest rates is still far way but an industry executive says borrowers should be aware of the possibility. “Despite the quickening pace towards recovery in the United States economy, [I] believe there is still some time before a hike in the [local] interest rate takes place,” Lee Tak Lim, director and general manager of Banco Weng Hang SA, was quoted as saying in a report by Chinese-language newspaper Macao Daily News. According to his “conservative prediction”, the interest rate would only “rise significantly” more than a year from now. Banco Weng Hang is a subsidiary of Hong Kong-based Wing Hang Bank Ltd. Latest data from the Monetary Authority of Macau show MAIBOR (the Macau Interbank Offered Rate for lending between banks) stood at 0.54 percent for the six months to May 2013. But even with a stable interest rate, Mr Lee says the city should be “cautious” about the effects of any future upward movements.

Fitch gives stable outlook to two Macau Banks

Though he did not specify to what risks he was referring, one of the obvious impacts would be on mortgages for homebuyers. Economists around the world have anticipated a possible rise in U.S. interest rates after the Federal Reserve chairman Ben Bernanke last month signalled plans for a scaling down later this year of its bond-buying programme. It sparked nervousness among investors. But there’s general consensus among economists that the ‘patient’ – the world economy

– must eventually be weaned off this U.S. stimulus medicine. Mr Bernanke’s signal prompted Hong Kong Financial Secretary John Tsang Chun Wah to say Hong Kong rates could rise ahead of any U.S. move. That could push up interest rates in Macau. The city’s currency is indirectly pegged to the U.S. dollar through the Hong Kong dollar. But dialling down the U.S. bondbuying programme could prove harder than expected, as Mr Bernanke said monetary easing was still needed due to the weak U.S. job market.

The prospects of Banco Weng Hang SA and Tai Fung Bank Ltd remain stable while the risk that both lenders will experience long-term issuer default remains extremely low, Fitch Ratings said. The rating agency has maintained an ‘A-’ rating for Weng Hang and ‘BBB+’ for Tai Fung. Fitch also said Tai Fung, in which Bank of China Ltd has a 50.3 percent stake, remains constrained by its small size. Tai Fung had a market share of seven percent of total Macau bank assets at the end of last year. Weng Hang’s share remains limited, at three percent. The rating agency also pointed out that Tai Fung “remains vulnerable to Macau’s volatile property market, given that residential mortgages and commercial property lending accounted for 16 percent and 17 percent of [its] total assets”.

July 15, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Clothing China The Statistics and Census Service has a big database on external trade. It is available online. It gives more detailed information on this topic than on any other. Searching for specific products requires some familiarity with the commodity coding used, which is also available online. The coding system is numeric, with big sections identified by two digits. The classification goes down to specific products, which are coded with eight digits. This degree of detail allows insights into the dynamics of external trade. Most of the goods that Macau consumes are imported, as manufacturing companies here produce less and less of anything. The mainland is the biggest source of those goods. Imports from the mainland make up about one-third of all imports, typically. What is less apparent is that the mainland is also a big market for goods that Macau exports. Much of the data are unavailable in this degree of detail because of statistical confidentiality rules, so the chart does not show them.

Get ready for a slowdown, Gallaway advises casinos Only if China were to legalise gaming somewhere other than Macau would there be any real competition for the casino industry here, says Gaming Market Advisors principal Steve Gallaway. Mr Gallaway told Business Daily in an interview over the phone from the United States that there was no real competition for Macau from elsewhere in this part of the world. He said Singapore was not aiming to be known principally as a gaming destination, and that the far eastern Russian city of Vladivostok would attract mostly northeastern Chinese. Macau businessman Lawrence Ho Yau Lung, chairman of Melco International Development Ltd, will be one of the partners in a casino project in Vladivostok. Mr Gallaway said neither the economic slowdown in the mainland nor June’s credit squeeze had affected Macau, but that the city would feel the pinch if Beijing decided to be less liberal in granting individual visa scheme (IVS) visas to mainlanders to visit Macau as individuals rather than as members of tour groups. Luciana Leitão

leitao.luciana@macaubusiness.com

The Chinese economy is slowing down, with economists predicting 7.5 percent growth for the second quarter. Is this having an impact on Macau? While China is slowing down a bit on growth, it is still growing much faster than other fully developed countries and, also, gaming is accessible to more and more citizens in China. At the end of the day, providing the Chinese economy continues to grow, which it still is, the future of Macau will be more dependent on the Chinese government’s visa restrictions.

The only real constant in Macau’s main exports to the mainland in the past three years has been the relative importance of textiles which we can describe generally as knitted and non-knitted clothing and accessories. The amounts exported were small and changed as time passed. Exports of knitted clothing have more than doubled since 2010. Exports of non-knitted clothing have been more irregular. Together, knitted and non-knitted clothing made up a bit less than 50 percent of exports to the mainland in 2010 and 2011, then made up 75 percent last year. The other main exports do not seem to follow regular patterns. J.I.D. The content of this column is the work of Business Daily’s journalists.

But if a credit crunch in China does happen, as analysts keep saying it will, will Macau suffer a severe blow? I’m going to say yes. Obviously, economic conditions in China can have an impact on Macau, but I haven’t seen anything occurring in China yet that is going to result in Macau revenues declining. The bigger question for Macau is if it will be able to absorb all the capacity in the same fashion in which it has absorbed it in the past. Why won’t the city be able to absorb the capacity? The rate at which Macau has been expanding, at some point in time, is going to slow

down to more normal rates. And I question how much that slowdown has been taken into account in many of the new facilities being built. I believe all of the facilities will ultimately

The rate at which Macau has been expanding, at some point in time, is going to slow down to more normal rates

be successful and that Macau can absorb them. I just question how many years it will take and what will the impact on the operators be. Some analysts say China’s slowdown is already taking its toll on the VIP gaming sector. Do you a see a new trend, in which the mass market outgrows the high-end segment? The mass market will outpace the VIP, and I say that for two reasons. First of all, the mass market really is depending a lot on how many visitors are allowed to leave China to go to Macau. The second reason is that, as Macau is maturing, operators are able to move some of their VIP junket business into the mass market. Mass market doesn’t mean that people are small gamblers. Mass market means you don’t have to pay your junket operator outrageous fees. Operators prefer to get people in their database, wealthy Chinese with the ability to move money out of China on their own, and have them come directly to them without the junket operator. I believe the operators are slowly finding ways to do that. Is the VIP segment already facing some pressure? It is pressure that prohibits

July April15, 19,2013 2013

Macau

capital growth, not that puts it at risk of declining. Also, you still have a much greater penetration in the VIP segment today, obviously through junkets – I’m purely looking at the numbers of how big the population of both of those segments is and what percentage of them is going to Macau. Is there a possibility of Macau continuing to grow at this pace without the junket system? No. Macau has been able to be exceptional and grow where it is today because of the junket system. The reality is, if the junkets didn’t exist, the majority of the money that goes through the junket system would have extreme difficulty of finding its way into Macau. Junket operators’ number one ability is to assist the Chinese in providing them gambling funds on the other side of the Chinese border. If you take away that ability – and the junkets have been doing that for years – you’re going to seriously impact Macau gaming revenues. When I say operators rather have a gambler coming through their own doors than through a junket operator’s door, that is simply because they pay 25 percent less in taxes on that money. But the operators recognise the value that junket operators bring, and that transition of moving those players from VIP to mass market is going to be a very slow transition. American operators are subject to strict rules in the U.S., where the junket system is not viewed favourably. Aren’t they facing too many risks? That’s more of an issue of ‘that’s how business gets done in other countries’. American operators’ number one priority is making sure they maintain the integrity of their operations, and also their licences. That’s why they set up internal frameworks, to ensure that they follow and comply with all the laws of international money laundering regulations. Sure, it is known there are likely ties, or have been ties in the past, to triads, but the junket operators are the buffer zone on a lot of the money that still comes in. At the end of the day, American operators recognise the value of Asian operations. A couple of years ago, when MGM did the deal with Pansy Ho, they cleared with the Nevada

Gaming Control Board, but the state of New Jersey told MGM that either they had to end the relationship with Pansy Ho or they needed to divest from their share of the Borgata. MGM said: ‘Thank you very much. We’ll sell Borgata.’ MGM recognised the importance of Asia to the overall financial security of the company and opted to stay of Asia and let go of an asset in the U.S. American operators are very concerned about their licences and they’ll always do everything right to protect them, and they’ll continue to operate very legitimate and open casinos, but their number one concern is making money and they are going to stay in a jurisdiction in which they are going to provide the highest return to their investors. Macau is a respected gaming jurisdiction. Yes, the money that comes out of China, there are links there that make you question how it happened, but they feel safe in Macau. Should U.S. authorities have greater control over the American operations here? Each U.S. operator in Macau spends millions of U.S. dollars a year to audit and on bringing Nevada regulators over to show them their operations, and to keep the regulators happy. Are there risks? I guess there are risks in everything you do, but they’ve minimised the risks by having an open-book operation and they are not going to give up on Macau because they are told to. Caesars has 38 non-Nevada properties, and many jurisdictions in which Caesars operates in the U.S. would not put up with Asia. They have difficulties if they want to do a deal in Asia with an Asian partner, whereas Wynn, MGM and Las Vegas Sands don’t have much to worry because, the money they have in the U.S., almost all of it comes from Nevada and Nevada is more understanding. As Asian countries get into gaming, are there any real competitors with Macau? With Singapore open, I would say the only potential real competitor to Macau would be another Chinese region that Beijing could potentially allow to turn into a Macau. I don’t think anyone believes China would authorise gaming on the mainland anytime soon – if they did that, it would be very hurtful for Macau.

