Macau Business Daily, July 17, 2013 by Business Daily

MOP 6.00 Vitor Quintã

Continuing 1 education subsidy could increase Page 3

Witnesses ‘reluctant’ on Okada bribe claims Page 5

Airport op’s revenue up on aviation charges Page 6

Year II

Number 328

Wednesday July 17, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Gaming revenue up 15.8 pct in Q2

April 19, 2013

asino revenue rose 15.8 percent year-on-year in the second quarter, to 86.16 billion patacas (US$10.78 billion). That’s more in a single quarter than Macau generated in the whole of 2007. Mass-market baccarat revenue grew by 33.2 percent year-on-year in the period, while VIP baccarat revenue expanded 11.2 percent according to official data released yesterday. It’s speedier expansion than in the first quarter. Revenue from live multi-games – also known as stadium games – rose nearly 92 percent year-on-year in Q2. Meanwhile, analysts expect July’s gaming revenue to grow by between 17 and 21 percent year-on-year. It would call into question the assertion last Friday of Francis Tam Pak Yuen, Macau’s Secretary of Economy and Finance that Macau’s gaming revenue would only expand by 10 percent year-on-year in 2013. More on page 2

www.macaubusinessdaily.com

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Bally Technologies to buy SHFL for US$1.3 bln

Hang Seng Index 21400

Bally Technologies Inc agreed to buy SHFL entertainment Inc for about US$1.3 billion (10.39 billion patacas) in a deal that combines two of the leading Nevada-based gaming equipment firms supplying Macau and the Asia Pacific region. The announcement was made on Tuesday morning United States time. An analyst told Business Daily that SHFL’s strong slots and electronic table games presence in Asia and Australasia, and its strong market share globally in electronic shufflers for casino playing cards, would provide plenty of upside for the new company.

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July 16

HSI - Movers

Legislator wants Macau, Malta details on Pac On sign anti-tax budget overrun evasion treaty

Most info kiosk users showed gambling problems

The head of the Legislative Assembly’s committee for land and public concession affairs, Kwan Tsui Hang, is considering calling an extraordinary meeting for the government to provide details on the overspending in the Pac On ferry terminal. A report on Monday from the Commission of Audit criticised the Infrastructure Development Office for failing to control the fivefold increase in the original 583 million patacas (US$73 million) budget.

Macau and Malta have agreed to work together to prevent tax evasion and tax avoidance. Macau’s Secretary for Economy and Finance Francis Tam Pak Yuen and the Maltese ambassador to China, Joseph Cassar, signed a tax treaty in Beijing on May 30. The treaty was made public in Monday’s Official Gazette. The authorities may share information held by banks or other financial institutions.

More than half of the respondents to an Institute for the Study of Commercial Gaming survey of problem gambling showed signs of addiction. But the researchers say the survey was not scientific enough for the results to be taken at face value. The Social Welfare Bureau adds that since November it has dealt with 38 people seeking help with difficulties due to problem gambling.

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Name

%Day

HENGAN INTL

2.96

TENCENT HOLDINGS

2.61

TINGYI HLDG CO

1.68

LI & FUNG LTD

1.08

AIA GROUP LTD

1.03

CHEUNG KONG

-1.31

KUNLUN ENERGY CO

-1.36

CHINA COAL ENE-H

-1.97

HANG LUNG PROPER

-2.34

CHINA RES LAND

-2.97

Source: Bloomberg

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July 17, 2013

Macau

July tracks 17 to 21 pct revenue growth Calls into question Francis Tam’s assertion of 10 pct gaming growth for whole year

nalysts expect July’s gaming revenue to grow by between 17 and 21 percent year-onyear, based on daily run rates up to and including July 14. Such robust gaming growth in the seventh month of the year would call into question the assertion last Friday of Francis Tam Pak Yuen, Macau’s Secretary for Economy and Finance, that Macau’s gaming revenue would only expand by 10 percent year-onyear in 2013. In the first six months it has already grown by 15.3 percent compared to the same period in 2012. An annual rate of 10 percent for the whole of 2013 would imply a major slowdown in the final five months. Cameron McKnight of Wells Fargo in New York wrote in a note: “…economic sentiment among highincome Chinese consumers remains strong.” He added: “…a proprietary economic sentiment index of highincome Chinese consumers that we track rose from 73.6 in May to 76.0 in June.” Sterne Agee senior research analyst David Bain says gaming revenue from tables stood at about 12.8 billion patacas (US$1.6 billion) for the month up to July 14. He estimates July’s tally will be 29.2 billion patacas – about 19 percent more than a year ago. Kenneth Fong of J.P. Morgan in Hong Kong said in a note he expected a busier second half to the month. “July historically starts off relatively more slowly and picks up toward the end due to the summer holiday effect. We assume daily revenue for the rest of the month of 950 million patacas, and July should end at around 29.7 billion, for 21 percent year-on-year growth,” he stated. M.G.

Live multi-games – 91 pct revenue growth

Mass-market baccarat up 33 pct in Q2 Live multi-games nearly double quarterly take in wake of rising minimum bets on traditional tables Michael Grimes

michael.grimes@macaubusinessdaily.com

ass-market baccarat revenue grew by 33.2 percent year-on-year in the second quarter, while VIP baccarat revenue expanded 11.2 percent, according to official data released

yesterday. Slots showed a more modest 6.2 percent year-on-year growth. Overall, casino revenue was up around 15.8 percent year-on-year in Q2. VIP gambling for the quarter generated approximately 58.03 billion patacas (US$7.26 billion) in gross revenue – or 67.3 percent of the total 86.163 billion patacas for the quarter from all casino games. That was more in a single quarter than Macau casinos generated in the whole of 2007, and an all-time quarterly record. Mass market baccarat generated around 20.72 billion patacas in Q2. The latest data show that relative to the first quarter, the pace of expansion of the VIP segment and of the mass segment has quickened in Q2; but that of the VIP trade proportionately more. In the first quarter of 2013, VIP grew by about 9.8 percent, while mass baccarat saw 32.3 percent expansion. Perhaps one of the most interesting statistics for the second quarter however was the rise of the ‘live multi-game’ segment. Revenue from that rose nearly 92 percent year-on-year in Q2 from 184 million patacas to 351 million patacas. Live multi-game is a term used to describe mass floor gaming installations featuring many betting terminals or seats, served usually by a

single live dealer or pair of dealers at the front of the stadium-style seating, and with the card drawing shown live on overhead screens. The growth of the product segment has coincided with the rise of minimum bets on Macau mass floors in the wake of the government’s table cap. Although such games have high initial capital costs, their high volume betting – via minimum bets typically many multiples lower than conventional live dealer tables – and modest overheads, can quickly produce good returns for the casino operators, say analysts. Average mass-market minimum bets for traditional live dealer baccarat in Macau’s seven biggest casinos have risen by 37 percent since June last year, suggested a report from Deutsche Bank last month. The number of electronic table games in Macau could increase by 35 percent within five years, from nearly 4,800 seats, to “at least” 6,500 seats suggested a report by Union Gaming Research Macau in April. Last month The Venetian Macao added more tables of the highly popular Fast Action Baccarat product – featuring a racetrack-style table with the dealer in the middle and a novel trap door system that clears losing chips at the end of a game – to its main gaming floor.

July April17, 19,2013 2013

Macau

Legislator demands details of Pac On budget overrun Other Legislative Assembly members call for more power to supervise big infrastructure projects Stephanie Lai

sw.lai@macaubusinessdaily.com

Construction of the new ferry terminal is due to be completed this year

he chairwoman of the Legislative Assembly’s committee on land and public concessions, Kwan Tsui Hang, is considering calling an extraordinary meeting so the government can give details of the overspending on the Pac On ferry terminal on Taipa. A report by the Commission of Audit, released on Monday, criticises the Infrastructure Development Office for failing to plan accurately its spending on the ferry terminal. The commission’s report says the government never got a grip on costs or passenger projections in trying to improve its plans for the ferry terminal, which will serve Cotai. The report says this caused the

estimated cost to balloon from 583 million patacas (US$73 million) in 2005, for a more modest terminal, to 3.2 billion patacas now, without the government having a firm idea of how many people will use the terminal. “I’ll ask if my colleagues can squeeze in the remaining time before this legislative term ends, so that we can at least discuss the report in the committee,” Ms Kwan told Business Daily yesterday. The legislative term is scheduled to end on August 15. The Commission of Audit has been critical of government departments and public bodies in a number of recent reports, and has accused the government of

mismanaging its budgets. “We’ve noticed that there is a prevalent lack of consciousness in making a comprehensive estimation of the overall expenditure for major infrastructure projects,” the latest report says. In response, the Infrastructure Development Office said it would endeavour to make better estimates of the costs of future projects. The office told Business Daily that it would try to have construction of the Pac On ferry terminal completed by the fourth quarter of this year. Ms Kwan said the commission’s latest report showed that the government had done little to improve its financial management, in

Subsidy in continuing education scheme could increase: official

Gold rush boost Luk Fook Macau sales

otal subsidies for the criticised continuing education programme could increase next year, said Secretary for Social Affairs and Culture Cheong U. He told reporters yesterday on the sidelines of a Legislative Assembly session the government had listened to different social sectors and had commissioned an outside study on the initiative. “At least the amount will be the same next year. I do not rule out [the possibility of] an appropriate rise,” he said. Macau residents aged 15 or above are entitled to a maximum 5,000 patacas (US$625) to spend on government-approved courses or examinations, according to the original three-year scheme. That ends this year, but the government has already indicated it will be extended, though it’s not clear for how long. Mr Cheong said the programme

would very likely be renewed. But he stated the renewed version may not allow residents to choose driving lessons as their continuing study. Support for study courses designed to help improve locals’ skills and enable Macau to become a world tourism centre would not be changed, said Mr Cheong. In November the Commission of Audit released a report critical of the programme. It suggested hundreds of courses and exams had been wrongly approved. The programme has so far cost the government over 340 million patacas (US$42.5 million). Up to May, it has had 210,000 individual participations. Secretary Cheong also said the government would improve signs guiding tourists around the city, and increase tour guide services. T.L.

he slump in the international gold price spiked the sales volume and thus profits of jeweller Luk Fook Holdings (International) Ltd in the second quarter despite a lower margin on sales. The jewellery retailer told the Hong Kong Stock Exchange yesterday same store sales growth in Macau and Hong Kong surged 83 percent year-on-year in the three months ended June 30. Hong Kong-based Luk Fook explained the low gold price generated an influx of buyers, “boosting the demand for gold products and particularly gold wedding items” in the past three months. There are currently 10 Luk Fook stores in Macau with its largest flagship shop in the city opening in Circle Square last month. Macau sales accounted for 13 percent, or HK$1.75 billion (US$225.7 million), of the group’s revenue in the financial year ended

spite of legislators having demanded several times that it do so.

