Macau Business Daily, July 16, 2013 by Business Daily

MOP 6.00 Vitor Quintã Deputy editor-in-chief Editor-in-chief Tiago Azevedo

Number 327

Tuesday July 16, 2013

Auditor slams fivefold rise in ferry port spend

April 19, 2013

Viva the pataca: currency losing momentum Page 4

Philippine carriers seek more flights to Macau Page 5

Year II

Tear up Macau Cable TV contract, legislator says Page 7

I SSN 2226-8294

www.macaubusinessdaily.com

Mainland package tours up 17.6 pct in May Mainland Chinese package tourist numbers to Macau jumped 17.6 percent year on year in May according to data released yesterday by the Statistics and Census Service. There were more than half a million such visitors for the month – a total of 547,803, equal to around 17,600 people per day. It pushed the cumulative total of mainland package tourists for the year to May 30 to nearly 2.83 million. Page 2

Hang Seng Index 21380

21344

21308

21272

21236

21200

July 15

HSI - Movers Name

Applications for youth Airport land sale not business loans from Aug 1 initiated by Ao: lawyer

The loan scheme for young entrepreneurs will be open for applications starting from August 1, according to an official dispatch published in yesterday’s Official Gazette. The initiative has a maximum loan grant of 300,000 patacas (US$37,500) per applicant. There are no restrictions on the type of start-up company. But only entrepreneurs aged 21 to 44 with businesses set up within the past two years are eligible.

Bidding in 2005 on land plots – eventually purchased by Hong Kong entrepreneurs Joseph Lau Luen Hung and Steven Lo Kit Sing for the La Scala housing project – was not initiated by Ao Man Long said lawyers for the businessmen yesterday. They are accused of paying Mr Ao – a now-jailed former secretary for Transport and Public Works – HK$20 million (US$2.5 million) to ensure the success of their bid.

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%Day

TENCENT HOLDINGS

3.74

CHINA RES ENTERP

3.33

COSCO PAC LTD

2.14

CITIC PACIFIC

2.10

HANG LUNG PROPER

1.18

HONG KG CHINA GS

-1.32

AIA GROUP LTD

-1.45

WHARF HLDG

-1.87

BELLE INTERNATIO

-2.15

HENGAN INTL

-2.75

Source: Bloomberg

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2013-07-18

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July 16, 2013

Macau

Mainland package tours up 17.6 pct in May But changes in how people book and travel could also be depressing HK package tourist figures, says academic Michael Grimes

michael.grimes@macaubusinessdaily.com

ainland Chinese package tourist numbers to Macau jumped 17.6 percent yearon-year in May according to data released yesterday by the Statistics and Census Service. There were more than half a million such visitors for the month – a total of 547,803, equal to around 17,600 people per day. It pushed the cumulative total of mainland package tourists for the year to May 30 to nearly 2.83 million. For mainland Chinese not only price but also ease of travel is motivation for travelling in a package tour group. It is generally easier to get permission to travel to Macau in a group than via the mainland’s Individual Visit Scheme say tourism industry sources. The IVS visas are in any case only open to residents of selected Chinese cities.

“Travel from the mainland has always been restricted by a lot of different policies,” Ricardo Siu Chi Sen – associate professor of business and economics at the University of Macau – told Business Daily “Access to IVS visas is sometimes restricted. But if visitors from China coming via a tour group or package, it can often be very easy,” he added. A m a i n l a n d a d m i n i s tr a ti v e decision in October 2008 restricted IVS visits to Macau to once every three months per person, compared to the once per month that had been permitted previously. Within 18 months of the decision, the

Visitor Arrivals in Package Tours Place of residence

Cost of a good time rises in May

mainland inbound package trade to Macau had leapt, although other factors including increased hotel capacity in Macau probably played a role. In May 2010, the package tour trade from the mainland rose 168 percent year-on-year. Between 2008 and 2010, the number of hotel rooms in Macau rose 20 percent to 19,573. The numbers of package visitors from Taiwan and Hong Kong were down year-on-year during this May, showing declines of 16.9 percent and 10.3 percent respectively. In May 2012 those two markets had shown growth

May

Mainland China

547,803

17.6

2,826,698

Taiwan

43,926

-16.9

265,211

Hong Kong

30,048

-10.3

162,489

South Korea

25,011

0.3

181,837

Thailand

15,546

28.1

79,213

Hikes in meals, alcohol and other entertainment push Tourist Price Index up 6.08 pct

igher prices on goods and services might be putting off some Hong Kong visitors. They have their currency pegged to the U.S. dollar, while mainland visitors find they have more spending power as their currency the yuan appreciates relative to the U.S. dollar, the Macau pataca and Hong Kong’s currency. According to the Tourist Price Index for May released yesterday by the Statistics and Census Service, the cost of food, alcohol and tobacco rose 6.08 percent year-on-year. Restaurant prices were up 7.28 percent, transport 5.96 percent and entertainment up 7.84 percent. Overall the TPI rose 6.08 percent year-on-year, though it fell 6.22 percent when judged quarteron-quarter. The statistics bureau said one likely reason was the fall in hotel costs after the peak Lunar New Year period. During May the cost of accommodation rose a modest 1.94 percent year-on-year. M.G.

KEY POINTS

Y-o-Y Change (%) Cumulative

Source: Statistics and Census Service

Follow me – mainland package tourist numbers show healthy growth

of 63.2 percent and 28 percent respectively. “What I do observe and based on some previous studies, during peak seasons – such as the summer holidays, the Christmas holiday or the Chinese New Year – visitors from Hong Kong choose not to come to Macau because of the unavailability of hotel rooms,” said Mr Siu. “I can’t comment on the Taiwan numbers because I don’t have information on that.” One possible reason could be Macau hotels blocking off rooms for the mainland package trade during peak times. But Mr Siu thinks the data on package tours may not reflect actual market conditions. “The opening of [Sands] Cotai Central by Sands China last year led to direct promotions in Hong Kong for advance bookings. These offers don’t necessarily appear as a component of Macau’s package tour statistics,” said Ricardo Siu. “The rapid changes in the tourism market and in the business models used means that official statistics don’t always exactly reflect what is actually happening in the market,” he added. According to the May data released yesterday, hotel occupancy across all segments stood at 78 percent.

Mainland package tourists up 17.6 pct in May Equal to 17,600 visitors per day during month Mainlanders 59 pct of all hotel guests HK package tourists down 16.9 pct

July April16, 19,2013 2013

Macau

Pac On ferry terminal budget up fivefold Auditors criticise swollen budget and poor assessment of project

$pend, $pend, $pend Michael Grimes

michael.grimes@macaubusinessdaily

Stephanie Lai

sw.lai@macaubusinessdaily.com

The new Pac On ferry terminal at Taipa joins a long but not very distinguished list of public infrastructure schemes that have gone wildly over budget and occasionally massively over deadline. The leaking bucket list even includes the home opened in 2011 for Macau’s two giant pandas. But it’s not just the public sector that faces cost overruns. Earlier this year Francis Lui Yiu Tung, vice chairman of casino operator Galaxy Entertainment Group Ltd, told our sister publication Macau Business magazine that construction costs in Macau had risen 30 percent in the previous three years. In early June Mr Lui said his firm had increased the budget for the second phase of the Galaxy Macau casino resort on Cotai by HK$3.6 billion (US$464 million), an increase of 22.5 percent on the original HK$16 billion price tag. Nonetheless it’s the public sector that excels at budget hikes. Here are just some of the most prominent examples.

University of Macau, Hengqin

Taipa ferry terminal plan had an original budget of 583 million patacas

he government never got a grip on costs or passenger projections when it decided to upgrade plans for a Taipa ferry terminal to serve Cotai, said a critical report from the public spending watchdog the Commission of Audit yesterday. That caused administration plans first hatched in 2003 for a modest terminal - budgeted in 2005 at 583 million patacas (US$73 million) – to balloon into a behemoth costing 3.2 billion patacas, nearly five times as much, with no firm idea of who and how many people would use it, said the commission. Included in the total bill is 173 million patacas for the temporary ferry port next door while the new Pac On facility is completed. Work on the latter began in the second quarter of 2010 and is due to be completed this year. “…several changes to the original plan led to a sharp increase in construction costs,” says the audit commission. “We’ve noticed that there is a prevalent lack of consciousness in making a comprehensive estimation of the overall expenditure for major infrastructure projects,” adds the document. Back in 2003, when the idea was for a more modest permanent facility, the Land, Public Works and Transport Bureau was put in charge of consultations. It handed over the project to the Infrastructure Development Office in May 2005. It then underwent years of consultations and design changes until it included an underground car park, shops and a helicopter pad. Not surprisingly, costs rocketed. Plans for shops have since been dropped, according to the commission report. During all that time, the infrastructure officials didn’t make an assessment of future passenger demand, said the official audit. “There is a risk of either the terminal being underused or having too little room for passenger

demand,” the report states. “Their plan has not considered the passenger flow that the Hong Kong-Zhuhai-Macau Bridge might bring in and the existing Outer Harbour,” the report noted, adding “…The office has only estimated the passenger flow based on a design plan from 2006 and another estimation in 2011 according to how much traffic the designed facilities at the Pac On terminal could handle.”

KEY POINTS Construction costs up fivefold to 3.28 bln patacas No proper assessment of future passenger flow No accurate reference for terminal cost in investment plan Start date was delayed to 2010 Auditors criticise ‘lack of consciousness’ by officials

The official audit body also noted the infrastructure office failed to present an overall construction costs estimate for the Taipa terminal, even though that office asked to be included in the government’s public investment plan. “It is hard for the decision-making bodies to assess the economic benefits of the project when it cannot have

an overall understanding of the projected spending,” the report said.

Tam’s assurances Legislator Ng Kuok Cheong told Business Daily he and colleagues had previously raised concerns over the spiralling Pac On costs. “We don’t have a legislation supporting the budget plan for individual projects, but [instead] a public investment plan blanket that can cover all these different projects,” said Mr Ng, who is also a member of the Legislative Assembly’s Monitoring Committee for Public Finance. “Our committee did chase the Pac On [budget] problem several times and Secretary [for Economy and Finance] Francis Tam said the Budget Law was going to solve the problem. With the new law, each public project will have to establish a budget plan,” he explained to Business Daily. The government must use public money more wisely, Commission of Audit director Ho Veng On said in April. T h e c o m m i s s i o n h a s been critical of government departments and public bodies in a number of recent reports, and accused the government of mismanaging its budgets.

Official reply The Infrastructure Development Office said in a statement it “acknowledged the commission’s suggestions and will implement them in due course”. The latest floor plan for Pac On lists the total gross floor area at 362,900 square metres, up from the original 107,200 square metres in 2005. The number of berths – each capable of taking a 400-seater catamaran – has also doubled from the original eight to 16. The terminal will also be able to accommodate three 1,200-seat catamarans.

In January – nine months after the government found out – the administration admitted the university’s Hengqin island campus budget had risen above 10.2 billion patacas (US$1.3 billion). That was 76 percent over the government’s initial estimate made in April 2010, of 5.8 billion patacas.  The public spending watchdog the Commission of Audit said in a January 14 report that the government gathered “revealing information” about the gap between the estimate and the actual cost of the project, but left the budget unchanged. “The budget was completely out of step with the real construction costs and ineffective in managing and controlling spending,” the report added.

Light Rapid Transit In April it was reported the project’s budget had topped 11 billion patacas (US$1.38 billion) – almost three-times higher than the initial forecast. The launch of the railway project was originally slated for 2008 but it has been successively postponed. The Macau government is no longer issuing a timetable for the opening. Ominously on March 31 the Transportation Infrastructure Office, which is overseeing the project, said the Taipa section was proving more “complex than expected”. It said this would “really bring greater challenges to progress of the project”. In September last year the city’s graft bustercum public ombudsman the Commission against Corruption said the decision to run the railway along the narrow Rua de Londres in the middle of the reclaimed NAPE district on Macau peninsula rather than along the waterfront to the south was “not based on scientific data”.