Why isn’t Singapore a real competitor? Singapore is a first-world citystate with a very successful economy independent of gaming. Singapore doesn’t have a desire to become a Macau or Las Vegas. They are a first-world city, they are proud of themselves and they view having casinos as a form of tourism and entertainment. They do not need gaming as a way to save their economy. Once you leave Singapore, most of the other Asian countries that can really threaten China don’t have the political stability and first-world reputation that Singapore holds, the only exception being Japan. If Japan authorises gambling, which it may one day, developers would go there and build a couple of multibilliondollar resorts, but it is still less convenient to go there for Chinese nationals. It’s still harder in terms of Chinese restrictions, and it would be much more expensive. If Japan authorised gaming, yes, it would lure some Chinese, but most of the revenue would probably come from Japanese and Koreans.

know if that was just market dynamics, or if investors not understanding the deal in Vladivostok are scared of doing business in Russia. Russia doesn’t exactly have strong history of allowing international investors coming into Russia and do very well there, which is why it’s very important to have a local partner. Now, Mr Ho does have a local partner. It’s smart to have a partner, but I don’t think you’re going to see Mr Ho putting hundreds of millions of dollars in Vladivostok, initially. We’re going to see a slow and cautious investment to make sure his money is protected and to make sure he is going to be able to be successful there, and to move the money out. There is no law that prohibits people from moving money in or out of Russia, and I believe they will be able to do that without a problem, but I believe there is a perception out there that that is a real risk. Unfortunately, when it comes to investments on Wall Street, perception is reality.

Vladivostok has been in the news lately because of a casino investment involving a Macau businessman, but you’ve said previously that it is not a threat to the industry here. Why? What makes the potential to be successful is its location and adjacency to northern China. Harbin is one of the cities that today do not visit Macau. It’s hard for them to get down to Macau and they don’t have the IVS. Northeast China and Vladivostok have hundreds of years of history together. When you go into Harbin, for example, you have signs that are both in Russian and Chinese, and there are special visitation rights between northeastern China and Vladivostok. You can be in a tour of five people or more, so there is already an established way for Chinese to visit Russia, and Russians from Primorsky Krai, the province in which Vladivostok is located, go to China to do their shopping all the time. These cultures are very intertwined. So, once a casino can successfully open in Vladivostok, most of their business is going to come from those northern Chinese. It’s going to create new gamblers or, rather, it is going to create gamblers that don’t go to Macau today.

Macau has been able to be exceptional and grow where it is today because of the junket system

So is Lawrence Ho Yau Lung’s investment in Vladivostok a smart move? From a commercial opportunity investment, it was a very smart move. If you look on a map, if you are an operator in Asia, Vladivostok makes strategic sense. It gives you a proximity location to the northeastern Chinese. It is very wise. The hesitation is the doing-businessin-Russia factor, so it is a political risk. The interesting thing was that Melco only had 5 percent of the deal, but their stock went down by 6 percent after the announcement. I don’t

Looking at the future of the gaming industry in Macau, there is an issue that has been constantly in the media: the cap on live gaming tables. Considering the further projects ahead for Cotai, people wonder how that will be manageable. What’s your take on that? First of all, many operators are looking into unique ways of artificially expanding the number of tables on their floor. Many operators are getting creative in terms of how they’re getting their tables. For example, if you look at Las Vegas Sands, at the Venetian Macao, they have a baccarat table, which is a stand-up baccarat table. There are four dealers, or five, standing in the middle of the baccarat table and each table has over 30 positions. So you’re taking a game that typically has 10 positions and you’ve tripled the size of it, but according to Macau regulations it is still only one table. That only solves part of the problem. I’m assuming, looking at all these developments going on and how large people expect them to be, there must be discussions going on in terms of having that cap raised. Logic dictates there must be some going on, and the operators there all have ties with the local political environment. Macau is business-driven. They are the ones who put the cap on, and they’re the ones who can raise the cap. It would not surprise me to see, as these resorts get closer and open, some sort of raise to the cap.

July 15, 2013 April 19, 2013

Macau

Jiangmen’s US$6 bln uranium plant scrapped The proposed complex had sparked unease also in Macau and Hong Kong

hina has abruptly cancelled plans to build its largest uranium processing plant in a southern Chinese city, a day after hundreds of protesters took to the streets demanding the project be scrapped, a government website said on Saturday. The proposed 230-hectare complex in the heart of China’s Pearl River delta industrial heartland in Guangdong province had also sparked unease here and in Hong Kong. State-run China National Nuclear Corporation and China Guangdong Nuclear Power Corp (CGNPC) had planned to build the 37 billion yuan ($6 billion) project. Officials from both companies could not be reached for comment. Macau’s Chief Executive Fernando Chui Sai On had formally raised the issue with the Guangdong government. On Friday the government received the detailed plan for the uranium plant in Jiangmen, it said in a statement. Mr Chui had asked the Environmental Protection Bureau to carry out an evaluation of the project to assess the potential impact to Macau. But an online statement published on the Heshan city government’s

website on Saturday said that “to respect people’s desire, the Heshan government will not propose the CNNC project”. A Beijing-based nuclear power expert said he was surprised local authorities had taken the decision as the project designed to produce 1,000 tonnes of uranium fuel annually by 2020 was hotly contested by local governments. “Compared to a nuclear power plant, a uranium processing facility is way more safer, as there is no fusion or reaction taking place in the production process,” said the official with close knowledge of the project. He declined to be identified as he was not authorised to speak to the press. The surprisingly swift decision to cancel the project came after hundreds marched to city offices on Friday that forced officials to pledge an extension of public consultation by 10 days. Locals had planned more protests for yesterday. “The Pearl River Delta is significant,” Peng Peng, a political scientist at the Guangzhou Academy of Social Sciences, told Hong Kong’s South China Morning Post. “It’s at the forefront of China’s reform and also the

Corporate

Essential Macau wins top Asian award Essential Macau, our sister publication, was one of the winners of this year’s edition of the Asian Publishing Awards, which were presented on Friday. “Métiers d’Art,” a story published in the June/July 2012 edition of Essential Macau, won the Gold Award for Best Feature on Timepieces category. In this story Carlos Torres, the watch editor for the Essential group of magazines in Asia and Europe, gets behind the scenes and under the skin of decorative art in the world of haute horlogerie. This 12-page feature brings together the work of some of the greatest masters in the craft with the most exclusive brands in fine watchmaking. A total of 171 projects from 31 companies in eight countries were vying for the awards in 18 categories. “The judges had a very difficult time evaluating the entries,” the organisers said in a statement. “Another Country Not My Own,” a feature published by C! Magazine Group’s magazine Calibre, came next in this category, taking home the Excellence Award. The Asian Publishing Awards 2013 recognise best multimedia practices in magazine, book and corporate communications sectors. The fifth edition of the award were organised simultaneously with the Asian Publishing Convention, which took place in Manila, Philippines. The annual two-day convention for magazine and online publishers was first held in Kuala Lumpur, Malaysia, in 2007. About 200 senior publishing professionals from 12 countries attended the gala dinner ceremony held on Friday, during which the awards were presented. Essential Macau is published bi-monthly by the Global Asia Media Ltd, a joint venture between Macau’s Project Asia Corp and Portugal’s Open Media SA. Project Asia is the publisher of Business Daily.

backyard of Hong Kong and Macau.” “The province’s leaders had to resolve the tension quickly and effectively or they would face immense pressure from the central authorities,” Mr Peng was quoted as saying. Chinese authorities are becoming increasingly sensitive to local protests over environmental issues, having cancelled, postponed or relocated several major petrochemical and

metals plants. The planned conversion and enrichment plant had been meant to supply fuel for China’s expanding nuclear power capacity, likely to reach 60-70 gigawatts by 2020 from the current 12.6 GW. China currently produces 800 tonnes of uranium fuel at its plants in southwestern Sichuan province and north China’s Inner Mongolia. China sources uranium both from domestic mines and imports from Kazakhstan, Canada and Australia, said the expert. Guangdong is one of the country’s largest nuclear power bases, already running five nuclear reactors and building another dozen, incorporating technologies from companies like French Areva and Westinghouse, a unit of Japan’s Toshiba Corp.

Protests prompt authorities to cancel Jiangmen uranium plant

T.A. with Reuters

July April15, 19,2013 2013

Greater China Beijing commits to more currency flexibility: U.S. The U.S. Treasury Department said on Friday that Chinese officials committed in bilateral talks to move to a marketdetermined exchange rate for the renminbi currency and to open up its financial sector to U.S. participation. The Treasury Department also said China would submit a revised government procurement agreement offer to the World Trade Organisation by the end of the year, and begin intensive technical talks with the United States this summer to tackle the remaining obstacles to China’s accession to the WTO government procurement accord.

Zurich pares stake in Chinese insurer Zurich Financial Services AG has sold about US$283 million worth of shares in New China Life Insurance Co Ltd, paring its stake in China’s third-biggest life insurer in an attempt to diversify its Asian portfolio. Shares in New China Life have slipped more than 20 percent in Hong Kong since the start of 2013. Zurich said the sale was a move to address its financial exposure to a large single holding. “We want to take the proceeds and re-invest it in the same region but on a broader, diversified basis,” a spokesman for Zurich said, adding that the Swiss insurer had made a capital gain of about US$152 million after tax from the sale.