Greater supervision “The Infrastructure Development Office has not yet shown us how it will be able to improve its budget management performance,” she said. Legislative Assembly members Ng Kuok Cheong and Au Kam San, who belong to the New Macau Association, told Business Daily that forthcoming amendments to the budget law should prevent overspending on big infrastructure projects. The amendments will be put before the new Legislative Assembly, which will be elected in September. Mr Ng said it would be easier to avert overspending if the assembly could oversee Infrastructure projects individually, instead of as items in the government’s capital spending budget. Mr Au said it was unclear how the government intended to amend the law. “What we have always suggested is that expensive infrastructure projects – say, those exceeding 40 million patacas – should be considered by the assembly so we can examine how public money is spent,” he said. Mr Au said Hong Kong had set a good example. “Any public project that costs over HK$15 million has to go through the Legislative Council,” he said. “I think we should at least adopt a similar mechanism so that legislators can have greater supervisory power.” An assistant professor of public administration at the University of Macau, Eilo Yu Wing Yat, said there was little legal basis here for such an arrangement. “That will require a long debate between the government and the assembly to decide if the project has to be signed off by legislators before any money is allocated,” Mr Yu said. “Our Legislative Assembly is indeed very limited in power, but I don’t think the functional committees have fully utilised their power to follow up major cases so far,” he said.

March 31 2013. The retailer said yesterday both the sales and profits from the retail of gold products “more than doubled” year-on-year in the April-June period in the markets of Macau, Hong Kong and mainland China. But Luk Fook noted there was “a decrease in overall gross retail margin by low single digit, due to the increase in mix of gold products”. That was a reference to the fact that normally higher margin general jewellery products made a smaller contribution to total sales in the second quarter. Gold products had a lower gross profit margin than jewellery, which Luk Fook said saw only “a double digit growth” in sales. The firm’s market rival Chow Tai Fook Jewellery Group Ltd also recorded an 85-percent rise in revenue in Macau and Hong Kong in the past three months, helped by a spike in retail sales of gold products. T.L.

July 17, 2013

Macau Louis XIII cuts board lot shares

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Louis XIII Holdings Ltd is reducing by three quarters the number of board lot shares traded in Hong Kong. A filing said it “may improve the liquidity of the shares”. The firm plans a US$800 million (6.39 billion patacas) casino resort on the Cotai-Coloane border, opening in late 2015 or early 2016. The firm, which only officially adopted its current name on April 24, had a flotation as Paul Y. Engineering Group in January. It raised HK$3.2 billion toward the casino scheme. Board lot share numbers will fall to 500 from 2,000 with effect from 9am on August 5.

HOSPITALITY Individual city slickers Visitor’s data for the first five months of the year show that just six regions of mainland China account for 58 percent of the total number of visitors. Together, the provinces of Guangdong, Fujian and Zhejiang and the cities of Beijing, Shanghai and Tianjin sent us over 4.3 million of our 7.4 million visitors from the mainland. Theses figures represent a relative decrease compared to the two previous years, when the share of these six regions stood at around twothirds of the total. This loss of share is the result of a comparatively slower rise. The number of visitors from our main sources of mainland tourists, taken together, has been mostly stable for the past three years, but the number of visitors from elsewhere in the mainland has kept rising steadily.

Data sharing will include exchanging information held by banks

Macau, Malta sign tax treaty The accord is meant to counter tax evasion and avoidance Tiago Azevedo

tiago.azevedo@macaubusinessdaily.com

The stability of the top six regions of origin, however, hides a significant change within the leading region, neighbouring Guangdong. Almost 45 percent of visitors from the mainland in the first five months were from Guangdong. Two years ago, half of Macau’s visitors from the mainland were from Guangdong. Compared with Guangdong, all the other provinces and cities seem minor. But it is their rise that is keeping the overall numbers from dropping. A trend worth of attention is the rise in the usage of the individual visit scheme. The figures for this year, until May, show a rise of almost 20 percent in the overall number of individual visas. That scheme is especially important in cities. Visitors travelling as individuals made up 70 percent of visitors from Beijing and over 80 percent of visitors from Shanghai and Tianjin. J.I.D.

84.9 %

Proportion of visitors from Tianjin travelling as individuals in the first five months

acau and Malta have agreed to work together to prevent tax evasion and tax avoidance. Macau’s Secretary for Economy and Finance Francis Tam Pak Yuen and the Maltese ambassador to China, Joseph Cassar, signed a tax treaty in Beijing on May 30. The treaty was made public in Monday’s Official Gazette. All the legal arrangements between both jurisdictions have been completed and the treaty is likely to come into force in January. The treaty allows the authorities in Macau and Malta access to other’s data on the financial position and income of their citizens that owe tax, and may reveal undeclared assets and earnings. Such data will include information relevant “to the determination, assessment and collection of taxes, the recovery and enforcement of tax claims, or the investigation or prosecution of tax matters”, the treaty says. The authorities may share information held by banks or other financial institutions. They may share information

about the direct or indirect ownership of companies, trusts and foundations, and about partnerships. Finance ministers from the Group of 20 economic powers intend to begin this week a new phase of the international campaign against corporate tax avoidance. The Financial Times reported that a plan of action to tackle base erosion and profit shifting is due to be presented on Friday to the G20 by the Organisation for Economic Cooperation and Development, a club of rich countries. Macau has at least 16 double taxation treaties or tax information exchange agreements. A total of five Double Taxation Agreements were signed with mainland China, Portugal, Mozambique, Cape Verde and Belgium, and 11 Tax Information Exchange Agreements with Denmark, Faroe Islands, Iceland, Norway, Finland Sweden, Greenland, Australia, India and Jamaica. The Financial Services Bureau had said before that Macau is likely to sign such accords with Ireland, New

Zealand, Germany and Argentina. “The treaty negotiation process [with other jurisdictions] is still ongoing, and progress will be announced when appropriate,” the Financial Services Bureau said in written reply yesterday. The OECD acknowledged in 2011 that Macau was getting better at exchanging tax information, having all but denounced the city as a tax haven less than two years before. Last year the government withdrew a tax code bill from the Legislative Assembly, where it had been stuck for almost a year. The government said it would review the whole tax system.

Countries or regions have signed tax treaties with Macau

July 17, 2013

Macau

Kiosks find signs of gambling addiction in 60 pct of users But users of the responsible gambling kiosks may be just playing around Tony Lai

Dozens look for help with gambling woes

tony.lai@macaubusinessdaily.com

ore than half of the respondents to a survey of problem gambling showed signs of addiction, but the researchers say the survey was not scientific enough for the results to be taken at face value. The Institute for the Study of Commercial Gaming at the University of Macau and the Social Welfare Bureau carried out the survey in the first quarter of this year. They made assessments of 270 people that used automated kiosks set up in casinos to give out information on responsible gambling. The assessments found that 60.4 percent showed symptoms of pathological gambling behaviour. The kiosks asked the respondents 10 questions, and affirmative answers to more than four were taken as indications of pathological gambling behaviour. “It is self-assessment from the users so, without help, they might have misunderstood some questions,” the director of the Institute for the Study of Commercial Gaming, Davis Fong Ka Chio, told a press conference yesterday.

“They may also have had a jocular attitude when answering the questions and simply chosen ‘yes’ for fun,” Mr Fong said. Even so, the survey might have done some good, he said. “The results show the users are interested in knowing more,” he said. “When they know what behaviour is considered pathological gambling, they may be able to limit that behaviour.” Mr Fong said the main purpose of the kiosks was to be a “preventive mechanism”. Social Welfare Bureau official Hon Wai said the kiosks helped people understand better what gambling addiction looked like. The Institute for the Study of Commercial Gaming’s most recent data indicate that the rate of problem gambling in Macau increased to 2.8 percent in 2010 from 2.6 percent in 2007. The kiosks engage people that use them with simulated gambling games like Sic Bo, quizzes with prizes for winners, and information about

responsible gambling. Over 6,400 people, two-thirds of them tourists, used the kiosks in the first quarter. Mr Fong and Mr Hon said the survey showed that users of the kiosks did not have firm knowledge about responsible gambling or pathological behaviour. They called for more work on promoting awareness about responsible gambling and pathological behaviour. The kiosks are part of a pilot programme to promote responsible gambling. The first phase of the programme cost about 1.3 million patacas (US$162,500). Consideration is now being given to the second phase. Mr Fong said the programme would have more kiosks, which would offer a greater variety of information, covering sorts of gambling other than betting in casinos, such as horseracing and betting on sports. No budget or duration has been decided for the second phase.

Witnesses ‘reluctant’ on Okada Manila bribe claims Gaming entrepreneur faces double jeopardy, with U.S. criminal probe also pending Michael Grimes

michael.grimes@macaubusinessdaily.com

ey witnesses have been ‘reluctant’ to cooperate with a Philippine government investigation into possible bribery over Japanese gaming entrepreneur Kazuo Okada’s US$2 billion (16 billion patacas) Manila casino project, reports the Philippine Daily Inquirer. “…we were unable to establish the purpose of the payments because the witnesses were reluctant [to talk],” the country’s Justice Secretary Leila de Lima is reported saying at a press conference in the country’s capital. The ‘payments’ are up to US$40 million said to have passed between companies controlled by Mr Okada – a former director of Wynn Macau Ltd – and at least one Filipino citizen, Rodolfo Soriano. The US$40 million figure was mentioned in a special Reuters report in December last year. Mr Okada’s company Universal Entertainment Corp has sued Reuters alleging libel over suggestions of a linkage between the money and some issues Mr Okada was trying to solve. Reuters said that in late 2009

Davis Fong

Philippines Justice Secretary Leila de Lima

and early 2010 Mr Okada wanted solutions to a number of issues delaying his project. One was his need for majority control of the land for the casino scheme (the Philippines constitution forbids majority foreign ownership of land). Another was

an improvement in the terms of his provisional casino licence. Ms de Lima indicated this week that just because people weren’t talking so far about the US$40 million, it won’t stop her officials from asking more questions.

The Social Welfare Bureau says that since November it has dealt with 38 people that sought its help with difficulties due to problem gambling. The bureau says all were referred by the Gaming Inspection and Coordination Bureau. Since November the law has provided that anybody that asks to be excluded from casinos can be banned from gaming floors for up to two years. An official of the Social Welfare Bureau, Hon Wai, told reporters yesterday that one-third of people that had asked to be excluded from casinos needed more help from his bureau. Mr Hon said some were willing to let the bureau try to help them stop gambling, while others were unwilling. “Many of them think they are fine and can stop once they have applied to be included in the self-exclusion list,” he said. The Gaming Inspection and Coordination Bureau said in May that an average of 12 people each month asked it to exclude them from casinos. T.L.

There were “indications that there might be something anomalous in these payments,” she added. In May, Osaka-listed Universal Entertainment said in a regulatory filing in Japan that an internal company inquiry had shown that US$25 million of the cash had been “unnecessary” payments. In August last year Universal sued an executive from one of its own subsidiaries, saying he had made an “unauthorised” payment of US$5 million from the company’s Bank of Tokyo-Mitsubishi UFJ account in May 2010. Reuters said the money was transferred via Hong Kong-registered Future Fortune Ltd, to a company called People’s Technology Holding Ltd. The latter firm – established in 2009 – is wholly owned by Rodolfo Soriano, it said. Mr Soriano could not be contacted for comment yesterday. That still leaves US$10 million in payments unaccounted for, said Ms de Lima. Mr Okada and Universal Entertainment deny any wrongdoing and say their pursuit of the Manila project has been based on local legal advice that they were acting lawfully. The stakes are high because if bribery were proven, Mr Okada could lose his Manila casino licence. In November JG Summit Holdings Inc, a local conglomerate headed by a member of the influential Filipino-Chinese Gokongwei family, expressed interested in bidding for the permit if it were cancelled by the authorities and re-tendered. Mr Okada faces double jeopardy, as his pursuit of the Philippines scheme is also subject to a criminal inquiry in the United States it was revealed in a court filing in the U.S. in April.