Panda Pavilion Seac Pai Van Park’s 3,000 square metre (32,291 sq. feet) pavilion –built to house the pair of giant pandas given to Macau by the central government – cost 10 million patacas (US$1.25 million) more than planned. The final bill was 90 million patacas, a modest 13 percent above the original price tag. The extra spend was due to it being relocated 60 metres from its original planned spot after advice from “panda specialists”. The animals, named in Cantonese Hoi Hoi and Sam Sam, were delivered to Macau in December 2010 from Chengdu. The panda pavilion opened in 2011.

Macao Dome Records were broken away from the athletics track in the lead up to the East Asian Games in the city in 2005. The budget overrun on the Macao Dome indoor arena on Cotai was 80 percent. The original price tag of 355 million patacas leapt to 640 million patacas. About 50 million of that was in the form of a bribe paid by a contractor to Ao Man Long, then Macau’s secretary for transport and public works, it was later revealed in a Macau court. The games as a whole were 70 percent over budget. The official with portfolio responsibility for the games as secretary for social affairs and culture, was Fernando Chui Sai On, now the city’s Chief Executive.

July 16, 2013

Macau

Govt to take youth loan applications from Aug 1 Business owners are unimpressed by the amounts of money on offer Stephanie Lai

sw.lai@macaubusinessdaily.com

he government will begin taking applications for loans for young entrepreneurs on August 1, according to yesterday’s Official Gazette. The government will lend entrepreneurs aged between 21 and 44 up to 300,000 patacas (US$37,500), free of interest, to help them get any sort of business up and running. The loans are for eight years, but the borrowers must begin repaying them after 18 months. Only an entrepreneur that is about to start a business or whose business has been going for less than two years will be eligible for a loan. The government has yet to announce the names for the members of the committee that will evaluate the business plans put forward by applicants. The director of Macau Economic Services, Sou Tim Peng, said this month that the committee would comprise experts in business and youth affairs. Mr Sou said the committee could begin work next month. “For a business proposal, we will first consider the viability, secondly the amount of preparation the entrepreneur has done to put the plan

Opening a shop can cost as much as 1 million patacas, shopkeepers say

into action, and the entrepreneur’s grasp of the market, along with other factors,” he said. The administrator of the Macau Small and Medium Enterprises A ssoc i a ti o n , Ken n eth L ei C h i Leong, has said that 300,000

patacas may be insufficient to start a new business, in view of rent, wage and marketing costs. Mr Lei told our sister publication, Macau Business magazine, that young entrepreneurs were most likely to make use of the loans to

start information technology or “innovative” businesses that did not require premises in high-rent commercial districts.

Caution advised A co-owner of a boutique that opened about a year ago, Daphne Sam Tik Suen, said: “The loan amount may be a bit tight for entrepreneurs that have been going for about a year and are expanding their businesses or doing some renovation of their shops.” Her boutique, Fonder Wear by Demand, occupies upstairs premises in the city centre. Ms Sam and a group of friends put together 140,000 patacas to start the business without having to borrow. “The 140,000 patacas was mainly spent on our shop renovation, which is rather simple, and some rent costs,” she said. “Our rent is not as high as rents for street-level shops, so our start-up expenses were a lot less than theirs,” she said. “A 300,000-pataca loan is still okay for those that want to do retail sales. It’s just that they ought to be very cautious in cost control,” Ms Sam said. “For those that want to run a restaurant, the loan may not be sufficient, as they have to be able to afford the heavy cost of equipment.” Macau Business reports in its latest issue that people in personal services or consulting estimate that an enterprise in their industries requires start-up financing of between 500,000 patacas and 800,000 patacas. Shopkeepers estimate that the initial capital needed to open a shop is anything from 500,000 patacas to 1 million patacas. Restaurateurs estimate that a small restaurant requires initial capital of 1 million patacas to 1.5 million patacas.

Pataca loses momentum The foreign exchange reserves have shrunk by 10 billion patacas since January Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

he pataca has been losing value against the currencies of Macau’s main trading partners, the Monetary Authority of Macau says. The city’s de-facto central bank said yesterday that the index of the pataca’s trade-weighted effective exchange rate had fallen to 97.77 points in June, 0.62 point less than in May and 0.94 point less than a year earlier. Although the pataca strengthened slightly during the course of the first half, the index remains far below the 105-point mark it reached in June 2010. The pataca may be under the same pressure as many Asian currencies, which have weakened since United States Federal Reserve chairman Ben Bernanke mentioned on June 19 the possibility of the Fed buying up fewer bonds. Investors holding higher-yielding Asian currencies began buying U.S. dollars, taking Mr Bernanke’s remarks as a sign that the Fed’s ultra-easy monetary policy may be

drawing to a close. For much of the first half of this year the pataca, which is indirectly pegged to the U.S. dollar through the Hong Kong dollar, strengthened. It weakened only in April and last month. It was at its strongest in May, when the effective exchange rate index was at 98.39 points. The yuan also strengthened in the first half, which may fuel inflation here. A stronger yuan makes imports more expensive, the mainland being Macau’s biggest trading partner. The annual rate of consumer price inflation was 4.84 percent in May. The pataca has lost ground in the past three years against the currencies of Macau’s other main trading partners, including the European Union. University of Macau economics professor Henry Lei Chun Kwok said in April that the fluctuations in the pataca this year “would be limited”. Mr Lei said there was “room for further depreciation of the pataca against the yuan”. Macau’s foreign exchange reserves

The pataca is still weakening against the yuan

remain comfortably large, although they were smaller at the end of June than they were in May or a year earlier. The Monetary Authority said the reserves had amounted to 127 billion patacas (US$15.9 billion) at the end of June, having fallen from a revised

128.5 billion patacas in May and 7.5 billion patacas a year earlier. The June figure was 15 times the amount of currency in circulation. The value of the reserves has been falling since January, when it was 137 billion patacas.

July 16, 2013

Macau Sands China, Melco Crown seen as top tips for Q2 Sands China Ltd and Melco Crown Entertainment Ltd will be the two big winners among Macau’s six casino operators when second quarter results are released, says Morgan Stanley Asia Ltd. The investment bank says it expects the two companies to see their earnings before interest, tax, depreciation and amortisation from their casino-resort properties increase by 56 percent from a year earlier. Wynn Macau Ltd’s property EBITDA is forecast to contract by 2 percent. Morgan Stanley says Galaxy Entertainment Group Ltd and MGM China Holdings Ltd will each post a growth rate of 10 percent, while SJM Holdings Ltd will see its company EBITDA grow by 8 percent.

Philippine carriers seek more flights to Macau Low-cost airlines queue up to fly passengers in from Manila

Zest Air has plans to begin flying to Macau on October 15

our Philippine low-costairlines have applied to carry more passengers to Macau, Philippine Civil Aeronautics Board documents show. Tiger Airways Philippines has asked to fly in up to 1,260 passengers a week from the Philippines, Zest Airways has asked to fly in up to 820, Cebu Pacific has asked to fly in up to 440 and PAL Express has asked to fly in up to 900, according to Philippine news media. Zest Airways has applied to fly here from Manila three times a week, starting on October 15. “Our assessment is underway,” a spokesperson for the Macau Civil Aviation Authority told Business Daily a fortnight ago.

Cebu Pacific has plans to add to its services to and from Manila. At present, Cebu Pacific flies here from Manila daily, and is entitled to bring in 179 passengers on each flight. The Macau and Philippine governments signed a new air services agreement last month. The new agreement increases the number of passengers that carriers can bring to Macau from Manila to 4,500 a week from 3,500. It also allows carriers to bring in an unlimited number of passengers from provincial airports in the Philippines. The old agreement allowed them to bring in only 10,000 passengers per week from provincial airports. The executive director of the Philippine Civil Aeronautics Board, Carmelo Arcilla, told reporters that Macau was a small but important market for the Philippines, being a gateway to China, which is one of the 10 main sources of tourists to the Philippines. Macau’s Human Resources Office says 17,318 Filipinos were working in Macau at the end of May. T.A.

July 16, 2013 April 19, 2013

Macau Louis XIII directors get early share options Nearly three-quarters of 26,470,000 share options announced by Louis XIII Holdings Ltd are to be divided between the directors and the chief financial officer. The regulatory filing comes more than two years before the Hong Kong-listed firm is expected to open a boutique casino hotel with 66 tables and 230 rooms on the Cotai-Coloane border in late 2015 or early 2016. The shares’ exercise price is HK$6.80 (87.6 US cents) each. That’s a premium of 9.47 percent to the average closing price of HK$6.21 per share for the five business days immediately prior to the grant on July 12.

Airport land sale not initiated by Ao: lawyer Companies that owned the land would have been forced to sell their assets, says Joseph Lau’s legal defence Tony Lai

tony.lai@macaubusinessdaily.com

Steven Lo at Macau’s Court of First Instance (Photo: Jornal Tribuna de Macau)

he legal defence of Hong Kong prominent businessmen Joseph Lau Luen Hung and Steven Lo Kit Sing argued yesterday that there was no order from Ao Man Long to allow the bidding process for the airport land where the La Scala project was being built. But the witness testifying yesterday could not confirm the claims. Mr Ao, former secretary for Tr a n s p o r t a n d P u bl i c W o r k s , has been sentenced to prison on bribery charges. Mr Lau and Mr Lo are accused of paying Mr Ao HK$20 million (US$2.5 million) to ensure the success of their bid in 2005 for the five land plots near Macau airport. Leong Weng Pung, the lawyer representing Mr Lau – chairman of Chinese Estates Holdings Ltd –, said Lei Pou Fat Development Co Ltd intended to sell the five plots in 2005 because the companies that owned the land had liabilities. He argued that the decision was not taken by Mr Ao.

Lei Pou Fat is an umbrella company overseeing the five companies that owned the plots near the Macau airport. The government is the majority shareholder in the company. “At the time the amount of the assets of the five companies was lower than half of their registered capital,” Mr Leong said, adding they would have to be dissolved according to the city’s law if the situation did not change. Pun Pou Leng, former deputy manager of Lei Pou Fat, could only confirm about the liabilities, owing to the low market value of the land plots. A document was also shown in court yesterday saying Lei Pou Fat directly granted an airport land to Macau businessman Ng Fok for the value of 73 million patacas (US$9.1 million) in early 2005, before any bidding took place. Ms Pun confirmed the grant but did not explain the reasons behind the decision. She said that José Castanheira Lourenço, who at the time headed the Infrastructure Development Office and was Lei Pou Fat’s manager, led the decision of the board. She said she could not say whether Mr Castanheira Lourenço took orders from Mr Ao. Jorge Neto Valente, Mr Lo’s counsel, also said yesterday that Lei Pou Fat invited Sociedade de Turismo e Diversões de Macau SA (STDM), founded by gaming tycoon Stanley Ho Hung Sun to the bidding, but not the two Hong Kong businessmen. Mr Ng and Sociedade de Turismo e Diversões de Macau SA (STDM), founded by gaming tycoon Stanley Ho Hung Sun, held stakes in Lei Pou Fat.