Scotiabank withdraws bid for Bank of Guangzhou Bank of Nova Scotia withdrew its application to acquire a nearly 20 percent stake in Bank of Guangzhou after Chinese authorities decided against proceeding with the C$719 million (US$691.28 million) deal. Scotiabank, Canada’s No. 3 lender, warned in May that Chinese authorities were reevaluating whether they wanted to go ahead with the deal, originally struck in September 2011. Bank of Guangzhou is primarily government-owned and is not publicly listed. “Scotiabank will continue to consider future opportunities for investment in China that are in line with our strategy and footprint in the region,” Scotiabank’s head of International banking, Dieter Jentsch, said in a statement issued by the bank.

Regulator to speed up 4G licence issuance China will quicken the pace of issuing 4G network licences within this year and increase the coverage of 3G network, to drive demand and boost industry growth, the State Council said. The State Council said at a regular meeting that China targets an average annual growth rate of information consumption of over 20 percent between the period 2013 to 2015, according to a statement on the central government’s website. It also said China will push integrated Internetbased telecommunications, radio and television services nationwide within this year. Domestic media reported in March that Beijing planned to issue 4G network licences by the end of the year.

China ‘may accept growth below 7 pct’ Structural economic adjustment a painful process, finance chief says

hinese Finance Minister Lou Jiwei signalled the world’s second-biggest economy may expand less than the government’s target this year and that growth as low as 6.5 percent may be tolerable in the future. While the government in March set a 2013 growth goal of 7.5 percent, Mr Lou said he’s confident 7 percent can be achieved this year. He spoke at the U.S.-China Strategic and Economic Dialogue in Washington. Mr Lou’s comments suggest China is prepared to allow a further slowdown from a rate that’s already at risk of falling to a 23-year low this year as Premier Li Keqiang focuses on policy changes to create more sustainable expansion. Mr Li said last week that the government should keep restructuring the economy as long as growth, employment and inflation stay within limits he didn’t specify. “We don’t think 6.5 percent or 7 percent will be a big problem,” Mr Lou said at a press briefing in response to a question on whether there’s a limit on slower growth that officials will tolerate. “It’s difficult to give you a limit. But from the data we have, we have the confidence.” He said, “Please don’t forget that our expected GDP growth rate this year is 7 percent,” adding that “there won’t be much of a problem to meet our expectations this year”. The official Xinhua news agency corrected on Saturday a dispatch that quoted the finance minister as saying growth could be 7 percent this year, in an apparent attempt to defuse market worries on a more severe slowdown. Xinhua’s corrected story clarified that Mr Lou said: “There is no doubt that China can achieve this year’s growth target of 7.5 percent”.

Growth targets Mr Lou’s remarks may add to confusion over the government’s growth targets and tolerance levels. Premier Li said in May that the nation seeks 7 percent annual expansion this decade. He said at a March 17 press conference, his first after becoming premier, that China must average 7.5 percent growth through 2020. Statemedia transcripts of the briefing that day said Mr Li gave a 7 percent figure. China’s current economic growth

PBOC squeezes speculative credit C

hina made progress in curbing shadow banking in June and slowed money-supply growth, as the government seeks to rein in the credit boom that poses risks for the nation’s financial system. Data for aggregate financing, the broadest measure of credit, showed new yuan loans played the biggest role since September 2011, with non-traditional sources of finance less

We don’t think 6.5 percent or 7 percent will be a big problem Lou Jiwei, Chinese Finance Minister

is within a “reasonable range” of 7 to 8 percent, the official Xinhua News Agency said today in a report posted on the State Council’s website. The job market will not be significantly affected if growth does not fall below 7 percent, Xinhua said, citing unidentified analysts. The nation’s stocks had their biggest two-day rally in 18 months through Friday, amid speculation that authorities will take measures to bolster growth after Mr Li’s comments on economic restructuring and parameters. The Shanghai Composite Index closed 1.6 percent lower on Friday. “To have said 6.5 percent seems like a new line in the sand,” said Tim Condon, head of Asia research at ING Groep NV in Singapore, who formerly worked at the World Bank. “It may well be that they don’t want people to be suckered into a false stock-market rally.” The comment “reinforces the reform credibility of the new administration,” Mr Condon said. The statistics bureau reports second-quarter gross domestic product

today with the median estimate of analysts for a 7.5 percent increase from last year. First-half expansion was probably below 7.7 percent “but not too far from it,” Mr Lou said. Mr Lou ruled out the possibility of widening the budget deficit to stimulate the economy. Instead, policy makers have decided to cut the spending of central government agencies by 5 percent, and may use the savings to reduce taxes or increase spending on measures to support jobs and growth, he said. “I want to emphasise that the structural economic adjustment is a painful process,” Mr Lou said. “It won’t be possible to enjoy a comfortable life and a rapid growth rate with the structural adjustment.” Macquarie Group Ltd lowered its 2013 China growth forecast to 7.3 percent from 7.8 percent, and to 6.9 percent in 2014 from 7.5 percent. The median projection of 56 analysts in a Bloomberg News survey last month was for 7.7 percent expansion this year.

prominent. M2 money supply rose 14 percent, down from 15.8 percent the previous month, People’s Bank of China numbers showed. A central bank-engineered cash crunch last month helped squeeze speculative lending and rein in what Vice Finance Minister Zhu Guangyao last week termed “prominent” shadow-banking risks. The danger for the government is that efforts to protect the financial system only worsen the nation’s slowdown after exports unexpectedly fell and manufacturing contracted. “The impact of the PBOC’s liquidity crunch operation is very clear: targeting shadow banking but maintaining regular bank lending,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd in Hong Kong. The surge in the

share of bank loans in aggregate financing reflects “a severe decline in shadow-banking activities,” he said. Aggregate financing, the PBOC’s broadest measure of credit that includes bond sales, entrusted loans and bankers’ acceptance bills, was 1.04 trillion yuan (US$169 billion) in June, the data show. That was down from 1.19 trillion yuan in May and 1.78 trillion yuan a year earlier. New local-currency loans were 860.5 billion yuan last month, up from 667.4 billion yuan in May. Yi Gang, a deputy governor of the central bank, said the nation’s money market has recovered to normal levels and the financial market is stable. “At the moment, the tension has been relieved,” Mr Yi said on Friday.

Bloomberg News

10 10

July 15, 2013 April 19, 2013

Greater China

Foreign funds gain wider access to capital markets Regulator gives more channels for investors to buy Chinese assets

hina will almost double the quota of the Qualified Foreign Institutional Investor (QFII) scheme to US$150 billion, the country’s top securities regulator said, as Beijing moves to widen channels for foreign investors buying mainland stocks, bonds and money market instruments. The spokesman for the China Securities Regulatory Commission (CSRC), speaking at a regular media briefing on Friday, also told reporters that the Renminbi Qualified Foreign Institutional Investor (RQFII) pilot programme will be expanded to London, Singapore, Taiwan and other unnamed locations. The scheme is currently available only through designated institutions in Hong Kong. “This is a gesture to show people the Chinese government is actually doing something to enhance market liquidity,” said Ronald Wan, a committee member at Hong Kong Securities & Investment Institute. “This is a major moment for the Chinese government to show they are doing something. It’s important.” The QFII programme was started in 2002 to allow foreign investment in Chinese securities using foreign currencies. The current quota now stands at US$80 billion, but only US$43 billion of that has been

Move may bolster a stock market that’s slumped more than 10 pct this year

has been tempered in recent years by concerns that onshore markets are driven primarily by speculation on policy direction and stimulus spending instead of business and economic fundamentals. Investors also cite corporate governance issues as a problem. Analysts say a lack of clarity about how Beijing will tax profits from QFII investments has also restrained more conservative investors. Interest for bonds issued in the mainland, which can be obtained through both QFII and RQFII funds, has also been mixed. While monetary easing by major central banks has made higher yielding Chinese bonds more attractive, the lack of transparency in bond covenants and the fact that China has yet to allow a corporate debt default have also worried fixed income investors. Instead, many fund managers say they prefer to buy yuan-denominated “dim sum” bonds issued in Hong Kong, which they say are more transparently regulated. Reuters

allocated to specific fund management companies for use in investment, according to the statement. The statement said that the increased quota was made in response to the rapid growth of the QFII programme this year which has seen the number of approved institutions increase by 22 to a total of 229. The announcement did not say if the RQFII quota would be increased. Former CSRC chief Guo Shuqing told an investment forum in Hong Kong in January that QFII and RQFII quotas could easily be expanded by up to 10 times current levels.

In 2011 Beijing followed up with the RQFII scheme, which allows investors to buy mainland stocks and bonds using offshore yuan, with an initial quota of 20 billion yuan (US$3.2 billion).

Stocks boost Regulators expanded it to 270 billion yuan at the end of 2012, and have introduced yuan-denominated exchange traded funds (ETFs) that track major mainland indexes like the CSI300 in an attempt to invigorate investor interest. Foreign interest in Chinese equities

KEY POINTS Regulator raises quota to US$150 bln Programme expanded to London, Singapore, Taiwan Foreigners concerned by taxation issues, lack of transparency

11 11

July April15, 19,2013 2013

Asia N. Korea posts fastest growth since 2008 North Korea’s economy is estimated to have expanded at the fastest pace since 2008 last year, even as Kim Jong-un’s regime faced increasing isolation over its missile tests and nuclear-weapons programme. Gross domestic product increased by 1.3 percent in 2012 after a 0.8 percent rise in 2011, according to calculations released by South Korea’s central bank. Foreign trade, excluding commerce with the South, rose 7.1 percent to US$6.8 billion, the Bank of Korea said. South Korea’s central bank releases annual estimates of the North’s economic conditions based on information from the National Intelligence Service and related organisations.