July 17, 2013 April 19, 2013

Macau Govt makes it easier to import vehicles

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The Executive Council said that the process to import vehicles to Macau would become easier. It announced a bylaw yesterday that reduces the number of documents needed when importers introduce new car models here. Leong Heng Teng, spokesperson for the Executive Council, said the amendment would help cope with the city’s development. The bylaw also makes each step of the procedure clearer, like stating that inspections on the new car models have to be carried out 90 days after the authorities have reviewed the documents. The new rules will come into force a day after the bill is published in the Official Gazette, said Mr Leong.

Financial Monitor Wearing away The fate of the textiles industry in Macau has always been linked to the fortunes of the industry in the mainland. The development of the industry here was a result of the existing international framework for trade in textiles. China was not a member of the World Trade Organisation, which meant Chinese exports were subject to quotas mostly everywhere. Macau, just as Hong Kong, was member and could, therefore, provide a much-sought indirect channel for Chinese exports. The mainland’s accession to the WTO and the liberalisation of world trade in textile products meant the previous role of Macau became superfluous. The textiles trade with the mainland is now mostly a one-way affair. But the mainland is still a market for some exports from Macau, especially fibres, cloths and parts for the production of clothing. Clothing, as such, has lost its earlier dominant position. Unfortunately, our ability to peer into the details of bilateral trade is limited by issues of statistical confidentiality.

The airport handled 2.36 million passengers in the first half

CAM’s H1 revenue jumps as aviation takings grow But its air cargo and non-aviation business is not so vigorous Tony Lai

tony.lai@macaubusinessdaily.com

In the first five months of this year Macau’s exports of clothing to the mainland represent just 5.6 percent of what was imported. However, Macau had a marginal bilateral surplus in trade in certain sorts of knitted materials. But the amounts traded were tiny, and the surplus was due more to imports dwindling as domestic production disappeared than to Macau being a successful exporter of such goods. In the case of clothing, both knitted and non-knitted, the bilateral figures covered by statistical confidentiality amount to about a quarter of the total. The amount of knitted and non-knitted clothing Macau exported was small. Most of the other goods represented in the chart were bed linen, tablecloths, bags and the like. J.I.D. The content of this column is the work of Business Daily’s journalists.

he first-half revenue of Macau International Airport Co Ltd (CAM) rose by nearly one-fifth as growth in its aviation business speeded up. But growth in the airport operator’s non-aviation business slowed. CAM announced yesterday that its first-half revenue was 426 million patacas (US$53.25 million) this year, 18 percent more than last year. The company gave no profit or loss figure. It made an annual profit of 66.9 million patacas last year, its first since it began operating in 1995. CAM’s first-half takings from its aviation business, such as landing fees, rose by 20 percent. The airport handled 2.36 million passengers, 15 percent more than a year earlier. It handled 927 aircraft movements by private jets, 18.5

percent more. In contrast, the airport handled 12,502 tonnes of cargo, 6.3 percent less. CAM’s air freight target for all of this year is 28,200 tonnes. The secretary-general of the Board of Airline Representatives in Macau, Mike Lam In Wai, said last month that he did not expect much recovery in air cargo traffic here until the completion of the Hong Kong-Zhuhai-Macau Bridge in 2016. CAM’s first-half takings from its non-aviation business, such as rents for duty-free shops, rose by 16 percent from a year earlier. Last year, annual revenue from its non-aviation business was 23.4 percent higher than the year before, making up 55.4 percent of its total revenue of 769 million patacas. The company said an increase in passenger numbers helped increase its revenue last year.

The airport handled 4.49 million passengers last year, 11 percent more than the year before. It handled 41,997 aircraft movements, 8 percent more. CAM has invited bids to build a new hangar for private jets at the airport, but has yet to announce the winning bid. The company is seeking more private aviation business. It has also shown interest in adding charter flights to and from Johor in Malaysia and between Macau and Hanoi in the second half of this year. Direct flights to Russia and Indonesia were also part of CAM’s plans for this year. “The route expansion is basically still in the negotiating process, where we are dealing with issues like aviation rights,” said Grace Cheang Sok Kuan, the airport company’s director of finance and administration.

July April17, 19,2013 2013

July 17, 2013 April 19, 2013

Greater China

China wealth eludes foreign investors Stocks earn 1 percent a year since 1993 Weiyi Lim and Kana Nishizawa

hina’s 20-year economic boom has boosted the wealth of its 1.3 billion citizens at the fastest pace worldwide and spawned some of the biggest companies in history. Foreigners earned less than 1 percent a year investing in Chinese stocks, a sixth of what they would have made owning U.S. Treasury bills. The MSCI Chin a Index h as gained about 14 percent, including dividends, since Tsingtao Brewery Co became the first mainland company to sell H shares to international investors in Hong Kong in July 1993. That compares with a 452 percent return in the Standard & Poor’s 500 Index, 322 percent in the MSCI Emerging Markets Index and 86 percent from Treasuries. Only the MSCI Japan Index had a weaker performance among the 10 largest markets, losing about 1 percent. While China’s shift toward a market economy has lifted percapita incomes by 1,074 percent and helped its companies raise at least US$195 billion through stock sales in Hong Kong, investors with US$695 billion say that corporate governance concerns, competition and state intervention have eroded returns for minority shareholders. Now, as China allows

unprecedented access to its local capital markets amid the weakest projected gross domestic product growth since 1990, Aberdeen Asset Management Plc says valuations must fall further before it buys. “China is a case in point that great GDP doesn’t mean a great stock market,” Nicholas Yeo, a money manager at Aberdeen Asset, which oversees about US$322 billion worldwide, said. “The lack of quality in terms of corporate governance is one of the main reasons we find why companies don’t perform well over the long term.” China was ranked ninth out of 11 Asian countries for corporate governance as of September 2012 and had the biggest deterioration in the region since 2010, according to a survey by CLSA Asia Pacific Markets and the Asian Corporate Governance Association.

Bear market The MSCI China index has dropped 9.3 percent this year, after government data on Monday showed the economy expanded at a 7.5 percent pace in the second quarter. The gauge of companies from Industrial & Commercial Bank of

China Ltd, the world’s secondlargest lender by market value, to PetroChina Co Ltd, the third-biggest energy producer, entered a bear market last month after falling as much as 22 percent from this year’s high in January. The Hang Seng China Enterprises Index, a gauge of 40 H shares, has declined 18 percent this year. It’s up 138 percent, excluding dividends, since Tsingtao Brewery began trading on July 15, 1993. The Shanghai

KEY POINTS Investment quota for foreign funds raised to US$150 bln Competition, state intervention erode returns – investors Gauge of biggest entered bear market in June Economy on track for weakest annual growth rate – analysts

Beijing ‘sincere’ on HK’s universal suffrage Democracy should match city’s situation, says China’s top official Simon Lee

eijing will work with Hong Kong to implement universal suffrage suitable for the city in 2017, the top Communist Party official in the city told lawmakers amid rising calls for electoral reform. “The central government’s stance and sincerity on Hong Kong implementing universal suffrage is without question,” Zhang Xiaoming, director of Beijing’s Liaison Office in the city, said at a lunch with lawmakers yesterday. The government needs to “design a universal suffrage system that matches Hong Kong’s actual situation with Hong Kong characteristics”. Mr Zhang’s comments indicate China won’t bow to demands from Hong Kong opposition lawmakers to allow for democracy in line with international standards in 2017, when China has pledged to allow popular election of the city’s new leader. Hong Kong Chief Executive Leung Chun Ying, who began his five-year term in July 2012, is facing rising calls to start public consultation on arranging the vote. “China has always refused to recognise western standards, so that’s why he said it’s universal suffrage with Hong Kong characteristics,”

LegCo includes both pro-Beijing and pro-democracy members

Ivan Choy, political scientist at the Chinese University of Hong Kong, said. “He’s using this as an excuse.” Mr Leung said in an interview last month he wants to deliver on the

reforms, though increased democracy may lead to China’s refusal to appoint a leader elected by the city’s people. A committee of tycoons, lawmakers and professionals has

Composite Index of mainland-listed companies has dropped 10 percent this year and is up 143 percent during the past two decades. The nation’s stocks have retreated amid a surge in money market rates last month that spurred economists at Goldman Sachs Group Inc and China International Capital Corp to predict GDP will expand 7.4 percent this year, which would be the weakest annual rate since 1990. Chinese leaders seem willing to sacrifice short-term economic growth as they seeks to make the nation’s long-term expansion more sustainable, in part by curbing credit, Gary Dugan, the Singapore-based chief investment officer for Asia and the Middle East at Coutts & Co., said. “With a new plan to rebalance the economy, we’ve got something of a cloud over” stocks, Mr Dugan said.

Relative value China will increase a programme for foreign funds to invest in its local financial markets to US$150 billion from a previous limit of US$80 billion, according to a statement posted on the China Securities Regulatory Commission’s website on July 12. The government restricts access

selected all of Hong Kong’s chief executives since it returned to Chinese sovereignty in 1997. “We are willing to work with all sectors of the Hong Kong society to successfully achieve universal suffrage,” Mr Zhang said in the televised speech. “It requires the wisdom of the Hong Kong community to implement the Basic Law’s provisions on universal suffrage,” he said. Any universal suffrage system for Hong Kong must ensure the protection of China’s sovereignty and legal rights, he added. “I think the Hong Kong characteristic is very clear, the vast majority of the people here want universal suffrage,” Emily Lau, chairwoman of the Democratic Party of Hong Kong, said by telephone. “They want the right to elect the chief executive in a thorough and fair election.” People should be given a “real stake” in the elections planned for 2017, U.K. Foreign Secretary William Hague said on Monday in a report. U.K. is a party to an international treaty with China on the transfer of Hong Kong. The best way of guaranteeing the city’s stability and prosperity is “by Hong Kong moving to a democratic system of universal suffrage in line with public consultations, the promised timetable and international standards,” Mr Hague said. In response to Mr Hague’s report, the Hong Kong government said it will have election consultations in accordance with the city’s laws. It is glad to see that the Liaison Office is maintaining “communication with Hong Kong society, including the Legislative Council,” Chief Executive Leung said yesterday. Bloomberg News

July April17, 19,2013 2013

Greater China

Baidu in Chinese app store deal Company seeks to broaden business into mobile Internet

Market sentiment ‘quite fragile’, money manager says

to mainland markets through its Qualified Foreign Institutional Investor programme, which has granted firms a combined quota of US$43.5 billion as of June 26. That compares with the US$3 trillion market value of locallylisted companies. MSCI’s China measure trades for 9.3 times reported earnings, versus 16 times for the S&P 500 index, the biggest discount since September 2003, weekly data compiled by Bloomberg show. The MSCI Emerging Markets index has a multiple of 11.

“Sentiment is quite fragile” on China, Marco Li, a Hong Kong-based money manager at Manulife Asset Management, which oversees about US$238 billion, said. In 1992, China’s Vice Premier Zhu Rongji approved the first batch of nine state-owned companies to sell shares in Hong Kong, then under British control. Another 167 companies have sold H shares in Hong Kong since then. The nation’s stock market has produced gains for investors who picked the right times to buy and sell.

The MSCI China gauge returned 680 percent from November 10, 2001, when the country won entry into the World Trade Organisation, through the index’s peak during the stockmarket bubble on October 30, 2007. But Chinese equity indexes have been weighed down with large positions in state-owned companies that tend to put political interests ahead of shareholder returns, according to Tony Hsu, a Shanghai-based money manager at Dalton Investments. Bloomberg News

Regulators widen drugmaker probe As GlaxoSmithKline bribery charges outlined Gao said, included bribes that went to “government officials, medical associations, hospitals and doctors.”