Witness retells different story in court Former government official gives confusing testimony Tony Lai

tony.lai@macaubusinessdaily.com

hey were events related to the same case, but the former deputy chief of the Infrastructure Development Office Pun Pou Leng gave a different testimony yesterday from what she had said three years ago. Ms Pun was testifying in the latest hearing of the bribery trial linked to disgraced secretary Ao Man Long. Grilled by prosecutors and lawyers representing the defendants for nearly seven hours in the Court of First Instance, she often used the same expressions: “I don’t recall”, “I don’t know” and “I forgot”. Assistant Prosecutor-General Paulo Martins Chan said Ms Pun’s written testimony in 2010 shows Sociedade de Turismo e Diversões de Macau SA (STDM) had complained that the bidding time for the airport

land – 11 days – was too short. But Ms Pun, also former deputy manager in Lei Pou Fat Development Co Ltd, said: “I do not recall they had complained before bidding.” Five companies overseen by Lei Pou Fat held the airport land plots where the high-end residential project La Scala was being built. The government is the controlling shareholder in Lei Pou Fat. STDM, founded by gaming tycoon Stanley Ho Hung Sun, has a 5-percent stake in the company. “STDM just filed a complaint after the bidding process was over – asking why the contract was not awarded to it, which was one of the shareholders,” Ms Pun said. The contrast between her 2010 remarks and yesterday’s testimony was even more obvious in the case related

to the wastewater treatment plant. According to her written testimony in 2010, she couldn’t deny being influenced by Ao Man Long in giving higher marks to Waterleau Macau Lda in the bidding for the sewage plant in the Zhuhai-Macau Cross-Border Industrial Park. In the 2010 testimony, Ms Pun said she had understood Mr Ao wanted the company, managed by defendant Luc Vriens, to win the contract. But Ms Pun said yesterday Mr Ao only mentioned Mr Vriens had been involved in the design of the wastewater treatment plant in Taipa in “a casual conversation”. “It served as a reference for me to recognise that Waterleau was a company involved in Macau projects before,” she said. She said she “received no orders”

from the then secretary to benefit Mr Vriens’s company. Though she did give higher marks to Waterleau based on the company’s profile, she explained: “At that moment I don’t think it [the mention of Waterleau] was of any influence on me.” The counsels of the eight defendants also asked Ms Pun yesterday about the details of the case regarding the airport land and wastewater treatment plant, but she mostly said she did not recall any details. Pedro Redinha, a lawyer representing Mr Vriens, slammed Ms Pun for not taking the court seriously. Ms Pun now still serves in the government as the senior technical adviser to the Security Forces of Macau.

July April16, 19,2013 2013

Macau

Tear up Macau Cable TV contract, legislator says Au Kam San calls for a Legislative Assembly debate on ending the company’s concession Stephanie Lai

sw.lai@macaubusinessdaily.com

Au Kam San says the government should pull the plug on the cable television concessionaire

Corporate UFC for Chinese TV via Sands China deal Macau casino company Sands China Ltd and the Ultimate Fighting Championship have agreed a multi-year deal to bring regular live UFC mixed martial arts events to Asia. The arrangement also involves a tie between UFC and mainland broadcaster Liaoning Radio Television. They will co-produce and broadcast the first Chinese edition of The Ultimate Fighter, a reality television series originating in the United States. Beginning in 2014, the UFC will stage a series of live events at both The Venetian Macao and Marina Bay Sands, the Singapore property of Sands China’s parent company, Las Vegas Sands Corp. Cotai Strip Resorts Macao and Marina Bay Sands will also be the presenting sponsors of The Ultimate Fighter China. The deal follows the success of last November’s live UFC event at The Venetian Macao’s CotaiArena. The Ultimate Fighter China is due to premiere in November to a potential audience of more than 830 million Chinese viewers via Liaoning Satellite TV.

Electricity firm sparks local skills The city’s electricity distributor Companhia de Electricidade de Macau SA (CEM) says it’s promoting professional skills among the young. CEM is currently hosting six students from Macau Kung Luen Vocational & Technical Middle School. Lei Kam Mei, of the Education and Youth Affairs Bureau and Chiang Chong Sek, director of Macao Federation of Trade Unions recently visited CEM’s headquarters to find out how the collaboration works and what more can be done to spread best practice across other sectors. A shortage locally of skilled personnel is an issue consistently identified by investors in the city’s economy. The school and CEM jointly run a course in technical operator skills for the electrical power industry. The tie up also involves some CEM engineers visiting the school to help in teaching and in provision of educational materials. CEM says it will offer internship positions for some students in September. CEM posted 548 million patacas (US$68.5 million) net profit in 2012.

egislative Assembly member Au Kam San is pressing for a debate in the assembly on ending Macau Cable TV Ltd’s concession early and compensating the company. Mr Au’s motion for a debate was made public at the weekend. The assembly has yet to set a date to vote on his motion. The government gave Macau Cable TV an exclusive concession to provide cable television in 1999. The concession is due to expire next April. Mr Au’s motion says the company’s exclusive contract is against the public interest. “Terminating the contract would ensure that residents continue to receive TV transmissions,” he said. Last month the Court of Second Instance ordered the government to stop the public antenna companies from illegally relaying paid-for cable television transmissions and to do so within 90 days.

Macau Cable TV operations director Ricky Tam Mong Peng told Business Daily that some public antenna companies were still relaying television programming that they had no copyright for. “Examples are the music channels of China’s CCTV or the foreign news programmes carried by Taiwan channels, which are now common in local households,” said Mr Tam. “They are, for sure, free-toair, but not free-to-business,” he said. “The public antenna companies are still airing these programmes without getting the respective copyright.” Last week the Bureau of Telecommunications Regulation proposed a shortterm settlement of the dispute between Macau Cable TV and the public antenna companies. The bureau proposed that the public antenna companies be allowed to relay copyrighted television programming provided by Macau Cable TV, and that the government pay Macau Cable TV compensation. Bureau of Telecommunications Regulation director Lawrence Tou Veng Keong said the government would like hear the response of the public antenna companies before July 17. A representative of the public antenna companies, Sai Kai Electronics manager Yeung Ka Ke, said they were averse to the proposal. Mr Yeung said the proposal was “childish”, and would give Macau Cable TV a complete monopoly.

July 16, 2013 April 19, 2013

Greater China

Chinese economy slows to 7.5 pct Second straight quarter of weaker growth

hina’s economy slowed for a second quarter as growth in factory output and fixed-asset investment weakened, adding to risks that the government will miss its expansion target as Premier Li Keqiang reins in a credit boom. Gross domestic product rose 7.5 percent in April-to-June from a year earlier, the National Bureau of Statistics said in Beijing, in line with the median forecast in several surveys and down from 7.7 percent in the first quarter. June production growth matched the weakest pace since the 2009 global recession. The slowdown may increase speculation that policy makers will act to safeguard their growth goal of 7.5 percent for the year even as Mr Li signals reluctance to boost stimulus and tries to reduce financial risks. With the International Monetary Fund last week cutting its outlook for global expansion, Mr Li’s administration faces limits on turning to exports for support. “The new government under Mr Li should be seriously worried about the prospect as to whether they can meet the growth target,” said Liu Li-Gang, head of Greater China economics at Australia & New

KEY POINTS First half growth at 7.6 pct Weak trade data, credit crunch weigh on economy June industrial output up 8.9 pct from year ago Retail sales rise 13.3 pct, more than expected

Zealand Banking Group Ltd in Hong Kong, who formerly worked at the World Bank. Expansion should stabilise this quarter and may rebound in the following period “if monetary policy can quickly adjust to reflect the rapidly changing domestic and external environment and fiscal policy can be more active by targeting effective investment projects and technology upgrading,” Mr Liu said. “Otherwise, the growth trajectory is heading to less than 7 percent.” The latest data showed the economy grew 7.6 percent in the first half of the year from a year earlier, just ahead of the full-year target.

Chinese leaders appear ready to accept a slower rate of expansion

Grim outlook Sheng Laiyun, a spokesman for the statistics bureau, said at a briefing yesterday that the world’s second-biggest economy will have no problem achieving the 2013 growth target. The agency said in a statement that first-half growth was “generally stable,” with major indicators in a “reasonable range”. “However, we are still faced with grim and complicated economic situations,” the agency said. China’s industrial production rose 8.9 percent in June from a year earlier, yesterday’s report showed. That compared with the 9.1 percent median forecast and a 9.2 percent gain in May. Last month’s pace matched the slowest since 2009, excluding figures for January and February, which the government doesn’t publish separately because of distortions from the weeklong Chinese New Year holiday. Retail sales in June rose 13.3 percent from a year earlier after a 12.9 percent increase in May. The median forecast was for an increase of 12.9 percent. The government in March set a 2013 growth target of 7.5 percent and

has a goal for an average 7 percent during its current five-year plan that runs through 2015. Last week, customs data showed China’s exports fell 3.1 percent in June against forecasts for a rise of 4 percent, while imports dipped 0.7 percent versus an expected 8.0 percent rise. The customs administration added that the outlook for July to September was “grim”.

Expansionary policies Comments by Mr Li last week that growth should remain above a certain unspecified floor and Finance Minister Lou Jiwei’s remarks that 6.5 percent or 7 percent growth wouldn’t be a “big problem” added to confusion about where the government’s tolerance would end. Mr Lou, speaking at a press briefing in Washington, where Chinese officials were meeting with U.S. counterparts, said this year’s expected growth rate is 7 percent and China can reach that. The official Xinhua News Agency later corrected its English-language report on Mr Lou to say there’s no doubt that China

can achieve this year’s growth target of 7.5 percent. Mr Sheng, the statistics bureau spokesman, said yesterday that while he didn’t know if 7 percent was the government’s bottom line for tolerating slower growth, he said that the line “is definitely changeable, it won’t be fixed at one point”. “We expect Premier Li’s cabinet to introduce some fiscal expansionary policies on a limited scale to arrest

We expect Premier Li’s cabinet to introduce some fiscal expansionary policies on a limited scale to arrest the slowdown Lu Ting, Bank of America Corp

Home sales value jumps 24 pct Buyers defy government curbs with biggest monthly gain

hina’s home sales transaction value rose 24 percent in June from the previous month, the biggest monthly gain this year, signalling that the government’s latest property measures are failing to deter buyers. The value of homes sold climbed to 624.4 billion yuan (US$102 billion) last month from 503 billion yuan in May, based on the difference between the National Statistics Bureau’s data for the first half of the year and the first five months. The June value was almost the same value of the sales in the first two months of the year combined. Housing sales in the first six months rose 46 percent to 2.82 trillion yuan from a year earlier, according to the data. China stepped up a three-year campaign to cool home prices in March, with the capital city of Beijing among 35 provincial-level

cities issued the toughest measures. The strong growth of home sales may not be sustained in the second half of the year as the country’s economy slows and liquidity squeezed, said Johnson Hu, a Hong Kong-based property analyst at CIMB-GK Securities Research. “The credit tightening will have some impact on developers in the second half because a longer approval period for mortgage or development loans will hit home sales,” said Mr Hu in a telephone interview.

RMB2.82 trln

Total value of homes sold in the first half

Slowing economy Investments in homes, office buildings, malls and other real estate gained 20 percent to 3.68 trillion yuan in the first half, compared with a 17 percent gain a year earlier, according to the statistics bureau data announced at a press conference in Beijing yesterday.

Growth in revenues from property sales in the first half eased to 43.2 percent from a rise of 52.8 percent in January-May, but remained robust, the NBS said. New property construction rose 3.8 percent to 959 million square metres (10.3 billion square feet).

Home sales volume rose 30 percent in the first half from last year to 460.9 million square metres, the government data showed yesterday. Property sales value including office buildings and retail space rose 43 percent to 3.34 trillion yuan from a year ago.