Philippine Air to fly to European cities Philippine Airlines Inc, controlled by billionaire Lucio Tan, plans to fly daily to five cities in Europe, with flights to resume this year after the European Union took the country off its safety blacklist. The flag carrier will use its six Boeing Co 777 aircraft for direct flights to London, Frankfurt, Paris, Amsterdam and Rome, president Ramon Ang told Bloomberg. “After the EU lifting, we need to make arrangements with the airports, which may take one to two months,” Mr Ang said. “We will be flying to London by October at the latest. By November, we should be flying to all.”

India industrial output unexpectedly shrinks Factory production slides by 1.6 pct as inflation quickens

ndia’s industrial output contracted unexpectedly in May, adding pressure for more government steps to revive the economy as a sliding rupee curbs scope for further interest-rate cuts. Production at factories, utilities and mines declined 1.6 percent from a year earlier after a revised 1.9 percent climb in April, the Central Statistical Office said in New Delhi. The median of 31 estimates in a Bloomberg News survey was for a 1.4 percent gain. Another report showed consumer-price inflation accelerated to 9.87 percent in June. “Industrial recovery is not yet in sight – this is definitely a surprise on the downside,” said D.K. Joshi, chief economist of India’s leading credit rating agency Crisil. The rupee’s plunge to a record low against the dollar this year threatens to stoke inflation and prompted the Reserve Bank of India to leave borrowing costs unchanged last month, snapping a run of three

reductions. The government has eased foreign- investment limits in industries such as aviation and retail, seeking to steady the currency and spark an economic revival. “The industrial-production data is bad and it’s a surprise that it’s a negative, while consumer price inflation remains high,” said Prasanna Ananthasubramanian, an economist at ICICI Securities Primary Dealership Ltd in Mumbai. “There is an immediate need to release food stocks to cool down food prices.” The rupee strengthened 0.1 percent to 59.63 per dollar at the close in Mumbai on Friday, while the S&P BSE Sensex index advanced 1.4 percent. The yield on the 8.15 percent note due June 2022 rose to 7.65 percent from 7.57 percent on June 11. The rupee touched an all-time low of 61.2125 on July 8 and is the worst performer in 2013 after the yen in a basket of 11 Asian currencies tracked by Bloomberg, dropping 7.8 percent. India’s record current-account

deficit and the possibility of reduced U.S. monetary stimulus have hurt the currency. The nation is considering selling sovereign bonds abroad for the first time as policy makers weigh measures to help stem rupee declines, two officials with direct knowledge of the matter said. The trade deficit narrowed to US$12.2 billion in June from US$20.1 billion the previous month as gold and silver imports slid, a separate government release and previously reported data showed on Friday. India has raised import taxes on the yellow metal twice in 2013. The Reserve Bank left borrowing costs at 7.25 percent in June, after 25 basis-point cuts in January, March and May each. Asia’s third-largest economy expanded 5 percent last fiscal year, the slowest pace in a decade. Consumer-price inflation in June quickened from 9.31 percent in May and remained the second-fastest in the Group of 20 major economies. Bloomberg News

US$12.2 bln

India’s trade deficit in June

Stocks cap best week since April Asian stocks rose, with the regional benchmark index capping its biggest weekly advance since April, after the U.S. and Japanese central banks signalled they will maintain measures to boost their economies. Japanese shares rallied for a fourth week, with the Topix index gaining 1.1 percent this week and the benchmark Nikkei 225 Stock Average rising 1.4 percent. South Korea’s Kospi index advanced 2 percent, while Taiwan’s Taiex index jumped 2.7 percent. Singapore’s Straits Times Index climbed 2.1 percent, extending gains for a third week, as the nation’s economy grew at the fastest pace in more than two years. The MSCI Asia Pacific Index rose 2.7 percent to 134.88 last week.

San Miguel seeks about US$4b in sales San Miguel Corp, the Philippines’ most acquisitive company, plans to raise about US$4 billion selling power assets to fund an expansion into infrastructure. “If we can sell something, good,” president Ramon Ang said yesterday in an interview. “We’re not in a hurry. Does San Miguel need the money? No. We can always borrow to fund any opportunity.” The country’s biggest company will raise at least US$3 billion selling its 32.8 percent stake in power retailer Manila Electric Co and the deal will probably be initiated this year, Mr Ang said. A 49 percent stake in unit SMC Global Power Holdings Corp may fetch at least US$800 million, he said.

Industrial recovery not yet in sight

Singapore fines 22 firms over money laundering Andrea Tan

ingapore’s central bank fined 22 financial institutions and restricted operations at seven for failing to comply with rules to prevent money laundering and terrorism financing in the past three years. The Monetary Authority of Singapore also issued 47 warnings and reprimands and ordered “a few” financial firms to review their antimoney laundering framework, Lee Boon Ngiap, an assistant managing director at the regulator, said in a speech. Mr Lee didn’t identify the firms involved.

Singapore tightened money laundering laws in an effort to guard its reputation as the hub of Asia’s private banking and offshore industry. The city made tax evasion a money laundering offense on July 1 and boosted the number of jurisdictions with which it trades information on tax issues by 11. “Like any international financial centre, we recognise that Singapore is vulnerable to being used as a conduit for illicit funds,” Mr Lee said. “This is a clear message that Singapore neither wants nor will tolerate such

illicit flows.” Mr Lee didn’t specify in his speech the penalties that were imposed on the financial institutions. Individuals may be fined as much as S$500,000 (US$397,000) and jailed for as long as seven years for money laundering offences. Companies may be fined as much as S$1 million. Financial firms can be punished for weak controls “even if no actual money laundering has occurred,” MAS said in an e-mailed statement, which didn’t identify the companies involved. “Such sanctions incentivise financial institutions to take measures” to make improvements, it said. Financial institutions are required to update the authority on followup actions taken, Mr Lee said. The regulator did 108 inspections related to anti-money laundering and terror financing controls on financial firms from 2010 to 2012. Thirteen money changers and remittance agents had their licences revoked or not renewed because of their lax controls, Mr Lee said. Bloomberg News