Drugmaker target

hina is investigating at least four multinational drugmakers as it widens its probe of GlaxoSmithKline Plc, according to a lawyer in Hong Kong whose firm advises companies on cross-border anti-corruption. The investigations point to an increased targeting of the pharmaceutical industry in corruption probes as the world’s most populous country faces rising healthcare costs and seeks to lower drug prices. While the four drugmakers are being probed by local regulators, the results may draw added questions from officials in Beijing and scrutiny by the U.S. government under the Foreign Corrupt Practices Act. “We are aware of four pharmaceutical companies who are facing” investigation by local anticorruption units, said the lawyer, Wendy Wysong, the head of anti-

corruption practice in Asia-Pacific at law firm Clifford Chance. Ms Wysong declined to identify the companies. On Monday, Chinese officials said Glaxo used travel agencies as a conduit for bribes, that company executives received “sexual bribes,” and that other drugmakers have transferred money to the agencies. “As to whether these companies are also involved in illegal dealings, you can go and ask them,” said Gao Feng, head of the economic crimes investigations unit at China’s Public Security Ministry. “Of course they won’t answer. But you can ask them one question: ‘Can you sleep well at night?’” Mr Gao didn’t identify the other companies linked financially to the travel agencies at a news conference. His comments were unusual, given that Chinese police rarely speak publicly to foreign media about ongoing investigations. The Glaxo case, Mr

China, the world’s fastest-growing market for medicines, has become an important target for the pharmaceutical industry as more and more best-selling therapies have gone off patent. Glaxo’s revenue from China increased 17 percent last year to 759 million pounds (US$1.1 billion), while product sales for London-based AstraZeneca rose 20 percent in China to US$1.5 billion. Pfizer Inc and Merck & Co, the two biggest U.S. drugmakers, together employ about 14,000 people in China. AstraZeneca, Pfizer and Merck haven’t been identified by China as targets of their probe. Glaxo said in an e-mailed statement it is “deeply concerned and disappointed” and will stop using agencies identified in the probe. The drugmaker is reviewing all thirdparty agency relationships and will cooperate with Chinese authorities, according to the statement. China detained four senior Glaxo executives on suspicion of economic crimes involving 3 billion yuan (US$489 million) of spurious travel and meeting expenses, and receiving sexual favours. The alleged offenses date to 2007 and involved 700 travel agencies, Mr Gao said at Monday’s briefing. The ministry has been handling the Glaxo case for more than half a year following police investigations, Mr Gao said. Bloomberg News

aidu Inc, China’s top Internet search engine, said yesterday that it would buy app store 91 Wireless for US$1.9 billion, as it looks to diversify beyond its mainstay search business and beef up its presence in the mobile sector. The planned acquisition follows Baidu’s announcement in May that it would buy the online video business of PPS Net TV for US$370 million. Chinese rivals Tencent and Alibaba Group are also investing to stimulate revenue growth, with Alibaba this year buying stakes in Sina Corp’s socialnetworking website Weibo and in navigation and maps firm AutoNavi. Baidu is also looking to fend off Qihoo 360, which has been eating away at its search market share since breaking onto the scene last year and which also has a competitive app store. “Baidu is pretty strong in the PC Internet space and 91 Wireless will serve as an important gateway into the mobile Internet sector, where it is still pretty weak right now,” said Xue Yongfeng, an analyst at research firm Analysys International in Beijing. Baidu said it has agreed to buy a 57.4 percent stake in 91 Wireless, one of China’s earliest app stores, from NetDragon Websoft Inc for US$1.09 billion, and the remainder from other shareholders. “Mobile app stores are an increasingly important entry point to the mobile Internet and are therefore of great strategic interest to Baidu,” Baidu spokesman Kaiser Kuo told Reuters. China’s mobile Internet market is expected to double to about 300 billion yuan (US$48 billion) in 2014 from 150 billion yuan in 2012, with the number of active mobile Internet users rising to 749 million from 521 million during the same period, according to Analysys International. Shares of NetDragon fell as much as 21.16 percent after the announcement as the online gaming company was giving up one of its key assets, analysts said. NetDragon also said that it would scrap the planned spinoff and listing of 91 Wireless on Hong Kong’s secondary Growth Enterprise Market if the acquisition is finalised. NetDragon said it would continue to focus on the development and operation of online and mobile games. In 2012 it had a profit of 39 million yuan ($6.3 million), one quarter of which came from its mobile Internet business, according to Thomson Reuters Eikon data. Reuters

Baidu to buy app store for US$1.9 billion

10 10

July 17, 2013 April 19, 2013

Asia

ADB trims developing Asia’s growth forecasts Says it will be a challenge for economies to maintain growth momentum

he Asian Development Bank (ADB) said on Tuesday it has lowered its growth forecasts for developing Asia this year and the next as a softer outlook for the world’s second-biggest economy China meant subdued economic activity elsewhere in the region. The bank lowered its growth forecast for developing Asia by 0.3 percentage points to 6.3 percent in 2013 and 6.4 percent in 2014, the Manila-based development lender said in a supplement to its Asian Development Outlook 2013 first released in April. The International Monetary Fund reduced its global growth forecast earlier this month as the U.S. recovery weakens, China’s economy levels off and Europe’s recession deepens. The ADB cut its growth estimates for China by 0.5 percentage points to 7.7 percent and 7.5 percent this year and the next, with data showing investment growth slowed in May and is expected to weaken further with financial institutions becoming more averse to risk following turbulence in its domestic interbank money market.

Slower growth helping to contain inflation

“The drop in trade and scaling back of investment are part of a more balanced growth path for the PRC (People’s Republic of China), and the knock-on effect of its slower pace is definitely a concern for the region,” ADB chief economist Changyong Rhee said in a statement. “We are also seeing more subdued activity across much of developing Asia,” he said. China reported on Monday that annual GDP growth slowed to 7.5 percent in April to June – the ninth

quarter in the last 10 that expansion has weakened – putting pressure on Beijing to quicken reforms rather than slow them to take up the economic slack.

Softer demand The ADB also lowered for the second time this year its forecast for South Asia’s largest economy India to 5.8 percent from its April estimate of 6.0 percent, with growth still constrained by supply-side bottlenecks and sluggish progress in pushing through structural reforms. Southeast Asia’s growth is expected to be slightly lower than previously expected, mainly due to softer demand from China. However, the sub-region as a whole is likely to buck the regional trend of softerthan-expected price pressures largely due to 44 percent jump in subsidised oil prices in Indonesia last month. Offering some comfort for central banks, the ADB forecast inflationary pressures would be benign due to decelerating growth in the region and on continued weakness in commodity prices due to soft global demand. The bank lowered its inflation forecasts for developing Asia to 3.5 percent this year and 3.7 percent in 2014, the latter on par with the 2012 rate. The ADB also said it expects Japan’s recovery to pick up speed as the effects of “Abenomics” take root and improving corporate profits bolster household income and business environment. It forecast growth in Japan this year of 1.8 percent, against an April estimate of 1.2 percent.

New Zealand inflation slows New Zealand inflation slowed more than economists forecast last quarter as import prices dropped, adding to signs that a period of record-low interest rates will extend into next year. Consumer prices rose 0.2 percent from the first quarter, when they gained 0.4 percent, Statistics New Zealand said yesterday. Prices gained 0.7 percent from a year earlier, the least since 1999 and below economists’ 0.8 percent estimate.

Sri Lanka sees rates on hold Governor of the Central Bank of Sri Lanka Ajith Nivard Cabraal said benchmark interest rates probably will be kept on hold at next week’s monetary policy meeting and that growth remains on target while inflation retreats. The May 10 rate cuts probably will remain unchanged, Mr Cabraal told Bloomberg. “We don’t need to see any changes right now,” he said. “The chances are that what we have needed to do we have done. We think that the steps that we have taken should take us at least until September.”

Reuters

Billabong strikes debt, asset sale deal Australian surfwear company Billabong International Ltd said yesterday it had agreed a A$395 million ($359 million) refinancing package and asset sale with former suitor Altamont Partners to raise funds to repay debt. Billabong said it was selling its DaKine clothing and accessories brand for A$70 million to Altamont and also issuing share options in exchange for a A$325 million bridging loan facility. Altamont and its partners could end up owning as much as 40.5 percent of Billabong if all the options and preference share issues are exercised.

Australia moves to scrap carbon tax Emissions trading scheme brought forward to 2014 James Grubel

ustralia’s government moved yesterday to scrap its carbon tax and bring forward an emissions trading scheme in a policy shift to win over voters, angry over rising power costs, before an election expected within weeks. Prime Minister Kevin Rudd said he wants the fixed price on carbon emissions to end on June 30, 2014. A floating carbon price, or emissions trading scheme (ETS) that will be linked to the European carbon market, will start the following day, a year earlier than planned. On current prices, the shift would see the cost of carbon permits fall from the planned A$25.40 (US$23.09) per tonne from July 2014 to around A$6 per tonne, saving big businesses billions of dollars in carbon costs. Mr Rudd also said the change would slash A$3.8 billion (US$3.46 billion) from the federal budget over four years, but his government planned to make up the gap with savings of around A$3.9 billion from a range of measures. The widely unpopular tax, blamed for rising electricity costs, was due to raise A$8.14 billion in 2013-14 and A$8.6 billion in 2014-15. Scrapping the plan would cut average household

electricity and gas bills by A$4 a week, Mr Rudd said. “This is modest relief, but it is real,” Mr Rudd told reporters at a media conference in Queensland state. The carbon tax, introduced by Mr Rudd’s predecessor Julia Gillard as her central policy to cut carbon emissions, is currently set at A$24.15 a tonne. It applies to around 300 of Australia’s biggest polluters, including mining giant BHP Billiton Ltd, Qantas Airways Ltd and BlueScope Steel Ltd, and 60 percent of the country’s 550 million tonnes of annual emissions. Mr Rudd’s new carbon plan relies on his centre-left Labor party winning national elections, due between late August and November, and on receiving support from the minority Australian Greens party. The conservative opposition has promised to scrap the carbon price altogether if it takes power, with opposition leader Tony Abbott dismissing the ETS as a “so-called market in the non-delivery of an invisible substance to no-one”. Deutsche Bank AG carbon analyst Tim Jordan said the policy shift would have no real impact

on carbon markets because there was no effective forward market beyond the current fixed-price period. However, he said the move could see a change in the investment outlook as coal-fired power became more economic compared with lowemissions gas-fired power. “Europe has seen a big switch back to coal with the falling carbon price. So a lower price for coal and a lower carbon price in Australia could be good for coal and bad for gas,” he said. Reuters

KEY POINTS Move will slash permit costs, saving businesses billions Move to ETS in July 2014, a year earlier than planned Change in plans seen as ‘good for coal, bad for gas’

Rio Tinto iron ore output up 7 pct Rio Tinto Group, the world’s secondlargest mining company, said secondquarter iron ore production rose 7 percent from last year, narrowly beating analyst expectations. Output was 51.8 million metric tons in the three months to June 30, compared with 48.6 million tons a year earlier, the company said yesterday. Growth in China, Rio’s biggest customer, slowed for a second quarter as gains in factory output decelerated.