July April16, 19,2013 2013

Greater China Chinese police probe GSK deals Investigating 3 billion yuan in deals as far back as 2007

the slowdown,” Lu Ting, head of Greater China economics at Bank of America Corp in Hong Kong, said in a note yesterday. The central government will take over more of the spending burden from local governments while emphasising infrastructure construction to combat pollution and support consumption, Mr Lu said. Beijing is still cleaning up trillions of dollars in local government debt left over from its last spending spree during the 2008/2009 global financial crisis, while trying to rein in off-balance-sheet loans. “The focus is still on reforms. The chances of a cut in interest rates or banks’ reserve ratio look slim,” Xu Hongcai, senior economist at the China Centre for International Economic Exchanges, a think-tank in Beijing, said before the release of the GDP data. “Previously, when the economy was not good, local officials held out their hands for money from the central government. But now they have to embrace reforms as no money will be given.” Bloomberg News/Reuters

“We are especially concerned about the rather significant downside of investment growth, led by real estate investment,” Ren Xianfang, senior economist at consultancy IHS Global Insight in Beijing, said in a note to clients. Reuters/Bloomberg News

ritish drugmaker GlaxoSmithKline Plc channelled bribes to Chinese officials and doctors through travel agencies for six years to illegally boost sales and to raise the price of its medicines in China, authorities said yesterday. Four senior Chinese executives from GlaxoSmithKline (GSK) had been detained, said Gao Feng, head of the economic crimes investigation unit at the Ministry of Public Security. Since 2007 the company had transferred as much as 3 billion yuan (US$489 million) to more than 700 travel agencies and consultancies, Mr Gao told a news conference. He did not make clear how much of this money was spent bribing officials and doctors. Last week the Ministry of Public Security said GSK executives in China had confessed to bribery and tax violations. Until yesterday, Chinese authorities had released few details on the probe into Britain’s biggest drugmaker, one of a string of investigations into foreign firms and their pricing practices in the world’s second-biggest economy. “We have sufficient reason to

suspect that these transfers were conducted illegally,” Mr Gao said. “You could say the travel agencies and GSK were criminal partners. Among the partners, GSK was mainly responsible. In a criminal organisation there is always a leader.” GSK officials were not immediately available for comment yesterday. The company has previously said it had found no evidence of bribery or corruption in China, but added it would cooperate with the authorities. It has said it was only told about the investigation in early July. The detained executives include Liang Hong, vice president and operations manager of GSK (China) Investment Co Ltd and Zhang Guowei, the company’s vice president and human resources director, the official Xinhua news agency reported. It was unclear if any of the executives had legal representation.

Key market China is an increasingly important country for international drugmakers, which are relying on growth in emerging markets to offset slower sales in Western markets where many former top-selling

medicines have lost patent protection. IMS Health, which tracks pharmaceutical industry trends, expects China to overtake Japan as the world’s second biggest drugs market behind the United States by 2016. The charges of bribery make the GSK case the highest profile corporate investigation in China since four executives from mining giant Rio Tinto Plc were jailed in March 2010 for taking bribes and stealing commercial secrets. Mr Gao gave no specific examples of how the bribery involving the GSK executives worked in practice. The official People’s Daily newspaper said GSK collaborated with travel agencies to funnel bribes to doctors and officials by creating fake “conference services” as expenditure for GSK in order to misappropriate funds, some of which would then be spent on bribes. GSK supplies key products such as vaccines in China, as well as drugs for lung disease and cancer. The police last Thursday said the case against GSK involved a large number of staff, with bribes offered to Chinese government officials, medical associations, hospitals and doctors. Reuters

Alibaba gets nod to stir up loans Group pushes into finance to diversify business operations

hina has authorised billionaire Jack Ma’s Alibaba Group to expand funding for its online loans business, designed to shake up an industry divided into heavily regulated state banks and shady financing schemes. The Chinese Securities Regulatory Commission approved the sale of up to 5 billion yuan (US$815 million) of notes backed by loans from Alibaba, according to a July 8 filing. Since starting its microloans business three years ago, Alibaba has extended more than 100 billion yuan of financing to over 320,000 small online businesses and entrepreneurs, it said in an e-mailed statement. Alibaba’s Mr Ma said an outsider was needed to “stir things up” after restrictions on bank credit spurred property developers and entrepreneurs to seek funds from curbside lenders. Chinese regulators have sought to reduce risks taken in so-called shadow banking, which has assets of 36 trillion yuan according to JPMorgan Chase & Co estimates, by forcing more products to be publicly traded and squeezing access to funding with a record cash crunch. “The government wants something that is more effective,” said Victor Wang, a Hong Kongbased analyst at Macquarie Group Ltd. “The loans that Alibaba offers are all for small and micro enterprises, which is something that the government wants. Traditional banks usually cater to state-owned enterprises.” The CSRC approval allows Alibaba to boost its loans by as much as the maximum 5 billion yuan it can sell of the notes. Currently it can lend out at least 2.4 billion yuan, financed mainly with shareholder equity and bank loans, according to Chai Liang, a company spokeswoman.

Alibaba has extended more than 100 billion yuan in financing

Alibaba operates China’s largest e-commerce company. It runs platforms including Taobao Marketplace and Tmall.com that connect retail brands with consumers, a cross between Amazon. com Inc. and EBay Inc. The transaction history of smaller companies on its sites could help gauge their credit history, said Richard Ji, former Morgan Stanley analyst who is now raising his own fund, All-Stars Investment Ltd. to focus on Internet companies. “It’s very hard to service small- and medium-sized enterprises,” Mr Ji said. “There are too many of them and the loans that they take are too small.” The average size of Alibaba’s loans is 40,000 yuan, and the nonperforming loan ratio was 0.87 percent as of the second quarter of this year, the company said. That’s less than the 0.96 percent average for commercial banks as of March 31. Alibaba’s push into finance comes as borrowing costs for Chinese banks

surged the most in at least six years last month on concern a record cash crunch threatened to swell bad loans. Premier Li Keqiang has tried to rein in debt expansion after the government’s broadest measure of credit rose to a record 6.16 trillion yuan in the first quarter, even as economic growth has slowed. New yuan loans in China fell to 860.5 billion yuan last month from 919.8 billion yuan a year ago, data July 12 showed. Bad loans at banks including Industrial & Commercial Bank of China Ltd have increased for six straight quarters through March 31, the longest streak in at least nine years. So-called shadow lending has grown as an estimated 97 percent of the nation’s 42 million small businesses can’t get bank loans, according to Citic Securities Co. The industry may be 69 percent as large as China’s annual economic output, JPMorgan estimated in May. Bloomberg News

10 10

July 16, 2013 April 19, 2013

Asia

India inflation reaches three-month high Rupee was the world’s worst performer last month Kartik Goyal

Rudd seeks to ditch carbon tax Prime Minister Kevin Rudd plans to accelerate Australia’s move to emissions trading, scrapping predecessor Julia Gillard’s cleanenergy policy that’s left the nation with the world’s highest carbon price. Mr Rudd seeks to bring forward by a year to 2014 the move to a floating price on carbon, Treasurer Chris Bowen said yesterday in an interview with Channel Ten’s “Meet The Press”. Australia’s fixed carbon price is four times higher than Europe’s. The move came as the ruling Labor party drew even with the coalition in an opinion poll after Mr Rudd ousted Ms Gillard as leader last month. “The government is moving in this direction because a floating price takes cost-of-living pressures off Australian families and still protects the environment and acts on climate change,” Mr Rudd told reporters yesterday in Cairns, Queensland. “We have still got a fair bit of budget work to do, as this has to be a budget neutral undertaking.” In overturning a key policy of Ms Gillard and stressing a potential benefit for voters in lower energy costs, Mr Rudd is aiming to bolster support for his Labor government ahead of an election that must be held by the end of November. He’s also seeking to counter attacks from opposition LiberalNational leader Tony Abbott, who has pledged to ditch the carbon price system if he wins office, calling it a toxic tax. Australia’s carbon pricing began at A$23 (US$20.81) a ton in July 2012, rose this month to US$24.15 and is scheduled to increase to A$25.40 in July 2014. European prices fell 1.2 percent to 4.04 euros (US$5.28) on the ICE Futures Europe exchange July 12 in London.

Abe on track for hefty win: polls Prime Minister Shinzo Abe’s ruling bloc remains on track for a big win in Sunday’s upper house election, final surveys before the vote showed yesterday, a victory that would likely help end six years of parliamentary deadlock. The surveys showed support for Mr Abe’s conservative Liberal Democratic Party (LDP) far outstrips other parties, buoyed by hopes that his hyper-easy monetary policy, public spending and structural reform will bolster growth and jolt Japan out of years of stagnation. Voter preference polls taken on Saturday and Sunday and published by the Asahi and Mainichi dailies showed that 37 to 43 percent of voters wanted to vote for the LDP. Such support meant that, along with coalition partner the New Komeito, the LDP would likely win a majority in the upper house. It would also spell an to the “twisted parliament” in which the opposition controls the upper house, hampering policy implementation, even if Mr Abe’s commitment to growthgenerating and potentially painful reforms such as deregulation remains in doubt. Yesterday’s surveys showed 8 percent of respondents wanted to vote for the New Komeito, ahead of the main opposition Democratic Party of Japan (DPJ) with 7 percent. Around a third of those surveyed did not support any party, and voter turn-out was expected to be low. Japan has suffered parliamentary gridlock ever since Mr Abe led the LDP to a massive defeat in a 2007 upper house vote. He quit abruptly two months later due to the deadlock, plummeting support and ill health.

ndian inflation accelerated to a three-month high in June, threatening to curb scope for a further interest-rate cut as rupee weakness stokes import costs. The wholesale-price index rose 4.86 percent from a year earlier, exceeding May’s 4.7 percent climb, a Commerce Ministry statement showed in New Delhi yesteray. The median estimate in a Bloomberg News survey of 30 analysts was 4.94 percent. The Reserve Bank of India’s threshold level is about 5 percent. The rupee’s drop of about 8 percent against the dollar in 2013 has made imports including oil more expensive and threatens to fan wider price pressures even as economic growth falters. The Reserve Bank will leave borrowing costs unchanged on July 30 for a second month after retail inflation quickened toward 10 percent, State Bank of India and Nomura Holdings Inc predict. “I don’t think the Reserve Bank can afford any cuts at this time due to the levels of consumer prices and the rupee’s decline,” said Suvodeep Rakshit, an economist at Kotak Securities Ltd in Mumbai. The currency, which touched an all-time low of 61.2125 per dollar on July 8, depreciated 0.4 percent to 59.8838 yesterday in Mumbai. The S&P BSE Sensex index gained 0.3 percent, while the yield on the 8.15 percent bond maturing June 2022 rose to 7.67 percent from 7.65 percent on July 12. Inflation remains “high” even after easing somewhat and controlling it is the priority, Reserve Bank Governor Duvvuri Subbarao said last week. Indian Oil Corp, the nation’s biggest refiner, raised fuel prices in June and July, citing the rupee. The currency was the world’s

Food prices climbed 9.74 percent in June

worst performer last month, hurt by a record current-account deficit. The possibility of reduced U.S. monetary stimulus has also sapped demand for assets in emerging markets from Brazil to India. Mr Subbarao lowered the central bank’s benchmark repurchase rate by 25 basis points in January, March and May each to 7.25 percent to bolster Indian expansion, which slowed to a decade low in the financial year ended March. Industrial output unexpectedly shrank in May while consumer-price inflation accelerated to 9.87 percent in June, signs that Asia’s third-largest economy continues to struggle as exports drop, domestic demand moderates and supply bottlenecks contribute to price increases. Food prices climbed 9.74 percent in June from a year earlier, yesterday’s report showed. Fuel and power rose 7.12 percent. Nonfood manufactured goods prices, a

measure of core inflation, advanced 2.1 percent after a 2.35 percent gain in May, according to Bloomberg calculations based on the data. Bloomberg News

I don’t think the Reserve Bank can afford any cuts at this time due to the levels of consumer prices and the rupee’s decline Suvodeep Rakshit, economist, Kotak Securities

Koreas hold third round of talks Officials met at Kaeseong seeking common ground

outh Korean negotiators crossed the demilitarised zone for the third time in just over a week as they seek agreement with their North Korean counterparts on restarting a jointly-operated industrial park. The two sides met at the Kaeseong factory complex located 10 kilometres (6 miles) north of the border yesterday, picking up where they left off in talks on July 10, the South’s Unification Ministry said. “I’ll do my best to reopen Kaesong and develop it into an international industrial park,” South Korea’s chief delegate Kim Ki-woong told reporters before talks started. Mr Kim replaced Suh Ho in what was described as a regular reshuffle ahead of the talks. More than 150 businessmen from 48 textile companies were scheduled to visit Kaeseong yesterday to survey facilities and retrieve completed goods they left behind when the North shut the zone in April. North Korean leader Kim Jong-