12 12

July 15, 2013 April 19, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

34.6

-1.142857

19387597

CHINA UNICOM HON

ALUMINUM CORP-H

2.56

1.185771

20052952

BANK OF CHINA-H

3.17

-1.552795

324269049

-1.574803

27205066

-1.234568

1153931

11.18

-0.1785714

35879832

24.3

BANK OF COMMUN-H BANK EAST ASIA BELLE INTERNATIO BOC HONG KONG HO

NAME

PRICE

DAY %

VOLUME

10.62

10921192

CITIC PACIFIC

8.57

-0.2328289

CLP HLDGS LTD

63.9

CNOOC LTD

NAME

PRICE

DAY %

VOLUME

POWER ASSETS HOL

69.2

-2.052371

2173421

6315499

SANDS CHINA LTD

39.2

-1.134931

8608359

0.392773

3673296

SINO LAND CO

10.96

-0.1821494

4573823

13.7

0.4398827

57432619

SUN HUNG KAI PRO

102.3

0.5899705

4389619

COSCO PAC LTD

10.28

-0.7722008

3089981

SWIRE PACIFIC-A

94.8

-0.9921671

1321724

ESPRIT HLDGS

11.58

0.1730104

3215101

TENCENT HOLDINGS

309.8

-0.3217503

1876819

5600737

HANG LUNG PROPER

25.35

-2.873563

6469053

TINGYI HLDG CO

18.98

-2.965235

11675857

10.8

-0.3690037

11088004

66.75

-0.5216095

2096663

13.44

-1.466276

2542655

HANG SENG BK

117.4

-0.4240882

1197806

WANT WANT CHINA

CHEUNG KONG

107

-0.6499536

1940854

HENDERSON LAND D

49.05

1.552795

4487424

WHARF HLDG

CHINA COAL ENE-H

4.03

-3.357314

40304004

79.9

0.4399749

2717892

CHINA CONST BA-H

5.44

-1.270417

309308381

CATHAY PAC AIR

HENGAN INTL HONG KG CHINA GS

19.66

-0.9072581

8202783

HONG KONG EXCHNG

121

0.1655629

3845456

HSBC HLDGS PLC

84.7

-0.5868545

8444118

84.25

-0.7071302

3820087

4.9

-1.010101

311143319

MOVERS

CHINA LIFE INS-H

18.52

-2.010582

36390926

CHINA MERCHANT

23.65

-0.2109705

2361017

CHINA MOBILE

81.55

-0.4881025

14908964

HUTCHISON WHAMPO

CHINA OVERSEAS

21.55

19163698

IND & COMM BK-H

5.5

-1.256732

79535154

LI & FUNG LTD

11.16

-1.760563

12979477

HIGH

21522.15

29.35

-0.170068

2118113

LOW

20644.18

CHINA PETROLEU-H

3 21530

INDEX 21277.28

24.05

-1.635992

2330544

MTR CORP

21.8

-0.456621

6700513

NEW WORLD DEV

11.14

-0.1792115

16974289

CHINA RES POWER

19.82

-1.881188

5523094

PETROCHINA CO-H

9.25

-1.069519

76813517

CHINA SHENHUA-H

20.7

-1.193317

17960893

PING AN INSURA-H

51.15

-2.478551

11948511

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

25.35

-2.123552

11054474

YANZHOU COAL-H

5.59

-2.61324

33048887

5.5

-1.256732

79535154

ZIJIN MINING-H

1.57

-1.875

60220737

5.23

0.5769231

19949080

11.58

-1.194539

4549012

CHINA RES ENTERP CHINA RES LAND

52W (H) 23944.74 (L) 18710.58984

20640

10-July

12-July

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.15

-1.253918

150035400

AIR CHINA LTD-H

5.43

-0.9124088

12820729

CHINA PETROLEU-H

ALUMINUM CORP-H

2.56

1.185771

20052952

CHINA RAIL CN-H

6.94

9.810127

39620266

ZOOMLION HEAVY-H

ANHUI CONCH-H

22.65

1.569507

33357455

CHINA RAIL GR-H

3.73

8.746356

61353275

ZTE CORP-H

BANK OF CHINA-H

3.17

-1.552795

324269049

CHINA SHENHUA-H

20.7

-1.193317

17960893

NAME CHINA PACIFIC-H

-1.574803

27205066

CHINA TELECOM-H

3.79

-0.7853403

48787428

BYD CO LTD-H

28.8

0.5235602

2745344

DONGFENG MOTOR-H

9.65

-0.7201646

20342303

CHINA CITIC BK-H

3.58

-1.648352

35740122

GUANGZHOU AUTO-H

7.2

9339773

CHINA COAL ENE-H

4.03

-3.357314

40304004

HUANENG POWER-H

7.92

-2.10136

34375090

CHINA COM CONS-H

5.81

2.650177

44879213

IND & COMM BK-H

4.9

-1.010101

311143319

CHINA CONST BA-H

5.44

-1.270417

309308381

JIANGXI COPPER-H

12.54

-2.336449

15161270

CHINA COSCO HO-H

3.4

1.492537

9982302

PETROCHINA CO-H

9.25

-1.069519

76813517

18.52

-2.010582

36390926

PICC PROPERTY &

8.86

-1.446051

15446245

CHINA LONGYUAN-H

8.02

-1.715686

10914798

PING AN INSURA-H

51.15

-2.478551

11948511

CHINA MERCH BK-H

13.12

-1.501502

19084892

SHANDONG WEIG-H

7.64

-2.55102

3920515

CHINA MINSHENG-H

7.96

-2.331288

82846280

SINOPHARM-H

CHINA NATL BDG-H

6.89

1.923077

77994284

TSINGTAO BREW-H

15.44

-0.6435006

4590640

WEICHAI POWER-H

BANK OF COMMUN-H

CHINA LIFE INS-H

CHINA OILFIELD-H

19.04

1.276596

8576444

55.8

-0.5347594

1046000

24.4

0.8264463

NAME

MOVERS

1 9620

INDEX 9433.66 HIGH

9610.5

LOW

9045.02

52W (H) 12354.22 9040

(L) 8640.85 10-July

3720924

12-July

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

9.37

-3.600823

34568897

QINGHAI SALT-A

18.58

-1.327669

10976142

CITIC SECURITI-A

10.54

-4.268847

116114997

RISESUN REAL -A

15.79

-3.365973

15206564

21115934

CSR CORP LTD -A

3.7

1.928375

94122868

SAIC MOTOR-A

12.91

-2.859293

31914256

-0.8344924

34671979

DAQIN RAILWAY -A

6.04

-0.9836066

28968802

SANAN OPTOELEC-A

18.85

-2.634298

12909955

8.08

-4.604486

50911466

DATANG INTL PO-A

5.08

-2.119461

12192193

SANY HEAVY INDUS

7.28

-4.084321

40305046

BANK OF CHINA-A

2.68

-1.470588

38981626

EVERBRIG SEC -A

10.85

-4.824561

39557340

SHANDONG DONG-A

41.96

9908957

BANK OF COMMUN-A

3.92

-2.729529

100184479

GD MIDEA HOLDI-A

12.61

-3.593272

15960848

SHANDONG GOLD-MI

22.5

-3.681507

29602227

BAOSHAN IRON & S

4.03

-1.707317

21448710

GD POWER DEVEL-A

2.34

-1.265823

96161006

SHANG PHARM -A

11.22

-1.665206

8587301

BEIJING SL -A

60.5

0.08271299

3849410

GEMDALE CORP-A

7.3

-3.439153

46468651

SHANG PUDONG-A

8.49

-4.176072

162211373

23.15

-0.2155172

15558299

GF SECURITIES-A

11.76

-3.921569

33313654

SHANGHAI ELECT-A

12669936

GREE ELECTRIC

24.8

-2.477389

15680599

SHANXI LU'AN -A

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.51

-2.33463

124340934

AIR CHINA LTD-A

4.04

-2.179177

21308130

ALUMINUM CORP-A

3.23

-3.58209

ANHUI CONCH-A

14.26

BANK OF BEIJIN-A

BEIJING TONGRE-A BYD CO LTD -A

35.67

-0.02802691

NAME CHONGQING CHAN-A

NAME

3.33

-1.186944

5004155

11.72

-4.560261

27017549

CHINA AVIC ELE-A

23.82

-1.570248

4689863

GUANGHUI ENERG-A

10.61

-2.927722

87681143

SHENZEN OVERSE-A

5.59

-1.929825

77096835

CHINA CITIC BK-A

3.75

-2.34375

31370384

HAITONG SECURI-A

10.56

-3.385178

194632371

SUNING COMMERC-A

5.16

-2.087287

50073233

CHINA CNR CORP-A

4.09

1.741294

60600091

HANGZHOU HIKVI-A

19.71

2.38961

24219198

TASLY PHARMAC-A

46.09

2.490549

8651216

CHINA COAL ENE-A

4.92

-2.766798

14603026

HENAN SHUAN-A

42.3

0.6423983

8199635

TSINGTAO BREW-A

39.76

-0.5502751

2887543

CHINA CONST BA-A

4.48

-0.8849558

35155526

HONG YUAN SEC-A

8.86

235040250

WANHUA CHEMIC-A

16.93

-1.968732

9584150

CHINA COSCO HO-A

2.96

-1.66113

11259117

HUATAI SECURIT-A

8.62

-2.045455

49498476

WEICHAI POWER-A

18.05

-2.221018

7714454

CHINA EAST AIR-A

2.49

-1.968504

14796653

HUAXIA BANK CO

9.21

-3.459119

40000324

WULIANGYE YIBIN

20.18

-2.887392

20469351

CHINA EVERBRIG-A

2.88

-3.030303

99559635

IND & COMM BK-A

3.96

-0.5025126

131031250

YANZHOU COAL-A

10.23

-4.925651

18755977

CHINA INTERNAT-A

30.98

-1.180223

3323294

INDUSTRIAL BAN-A

10.07

-3.173077

226272539

YUNNAN BAIYAO-A

99.9

3.106616

2816446

CHINA INTL MAR-A

10.31

-2.735849