Vietnam slashes trade deficit forecast Vietnam’s trade ministry has slashed its 2013 trade deficit forecast to US$3 billion to US$4 billion from more than US$9 billion seen earlier, due to increased exports, state media reported yesterday. Vietnam, which posted its first annual trade surplus in two decades last year, largely as a result of reduced imports, was expected to post a deficit of US$9.9 billion this year, data from the staterun General Statistics Office showed.

11 11

July April17, 19,2013 2013

Asia

Rupee shows modest gains after bank intervention India’s move to shore up currency hits stocks and bonds

ndia’s boldest attempt yet to stem a rout in the rupee delivered only a modest lift in the currency but sent bond and stock prices tumbling yesterday, sparking concern that the unexpected measures inflict too much pain for limited gain. Late on Monday, the Reserve Bank of India raised short-term borrowing costs, restricted funds banks could access and said it would drain cash from the market via a 120 billion rupees (US$2 billion) bond sale as it sought to create demand for the rupee, which hit a record low last week. The steps make it harder to speculate in the rupee and are intended to attract foreign inflows needed to fund a record current account deficit, but markets were not convinced. “The best case or what we are all hoping for is that these are short term measures purely to drive home a point, that it does not endanger growth in the long term,” said Ananth Narayan, cohead of wholesale banking for South Asia at Standard Chartered Bank. While the central bank stopped short of an outright policy rate hike, its moves will still raise funding costs for firms that are already facing the slowest economic growth in a decade. The NSE stock index fell 1.6 percent, dragged by sharp losses in

banks and non-banking financial firms that most access short-term funds. Yes Bank Ltd shares fell 8.5 percent while IDFC Ltd fell 7.5 percent. Benchmark 10-year bond yields surged as much as 50 basis points yesterday to their highest since December 31, and short-term rates also jumped. “These measures are intended to quell speculation or excessive speculation in the forex market, trying to reduce volatility in forex market,” Finance Minister P. Chidambaram said. “These measures should not be read as a prelude to any policy rate changes,” he added.

Problems remain The rupee gained to 59.43/44 per dollar from a close of 59.89/90. Last week, it fell to a record low of 61.21 and is down nearly 10 percent since the start of May, the worst showing among emerging Asian currencies tracked by Reuters. “The central bank, presumably reluctant to use up too many foreign exchange reserves, clearly felt it had to show a stronger intent to put a floor under the rupee,” Credit Suisse economist Robert Prior-Wandesforde wrote in a note.

Regulators have also tried to clamp down on speculative trading by focusing on onshore derivative markets. The RBI has been reluctant to intervene aggressively in the market by dipping into foreign currency reserves that cover nearly 7 months of imports, as any rundown of these holdings could further erode foreign investor confidence. But as bond yields surged, analysts said the risk was that higher borrowing costs would become hard to reverse, and said there had to be steps to narrow the current account deficit from a record 4.8 percent of gross domestic product. “These measures do little to address the structural issues that have caused the rupee to underperform versus the rest of the region in 2013. Although the current account deficit has narrowed, it is still sizable and provides an enduring demand for U.S. dollars onshore,” HSBC Holdings Plc analysts said in a note. Reuters