The Kaeseong complex has 123 Seoulowned factories

un’s regime has begun toning down its rhetoric since June, after withdrawing its workers from Kaeseong on April 8 to protest tightened United Nations sanctions and U.S.-South Korean military drills. Mr Kim’s isolation intensified after China, his biggest backer, joined the U.S. and South Korea in condemning his nuclear ambitions. While the Unification Ministry said on July 7 the two Koreas share a desire to reopen Kaeseong, they haven’t agreed on the details. South Korea wants the North to take measures to prevent future closures,

while the North is calling on the South not to do anything – like conduct military exercises – that hinders operations at the industrial complex. The outcome of the talks will “have a bearing on overall inter-Korean relations” and the South will face “serious misfortune” if it maintains its “arrogant demeanour,” the Secretariat of the Committee for the Peaceful Reunification of Korea told the South on July 11, according to a notice carried by the North’s official Korean Central News Agency on July 13. South Korean President Park Geun-hye’s government has said it will not engage the North until it gives up its nuclear weapons, aside from talks on joint economic projects and humanitarian issues. Ms Park was elected last year partly on a pledge to boost ties through “trust-building”. She has said a nuclear-armed North Korea is unacceptable. AFP/Bloomberg News

11 11

July April16, 19,2013 2013

Asia

1,806

Homes were sold last month

Singapore – attempting to rein in prices since 2009

Singapore’s home sales climb As Moody’s cuts outlook for banks citing credit risks

ingapore’s June home sales rose for a second month to the highest since a March record as Moody’s Investors Service cut its outlook for the city’s banking system on concern that borrowing costs may climb. Home sales rose 24 percent to 1,806 units last month from a revised 1,459 units in May, the Urban Redevelopment Authority said on its website yesterday, the highest since 2,793 units in March. Moody’s said

the “rapid” loan growth and rising property prices in the city adds more risk to credit quality. Record home prices amid low interest rates raised concerns of a housing bubble and prompted the government to widen a fouryear campaign in January to curb speculation prices in Asia’s secondmost expensive housing market. “The operating environment for Singapore’s banking system has been

favourable for an extended period, with low interest rates and strong economic growth domestically and in the surrounding region,” Gene Fang, a Moody’s senior analyst, said in a statement yesterday. “With the potential risk of a turn in the interest rate cycle, we view strong asset inflation and credit growth trends as vulnerabilities, as this combination would likely cause credit costs to rise from their current low base.”

Rupiah weakens to levels last seen in 2009 Corporate dollar demand weighs on rupiah

ndonesia’s rupiah weakened beyond 10,000 per dollar for the first time since September 2009, on sustained dollar demand from local companies, traders said. A slowing economic growth in China also dimmed the outlook for exports and the current-account deficit. China, the No. 1 destination for shipments from the Southeast Asian nation, reported a second-quarter expansion yesterday of 7.5 percent compared with 7.7 percent in the

Bank Indonesia’s rate hikes are enough to stem inflation but not to calm markets as external imbalances pressure the currency Leo Rinaldy, economist, PT Mandiri Sekuritas

prior three months. Indonesia’s exports contracted for a 14th month in May, giving a trade shortfall of US$590 million, official data show. The currentaccount gap was a record US$24.1 billion in 2012 and US$5.3 billion in the first three months of 2013. The rupiah declined 0.3 percent to 10,023 per dollar in Jakarta, according to prices from local banks compiled by Bloomberg. One-month non-deliverable forwards fell 0.5 percent to 10,218, having traded weaker than the 10,000 level for more than a month. The rupiah’s current level is in line with market conditions and economic fundamentals, Bank Indonesia deputy governor Perry Warjiyo said yesterday. “A slowing China will impact other Southeast Asian countries and further weigh on our exports,” said Leo Rinaldy, a Jakarta-based economist at PT Mandiri Sekuritas, a unit of the nation’s largest lender by assets. “Bank Indonesia’s rate hikes are enough to stem inflation but not to calm markets as external imbalances pressure the currency.” The monetary authority raised its reference rate by 50 basis points, or 0.50 percentage point, to 6.50 percent last week, the biggest increase since 2005, following a 25 basis point move in June. Bank Indonesia is confident

the currency will stabilise after the changes, which were aimed at boosting confidence, Mr Warjiyo said.

Currency intervention The yield on the government’s 5.625 percent bonds due May 2023 rose five basis points to 8.21 percent, the highest level for a benchmark 10-year note since March 2011, according to prices from the Inter Dealer Market Association. Indonesia’s central bank sold dollars

Singapore on June 28 unveiled new rules governing how financial institutions grant property loans to individuals, extending efforts to curb excessive price increases. The island state’s private residential property price rose 0.8 percent to 214.9 points in the three months ended June 30, extending a 0.6 percent increase in the first quarter, according to preliminary estimates released by the authority on July 1. The pace of gain in suburban prices more than doubled from the previous three months. “The numbers don’t reflect the new measures introduced in June,” said David Neubronner, national director at broker Jones Lang LaSalle Inc’s residential project sales in Singapore. “Growth in home sales will slow down over the second half of the year as the latest curbs are the most potent of all measures introduced so far.” Singapore has been attempting to rein in prices since 2009, when the government barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. In January, the government introduced the seventh round of curbs in about four years, including an increase in stamp duties for homebuyers by 5 percentage points to 7 percentage points. Bloomberg News

in the past two to three months to support the rupiah, Mr Warjiyo said in a July 12 conference call from Jakarta, and its foreign-exchange reserves dropped below US$100 billion in June for the first time since February 2011. Global funds cut their holdings of the nation’s local-currency sovereign debt by 18.2 trillion rupiah (US$1.8 billion) since May 22, when the Federal Reserve signalled it may reduce its monthly bond purchases. “The rupiah will likely stabilise near here for the next couple of months after it converged with the offshore level and as Bank Indonesia supports it,” said Andy Ji, a Singapore-based strategist at Commonwealth Bank of Australia. “Investors are waiting to get in, but this depends on a number of key things like improvement on the current-account deficit and more clarity on the Fed’s policy.”