7237732

INNER MONG BAO-A

24.75

-3.169014

100319253

ZHONGJIN GOLD

9.55

-3.437816

26728501

CHINA LIFE INS-A

13.68

-3.389831

18879969

INNER MONG YIL-A

35.47

2.960813

13328722

ZIJIN MINING-A

2.56

-3.030303

68539227

CHINA MERCH BK-A

11.62

-4.36214

90111931

INNER MONGOLIA-A

4.05

-3.571429

89066296

ZOOMLION HEAVY-A

5.33

-4.821429

111574537

CHINA MERCHANT-A

11.14

-4.786325

52188407

JIANGSU HENGRU-A

29.55

1.511508

7689952

13.69

0.2196193

50775008

JIANGSU YANGHE-A

51.82

-3.085843

5642300

JIANGXI COPPER-A

16.74

-4.23341

15830286

8.46

-1.398601

16306484

CHINA MERCHANT-A

27.56

-1.746881

16219227

CHINA MINSHENG-A

9.11

-3.597884

220870041

CHINA NATIONAL-A

10.01

-3.564547

37319864

CHINA OILFIELD-A

14.62

-1.879195

6031903

KANGMEI PHARMA-A

20.91

1.014493

29165112

188.81

-3.65362

4299164

24.39

-1.134982

9427482

JINDUICHENG -A

16.43

-2.723505

20835220

KWEICHOW MOUTA-A

CHINA PETROLEU-A

4.59

-1.290323

81345689

LUZHOU LAOJIAO-A

CHINA RAILWAY-A

4.48

3.464203

65195659

METALLURGICAL-A

1.62

-2.409639

50086370

CHINA RAILWAY-A

2.56

2.811245

82637948

NARI TECHNOLOG-A

14.47

-2.097429

19992076

OFFSHORE OIL-A

7.34

0.5479452

82509220

8.12

-0.2457002

25917018

211854392

CHINA PACIFIC-A

CHINA RESOURCE-A

29.6

6437890

16.25

-2.927121

17983753

PETROCHINA CO-A

3.29

-2.662722

104587664

PING AN BANK-A

10.34

CHINA UNITED-A

3.19

-0.931677

98296634

PING AN INSURA-A

35.01

-3.39404

40838187

CHINA VANKE CO-A

10.4

-3.525046

92669019

POLY REAL ESTA-A

10.91

-3.621908

76068713

-0.990099

23911160

QINGDAO HAIER-A

11.56

11233644

NAME

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

ACER INC

23.25 -0.6410256

11994000

FORMOSA PLASTIC

CHINA SHENHUA-A CHINA STATE -A

CHINA YANGTZE-A

ZTE CORP-A

MOVERS

254

6 2360

INDEX 2275.373 HIGH

2350.37

LOW

2163.1

52W (H) 2791.303 (L) 2023.171

2150

10-July

12-July

FTSE Taiwan 50 Index

ADVANCED SEMICON ASIA CEMENT CORP ASUSTEK COMPUTER

NAME TAIWAN MOBILE CO

FOXCONN TECHNOLO

74.9

0.4021448

3773000

TPK HOLDING CO L

398 -0.6242197

41.2

3.128911

125263000

TSMC

110

0.456621

25.6

15248000

37.45

1.216216

4850000

FUBON FINANCIAL

269

2.47619

5746000

HON HAI PRECISIO

38454000

48448000

HOTAI MOTOR CO

394

-2.111801

1089000

CATCHER TECH

149.5

1.013514

6523000

191.5

-1.033592

12249000

CATHAY FINANCIAL

43.45

1.282051

39367000

HUA NAN FINANCIA

17.2

0.2915452

5210000

CHANG HWA BANK

17.4

8680000

LARGAN PRECISION

970

-2.020202

1338000

YULON MOTOR CO

CHENG SHIN RUBBE

96.7 -0.1033058

6481000

LITE-ON TECHNOLO

52 -0.5736138

4312000

15 -0.6622517

HTC CORP

34288000

MEDIATEK INC

8.69

1.282051

91914000

MEGA FINANCIAL H

CHINA STEEL CORP

25.15

0.6

24167000

NAN YA PLASTICS

CHINATRUST FINAN

19.15 -0.7772021

48877001

PRESIDENT CHAIN

CHUNGHWA TELECOM

360

2.857143

11396000

24.85

0.4040404

28433000

0.8130081

9196000

213.5 -0.2336449

1474000

100

0.2004008

14592000

QUANTA COMPUTER

-1.004304

5282000

19.15

1.861702

31924000

SILICONWARE PREC

37.6

-1.441678

17066000

DELTA ELECT INC

145

5918000

SINOPAC FINANCIA

14.8

0.3389831

12013000

FAR EASTERN NEW

32.9 -0.6042296

3944000

SYNNEX TECH INTL

39.4

0.7672634

4811000

FAR EASTONE TELE

79.1

7143000

TAIWAN CEMENT

37.85

1.747312

9253000

TAIWAN COOPERATI

16.95

COMPAL ELECTRON

1.150895

4007000

9486000

10.85

CHINA DEVELOPMEN

Volume

110.5 -0.4504505

0.8064516

AU OPTRONICS COR

CHIMEI INNOLUX C

PRICE DAY %

FIRST FINANCIAL

18.2

0.5524862

12469000

0.8928571

8932000

FORMOSA CHEM & F

76.6

1.188904

5681000

TAIWAN FERTILIZE

72.7 -0.6830601

3868000

FORMOSA PETROCHE

79.7

1.528662

3534000

TAIWAN GLASS IND

28.3 -0.1763668

1291000

UNI-PRESIDENT

7581000 31046000

60.3

0.3327787

7549000

14.25

-1.724138

81327000

WISTRON CORP

28.5

2.517986

21742000

YUANTA FINANCIAL

16.1

0.625

22512000

0.6036217

2618000

UNITED MICROELEC

MOVERS

6 5700

INDEX 5697.61 HIGH

5697.61

LOW

5510.79

52W (H) 5896.71 5500

(L) 4719.96 10-July

12-July

13 13

July April15, 19,2013 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 39.4

59.4

21.7

39.1

59.1

21.6

38.8

58.8

38.5

58.5

21.5 21.4

Max 39.35

average 38.75

Max 40.35

average 39.541

Min 38.3

38.2

Last 38.85

Min 39.15

average 59.175

PRICE

Min 21.2

Last 21.25

18.5

20.7

39.70

18.4

20.5

39.35

18.3

20.3

Max 18.5

average 18.405

DAY %

YTD %

(H) 52W

Min 18.26

Last 18.3

(L) 52W

0.991325898

13.00127986

107.4499969

86.29000092

BRENT CRUDE FUTR Aug13

108.81

1.002506266

1.815289604

115.1699982

96.70999908

GASOLINE RBOB FUT Aug13

311.75

3.180644734

12.06772593

314.5499945

262.5799894

GAS OIL FUT (ICE) Aug13

916.25

0.742166025

0.797579758

983.5

829.25

3.644

0.858012732

1.504178273

4.525000095

3.354000092

302.94

1.148580968

1.077708452

320.449996

273.4999895

NATURAL GAS FUTR Aug13 NY Harb ULSD Fut Aug13 Gold Spot $/Oz

1285.59

0.1254

-22.7623

1796.08

1180.57

Silver Spot $/Oz

19.94

0.0426

-33.7762

35.365

18.2208

Platinum Spot $/Oz

18.2

COUNTRY MAJOR

ASIA PACIFIC

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

1408

0.4552

-7.2311

1742.8

1294.18

722.15

-0.3175

3.2144

786.5

553.75

1845

0.544959128

-10.99855282

2200.199951

1758

LME COPPER 3MO ($)

6954

-0.657142857

-12.31874921

8422

6602

LME ZINC

1903

0.157894737

-8.509615385

2230

1779

13775

1.026769344

-19.25556858

18920

13205

15.205

-1.137841352

-1.298279779

16.47500038

14.60000038

509.25

-3.368121442

-15.08962068

665

489.5

681

-0.292825769

-15.6133829

905.75

652.25

1257.25

-2.595390277

-3.492611783

1409.75

1186.5

119.4

-3.241491086

-21.67923909

202.0500031

117.0999985

NAME

16.02999878

ARISTOCRAT LEISU

74.34999847

CROWN LTD

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

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep13 Dec13

WHEAT FUTURE(CBT) Sep13 SOYBEAN FUTURE Nov13 COFFEE 'C' FUTURE Sep13 SUGAR #11 (WORLD) Oct13

16.06

COTTON NO.2 FUTR Dec13

85.08

-0.248447205 0.401227283

-19.94017946 8.051816104

22.8599987 89.55999756

CROSSES

Max 20.9

average 20.439

Min 20.15

Last 20.15

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9049 1.5107 0.9465 1.3067 99.22 7.9915 7.7589 6.1382 59.63 31.14 1.2623 29.909 43.395 9991 89.779 1.23675 0.86494 8.0092 10.4217 129.66 1.03

-1.7801 -0.0397 0.3487 0.0919 0.0202 -0.0288 -0.0296 -0.1059 0.086 -0.0963 -0.0634 0.097 -0.2304 -0.1802 1.8334 0.2693 -0.1295 0.01 0.1017 -0.0771 0

-12.8059 -6.6086 -3.2858 -0.9325 -13.2231 -0.1039 -0.107 1.5053 -7.7729 -1.7983 -3.2401 -2.9289 -5.5075 -1.9818 -0.5035 -2.3667 -5.7253 2.6008 1.043 -12.4094 -0.0097

1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7664 6.3964 61.2125 32 1.286 30.228 44.181 10174 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.8999 1.4814 0.9022 1.2043 77.13 7.9818 7.7498 6.1203 51.3863 28.56 1.2152 28.913 40.54 9440 79.408 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.28