Finance Minister P. Chidambaram

12 12

July 17, 2013 April 19, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

34.45

1.026393

14234313

ALUMINUM CORP-H

2.49

-1.190476

4959750

BANK OF CHINA-H

3.15

-0.6309148

231207428

0.2004008

18182891

-0.1782531

783666

10.88

-0.5484461

20639774

ESPRIT HLDGS

BOC HONG KONG HO

24.4

0.2053388

10529794

CATHAY PAC AIR

13.3

-0.1501502

AIA GROUP LTD

BANK OF COMMUN-H BANK EAST ASIA BELLE INTERNATIO

CHEUNG KONG

PRICE

DAY %

VOLUME

POWER ASSETS HOL

68.3

-0.5098325

1361177

4179385

SANDS CHINA LTD

39.5

1.023018

7670867

0.07824726

1577750

SINO LAND CO

10.96

0.5504587

3092140

13.72

0.7342144

50605672

SUN HUNG KAI PRO

102.3

-0.2923977

2816166

10.58

0.7619048

3647403

SWIRE PACIFIC-A

93.9

-0.5823187

1119267

11.9

3.298611

8638839

TENCENT HOLDINGS

329.8

2.613566

5900352

HANG LUNG PROPER

25.05

-2.339181

10263000

19.4

1.677149

2894069

1841000

HANG SENG BK

116.2

-0.5136986

750865

WANT WANT CHINA

10.68

-0.1869159

10728919

HENDERSON LAND D

49.4

0.610998

3509995

WHARF HLDG

65.25

-0.3816794

3546803

2.960103

2444304

HONG KG CHINA GS

19.32

-0.4123711

7247806

HONG KONG EXCHNG

121.7

0.1646091

2052722

85.05

-0.05875441

8289784

105.3

-1.31209

4009578

CHINA COAL ENE-H

3.98

-1.970443

25625294

CHINA CONST BA-H

5.47

-0.3642987

152101197

NAME

PRICE

DAY %

VOLUME

10.78

0.9363296

19037280

8.69

-0.6857143

CLP HLDGS LTD

63.95

CNOOC LTD COSCO PAC LTD

CHINA UNICOM HON CITIC PACIFIC

HENGAN INTL

NAME

TINGYI HLDG CO

MOVERS

CHINA LIFE INS-H

18.54

21873554

CHINA MERCHANT

23.45

-0.845666

2344752

HSBC HLDGS PLC

CHINA MOBILE

81.35

-0.3674219

9794171

HUTCHISON WHAMPO

84.8

4093692

CHINA OVERSEAS

21.35

-0.9280742

11869171

IND & COMM BK-H

4.89

-0.407332

168736146

5.48

0.1828154

56722752

LI & FUNG LTD

11.26

1.077199

19202857

HIGH

21522.15

29.25

0.1712329

1090375

LOW

21221.26

CHINA PETROLEU-H

24.55

-1.207243

1724083

MTR CORP

21.2

-2.974828

8119387

NEW WORLD DEV

11.16

0.5405405

10538078

CHINA RES POWER

19.98

0.1002004

3127262

PETROCHINA CO-H

9.12

-0.6535948

50614071

CHINA SHENHUA-H

20.7

-0.7194245

10775421

PING AN INSURA-H

50.85

-0.2941176

6893804

CHINA RES ENTERP CHINA RES LAND

1 21530

INDEX 21312.38

52W (H) 23944.74 (L) 18710.58984

21210

12-July

16-July

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.14

68525026

AIR CHINA LTD-H

5.37

-0.1858736

ALUMINUM CORP-H

2.49

ANHUI CONCH-H BANK OF CHINA-H

NAME

PRICE

DAY %

VOLUME

CHINA PACIFIC-H

25.6

1.992032

9923400

7801787

CHINA PETROLEU-H

5.48

0.1828154

-1.190476

4959750

CHINA RAIL CN-H

7.19

22.05

-2.433628

12069389

CHINA RAIL GR-H

3.15

-0.6309148

231207428

PRICE

DAY %

VOLUME

YANZHOU COAL-H

5.54

-2.292769

16422000

56722752

ZIJIN MINING-H

1.55

-3.726708

39950700

2.86123

24185100

ZOOMLION HEAVY-H

5.11

-0.776699

8763469

3.78

2.162162

35411132

ZTE CORP-H

11.58

CHINA SHENHUA-H

20.7

-0.7194245

10775421

0.2004008

18182891

CHINA TELECOM-H

3.72

-0.8

30604000

BYD CO LTD-H

32.4

1.408451

5310120

DONGFENG MOTOR-H

9.65

-1.430031

16180260

CHINA CITIC BK-H

3.62

-0.5494505

18671553

GUANGZHOU AUTO-H

7.5

2.739726

6169232

CHINA COAL ENE-H

3.98

-1.970443

25625294

HUANENG POWER-H

8.1

2.143758

16068900

CHINA COM CONS-H

5.66

-0.1763668

23964121

IND & COMM BK-H

4.89

-0.407332

168736146

CHINA CONST BA-H

5.47

-0.3642987

152101197

JIANGXI COPPER-H

12.64

-1.557632

10534848

BANK OF COMMUN-H

3.42

0.5882353

6990000

PETROCHINA CO-H

9.12

-0.6535948

50614071

18.54

21873554

PICC PROPERTY &

8.84

8878920

CHINA LONGYUAN-H

8.42

1.568154

30694385

PING AN INSURA-H

50.85

-0.2941176

6893804

CHINA MERCH BK-H

13.04

-0.3058104

11135708

SHANDONG WEIG-H

7.49

-2.091503

6952000

CHINA MINSHENG-H

8.05

0.3740648

41144195

SINOPHARM-H

CHINA NATL BDG-H

6.69

-4.017217

54070036

TSINGTAO BREW-H

CHINA OILFIELD-H

15.2

0.2638522

6011200

WEICHAI POWER-H

CHINA COSCO HO-H CHINA LIFE INS-H

18.84

0.856531

1943600

58.9

2.168257

1272531

24.75

-0.6024096

NAME

MOVERS

5 9610

INDEX 9419.51 HIGH

9601.56

LOW

9381.57

52W (H) 12354.22 (L) 8640.85

9370

12-July

1869610

16-July

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

9.62

0.7329843

27460712

RISESUN REAL -A

15.6

-2.621723

15978775

CITIC SECURITI-A

10.97

0.09124088

80196335

SAIC MOTOR-A

13.1

-0.304414

17904730

12337194

CSR CORP LTD -A

3.85

1.851852

80840901

SANAN OPTOELEC-A

20.5

5.779154

24006988

-0.9943182

24717221

DAQIN RAILWAY -A

5.99

-1.155116

30179446

SANY HEAVY INDUS

7.31

22191804

0.9840098

29675741

DATANG INTL PO-A

5.2

0.9708738

10119572

SHANDONG DONG-A

44.02

1.195402

11350758

11.76

0.8576329

31394158

SHANDONG GOLD-MI

22.39

-0.9730208

15037891

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.53

0.3968254

82071867

CHONGQING CHAN-A

AIR CHINA LTD-A

4.04

-0.9803922

17821018

ALUMINUM CORP-A

3.25

-0.3067485

ANHUI CONCH-A

13.94

BANK OF BEIJIN-A

8.21

NAME

BANK OF CHINA-A

2.69

18425385

EVERBRIG SEC -A

BANK OF COMMUN-A

3.99

55055348

GD MIDEA HOLDI-A

12.78

1.107595

8448515

SHANG PHARM -A

11.53

-0.2595156

9264074

BAOSHAN IRON & S

4.09

0.4914005

18471004

GD POWER DEVEL-A

2.34

-0.8474576

58162461

SHANG PUDONG-A

8.54

-0.2336449

78430472

62.1

-1.926721

2503983

GEMDALE CORP-A

7.23

-0.9589041

80363804

SHANGHAI ELECT-A

BEIJING TONGRE-A

23.63

-0.1689903

7624423

GF SECURITIES-A

12.76

0.4724409

51789436

SHANXI LU'AN -A

BYD CO LTD -A

37.66

2.004334

13061463

GREE ELECTRIC

25.24

2.68511

17037010

CHINA AVIC ELE-A

25.22

4.257958

9463955

GUANGHUI ENERG-A

10.39

1.070039

56628081

CHINA CITIC BK-A

3.91

25883751

HAITONG SECURI-A

11.06

0.7285974

113682978

CHINA CNR CORP-A

4.26

1.428571

61621876

HANGZHOU HIKVI-A

21.16

2.718447

25958045

42.25

-0.6583588

4727312

BEIJING SL -A

3.4

0.2949853

4930322

11.91

1.189465

12101982

SHENZEN OVERSE-A

5.71

0.3514938

43097279

SICHUAN KELUN-A

58.67

0.894239

2502943

5.46

2.247191

72133179

TASLY PHARMAC-A

47.4

-0.4410838

5706270

TSINGTAO BREW-A

40.15

-0.6434051

1484848

SUNING COMMERC-A

CHINA COAL ENE-A

4.96

-0.2012072

11144983

HENAN SHUAN-A

CHINA CONST BA-A

4.46

0.6772009

34507295

HONG YUAN SEC-A

9.5

2.591793

131169916

WANHUA CHEMIC-A

17.24

1.11437

8559332

CHINA COSCO HO-A

2.97

0.3378378

7732324

HUATAI SECURIT-A

9.04

0.110742

37439925

WEICHAI POWER-A

17.93

-1.483516

11176043

CHINA EAST AIR-A

2.49

-0.7968127

10578299

HUAXIA BANK CO

9.43

0.6403415

21694186

WULIANGYE YIBIN

20.53

1.835317

23813285

CHINA EVERBRIG-A

2.91

0.3448276

42030875

IND & COMM BK-A

3.95

0.2538071

59191562

YANZHOU COAL-A

10.29

0.2923977

9629247

CHINA INTERNAT-A

30.93

-1.371173

5051511

INDUSTRIAL BAN-A

10.27

0.09746589

89531995

YUNNAN BAIYAO-A

101.21

-1.690141

2067207

CHINA INTL MAR-A

10.46

1.160542

7056250

INNER MONG BAO-A

25.04

-0.5559968

54790488

ZHONGJIN GOLD

9.49

-1.351351

17831120

CHINA LIFE INS-A

13.76

-0.2175489

10729798

INNER MONG YIL-A

36.52

-1.002982

5991904

ZIJIN MINING-A

2.56

0.3921569

48350400

CHINA MERCH BK-A

11.63

-0.1716738

61861194

INNER MONGOLIA-A

4.09

0.245098

36078412

ZOOMLION HEAVY-A

5.46

1.298701

50680724

CHINA MERCHANT-A

11.62

0.2588438

27519212

JIANGSU HENGRU-A

33.69

3.629652

19731247

ZTE CORP-A

13.69

50775008

CHINA MERCHANT-A

27.67

-0.5749192

16416001

JIANGSU YANGHE-A

52.98

2.277992

6696577

CHINA MINSHENG-A

9.19

0.3275109

103461603

JIANGXI COPPER-A

16.7

-0.6543724

9160172

CHINA NATIONAL-A

10.17

-0.2941176

30270765

KANGMEI PHARMA-A

21.7

1.686973

22735607

CHINA OILFIELD-A

14.85

0.6097561

3457335

KWEICHOW MOUTA-A

190.95

1.596169

3701140

24.6

0.8196721

11467449

CHINA PACIFIC-A

16.64

1.339829

17792632

LUZHOU LAOJIAO-A

CHINA PETROLEU-A

4.5

-1.315789

67761846

METALLURGICAL-A

1.64

32348875

CHINA RAILWAY-A

4.63

1.982379

27714684

NARI TECHNOLOG-A

15.71

5.22438

27778090

CHINA RAILWAY-A

2.59

1.568627

40985036

OFFSHORE OIL-A

7.46

-1.061008

34670720

6437890

PETROCHINA CO-A

7.99

-1.358025

19903186

PING AN BANK-A

10.38

-1.236917

101622760

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

29.6

16.19

-0.3078818

8909960

3.33

91291907

PING AN INSURA-A

35.01

-0.6526674

22238579

3.19

-0.3125

67393003

POLY REAL ESTA-A

11.01

0.7319305

61797888

10.45

89019725

QINGDAO HAIER-A

11.9

1.276596

9488878

1.005747

16911910

QINGHAI SALT-A

18.49

0.2711497

7214628

PRICE DAY %

Volume

NAME

PRICE DAY %

Volume

7.03

MOVERS 177

31 2340

INDEX 2317.848 HIGH

2331.7

LOW

2275.27

52W (H) 2791.303 (L) 2023.171

2270

12-July

16-July

FTSE Taiwan 50 Index NAME ACER INC

22.95

0.4376368

10642758

FORMOSA PLASTIC

76.4

0.1310616

17124006

ADVANCED SEMICON

25.35 -0.5882353

27247551

FOXCONN TECHNOLO

75.9

0.3968254

2475515

ASIA CEMENT CORP

37.35 -0.2670227

3668483

FUBON FINANCIAL

-0.373599

ASUSTEK COMPUTER

277.5

1.648352

6517054

HON HAI PRECISIO

78.4 -0.1273885

AU OPTRONICS COR

11.2

1.818182

65055503

HOTAI MOTOR CO

405

1.503759

588823

148.5

0.3378378

4497956

192.5

0.2604167

43.5

0.9280742

31590145

HUA NAN FINANCIA

17.4

17.25 -0.5763689

11880140

LARGAN PRECISION

983

LITE-ON TECHNOLO

CATCHER TECH CATHAY FINANCIAL CHANG HWA BANK CHENG SHIN RUBBE

96.3

0.9433962

5400959

CHIMEI INNOLUX C

15.35

HTC CORP

TPK HOLDING CO L

412

-2.830189

5072444

63069843

TSMC

108

-1.369863

35961041

28494671

UNI-PRESIDENT

3.833866

19188167

13.95

-3.125

97557462

6659828

WISTRON CORP

28.65

0.3502627

11134132

0.5780347

8572172

YUANTA FINANCIAL

16.25

0.308642

15608732

0.7172131

1288676

YULON MOTOR CO

1886386

51.9 -0.1923077

6331000

60770441

MEDIATEK INC

349.5

0.1432665

7305936

44507575

MEGA FINANCIAL H

24.75 -0.4024145

19218596

CHINA STEEL CORP

25.6

0.9861933

21745753

NAN YA PLASTICS

63.8

-0.3125

14175511

CHINATRUST FINAN

19.25

86361551

PRESIDENT CHAIN

218.5

0.2293578

1641035

CHUNGHWA TELECOM

99.8 -0.1001001

22414407

QUANTA COMPUTER

69.2

1.021898

4618083

COMPAL ELECTRON

19.2

0.5235602

14769127

SILICONWARE PREC

34.75

0.8708273

12871113

0.3344482

15686061

39.65 -0.7509387

6831045

149

2.758621

6774001

SINOPAC FINANCIA

0.3012048

5048201

SYNNEX TECH INTL

FAR EASTONE TELE

79.4

-0.75

3508927

TAIWAN CEMENT

FIRST FINANCIAL

18.3

12979347

FORMOSA CHEM & F

5908139

TAIWAN FERTILIZE

FORMOSA PETROCHE

79.8

0.5037783

1832328

TAIWAN GLASS IND

TAIWAN COOPERATI

3010047

UNITED MICROELEC

0.9868421

33.3

Volume

111

8.65 -0.9163803

FAR EASTERN NEW

PRICE DAY %

TAIWAN MOBILE CO

CHINA DEVELOPMEN

DELTA ELECT INC

NAME

38.1

0.2631579

5416397

17.05

0.2941176

8232365

73.3

1.243094

4536209

27.95

0.5395683

1335545

MOVERS

5 5720

INDEX 5708.91 HIGH

5715.03

LOW

5658.22

52W (H) 5896.71 5650

(L) 4719.96 12-July

16-July

13 13

July April17, 19,2013 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 60.0

38.5

21.5

38.3

21.4 59.6

38.1

21.3

37.9

Max 38.45

average 38.093

Min 37.75

37.7

Last 38.25

Max 60

average 59.966

Min 59.2

Last 60

59.2

Max 21.45

average 21.314

Min 21.2

Last 21.35

18.4

39.80

21.20 21.00

39.70

18.3

20.80

39.60

average 39.089

Min 38.85

39.40

Last 39.1

20.40 Max 18.36

average 18.223

Commodities PRICE

WTI CRUDE FUTURE Aug13

DAY %

YTD %

106.14

-0.169300226

(H) 52W

Last 18.3

(L) 52W

13.20392491

107.4499969

86.29000092

BRENT CRUDE FUTR Aug13

108.83

-0.238335319

1.83400393

115.1699982

96.70999908

GASOLINE RBOB FUT Aug13

311.46

0.377066615

11.96347689

314.5499945

262.5799894

GAS OIL FUT (ICE) Sep13

915.75

-0.136314068

0.881299917

980

832.5

3.652

-0.598802395

1.727019499

4.525000095

3.354000092

302.78

0.056177919

1.024323513

320.449996

273.759985

NATURAL GAS FUTR Aug13 NY Harb ULSD Fut Aug13 METALS

Min 18.14

Gold Spot $/Oz

1284.67

0.1091

-22.8176

1796.08

1180.57

Silver Spot $/Oz

19.8391

-0.1148

-34.1113

35.365

18.2208

Platinum Spot $/Oz

1414.75

0.0828

-6.7864

1742.8

1294.18

Palladium Spot $/Oz

727.78

0.4555

4.0191

786.5

553.75

LME ALUMINUM 3MO ($)

1804.5

-2.195121951

-12.95224313

2200.199951

1758

COUNTRY MAJOR

ASIA PACIFIC

CROSSES

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

LME COPPER 3MO ($)

6917

-0.532067875

-12.78527298

8422

6602

LME ZINC

1892

-0.578034682

-9.038461538

2230

1779

13505

-1.960072595

-20.83821805

18920

13205

15.155

-0.098879367

-1.622849724

16.47500038

14.60000038

509.75

1.241310824

-15.00625261

665

489.5

673.5

0.597460792

-16.54275093

905.75

652.25

1273

0.731948566

-2.283630781

1409.75

1186.5

123.65

0.324543611

-18.89143982

202.0500031

117.0999985

NAME

16.02999878

ARISTOCRAT LEISU

74.34999847

CROWN LTD

3MO ($)

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

Dec13

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

16.16

COTTON NO.2 FUTR Dec13

Max 21.15

average 20.645

Min 20.25

Last 20.25

85.25

0 0.17626322

-19.44167498 8.267716535

22.8599987 89.55999756

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9182 1.5091 0.9476 1.3075 99.63 7.99 7.7574 6.1353 59.2663 31.08 1.2617 29.87 43.317 10097 91.479 1.23903 0.86642 8.0229 10.4476 130.27 1.03

1.3354 0.2524 0.4643 0.3993 0.4717 0.0138 0.0129 0.0407 1.0608 0.2574 0.4359 0.1808 0.3024 -0.2278 -0.8592 0.0621 -0.15 -0.1172 -0.3752 0.0614 0

-11.5244 -6.7075 -3.3981 -0.8719 -13.5802 -0.0851 -0.0877 1.5533 -7.207 -1.6088 -3.1941 -2.8021 -5.3374 -3.0108 -2.3525 -2.5463 -5.8863 2.4256 0.7925 -12.8195 -0.0097