Indonesia rupiah weakens past 10,000 U.S. dollars

Bloomberg News/Reuters

12 12

July 16, 2013 April 19, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

34.1

-1.445087

20333564

CHINA UNICOM HON

ALUMINUM CORP-H

2.52

-1.5625

14886394

BANK OF CHINA-H

3.17

216964751

BANK OF COMMUN-H

4.99

-0.2

20531105

BANK EAST ASIA

28.05

0.1785714

1026891

BELLE INTERNATIO

10.94

-2.146691

13287698

BOC HONG KONG HO

24.35

0.2057613

CATHAY PAC AIR

13.32

-0.8928571

CHEUNG KONG

PRICE

DAY %

Volume

10.68

0.5649718

12144226

CITIC PACIFIC

8.75

2.10035

6225813

CLP HLDGS LTD

63.9

1416929

13.62

-0.5839416

40988883

10.5

2.140078

ESPRIT HLDGS

11.52

6399525

HANG LUNG PROPER

1829959

HANG SENG BK

106.7

-0.2803738

1662190

CHINA COAL ENE-H

4.06

0.7444169

30673163

CHINA CONST BA-H

5.49

0.9191176

213015889

NAME

PRICE

DAY %

Volume

68.65

-0.7947977

1020594

SANDS CHINA LTD

39.1

-0.255102

6990366

SINO LAND CO

10.9

-0.5474453

2982790

SUN HUNG KAI PRO

102.6

0.2932551

2190358

4539530

SWIRE PACIFIC-A

94.45

-0.3691983

1032388

-0.5181347

2599619

TENCENT HOLDINGS

321.4

3.744351

5251781

25.65

1.183432

6343345

TINGYI HLDG CO

19.08

0.5268704

4496755

116.8

-0.5110733

719042

WANT WANT CHINA

10.7

-0.9259259

16254629

HENDERSON LAND D

49.1

0.1019368

2907407

WHARF HLDG

65.5

-1.872659

3143057

HENGAN INTL

77.7

-2.753442

3306863

CNOOC LTD COSCO PAC LTD

HONG KG CHINA GS

19.4

-1.322482

7829108

121.5

0.4132231

1619772

HSBC HLDGS PLC

85.1

0.472255

9055181

HONG KONG EXCHNG

CHINA LIFE INS-H

18.54

0.1079914

21311279

CHINA MERCHANT

23.65

1056867

CHINA MOBILE

81.65

0.1226242

14904803

HUTCHISON WHAMPO

84.8

0.652819

3716288

CHINA OVERSEAS

21.55

11625672

IND & COMM BK-H

4.91

0.2040816

204327653

5.47

-0.5454545

65278119

LI & FUNG LTD

CHINA PETROLEU-H

NAME POWER ASSETS HOL

MOVERS

-0.1792115

11945241

HIGH

21522.15

29.2

-0.5110733

1456921

LOW

21177.63

52W (H) 23944.74

CHINA RES ENTERP

24.85

3.326403

1689654

CHINA RES LAND

21.85

0.2293578

3599031

NEW WORLD DEV

11.1

-0.3590664

6307360

CHINA RES POWER

19.96

0.7063572

4257992

PETROCHINA CO-H

9.18

-0.7567568

64171998

CHINA SHENHUA-H

20.85

0.7246377

14925894

PING AN INSURA-H

-0.2932551

6844199

5 21530

INDEX 21303.31

11.14

MTR CORP

(L) 18710.58984

21170

11-July

15-July

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.14

-0.3174603

107711174

AIR CHINA LTD-H

5.38

-0.9208103

8410500

ALUMINUM CORP-H

2.52

-1.5625

ANHUI CONCH-H

22.6

BANK OF CHINA-H

3.17

NAME

PRICE

DAY %

Volume

CHINA PACIFIC-H

25.1

-0.9861933

8738272

CHINA PETROLEU-H

5.47

-0.5454545

14886394

CHINA RAIL CN-H

6.99

-0.2207506

17550261

CHINA RAIL GR-H

216964751

PRICE

DAY %

Volume

YANZHOU COAL-H

5.67

1.431127

24189832

65278119

ZIJIN MINING-H

1.61

2.547771

56601109

0.7204611

11242950

ZOOMLION HEAVY-H

5.15

-1.529637

14818516

3.7

-0.8042895

25193997

ZTE CORP-H

11.58

CHINA SHENHUA-H

20.85

0.7246377

14925894

4.99

-0.2

20531105

CHINA TELECOM-H

3.75

-1.055409

51428560

31.95

10.9375

6943000

DONGFENG MOTOR-H

9.79

1.450777

13391488

CHINA CITIC BK-H

3.64

1.675978

44877118

GUANGZHOU AUTO-H

7.3

1.388889

10054128

CHINA COAL ENE-H

4.06

0.7444169

30673163

HUANENG POWER-H

7.93

0.1262626

23023748

CHINA COM CONS-H

5.67

-2.409639

26421265

IND & COMM BK-H

4.91

0.2040816

204327653

CHINA CONST BA-H

5.49

0.9191176

213015889

JIANGXI COPPER-H

12.84

2.392344

10269883

CHINA COSCO HO-H

3.4

5616381

PETROCHINA CO-H

9.18

-0.7567568

64171998

18.54

0.1079914

21311279

PICC PROPERTY &

8.84

-0.2257336

11016676

CHINA LONGYUAN-H

8.29

3.366584

22195095

PING AN INSURA-H

-0.2932551

6844199

CHINA MERCH BK-H

13.08

-0.304878

16094444

SHANDONG WEIG-H

7.65

0.1308901

5948000

CHINA MINSHENG-H

8.02

0.7537688

48335725

SINOPHARM-H

18.68

-1.890756

1701200

CHINA NATL BDG-H

6.97

1.161103

54338007

TSINGTAO BREW-H

57.65

3.315412

996416

15.16

-1.813472

5495730

WEICHAI POWER-H

BANK OF COMMUN-H BYD CO LTD-H

CHINA LIFE INS-H

CHINA OILFIELD-H

NAME

MOVERS

2 9620

INDEX 9445.56 HIGH

9610.5

LOW

9358.61

52W (H) 12354.22 9350

(L) 8640.85 11-July

3064819

15-July

24.9

2.04918

PRICE

DAY %

Volume

PRICE

DAY %

9.55

1.921025

32939285

QINGHAI SALT-A

18.44

-0.7534984

8341235

3.98482

151831637

RISESUN REAL -A

16.02

1.456618

11736470

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.52

0.3984064

103686284

AIR CHINA LTD-A

4.08

0.990099

26131207

CITIC SECURITI-A

10.96

CHONGQING CHAN-A

NAME

Volume

3.26

0.9287926

13396049

CSR CORP LTD -A

3.78

2.162162

67669699

SAIC MOTOR-A

13.14

1.781565

21533282

ANHUI CONCH-A

14.08

-1.262272

34433219

DAQIN RAILWAY -A

6.06

0.3311258

20143171

SANAN OPTOELEC-A

19.38

3.914209

10333494

BANK OF BEIJIN-A

8.13

0.6188119

42160713

DATANG INTL PO-A

5.15

1.377953

7085011

SANY HEAVY INDUS

7.31

0.4120879

28787309

BANK OF CHINA-A

2.69

0.3731343

24281119

EVERBRIG SEC -A

11.66

7.465438

62435003

SHANDONG DONG-A

43.5

3.670162

14550820

BANK OF COMMUN-A

3.99

1.785714

84409405

GD MIDEA HOLDI-A

12.64

0.2379064

10445927

SHANDONG GOLD-MI

22.61

0.4888889

16002682

BAOSHAN IRON & S

4.07

0.9925558

18005072

GD POWER DEVEL-A

2.36

0.8547009

57829570

SHANG PHARM -A

11.56

3.030303

11158963

BEIJING SL -A

63.32

4.661157

3629030

GEMDALE CORP-A

7.3

54708730

SHANG PUDONG-A

8.56

0.8244994

103850924

BEIJING TONGRE-A

23.67

2.24622

10300603

GF SECURITIES-A

12.7

7.993197

91459585

SHANGHAI ELECT-A

3.39

1.801802

5363601

18419706

GREE ELECTRIC

24.58

-0.8870968

17879772

SHENZEN OVERSE-A

5.69

1.788909

45025730

SICHUAN KELUN-A

58.15

5.977766

2126501

5.34

3.488372

51145287 5570374

ALUMINUM CORP-A

BYD CO LTD -A

36.92

CHINA AVIC ELE-A

24.19

1.553317

4425282

GUANGHUI ENERG-A

10.28

-3.110273

78022679

CHINA CITIC BK-A

3.91

4.266667

51898025

HAITONG SECURI-A

10.98

3.977273

194893571

4.2

2.689487

51939269

HANGZHOU HIKVI-A

CHINA CNR CORP-A

3.504345

SUNING COMMERC-A

20.6

4.515474

27018961

TASLY PHARMAC-A

47.61

3.297895

42.53

0.5437352

5831036

TSINGTAO BREW-A

40.41

1.634809

2700500

17.05

0.7088009

6225999

CHINA COAL ENE-A

4.97

1.01626

10092957

HENAN SHUAN-A

CHINA CONST BA-A

4.43

-1.116071

27307386

HONG YUAN SEC-A

9.26

4.514673

212273549

WANHUA CHEMIC-A

CHINA COSCO HO-A

2.96

11439178

HUATAI SECURIT-A

9.03

4.756381

60880925

WEICHAI POWER-A

18.2

0.8310249

7495439

CHINA EAST AIR-A

2.51

0.8032129

12350007

HUAXIA BANK CO

9.37

1.737242

30910516

WULIANGYE YIBIN

20.16

-0.09910803

19970021

CHINA EVERBRIG-A

2.9

0.6944444

65714573

IND & COMM BK-A

3.94

-0.5050505

73051077

YANZHOU COAL-A

10.26

0.2932551

12488709

10.26

1.886792

127122012

YUNNAN BAIYAO-A

102.95

3.053053

2285620

1.737374

76814933

ZHONGJIN GOLD

9.62

0.7329843

14200537

CHINA INTERNAT-A

31.36

1.226598

3117054

INDUSTRIAL BAN-A

CHINA INTL MAR-A

10.34

0.2909796

5858214

INNER MONG BAO-A

25.18

CHINA LIFE INS-A

13.79

0.8040936

14528305

INNER MONG YIL-A

36.89

4.003383

10432619

ZIJIN MINING-A

2.55

-0.390625

52341807

CHINA MERCH BK-A

11.65

0.2581756

67469648

INNER MONGOLIA-A

4.08

0.7407407

48551545

ZOOMLION HEAVY-A

5.39

1.125704

56440308

CHINA MERCHANT-A

11.59

4.039497

48214895

JIANGSU HENGRU-A

32.51

10.01692

12593424

ZTE CORP-A

13.69

50775008

CHINA MERCHANT-A

27.83

0.9796807

16930722

JIANGSU YANGHE-A

51.8

-0.03859514

4453755

CHINA MINSHENG-A

9.16

0.5488474

145173736

16.81

0.4181601

10716539

CHINA NATIONAL-A

10.2

1.898102

38159094

8.44

-0.2364066

8888314

CHINA OILFIELD-A

14.76

0.9575923

3646143

KANGMEI PHARMA-A

21.34

2.056432

19448355

CHINA PACIFIC-A

16.42

-0.06086427

25918752

KWEICHOW MOUTA-A

187.95

-0.4554843

3660735

JIANGXI COPPER-A JINDUICHENG -A

CHINA PETROLEU-A

4.56

-0.6535948

61998481

LUZHOU LAOJIAO-A

24.4

0.04100041

8533732

CHINA RAILWAY-A

4.54

1.339286

24160004

METALLURGICAL-A

1.64

1.234568

30693753

CHINA RAILWAY-A

2.55

-0.390625

42285440

NARI TECHNOLOG-A

14.93

3.178991

23003419

7.54

2.724796

44031583

8.1

-0.2463054

14745530

CHINA RESOURCE-A CHINA SHENHUA-A CHINA STATE -A CHINA UNITED-A CHINA VANKE CO-A CHINA YANGTZE-A

29.6

6437890

OFFSHORE OIL-A

16.24

-0.06153846

12706313

PETROCHINA CO-A

3.33

1.215805

84953235

PING AN BANK-A

10.51

1.644101

134165941

3.2

0.3134796

103574878

PING AN INSURA-A

35.24

0.6569552

33752657

10.45

0.4807692

86632508

POLY REAL ESTA-A

10.93

0.1833181

50547128

-0.5714286

18661170

QINGDAO HAIER-A

11.75

1.643599

8223327

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

6.96

MOVERS 246

19 2360

INDEX 2307.297 HIGH

2350.37

LOW

2232.16

52W (H) 2791.303 (L) 2023.171

2230

11-July

15-July

FTSE Taiwan 50 Index NAME ACER INC

NAME

PRICE DAY %

Volume

22.85

-1.72043

11395703

FORMOSA PLASTIC

76.3

1.733333

13015266

25.5

-0.390625

10665173

FOXCONN TECHNOLO

75.6

0.9345794

3387828

37.45

4317660

FUBON FINANCIAL

40.15

-2.548544

57382856

TSMC

ASUSTEK COMPUTER

273

1.486989

5271708

HON HAI PRECISIO

78.5

0.6410256

35717773

UNI-PRESIDENT

62.6

3.814262

16469609

AU OPTRONICS COR

1.382488

62195934

HOTAI MOTOR CO

399

1.269036

448340

UNITED MICROELEC

14.4

1.052632

74064134

CATCHER TECH

148

-1.003344

4853572

HTC CORP

192

0.2610966

11793502

28.55

0.1754386

14003489

CATHAY FINANCIAL

43.1 -0.8055236

43695497

HUA NAN FINANCIA

17.3

0.5813953

7231749

YUANTA FINANCIAL

16.2

0.621118

13140255

CHANG HWA BANK

17.35 -0.2873563

7130590

LARGAN PRECISION

976

0.6185567

1318483

YULON MOTOR CO

1204272

-1.344364

6117089

LITE-ON TECHNOLO

6214709

ADVANCED SEMICON ASIA CEMENT CORP

CHENG SHIN RUBBE

95.4

CHIMEI INNOLUX C

15.2

1.333333

36649507

MEDIATEK INC

CHINA DEVELOPMEN

8.73

0.4602992

41003911

MEGA FINANCIAL H

CHINA STEEL CORP

25.35

0.7952286

16410410

CHINATRUST FINAN

19.25

0.5221932

CHUNGHWA TELECOM

99.9

COMPAL ELECTRON

358 -0.5555556 0

19899074

NAN YA PLASTICS

3.225806

12331746

60496969

PRESIDENT CHAIN

218

2.107728

2127639

-0.1

18063573

QUANTA COMPUTER

19.1 -0.2610966

19420245

SILICONWARE PREC

34.45

-4.172462

24154941

6426756

DELTA ELECT INC

145

3385680

SINOPAC FINANCIA

14.95

1.013514

14897718

FAR EASTERN NEW

33.2

0.9118541

6843893

SYNNEX TECH INTL

39.95

1.395939

4750691

FAR EASTONE TELE

1.1378

4881676

TAIWAN CEMENT

0.3963012

7230371

FIRST FINANCIAL FORMOSA CHEM & F FORMOSA PETROCHE

18.3

0.5494505

8734671

TAIWAN COOPERATI

0.2949853

8002734

1.827676

5210197

TAIWAN FERTILIZE

72.4 -0.4126547

4848197

79.4 -0.3764115

2071915

TAIWAN GLASS IND

27.8

1535813

-1.766784

111

0.4524887

TPK HOLDING CO L

424

6.532663

7359554

109.5 -0.4545455

33144340

WISTRON CORP

3720166

7250100

24.85

68.5 -0.7246377

TAIWAN MOBILE CO

MOVERS

5 5720

INDEX 5715.03 HIGH

5715.03

LOW

5628.66

52W (H) 5896.71 5620

(L) 4719.96 11-July

15-July

13 13

July April16, 19,2013 2013

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

Max 38.8

average 38.281

Min 37.75

last 38.15

38.8

60.80

38.5

60.25

38.2

59.70

37.9

59.15

37.6

21.3

Max 60.8

average 59.554

Min 58.7

58.60

last 59.2

last 39.1

PRICE

20.8

38.8

20.7

18.20

20.6 18.15

Max 18.3

average 18.222

DAY %

YTD %

(H) 52W

Min 18.12

last 18.16

(L) 52W

105.28

-0.632373761

12.28668942

107.4499969

86.29000092

BRENT CRUDE FUTR Aug13

108.48

-0.303280948

1.506503228

115.1699982

96.70999908

GASOLINE RBOB FUT Aug13

309.95

-0.577385726

11.42066288

314.5499945

262.5799894

GAS OIL FUT (ICE) Aug13

913.5

-0.300136426

0.495049505

983.5

829.25

NATURAL GAS FUTR Aug13

3.679

0.960482986

2.479108635

4.525000095

3.354000092

302.36

-0.191457054

0.884188048

320.449996

273.759985

Gold Spot $/Oz

1281.73

-0.3003

-22.9942

1796.08

1180.57

Silver Spot $/Oz

19.8226

-0.5888

-34.1661

35.365

18.2208

Platinum Spot $/Oz

1412.18

0.2969

-6.9557

1742.8

1294.18

Palladium Spot $/Oz

726.95

0.6647

3.9005

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 14.60000038

NY Harb ULSD Fut Aug13

LME ALUMINUM 3MO ($)

3MO ($)

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

18.10

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

ASIA PACIFIC

CROSSES

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

15.24

0.230187438

-1.071080818

16.47500038

-1.080019637

-16.00666945

665

489.5

670

-1.615271659

-16.97645601

905.75

652.25

1257.25

-3.492611783

1409.75

1186.5

119.1

-0.251256281

-21.87602493

202.0500031

117.0999985

NAME

16.02999878

ARISTOCRAT LEISU

74.34999847

CROWN LTD

16.04

COTTON NO.2 FUTR Dec13

COUNTRY MAJOR

503.75

WHEAT FUTURE(CBT) Sep13

-0.124533001

85.08

-20.03988036 8.051816104

22.8599987 89.55999756

World Stock Markets - Indices NAME

20.5 Max 20.85

average 20.658

Min 20.4

last 20.55

20.4

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9092 1.5052 0.9503 1.3032 99.81 7.991 7.7583 6.1378 59.92 31.16 1.267 29.924 43.436 10059 90.751 1.23844 0.86576 8.0135 10.4123 130.07 1.03