0.7058824

35.87301

4.49

2.29

2364287

13.07

1.396431

22.49297

13.75

8.28

1859733

AMAX HOLDINGS LT

1.08

-0.9174312

-22.85714

1.72

0.75

283700

BOC HONG KONG HO

24.3

0.8298739

22.6

5600737

CHEUK NANG HLDGS

VOLUME CRNCY

0.315

18.86793

0.42

0.22

5.62

0.3571429

-6.176958

6.74

2.95

10000 19163698

CHINA OVERSEAS

21.55

-6.709958

25.6

16.761

CHINESE ESTATES

13.76

-1.007194

13.4432

14.12

8.031

21500

CHOW TAI FOOK JE

8.94

0.3367003

-28.13505

13.4

7.44

9554800

EMPEROR ENTERTAI

2.62

-1.132075

38.62434

3.07

1.34

345000

FUTURE BRIGHT

2.02

-1.463415

66.66307

2.76

0.964

2493508

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15464.3

0.02186157

18.0108

15542.4

12471.49

NASDAQ COMPOSITE INDEX

3600.08

0.6085565

19.22715

3600.082031

2810.8

GALAXY ENTERTAIN

38.55

-1.026958

27.01812

44.95

16.98

7720560

FTSE 100 INDEX

6544.94

0.0233823

10.97238

6875.62

5478.02

HANG SENG BK

117.4

-0.4240882

-1.095195

132.8

104.2

1197806

DAX INDEX

8212.77

0.6614943

7.886871

8557.86

6324.53

HOPEWELL HLDGS

24.8

-0.998004

-25.41353

35.3

20.727

1481600

HSBC HLDGS PLC

84.7

-0.5868545

4.182038

90.7

61.1

8444118

HUTCHISON TELE H

4.42

-1.55902

24.15731

4.66

2.98

1751000

LUK FOOK HLDGS I

20.85

1.95599

-14.54918

30.05

16.16

2846000

MELCO INTL DEVEL

15.04

3.867403

66.92563

18.18

5.12

11268000

14506.25

0.2326468

39.54785

15942.6

8328.019531

HANG SENG INDEX

21277.28

-0.7473356

-6.089268

23944.74

18710.58984

CSI 300 INDEX

2275.373

-2.205496

-9.813063

2791.303

2023.171

TAIWAN TAIEX INDEX

8220.49

0.5006394

6.766547

8439.15

6922.73

MGM CHINA HOLDIN

21.25

-2.298851

60.0358

21.85

9.509

3217070

KOSPI INDEX

1869.98

-0.4058372

-6.362888

2042.48

1758.99

MIDLAND HOLDINGS

3.08

0.6535948

-16.75676

2.68

1380000

S&P/ASX 200 INDEX

4973.885

0.1648307

6.989418

5249.6

4062.3

NEPTUNE GROUP

0.167

-0.5952381

9.868425

0.23

0.095

4230000

NEW WORLD DEV

11.14

-0.1792115

-7.321135

15.12

9.38

16974289

SANDS CHINA LTD

39.2

-1.134931

15.46391

43.7

20.65

8608359

SHUN HO RESOURCE

1.42

1.428573

1.67

1.03

SHUN TAK HOLDING

3.55

0.2824859

-15.27446

4.65

2.62

2873500 6213732

JAKARTA COMPOSITE INDEX

20.1

Macau Related Stocks

CENTURY LEGEND

NIKKEI 225

21.2

40.05

105.95

NAME

average 21.358

20.9

WTI CRUDE FUTURE Aug13

CORN FUTURE

Max 21.65

Currency Exchange Rates

NAME

METALS

58.2

Last 58.7

18.6

Commodities ENERGY

Min 58.25

40.40

39.00

Last 39.2

Max 59.3

21.3

4633.108

0.6273807

7.330179

5251.296

3964.808

FTSE Bursa Malaysia KLCI

1785.65

0.2526458

5.725455

1826.22

1590.67

NZX ALL INDEX

976.351

0.1115597

10.69075

998.487

767.748

PHILIPPINES ALL SHARE IX

4025.69

2.706654

8.832434

4571.4

3410.76

18.3

0.3289474

3.112198

22.382

12.995

SMARTONE TELECOM

SJM HOLDINGS LTD

12.52

1.294498

-11.07954

17.38

12.28

572500

WYNN MACAU LTD

20.15

-2.421308

-3.818619

26.5

14.62

6461600

HSBC Dragon 300 Index Singapor

620.92

3.09

-0.03

STOCK EXCH OF THAI INDEX

1453.71

0.460941

4.438435

1649.77

1172.92

HO CHI MINH STOCK INDEX

493.99

1.965034

19.39912

533.15

372.39

ASIA ENTERTAINME

4.04

1.253133

43.53304

4.7647

2.2076

54264

BALLY TECHNOLOGI

59.81

0.5210084

33.77321

41.74

282607

Laos Composite Index

1295.07

0.0788223

6.610299

1455.82

987.62

BOC HONG KONG HO

3.16

2.265372

2.931598

3.6

2.99

702

GALAXY ENTERTAIN

5.02

26.44836

5.77

2.25

4100 1285783

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

INTL GAME TECH

17.66

-0.4509583

24.6295

18.81

10.92

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332361

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54.12

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23.11

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15.26

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14 14

July 15, 2013 April 19, 2013

Opinion

Europe’s bad trade gamble? Zaki Laïdi

Professor of International Relations at L’Institut d’études politiques de Paris (Sciences Po)

he start of negotiations for a free-trade agreement between the European Union and the United States – officially called the Transatlantic Trade and Investment Partnership (TTIP) – marks a key turning point for EU and world trade. It also reinforces both sides’ shift away from multilateral trade policy in recent years. That might be the right move for America, but it could spell serious trouble for Europe. Over the past half-century, the EU, which represents only 7 percent of the global population, has managed to maintain an exceptionally strong trade position, despite the rise of emerging markets like China. So, while the U.S. and Japan have seen their respective shares of global exports fall, the EU’s share has remained stable, at around 20 percent. Indeed, EU trade power contrasts sharply with the perception of a weakened Europe. Most important, Europe was able to achieve it only by investing heavily in a multilateral trade system through the GATT and then the World Trade Organization. And yet, while the EU owes much to the multilateral trade system, since 2006, it, too, has shifted to bilateralism, scoring its biggest successes

with free-trade agreements with Latin America and South Korea. An agreement with Canada is now within reach (though bilateral negotiations with India seem to have stalled, probably because the Indians do not believe that a free-trade agreement would help them much).

Japan key Officially, the EU considers a bilateral approach to trade to be perfectly compatible with a return to multilateralism. But the facts belie this. First, it is clear that bilateralism is growing as multilateralism wanes. Since 2008, when the WTO’s Doha Round of global free-trade talks collapsed, the Europeans have proved unable to bring the U.S., China, and India back to the multilateral negotiating table. More important, they evidently have given up trying. This is reflected in the EU’s reluctance to press emerging countries to become parties to the WTO’s multilateral Agreement on Government Procurement, as if it has accepted that this issue can be resolved only bilaterally. Moreover, since 2008, U.S. trade policy has deliberately abandoned multilateralism in order to pursue containment of China via a two-pronged

strategy: the planned TransPacific Partnership (TPP) and the TTIP. The reason for this change is simple: The U.S. no longer has the power to set the rules of the global trade system, but it considers itself strong enough to work around them. The EU partly shares America’s strategic objective here, because it, too, has grievances against emerging powers in terms of market access, compliance with intellectual-property rights, access to government procurement, and subsidies to state companies. But Europe

In this sense, for both the U.S. and Europe, agreement with Japan will be the key measure of bilateralism’s success or failure

must avoid alignment with this new and narrow U.S. trade focus for several reasons. First, Europe does not have an Asian strategy or TPP equivalent. Granted, an agreement between the EU and Japan would be very beneficial to Europe and would diminish America’s advantages in Asia. But if the U.S. concludes the TPP before the Europeans secure a n agreement with Japan, the Japanese government’s bargaining power visà-vis the EU would automatically increase. In this sense, for both the U.S. and Europe, agreement with Japan will be the key measure of bilateralism’s success or failure. Second, and more fundamentally, the US is a political-military power in addition to being an economic power. As a result, its partners’ trade calculus will always be shaped by strategic considerations, which are not a factor for them when dealing with Europe.

Checking on China This is especially relevant with respect to China. The U.S. very clearly wants to check China by raising global trade standards. But, if broader geopolitical considerations

brought these two countries to an agreement, Europe could suffer. Something akin to this happened during the climatechange conference in Copenhagen in 2009, where the U.S. and China decided to oppose a comprehensive global agreement, effectively dismissing Europe. Likewise, the U.S. has no real interest in revitalising multilateral trade negotiations, because bilateralism is much mor e e f f e c t i v e i n extracting concessions from emerging powers. Europe has neither the same geopolitical interests as the U.S., nor, more important, the same means, which implies that it has a greater stake in revitalising multilateral trade. Indeed, the proliferation of bilateral agreements, with their own mechanisms for resolving differences, will inevitably weaken the WTO’s disputesettlement mechanism, further undermining multilateralism. The need to revive multilateralism is all the more important given that EUU.S. negotiations will likely be difficult and prolonged, owing especially to resistance from European and American regulators. European regulators have already decided to tighten conditions for authorising genetically modified organisms, as if to show U.S. trade negotiators that they will not move easily from cherished positions. Now that the TTIP talks have officially been launched, Europe must try to obtain the best terms that it can. Above all, the EU must accept that global trade is a merciless political game, played according to a paramount rule: keep all of one’s options open at all times. © Project Syndicate

editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.

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15 15

July April15, 19,2013 2013

Opinion Business

wires

A tale of two tapers

Market woes

Leading reports from Asia’s best business newspapers

Times of India

Barry Eichengreen

Professor of Economics and Political Science at the University of California, Berkeley

India is ready to begin talks with the United States on a bilateral investment treaty as part of its effort to reinvigorate ties with a valued trade partner, the country’s commerce and industry minister said. “We have said that yes, we are ready for it. Weareinfavour,”AnandSharma told reporters after meetings with U.S. Trade Representative MichaelFroman.MrSharmasaid there was no date for the first round of talks on the pact, which would set terms and condition for bilateral investment. “It was discussed on Saturday, and we have signalled our acceptance,” Mr Sharma said.

Korea Herald Political parties agreed in South Korea agreed to reopen parliamentary proceedings that have been suspended over a row triggered by an insult levelled at President Park Geunhye by an opposition lawmaker. All parliamentary activity came to a halt on Friday after Democratic Party spokesman Hong Ik-pyo referred to President Park as a child of someone who should never have been born. At a closed door meeting both sides agreed to end the standoff. The lawmaker who made the remark expressed his apologies and stepped down from his party post.

Jakarta Globe Three Indonesian ministers are discussing the appropriate actions for miners with “contract of works” agreements that continue to defy the government’s policy of adding value to its mineral resources sector. The government signed a new mining law in 2009 but miners with older agreements have argued that they are excluded from the law because it was passed after they signed c on t ra ct s . Co o rd inating Minister for the Economy Hatta Rajasa said that all of the miners have agreed to renegotiate their contracts. However, some have refused to comply with the new requirements.

Taipei Times Taiwan and Russia will sign a transport agreement next month, the Taipei City Government said. The city government said Russia is in need of Taiwan’s assistance in providing technology for product development, marketing and sales. Meanwhile, Russia can offer construction sites, land and factories as incentives for Taiwanese businesses to invest in the country. The Russian side reportedly said during the meeting that Taiwanese automaker Luxgen Motor Co already has a foothold in Russia and more Taiwanese businesses are welcome to venture into the country.

“guide market interest rates into a reasonable range,” and backed their statements with credit injections.