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

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

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.34

1.401869

37.77777

4.49

2.29

VOLUME CRNCY 6438369

12.91

-1.825095

20.99344

13.75

8.28

1369396

AMAX HOLDINGS LT

1.04

-4.587156

-25.71428

1.72

0.75

320950

BOC HONG KONG HO

24.4

0.2053388

1.244812

22.6

10529794 16000

0.315

-11.26761

18.86793

0.42

0.22

5.65

0.8928571

-5.676123

6.74

2.95

12000

CHINA OVERSEAS

21.35

-0.9280742

-7.575759

25.6

16.761

11869171

CHEUK NANG HLDGS CHINESE ESTATES

13.8

13.77297

14.12

8.031

6500

CHOW TAI FOOK JE

9.47

5.574136

-23.8746

13.4

7.44

16819270

EMPEROR ENTERTAI

2.58

36.50794

3.07

1.34

945000

3.092784

65.01295

2.76

0.964

3180000

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15484.26

0.1290715

18.16312

15542.4

12471.49

NASDAQ COMPOSITE INDEX

3607.492

0.2058843

19.47262

3609.59

2810.8

GALAXY ENTERTAIN

38.25

0.2621232

26.02965

44.95

16.98

5297062

FTSE 100 INDEX

6578.66

-0.1131168

11.54412

6875.62

5478.02

HANG SENG BK

116.2

-0.5136986

-2.106147

132.8

104.2

750865

DAX INDEX

8190.27

-0.5408747

7.591306

8557.86

6324.53

HOPEWELL HLDGS

25.05

0.2

-24.66165

35.3

20.727

462860

HSBC HLDGS PLC

85.05

-0.05875441

4.612542

90.7

61.1

8289784

HUTCHISON TELE H

4.42

-0.4504505

24.15731

4.66

2.98

2135476

LUK FOOK HLDGS I

20.85

2.457002

-14.54918

30.05

16.16

1698000

MELCO INTL DEVEL

14.82

-0.6702413

64.4839

18.18

5.12

3627000 1752800

FUTURE BRIGHT

NIKKEI 225

14599.12

0.6402068

40.44125

15942.6

8328.019531

HANG SENG INDEX

21312.38

0.04257554

-5.934341

23944.74

18710.58984

CSI 300 INDEX

2317.848

0.4572883

-8.129525

2791.303

2023.171

TAIWAN TAIEX INDEX

8260.11

0.06578087

7.281127

8439.15

6922.73

MGM CHINA HOLDIN

21.35

1.666667

60.78891

21.85

9.509

KOSPI INDEX

1866.36

-0.4692933

-6.544156

2042.48

1758.99

MIDLAND HOLDINGS

3.09

-16.48649

2.68

994000

S&P/ASX 200 INDEX

4986.017

0.09859256

7.250387

5249.6

4082.2

NEPTUNE GROUP

0.171

-1.156069

12.5

0.23

0.095

6200000

4651.814

0.3469789

7.763522

5251.296

3964.808

NEW WORLD DEV

11.16

0.5405405

-7.154746

15.12

9.38

10538078

FTSE Bursa Malaysia KLCI

1785.65

-0.05708945

5.725455

1826.22

1590.67

SANDS CHINA LTD

39.5

1.023018

16.34757

43.7

20.65

7670867

SHUN HO RESOURCE

1.46

4.285716

1.67

1.03

NZX ALL INDEX

979.259

-0.5724456

11.02043

998.487

767.748

SHUN TAK HOLDING

3.54

0.5681818

-15.51313

4.65

2.62

2242751

PHILIPPINES ALL SHARE IX

4022.15

-0.71266

8.736732

4571.4

3410.76

SJM HOLDINGS LTD

18.3

0.7709251

3.112198

22.382

12.995

3239475

SMARTONE TELECOM

12.7

0.7936508

-9.801136

17.38

12.28

355646

20.25

-1.459854

-3.341292

26.5

14.62

5885800

JAKARTA COMPOSITE INDEX

20.20

Macau Related Stocks

CENTURY LEGEND

NAME

18.1

Currency Exchange Rates

NAME ENERGY

20.60

18.2

39.50

Max 39.7

21.2

HSBC Dragon 300 Index Singapor

616.47

-0.23

-0.74

STOCK EXCH OF THAI INDEX

1440.83

-1.001099

3.5131

1649.77

1172.92

HO CHI MINH STOCK INDEX

496.22

0.4290629

19.93812

533.15

372.39

ASIA ENTERTAINME

4.1

1.485149

45.66472

4.7647

2.2076

180915

BALLY TECHNOLOGI

60.91

1.839157

36.23351

61.07

41.74

521049

Laos Composite Index

1297.1

1.35019

6.777411

1455.82

996.61

BOC HONG KONG HO

3.18

0.6329114

3.583064

3.6

2.99

1000

GALAXY ENTERTAIN

-0.3984064

25.94458

5.77

2.25

43500 2586474

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

18.05

2.208381

27.38179

18.81

10.92

JONES LANG LASAL

94.52

-0.2216827

12.60424

101.46

61.39

299547

LAS VEGAS SANDS

54.83

1.311899

18.7825

60.54

32.6127

3494095

MELCO CROWN-ADR

23.46

1.514496

39.31116

25.2

9.13

3009403

MGM CHINA HOLDIN

2.55

37.83784

2.71

1.36

2700

MGM RESORTS INTE

15.72

3.014417

35.05154

15.95

8.83

9875549

SHFL ENTERTAINME

18.7

3.030303

28.96552

18.78

12.35

303414

SJM HOLDINGS LTD

2.39

4.934281

2.9481

1.7255

419200

131.99

0.9252179

17.33488

144.99

84.4902

1263056

WYNN RESORTS LTD

AUD HKD

USD

14 14

July 17, 2013 April 19, 2013

Opinion

Japan prepares to vote. Not that you would know William Pesek

Bloomberg View columnist

ith elections to the upper house of parliament on July 21, Japanese voters seem ready to hand Prime Minister Shinzo Abe one of the bigger blank checks in memory. No one has forgotten there’s an election. It’s impossible to escape the cacophony of campaign sound trucks, blaring slogans out of tinny loudspeakers. What’s most noticeable, though, is the silence of the citizenry. Try finding the slightest hint that voters are fired up. If recent contests have been notable at all, it’s for setting low-turnout records. This one could top them all. This should be the ultimate issues election. Japan confronts a fastageing population; the world’s biggest public debt; a skyrocketing energy bill, and a pension time bomb. Abe has pledged vague but far-reaching reforms, including lowering trade barriers, empowering women, deregulating industry and possibly revising the pacifist constitution. There are questions about how many U.S. soldiers Japan should host, and whether loose monetary policy is creating a giant bubble. Yet the Japanese are debating none of this. A victory for Abe’s Liberal Democratic Party will be taken as vindication of policies that he’s laid out only in the sketchiest terms. The failure to hash out those reforms now isn’t just bad news for Japan’s US$5.9 trillion economy, but for the world, which could benefit from greater Japanese engagement and more inspired leadership in Tokyo.

Foregone election Perhaps voters sense that the outcome is a fait accompli. Polls overwhelmingly show the LDP headed for a resounding victory and control over both houses of parliament. A sense of defeatism among supporters of the opposition Democratic Party of Japan,

which governed from 2009 to 2012, may keep many from even voting. A landslide won’t necessarily reflect the feelings of a nation that’s more wary than polls suggest. Certainly voters seem willing to give Abe a chance to revitalise an economy that’s been losing ground for 20 years. But that doesn’t mean they support pet projects such as tweaking education to encourage nationalism, or that they condone increasingly testy exchanges with Japan’s trading partners, like China and South Korea. Many worry Abe will fan the flames by visiting Tokyo’s Yasukuni Shrine, which honours Japan’s war dead, including several convicted war criminals. Even on the economy, reservations abound. Abe’s headlong push to join the U.S.led Trans-Pacific Partnership is a case in point. On economic grounds, acrossthe-board trade liberalisation is a no-brainer. But for a reasonably egalitarian nation such as Japan, the idea of unfettered competition imposed from outside remains controversial. To many, that means more tainted food from China, a proliferation of giant WalMart Stores Inc, a reduction in wages and an embrace of the cutthroat capitalism that Tokyo bureaucrats have tried to avoid for decades. Voters seem to be discounting Abe’s chances of success. Bringing TPP to Japan would mean forsaking rural supporters, for instance, which the prime minister has in theory pledged not to do. By some measures, farming accounts for slightly more than 1 percent of gross domestic product. Yet gerrymandering and the LDP’s reliance on Japan’s less populated hinterlands give the farm lobby wildly disproportionate sway. If they really thought their interests were at risk, the outcry would be much louder. The same goes for tax policy. As households brace

for a doubling of Japan’s consumption tax over the next two years and the reflation the Bank of Japan is trying to engineer, Abe is mulling sizable reductions in corporate tax rates. It hardly seems fair that consumers, many entering their golden years, should bear all of the nation’s fiscal burden. And yet no Japanese Tea Party has sprung up to channel a non-existent outrage.

Alternative energy In some cases, Abe seems to be promoting an agenda directly at odds with public opinion. Recent days have

offered a steady drumbeat of bad news from Fukushima, where the worst nuclear crisis since Chernobyl is still unfolding. Highly radioactive nuclear waste is seeping into the ground and contaminating the Pacific Ocean. Polls show Japanese are overwhelmingly against restarting nuclear power plants mothballed since the disaster. Why, then, haven’t there been more protests as the LDP moves to restart the reactors? Why aren’t opposition lawmakers being more vocal and creative about energy alternatives, such as redoubling investments in renewables or following Iceland’s lead by generating more geothermal energy? Japan may have few natural resources, but it has an abundance of volcanoes. To some degree, the Japanese are apathetic

because they can be. Even after almost 20 years of deflation, Japanese society hasn’t unravelled into widespread homelessness, crime and deprivation. Also, Abe’s decisiveness is scoring points with the electorate. Japan is on its 16th prime minister since its asset bubble burst around 1990 and not since, or long before, Junichiro Koizumi (2001-2006) has it had a truly audacious leader pledging to shake up the status quo. It’s important, though, that reforms move Japan forward in accordance with the aspirations of its people. It’s up to voters and opposition politicians to tell leaders what those goals are and hold them accountable. By giving Abe such carte blanche, Japanese may be setting themselves up for buyer’s remorse. Bloomberg View

By giving Abe such carte blanche, Japanese may be setting themselves up for buyer’s remorse

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

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July April17, 19,2013 2013

Opinion Business

A world of vulnerability

Leading reports from Asia’s best business newspapers

Jomo Kwame Sundaram

Assistant Director General at the Economic and Social Development Department of the UN’s FAO

wires Korea Herald

The two Koreas failed again to agree on reopening their joint industrialparkinKaeseongduring a third round of talks on Monday. Thetwosidesendedthemeeting without a breakthrough, setting the next meeting for today. Seoul repeated its demand for a guarantee from Pyongyang against a future suspension before its normalisation. The North called for its reopening without any preconditions but offered a revised draft agreement. “During the talks the two sides exchanged views on each other’s drafts and there were differences in their positions,” the South’s delegate Kim Ki-woong said.

The Age The Reserve Bank of Australia says another interest rate cut could be on the cards thanks to a benign inflation outlook. In the minutes of its July meeting released on Tuesday, the RBA said it decided to leave the cash rate on hold at 2.75 per cent as it assessed the effects of earlier interest rate cuts as well as the falling, but still high, Australian dollar. The RBA said the inflation outlook, although slightly higher because of the falling Australian dollar, could provide scope for a further rate cut if required to support spending.