0.4752 -0.3641 -0.3999 -0.2679 -0.5911 0.0063 0.0077 0.0065 -0.484 -0.0642 -0.371 -0.0501 -0.0944 -0.676 -1.0711 -0.1365 -0.0947 -0.0537 0.0903 -0.3152 0

-12.3916 -6.9486 -3.6725 -1.1979 -13.7361 -0.0976 -0.0992 1.5119 -8.2193 -1.8614 -3.5991 -2.9775 -5.5967 -2.6444 -1.5691 -2.4999 -5.8145 2.5457 1.1342 -12.6855 -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

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.28

35.87301

4.49

2.29

VOLUME CRNCY 1144764

13.15

0.6120888

23.24274

13.75

8.28

1515392

AMAX HOLDINGS LT

1.09

0.9259259

-22.14286

1.72

0.75

371650

BOC HONG KONG HO

24.35

0.2057613

1.037343

22.6

6399525

CENTURY LEGEND

0.355

12.69841

33.96227

0.42

0.22

12000

5.6

-0.3558719

-6.510848

6.74

2.95

39000

CHINA OVERSEAS

21.55

-6.709958

25.6

16.761

11625672

CHINESE ESTATES

13.8

0.2906977

13.77297

14.12

8.031

18500

CHOW TAI FOOK JE

8.97

0.3355705

-27.89389

13.4

7.44

8849239

EMPEROR ENTERTAI

2.58

-1.526718

36.50794

3.07

1.34

170000

FUTURE BRIGHT

1.94

-3.960396

60.06256

2.76

0.964

5524068 7555263

CHEUK NANG HLDGS

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

38.15

-1.037613

25.70016

44.95

16.98

FTSE 100 INDEX

6593.5

0.7419472

11.79573

6875.62

5478.02

HANG SENG BK

116.8

-0.5110733

-1.600671

132.8

104.2

719042

DAX INDEX

8261.87

0.5978494

8.531879

8557.86

6324.53

HOPEWELL HLDGS

0.8064516

-24.81203

35.3

20.727

1865500

NIKKEI 225

14506.25

0.2326468

39.54785

15942.6

8328.019531

HANG SENG INDEX

21303.31

0.1223371

-5.974375

23944.74

18710.58984

CSI 300 INDEX

2307.297

1.403023

-8.547716

2791.303

2023.171

TAIWAN TAIEX INDEX

8254.68

0.4159119

7.210594

8439.15

6922.73

KOSPI INDEX

1875.16

0.2770083

-6.103503

2042.48

S&P/ASX 200 INDEX

4981.106

0.1451783

7.144748

4592.592

-0.8744886

FTSE Bursa Malaysia KLCI

1783.81

NZX ALL INDEX

PHILIPPINES ALL SHARE IX

JAKARTA COMPOSITE INDEX

20.9

18.25

WTI CRUDE FUTURE Aug13

CORN FUTURE

last 21

Currency Exchange Rates

NAME

METALS

Min 20.95

39.6

Commodities ENERGY

average 21.166

20.9

39.0 Min 38.85

Max 21.5

18.30

39.2

average 39.089

21.1

39.8

39.4

Max 39.7

21.5

HSBC HLDGS PLC

85.1

0.472255

4.674043

90.7

61.1

9055181

HUTCHISON TELE H

4.44

0.4524887

24.7191

4.66

2.98

2030000

LUK FOOK HLDGS I

20.35

-2.398082

-16.59836

30.05

16.16

1509000

MELCO INTL DEVEL

14.92

-0.7978723

65.59378

18.18

5.12

5023695

MGM CHINA HOLDIN

-1.176471

58.15302

21.85

9.509

1879235

1758.99

MIDLAND HOLDINGS

3.09

0.3246753

-16.48649

2.68

1394000

5249.6

4062.3

NEPTUNE GROUP

0.173

3.592814

13.81579

0.23

0.095

10950000

6.391586

5251.296

3964.808

NEW WORLD DEV

11.1

-0.3590664

-7.653914

15.12

9.38

6307360

-0.1030437

5.616514

1826.22

1590.67

SANDS CHINA LTD

39.1

-0.255102

15.16936

43.7

20.65

6990366

SHUN HO RESOURCE

1.46

2.816901

4.285716

1.67

1.03

52000

984.897

0.8753

11.65962

998.487

767.748

SHUN TAK HOLDING

3.52

-0.8450704

-15.99045

4.65

2.62

2613250

4051.02

0.6292089

9.51722

4571.4

3410.76

SJM HOLDINGS LTD

18.16

-0.7650273

2.323361

22.382

12.995

4441928

12.6

0.6389776

-10.51136

17.38

12.28

414155

20.55

1.985112

-1.909311

26.5

14.62

4994400

SMARTONE TELECOM

HSBC Dragon 300 Index Singapor

617.91

-0.48

-0.51

STOCK EXCH OF THAI INDEX

1457.41

0.2545212

4.704258

1649.77

1172.92

HO CHI MINH STOCK INDEX

494.1

0.02226766

19.42571

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

1279.82

-1.177543

5.354917

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.

WYNN MACAU LTD

INTL GAME TECH

17.66

-0.4509583

24.6295

18.81

10.92

JONES LANG LASAL

94.73

0.01055743

12.85442

101.46

61.39

332361

LAS VEGAS SANDS

54.12

-0.770077

17.24437

60.54

32.6127

3387141

MELCO CROWN-ADR

23.11

0.2603037

37.23278

25.2

9.13

3033138

MGM CHINA HOLDIN

2.55

37.83784

2.71

1.36

2700

MGM RESORTS INTE

15.26

31.09965

15.95

8.83

7005595

SHFL ENTERTAINME

18.15

-0.9279476

25.17241

18.62

12.35

262904

SJM HOLDINGS LTD

2.39

0.4201681

4.934281

2.9481

1.7255

419200

130.78

-0.6457494

16.25923

144.99

84.4902

1389396

WYNN RESORTS LTD

AUD HKD

USD

14 14

July 16, 2013 April 19, 2013

Opinion

Should Fed’s policies rule the world? Alexander Friedman Kiran Ganesh

Global chief investment officer at UBS AG

Cross-asset strategist for UBS Wealth Management

to domestic companies’ attempts to access cheap U.S. dollar funding in Hong Kong.

Fed tightening

p to 60 percent of global transactions are conducted in U.S. dollars, more than onethird of world economic output is produced in dollar bloc economies, and an even greater share of global assets are priced in the currency, or linked currencies. This role as the de facto global currency for more than six decades has made the Federal Reserve’s monetary policy one of the U.S.’s greatest exports. As we have observed recently in southern Europe, or in Asia during the 1997 financial crisis, importing monetary policy can be dangerous. It is surprising then that the Fed’s dominance hasn’t caused even deeper problems over the decades. The relative lack of trouble may be because, for the bulk of the past 60 years, the U.S. has been the world’s largest economy, and other mature economies have accounted for the much of the rest of global output. This has meant that monetary policy settings in the U.S. have usually been in tune with the global cycle. An acceleration of U.S. growth was likely to be mirrored in similar economies, or the better conditions in the U.S. were pulling along the rest

of the world through enhanced trade links. But this is changing. The U.S.’ diminishing contribution to global growth means that economic cycles around the world are becoming both less synchronised and more divergent. As a result, Fed policies are proving increasingly inappropriate for most of the rest of the world.

Overheating economies Consider the past three years. In 2010, emerging markets such as Brazil and China were battling rising inflation and overheating economies even as the Fed was engaging in quantitative easing, forcing even more capital toward those markets. Now, with the U.S. in the midst of a sustainable economic recovery driven by domestic causes such as cheap energy and rising house prices, the Fed appears to be signalling that it may tighten policy. Yet the euro area remains in, or close to, recession, and growth in emerging markets is slowing drastically. This points to a fundamental problem in the monetary system: the Fed’s monetarypolicy settings are becoming incongruous with the

economic environment of much of the rest of the world. To be sure, the U.S. is entitled to adjust its monetary policies in response to changes in domestic demand. Indeed, it would be politically unacceptable for the U.S. taxpayer-funded Fed to base its decisions on considerations such as unemployment in Spain or house prices in Hong Kong. Theoretically, countries that experience swings in exchange rates or capital flow as a result of Fed decisions should accept these as a normal part of a

The Fed’s monetarypolicy settings are becoming incongruous with the economic environment of much of the rest of the world

global rebalancing, whatever the cost, or benefit, to their international competitiveness. That is what Jeffrey Frankel and others have argued. But this isn’t realistic, because sovereign nations will instinctively seek to protect their own national interests above the common good. For years, China has sought to boost its international competitiveness through capital controls and/or foreign exchange intervention. And the quantitative easing era has encouraged many other countries, from Switzerland to Brazil, to do the same. However, the real effect of such intervention has been to create an overreliance on credit along with significant internal imbalances. As a recent International Monetary Fund working paper illustrates, countries that attempt to control exchange rates are more likely to experience credit booms, because of the added incentive for companies to take on foreign currency debt and the reality that foreign exchange reserve sterilisation is usually only partial. This dynamic is evident in the more than 20 percent annual credit growth in Brazil, or the overstatement of Chinese export data attributable

With investors now convinced that the Fed is on the tightening path, a withdrawal of capital from emerging markets threatens to expose these imbalances. Last week, in an attempt to attract back capital, Brazil increased interest rates by 50 basis points, to 8.5 percent. It is expected to increase rates by an additional 75 basis points by year-end. These are necessary, but hardly helpful, steps in an economy where growth has been driven by credit-backed consumption and where expansion already slowed to 0.9 percent in 2012. Meanwhile, the recent surge in Chinese interbank rates is being attributed to an unwinding of a U.S. dollar carry trade. Unfortunately, there is little that can be done at this stage to make the process of rebalancing away from credit-dependent expansion easy. In the near-term, it will mean higher non-performing loans, liquidity shortages and slower growth. Ultimately, emerging markets in particular need to resist the temptation to link their currencies to the dollar by intervening in foreign-exchange markets for extended periods of time; such measures may support short-term competitiveness, but do more harm than good in the long run. Unfortunately, the temptation for short-term gains is likely to prove too great, and without more meaningful international pressure, such boom-and-bust credit cycles will become more frequent. Therefore, in the future, rather than offering tacit support to capital controls and currency intervention, international institutions should take a tough line on countries building significant foreign exchange reserves, all the more so if interventions are associated with a sharp increase in credit. The coming years will probably show that such interventions are neither in the common nor the national good. Bloomberg View

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.

Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com

15 15

July April16, 19,2013 2013

Opinion

Thailand needs to invest wires in people, not rice Business

Leading reports from Asia’s best business newspapers

The Age

Australia’s competition regulator is investigating an alleged secret proposal by James Packer to keep his Crown casino empire out of Brisbane if the executives of Echo Entertainment, owner of the Star, agreed to let him into the Sydney market. Central to the investigation is an alleged statement from Mr Packer that Crown would stay out of Queensland if Echo ‘’behaved’’ itself ‘’vis-a-vis Sydney’’. An Australian Competition and Consumer Commission official said the investigators would look into potential breaches of competition and cartel law, following reports of a secret meeting between Mr Packer and Echo chairman John O’Neill.

William Pesek

Inquirer Business The Philippine government is losing an amount equivalent to 4 percent of the country’s GDP every year due to tax evasion, according to National Treasurer Rosalia de Leon. Based on latest official GDP figures, the losses from tax evasion amounted to at least 360 billion pesos (US$8.3 billion). “To plug this leakage, the government plans to mobilize its full bureaucracy to help the BIR [Bureau of Internal Revenue] crack down on delinquents,” she said.