Fed chairman Ben Bernanke, top, and Zhou Xiaochuan, PBOC’s governor

he United States Federal Reserve and the People’s Bank of China are not typically seen as two peas in a pod. But they have had similar experiences in recent weeks – and neither has been a pleasant one. The Fed’s bout of indigestion started with chairman Ben Bernanke’s June 19 press conference, where he warned that the Fed’s purchases of longterm securities might start to taper off if the economy continued to perform well – specifically, if unemployment fell to 7 percent. Stock prices swooned. Yields on U.S. Treasuries spiked. Emergingmarket currencies weakened on fears that capital flows from the U.S. would reverse direction. Indeed, the reaction was so extreme and alarming that a parade of Fed officials felt compelled to clarify. To say that the Fed’s policy of “quantitative easing” might taper off, they explained, was different from saying that it would be halted. When and how purchases of long-term securities were reduced would depend on

Though June 19 may not ‘be a date which will live in infamy,’ few central bankers will remember it fondly

incoming data. In particular, there was no guarantee that 7 percent unemployment would be reached before the end of the year. By coincidence, June 19 was the same day that the People’s Bank of China decided not to provide additional liquidity to the country’s strained credit markets. The interest rate that Chinese banks charge one another for short-term loans had begun rising two

weeks earlier on rumours that two medium-size banks had defaulted on their debts. The interbank rate went from 5 percent to nearly 7 percent. Investors expected that the PBOC would step in, as always, to prevent rates from rising further and slowing the economy’s growth. Instead, the PBOC stood pat. Officials worried that banks had been lending too freely to property developers and large state-owned enterprises (which in many cases are one and the same). They were concerned that the banks, through their wealth-management arms, were borrowing excessively on the overnight market to finance high-risk investments. In China, too, market reaction was violent. The Shanghai Composite, the country’s main stock index, tanked. Interbank rates shot up to 25 percent, raising deep concern about the stability of the financial system. This was not what Chinese officials expected. Like their Fed colleagues, they found it necessary to clarify and backtrack. They reassured investors that they would

Neither experience enhanced the reputation of the central bank in question. Though June 19 may not “be a date which will live in infamy,” few central bankers will remember it fondly. But central bankers, like the rest of us, should learn from their mistakes. What are the lessons of this one? First, the June 19 episode reminds us that central banks’ communications strategies remain works in progress. The Fed has repeatedly sought to explain its policies better. But, if a few relatively anodyne words can spark such a powerful reaction, then investors evidently remain uncertain, if not confused, about the Fed’s intentions. The PBOC performed even worse, having done nothing to prepare the markets for its new anti-speculation strategy. The Chinese authorities are seeking to develop the renminbi into a first-class international currency. But China’s June 19 episode is a reminder that the PBOC in particular and Chinese policymaking institutions in general have a long way to go before they succeed in instilling the necessary confidence in both the renminbi and themselves. A second lesson is that central banks are wise not to overreact to the latest bit of news. The Fed’s statements suggesting an end to quantitative easing appear to have been grounded in very recent evidence that the economy was improving. Now that the markets have reacted adversely, some investors have begun to worry that, as a result, the economy is doing worse. The Fed should wait for more – much more – data to come in before adjusting either its policy or its rhetoric. The PBOC, similarly, seems to have overreacted to data indicating a bank credit boom. In fact, some of this supposed evidence was misleading, because it reflected nothing more than a change in regulatory standards that had brought hidden loans to the surface. The PBOC would have been wise to wait for more data, so that it could distinguish the trend from the accounting glitch. A final lesson is that monetary policy is a blunt instrument for addressing asset-market problems. In the absence of inflation, it was mainly warnings about new asset bubbles that pressured the Fed to curtail its purchases of long-term securities. Similarly, worries about property prices drove the PBOC’s abrupt change of course. Bubbles should be a concern, but the June 19 episode in the U.S. and China reminds us that addressing them is first and foremost the responsibility of regulators. Central bankers cannot afford to ignore them, but they should be wary of reacting too soon. In the meantime, they have bigger fish to fry. © Project Syndicate

July 15, 2013

Closing Portugal’s borrowing costs jump

China has ‘worst flight delays’

Portugal’s borrowing costs rose to a seven-month high as political tensions grow over the country’s bailout terms. Yields on 10-year bonds hit an intraday high of 7.9 percent before easing back, while the Lisbon stock market closed down by 1.6 percent. On Friday, the opposition Socialists demanded a renegotiation of Portugal’s bailout terms. Investors fear disagreements over the bailout will weaken Portugal’s commitment to economic reform. Divisions over the bailout have already forced Lisbon to request a delay in a review of the bailout by its creditors – initially due to start today – until the end of August or early September.

China’s major airports have the worst flight delays in the world, a report from travel industry monitor FlightStats says. According to figures from around the world in June, Beijing and Shanghai airports came bottom for on-time flights, the U.S.-based firm said. Eight of the 10 worst-performing Asian airlines in terms of delays were Chinese carriers, the report added. But it did not explain the reasons for poor performance. Among 35 major international airports, the report ranked Beijing Capital International Airport lowest for on-time performance. China United Airlines was ranked the worst-performing among the 41 Asian airlines listed.

Deal making on rise at franchise expo New business opportunities to be seized from this year’s event, exhibitors said Tony Lai

tony.lai@macaubusinessdaily.com

he three-day Macau Franchise Expo saw more deals signed, more business sessions held and more opportunities to be explored than last year said the organisers. There were 28 protocols signed at this year’s event, which ended yesterday. That was three more than last year, according to the Macau Trade and Investment Promotion Institute. Agostinho Vong, the trade body’s senior manager, did not disclose in yesterday’s press conference the money amounts involved, only saying the contracts were about brand promotion and sales agency. “The event also facilitated 1,545 business matching sessions, a rise of nearly 15 percent year-on-year,” said Mr Vong, adding over 93 percent of the session participants were smalland medium-sized enterprises or business start-ups. Karen Kwan, vice chairman of the

Transatlantic trade talks off to a good start: EU T

alks on a landmark freetrade agreement between the United States and the European Union are off to a good start, U.S. and EU officials said, despite reports about U.S. spying that have raised concerns across Europe. “From the point of view of the European Union, the work this week has been very productive,” chief EU negotiator Ignacio GarciaBercero told reporters at a joint news conference with his U.S. counterpart, Daniel Mullaney. The United States and the EU are already the world’s largest

Total of 28 protocols signed in this year’s event

Licensing and Franchising Association of Hong Kong, added said she had received “very good” feedback from Hong Kong exhibitors at the event –

the fifth edition – about them meeting “high-quality business partners”. “There is about a 50-percent rise from last year in the number of

trade and investment partners but are struggling with slow economic growth, particularly in Europe. They hope to create new jobs on both sides of the Atlantic by striking a deal to eliminate remaining tariffs on each others’ goods and to reduce regulatory barriers to trade in areas ranging from agriculture to chemicals to services. “Our overarching priority is to promote U.S. economic interests and to provide increased opportunities for American workers, businesses, farmers and ranchers, and we are very optimistic about our prospects,” Mr Mullaney said. Last week’s first round of talks mainly set the stage for more substantive negotiations in the weeks and months ahead as the two sides strive to reach a deal by late 2014. But after more than a year of preparations, the talks started this week under a cloud because of reports of U.S. spying on EU offices. Both Mr Garcia-Bercero and Mr Mullaney played down that concern. The second round of talks are set for Brussels in October.

Fitch revises outlook on France to ‘negative’ F

Reuters

rance lost the last of its major AAA ratings in a blow to President Francois Hollande as his government battles to rein in public finances and kick-start the stalled economy. Fitch cut France’s credit rating by one notch to AA-plus, citing a deteriorating debt outlook and an uncertain economic environment as the euro zone crisis risked flaring up anew. The euro zone’s second-largest economy, which fell into a shallow recession in the first quarter of the year, had already lost its prized AAA ratings

interested investors,” she told the press conference. “After initial evaluation, there is a 25-percent increase in the number of parties that can have actual investments.” She was reluctant to say the exact figure but added one of their members, for instance, had 80 enquiries for partnerships in those three days. A Japanese ice-cream franchise and a Taiwan waffle brand separately reported positive responses. “The result is very good,” Junichiro Haneda, manager of icecream house Hobson’s China Co Ltd, stated. “All our ice-creams have been sold out with many people queuing.” The expo welcomed more than 17,000 visitors, up by 23.2 percent from the 13,800 visitors last year, the organiser said. “There are quite a lot of visitors in these few days and we have about 2030 business enquiries,” said Chang Yin, general manager of Taiwan’s Flylink Corp Ltd. But Mr Chang was cautious about how many inquiries would translate into firm investments as franchisees here face soaring rents apart from the franchise charges of “hundreds of thousand dollars”. Mr Vong said they would continue to follow up with the exhibitors, particularly the local ones, after the event to see whether any real business partnerships developed. He added next year’s event would invite even larger numbers of international professional buyers.

with S&P and Moody’s last year. In explaining its cut, Fitch cited a slew of causes for concern including a weaker economic output, a jump in the French unemployment rate, budget deficits and subdued external demand. Risks to fiscal projections “lie mainly to the downside,” the rating agency said in a statement, keeping a stable outlook on its new rating. “A debt ratio that is higher for longer reduces the fiscal space to absorb further adverse shocks,” it said. Fitch raised its estimate for how long it will take France to shave down its debt, forecasting it would peak at 96 percent of gross domestic product next year and still be as high as 92 percent in 2017. The government projects its efforts to whittle down public spending will have cut its debt to just over 88 percent by then. Standard & Poor’s rates France at AA-plus with a negative outlook. Moody’s rates it Aa1 with a negative outlook, meaning both agencies see another rating cut likely. Reuters