Jakarta Globe Business leaders are protesting a proposal from labour unions that have called for a 50 percent increase in monthly wages for 2014, saying the demand is irrational,especiallyascompanies are shouldering the rise in costs from the subsidised fuel price increase and higher interest rates.ErwinAksa,theIndonesian Chamber of Commerce and Industry’s deputy chairman for small and medium enterprises, said the proposal for an increase in labour wages should be made in such a way that would not disturb companies while accommodating the needs and interests of employees.

Inquirer Business Cash remittances reached a fivemonth high in May as overseas Filipino workers continued to send more money home to their families, data from the Bangko Sentral ng Pilipinas showed. The BSP on Monday said cash remittances reached 1.87 billion pesos (US$43 million) in May, up 5.3 percent over the same month last year. The increase in remittances in May was in line with the government’s full-year growth forecast of 5 percent. Remittances are the economy’s largest source of foreign exchange income which, apart from fuelling domestic demand, ensure the country has enough dollars to cover import needs.

n 2010, global leaders achieved the Millennium Development Goal (MDG) of reducing the share of the world’s poor to half of its 1990 level – five years ahead of schedule. But rising unemployment and falling incomes underscore the enduring threat of poverty worldwide. After all, poverty is not an unchanging attribute of a fixed group; it is a condition that threatens billions of vulnerable people. Despite their shortcomings, income measures are useful in gaining a better understanding of the extent of poverty and vulnerability worldwide. But the World Bank’s poverty line of US$1.25 per day (in purchasing-power-parity terms), which is used in measuring progress toward the MDGs’ povertyreduction target, is not the only relevant threshold. When the poverty line is raised to per capita daily spending of US$2, the global poverty rate rises from 18 percent to roughly 40 percent, suggesting that many people are living just above the established poverty line, vulnerable to external shocks or changes in personal circumstances, such as price increases or income losses. Three-quarters of the world’s poor live in rural areas, where agricultural workers suffer the highest incidence of poverty, largely owing to low productivity,

seasonal unemployment, and the low wages paid by most rural employers. In recent decades, vulnerability and economic insecurity have increased with the rise of transient, casual, and precarious employment, including self-employment, and part-time, fixed-term, temporary, and on-call jobs. At-home positions, frequently filled by women, are also on the rise. L a b o u r - m a r k e t liberalisation, globalisation, and unions’ declining influence have exacerbated these

Only a small minority of the global population has full, legally guaranteed access to existing socialprotection schemes

employment trends. At the same time, macroeconomic policies have focused on achieving and maintaining low-single-digit inflation, rather than full employment, while limited social protection has heightened economic insecurity and vulnerability. During the East Asian crisis of 1997-1998, poverty rose sharply. For example, Indonesia’s poverty rate soared from roughly 11 percent to 37 percent during the crisis, mainly owing to the massive depreciation of the rupiah. Likewise, following the 2008 global economic crisis, food-price spikes and recession caused the United Nations Food and Agriculture Organisation to revise its hunger estimates upward, to more than one billion people. Considering the FAO’s conservative definition of chronic severe hunger, this is a serious indictment of global poverty-reduction efforts.

Left out Most poor adults in developing countries have to work, if only to survive. Aside from the working poor, an additional 215 million workers worldwide slipped below the poverty line in 2008-2009, owing to the Great Recession. Another 5.9 percent, or 185 million workers, were living on less than US$2 per day. The estimated 330 million working women who lived

below the poverty line in 20082009 accounted for roughly 60 percent of the 550 million working poor worldwide. New estimates by the International Labour Organisation (ILO), based on a different methodology from that used by the World Bank, demonstrate that, while the number of those classified as working poor worldwide declined by 158 million from 2000 to 2011 (from 25.4 percent of workers to 14.8 percent), progress has slowed markedly since 2008. Indeed, only 15 percent of workers, or 24 million people, managed to rise above the poverty line in 2007-2011. The other 134 million workers who escaped poverty did so earlier, in 2000-2007. As a result, there were 50 million more working poor in 2011 than projected by pre-crisis trends for 2002-2007. The lack of basic social protection in most countries exacerbates vulnerability. The ILO World Social Security Report found high or very high vulnerability, in terms of poverty and labour-market informality, in 58 countries, mainly in Africa and Asia. Most such countries do not provide unemployment insurance, while more than 80 percent of their populations lack socialsecurity coverage and access to basic health services. Indeed, few countries currently provide comprehensive social protection, as defined by ILO Convention 102 (the instrument establishing internationally-agreed minimum social-security standards). According to the ILO, only one-third of countries worldwide – accounting for roughly 28 percent of the global population – provide all nine types of protection, meaning that only about 20 percent of the world’s working-age population (and their families) enjoys comprehensive coverage. Although all countries offer some kind of social protection or security, in most countries, coverage is severely limited and targeted at specific groups. As a result, only a small minority of the global population has full, legally guaranteed access to existing social-protection schemes – leaving roughly 5.6 billion people worldwide vulnerable to various degrees. Vulnerability exists at levels far above the World Bank’s US$1.25/day poverty threshold, especially given rising job insecurity and inadequate social protection worldwide. To address global poverty effectively, global leaders must take a more comprehensive approach that focuses on reducing citizens’ vulnerability. © Project Syndicate

July 17, 2013

Closing Greece holds fresh general strike

Euro zone imports fall steeply

Thousands of Greek workers have joined a 24-hour strike called by trade unions to protest against government plans to cut public sector jobs. The government needs to pass the bill this week to start receiving 6.8 billion euros (US$8.9 billion) of fresh bailout loans to keep the country afloat. Greece’s international creditors demanded the cuts in order to approve the latest batch of loans from its international bailout programme, as agreed earlier this month. They said Greece’s reform programme was moving too slowly. Hospital services and public transport have been affected by the strike.

The euro zone’s trade surplus widened in May from a year earlier, driven mainly by falling imports rather than export growth, the EU’s statistics office Eurostat said yesterday. Eurostat also confirmed June annual inflation at 1.6 percent, pushed upward by volatile energy and food prices, from 1.4 percent in May. The trade surplus for the 17 countries using the euro, unadjusted for seasonal swings, rose to 15.2 billion euros (US$19.8 billion) in May, from a revised 14.1 billion euro surplus in April. Overall exports were flat on the year in May, with imports decreasing by 6 percent.

Smithfield’s bidders plan HK IPO China’s Shuanghui International Holdings Ltd, which has agreed to buy U.S. pork producer Smithfield Foods Inc for US$4.7 billion, plans to list the combined company in Hong Kong after completing the takeover, people with knowledge of the matter told Reuters. A Hong Kong IPO, valued at around US$4 billion, would allow the merged group to trade in a market that would place a higher valuation on the stock than the U.S. or other exchanges, the sources said. Hong Kong is a far bigger and more international stock market than Shenzhen, the Chinese exchange where Shuanghui’s main publicly traded subsidiary is listed. A Hong Kong listing would also offer an ideal exit route for Shuanghui’s private equity investors, which includes Goldman Sachs Group Inc and New Horizon Capital, when they decide to sell their holdings, according to the people familiar with the matter. New Horizons is the private equity firm founded by Winston Wen, the son of China’s ex-Premier Wen Jiabao. Shuanghui could also use the proceeds to pay down some of the debt, people familiar said. Bank of China and Morgan Stanley have combined to provide US$7 billion of loans to finance Shuanghui International’s record deal to buy the U.S. pork producer. The total value of the Chinese company’s record agreement was US$7.1 billion, including net debt. The Smithfield deal has yet to close, the sources cautioned, and plans on what happens after the takeover would only be finalised upon the completion of the deal. Hong Kong stock exchange rules require one year of ownership before a merged entity can list.

Bally Technologies to buy SHFL for US$1.3 bln

Posco scraps Indian steel project

‘Unique’ strategic move and value opportunity for shareholders, says SHFL’s CEO

The enterprise value set at US$1.3 billion includes debt of US$8 million and cash of US$41 million as of April 30, the companies said. Based on trailing 12-month periods ended March 31 for Bally and April 30 for SHFL, the combined business generated approximately US$1.3 billion in revenue and adjusted earning before interest, taxes, depreciation and amortisation of US$415 million. One of the legacy issues faced by the new business is the ongoing litigation in Macau between SHFL and local equipment supplier LT Game. A patent dispute between the two over an electronic table game dates back to 2009. A related lawsuit is currently lodged with the Court of First Instance. In it, LT Game alleges infringement by SHFL of a patent held by LT Game. According to Macau law, patent infringement is a criminal offence. SHFL and its units deny any infringement.

South Korea’s Posco said yesterday it will pull out of a US$5.3 billion steel mill development in India’s Karnataka state, but will proceed with another US$12 billion project billed as the country’s largest foreign direct investment. POSCO said in a regulatory filing that it had agreed to cancel the project with the government of southern Karnataka state because of delays in receiving iron ore mining rights and opposition from residents which had held back land acquisition. The move could provide fresh impetus to POSCO’s main steel project in the eastern state of Odisha. Already eight years in the making, it has recently gained momentum with the clearing of legal obstacles to the granting of an iron ore exploration licence. “We will proceed with a steel mill project in Odisha, which is making progress. The latest move will make us more focused on the project,” POSCO spokeswoman Kim Jiyoung said. POSCO, the world’s fifth-biggest steelmaker, had pursued three steel mills in India as a way of hedging its bets on the slow-moving Odisha project. In 2010, POSCO signed a preliminary agreement with the Karnataka state government to construct a mill capable of producing 6 million tonnes of steel a year. A year earlier it signed a separate steel mill deal with state-run Steel Authority of India Ltd (SAIL). The POSCO spokeswoman said the talks with SAIL had “stalled”. An Indian steel ministry official who sits on SAIL’s board told Reuters the project was “as good as dead” as the federal government would not heed POSCO’s demand for a controlling stake.

With Bloomberg News

Reuters

Michael Grimes

michael.grimes@macaubusinessdaily.com

ally Technologies Inc agreed to buy SHFL entertainment Inc for about US$1.3 billion (10.39 billion patacas) in a deal that combines two of the leading Nevada-based gaming equipment firms supplying Macau and the Asia Pacific region. The announcement was made on Tuesday morning United States time. “Both Bally and SHFL have long histories of proven innovation, excellent customer service and s u c c es s f ully an ticip ating an d adapting to changes within our industry, which makes bringing our two companies together a great strategic fit,” said Ramesh Srinivasan, Bally’s president and chief executive. An analyst told Business Daily that SHFL’s strong slots and electronic table games presence in Asia and Australasia, and its strong market share globally in electronic shufflers for casino playing cards, would provide plenty of upside for the new company. Bally is traditionally strong

in slots in North America, and casino floor management systems globally. “SHFL’s intellectual property, renowned brands and industryleading suite of diverse, highperformance products will enable us to offer an unparalleled offering of gaming products and services…,” said Mr Srinivasan. “We believe that now is the right time to join forces with Bally as there is a unique opportunity to combine each other’s many strengths, particularly our talented teams who have been the key drivers of success for each organisation,” stated Gavin Isaacs, SHFL’s chief executive. Separately, David Bain of independent brokerage Sterne, Agee & Leach Inc, yesterday rated Bally a ‘buy’ with a price target of US$74 a share, from US$63. Bally’s offer of US$23.25 a share for SHFL is 24 percent higher than the firm’s closing price on Monday U.S. time. Both boards unanimously approved the transaction, the companies said in a statement.