Thanh Nien Daily Vietnam’s processing and manufacturing sectors account for the highest ratio of banks’ bad debts followed by property, theCentralInstituteforEconomic Management said. In February the State Bank of Vietnam estimated non-performing loans at US$7.8 billion, or 6 percent of the total outstanding loans of US$130 billion. Processing and manufacturing accounted for 22 percent, and real estate for 19 percent, a report showed. State firms, which got 17-19 percent of total loans, accounted for 70 percent of the bad debts.

China Daily Europe will “lose more than it gains” if it starts a trade war with China, a former senior Belgian diplomat has warned. “I am quite convinced that China’s development is the hope of European integration,” said Patrick Nijs, who left his position as ambassador to China earlier this year. His warning comes as the European Union and China are in the final stages of negotiations over solar panels. “Negotiation is the right way for us to resolve the friction, and my guess is that the two sides will also sit down to negotiate over Brussels’ antidumping allegations concerning China’s telecommunications equipment.”

Bloomberg View columnist

he search for lessons from lost economic decades has led from Japan to the U.S. to Europe. Now the spotlight turns to Thailand. This may strike some as odd, considering Thailand’s 5.3 percent growth, its young and expanding population, and the surprising level of political stability in Bangkok. In her two years leading Thailand’s 68 million people, Yingluck Shinawatra has somehow managed to tamp down the virtual civil war that led to the ouster of her prime minister brother in 2006. Look closer, though, at the thrust of Yingluck’s economic policies. Her government has subsidised rice prices, provided handouts to car buyers and favoured megaprojects that will enrich the politically connected more than the masses. All this comes at the expense of long-term competitiveness and prosperity: Thailand should instead be investing in its f u t u r e , e s p e c i a l l y education, if it wants to break out of the “middleincome trap” that befalls many developing nations. Yingluck’s U-turn last week on the government’s policy of hoarding rice at above-market rates is a case in point. She had planned to limit a practice that jeopardises the country’s fiscal position and warps commodity markets. Moody’s Investors Service

says the subsidies damage Thailand’s credit rating. Yet she caved to farmers, even firing her commerce minister to do so.

Thaksinomics redux Granted, the programme isn’t bankrupting Thailand. The country’s US$346 billion economy can handle the US$4.4 billion the government blew on rice purchases last year. But Yingluck’s recent priorities bear troubling similarities to those her exiled brother, Thaksin Shinawatra, championed from 2001 to 2006. His vaunted “Thaksinomics” never amounted to more than

Thailand matters because it’s a role model in the region … How Thailand evolves will reverberate around the neighbourhood

a Tammany Hall-like doling out of cash in return for rural votes. In January, Yingluck unveiled a plan to lift Thai living standards. She proposed spending about US$72 billion over 10 years on transportation, energy and telecommunications projects. Yingluck’s government is pushing an US$8.6 billion portand-industrial-zone project in neighbouring Myanmar. Last week in Turkey, she called for a “New Silk Road” rail project to link Europe and Asia. “We have some very big ideas, concrete ones, to make growth more inclusive,” Transport Minister Chadchart Sittipunt told me last month in Bangkok. Forgotten in this ambitious building boom, though, is any investment in social infrastructure. It’s even more important to invest billions of dollars in education and in training to improve the quality of the labour force and raise productivity so that Thailand can keep up in the world’s most dynamic region. The country lags not just at the tertiary level, but also at the primary and secondary phases of the education process. Like several other countries in the region, Thailand’s focus on rote learning gives short shrift to creative and critical thinking and English proficiency. “There is little sign that inadequate investment in human capital and the need for reform of the education

system is recognised by the current government,” says economist Peter Warr at the Australian National University in Canberra. He’s done extensive research on Thailand’s economic growing pains. Thailand matters because it’s a role model in the region. As Myanmar exits decades of isolation and tries to build a healthy economy, it’s looking to Thailand for direction and financing. The same goes for Cambodia, Laos and Vietnam. How Thailand evolves will reverberate around the neighbourhood.

Going nowhere At the moment, Thailand is walking in place even if its headline growth rates outpace Japan, the U.S. and Europe. To Bank of Thailand economist Piti Disyatat, per-capita gross domestic product tells the story: It has been hovering around 15 percent to 20 percent of U.S. levels for more than 10 years. This is a precarious moment for Thailand to be stuck at a per capita GDP of about US$5,000. Global growth is tepid, China is slowing, and Indonesia, Philippines and Vietnam are winning jobs that Thailand once took for granted. As Thai wages rise, so do production costs. It must move faster up the value chain to build more technologically advanced products in the electronics and automobiles sectors – preferably bearing Thai names, not just Japanese ones. Building a more entrepreneurial workforce requires big investments and political will, both of which are in short supply. Corruption, among other things, skews incentives. Massive road, bridge and power-grid projects are dripping with opportunities for politicians and business people to line their pockets. “There are few if any kickbacks available from investment in education,” Warr says. “Physical infrastructure is another matter.” Thaksin’s policy of cash handouts to rural areas was the economic equivalent of a sugar high. It did nothing to strengthen government institutions, build a credible legal system or invest in human capital. The five prime ministers who led Thailand between Thaksin’s ouster and his sister’s victory in July 2011 spent all their time avoiding another coup. Now that Thailand is stable, it’s time to invest in the future. Pouring more money into people rather than rice farms and construction companies would be a good start. Bloomberg View

July 16, 2013

Closing Spain PM under pressure over scandal

France insists no U-turn on shale

Spain’s Prime Minister Mariano Rajoy is facing renewed calls to resign after a newspaper published text messages allegedly linking him to the man at the centre of a secret payments scandal. The El Mundo report said Mr Rajoy had sent words of support to Luis Barcenas, former treasurer of the governing Popular Party. Mr Barcenas is in custody facing trial for corruption and tax fraud. He denies the allegations. Mr Rajoy, too, denies any wrongdoing. A series of newspaper allegations that Mr Rajoy and other top politicians received illicit payments has enraged a country in the depths of recession and record unemployment.

French President Francois Hollande has again ruled out exploration for shale gas during his presidency. The comments come as a French court was due to examine an appeal against a government ban on “fracking”. France has some of the most plentiful reserves of shale gas in Europe, but there are objections to shale exploration on environmental grounds. “As long as I am president, there will be no exploration for shale gas in France,” Mr Hollande told French TV. Supporters of drilling for shale gas say it would help boost the ailing French economy, and they point to the example of the United States where the shale revolution has led to a fall in gas prices

Philippines advises criminal charges v. Okada Seven-month probe finds evidence of dummy companies to get round country’s strict land ownership laws – for Manila casino scheme Michael Grimes

michael.grimes@macaubusinessdaily.com

Kazuo Okada

hilippine investigators have recommended filing criminal cases against Japanese gaming tycoon Kazuo Okada and 25 others for putting up dummy companies to acquire land for his planned US$2 billion (16 billion patacas) Manila casino, the country’s Department of Justice said yesterday. The inquiry found evidence some companies set up by Mr Okada and his associates in the Philippines “were actually dummies or fronts for Universal Entertainment, meant to circumvent or evade laws of nationalisation of certain rights, franchises or privileges,” a DOJ statement said. Under the country’s constitution

and public land act, only Filipinos, or entities owned at least 60 percent by Filipino citizens, are allowed to own land, thus restricting Mr Okada or his majority-owned companies to just 40 percent ownership. “We built the current landowning scheme based on advice from the Philippines’ prominent lawyers, so our understanding is that it’s legal,” said Nobuyuki Horiuchi, a spokesman for Universal Entertainment Corp, in reaction to the 36-page report. The investigating panel said it found Mr Okada, eight of his Japanese associates and 17 Filipinos liable to charges of violating the anti-dummy law. One of the Filipinos found

so liable was Rodolfo Soriano, a former consultant of the Philippine Amusement and Gaming Corporation – the country’s gaming regulator. But other claims of US$40 million in bribes involving Mr Okada and Mr Soriano could not be proven “so far”, said a team from the Philippines DOJ and the National Bureau of Investigation. Francis Hernando, Pagcor vice president, confirmed to Business Daily in late May that if any bribe paying were proven in relation to Mr Okada’s Manila licence acquisition, he might be stripped of those rights. Mr Soriano worked closely with Efraim Genuino, the chairman of Pagcor until June 2010. In late May

U.S. lawmakers show hand on online gambling Draft bills introduced in the House of Representatives

nline gambling is back before United States Congress, and some are betting it will move forward this time. Congress has swung into action this year after moves by states to set up their own Internet wagering systems. At least two bills to regulate Internet gambling have been introduced in the House of Representatives, and a Senate committee has scheduled a hearing tomorrow on the matter. After years of treating online gambling as criminal, the U.S. government quietly shifted its stand in late 2011 when the Justice Department released an opinion stating that only sports betting should be prohibited under a 1961 federal law known as the Wire Act. This opens the door to online poker, which is hugely popular on the Internet, and possibly other casino games along with state lotteries, say analysts. Nevada opened Internet wagering earlier this year, and New Jersey

and Delaware have both passed legislation to authorise it. “The challenge we’ve seen is that we are already starting to have a patchwork of inconsistent rules in different states,” said Michael Waxman, spokesman for the Safe and Secure Internet Gambling Initiative, a group pressing for regulation of online wagering. Mr Waxman said the prospects for congressional action are now better than at any time, and “we’re down to the decision over whether Internet gambling activity is going to be regulated on a state-by-state basis or by the federal government.” Representative Joe Barton has introduced a measure to legalise online poker, and Representative Peter King last month proposed a broader bill to set up a federal regulatory system for online gaming. Senator Jay Rockefeller, whose subcommittee holds a hearing tomorrow on online gambling, said lawmakers

need to examine the implications of the growth of online wagering. “Internet gambling is a multibillion dollar industry that comes with some serious risks, including the potential for money laundering used for terrorist financing. This alone demands that we take a hard look at what a growing Internet gambling industry means as more states have recent laws permitting online wagering,” said Mr Rockefeller. “We’ve also got to take a hard look at consumer protections, and how we’re going to fix any existing gaps that allow underage gambling o r o th er wi s e l ea v e c o n s u m e r s vulnerable to fraud and abuse.”

Divisive proposal The Poker Players Alliance, which endorsed the Barton proposal, said regulation would be beneficial. “We are all better served through licensing and regulation that

this year Mr Genuino was charged by the country’s corruption watchdog, the Office of the Ombudsman, with 19 cases of graft and 20 cases of ‘malversation’ amounting to more than 180 million pesos (US$4.34 million) relating to his Pagcor stewardship. Mr Okada was stripped of his directorship of Wynn Macau Ltd and had his near 20 percent stake in the casino firm’s Nevada-based parent Wynn Resorts Ltd cancelled at a discount in February last year after Wynn Resorts claimed he was “unsuitable”. The casino firm cited his conduct when independently pursuing the Manila casino licence as the reason for the finding. With Bloomberg News/Reuters

implements high standards to protect consumers, thwart fraud and abuse, and guarantee the proper safeguards against underage and addictive gambling,” said Alfonse D’Amato, a former senator who chairs the alliance. The brick-and-mortar casino industry’s chief lobby group has supported online poker but its members have been divided on the broader question of online gambling, which could mean less visitors to casinos. The American Gaming Association in a statement said it was “pleased that Representative Barton continues to understand and support the pressing need for a federal legislative solution that would allow for legal, regulated online poker in this country, while still providing the necessary framework for consistent consumer protection safeguards and effective tools to combat illegal Internet gambling.” But at least one major casino mogul, Las Vegas Sands Corp owner Sheldon Adelson, has been opposing legalisation of online gambling. Mr Adelson in a Forbes article described online gambling as “fool’s gold” and “a societal train wreck waiting to happen”. He also advances some familiar arguments by the antis – including the difficulty of age verification and the privacy of the behaviour compared to casino gambling. AFP/T.A