Macau Business Daily, July 22, 2013 by Business Daily

MOP 6.00 Vitor Quintã Deputy editor-in-chief Editor-in-chief Tiago Azevedo Monday July 22, 2013 Number 331 Year II

Interview

April 19, 2013

CTM boss pleads for consistency on telecoms The chief executive of Macau’s biggest telecoms provider says he would be “disappointed if the government chooses to complicate things” when it comes to introducing 4G mobile services to the city. “…the best way to go is to allow all the existing operators to naturally evolve into the next generation,” says Vandy Poon Fuk Hei of Companhia de Telecomunicações de Macau SARL (CTM). On the service network failures that occurred last year, Mr Poon stated the telco had done “a massive amount of work” to prevent a repetition. Pages 8 & 9

Mortgages on unfinished flats at 2-year high

n May, Macau banks lent the most on a monthly basis to buyers of unfinished flats since the government introduced curbs two years ago to dampen real estate speculation. The Monetary Authority of Macau said new mortgage lending approved in May for unfinished apartments surged by 146.4 percent from a year earlier, to 380.6 million patacas (US$47.6 million). It was the highest monthly level of such loans since at least July 2011. The May figure alone was already more than the lending approved for unfinished flats in the second half of 2011. That latter tally was below 372 million patacas.

Antenna firms want pledge on cable deal Page 4

Galaxy seals purchase of Grand Waldo venue

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SHFL reports patent win against LT Game

Hang Seng Index

A Macau unit of casino equipment manufacturer SHFL entertainment Inc says it has been cleared of any wrongdoing under Macau law on technology used in its popular Rapid Baccarat product. Locally based supplier LT Game Ltd complained that SHFL’s table game – with electronic bets but featuring a live dealer – infringed an LT Game patent in Macau for multi-terminal systems combining electronic betting with a live dealer. Page 3

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UM Hengqin campus in full swing next year

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HSI - Movers

The University of Macau’s new Hengqin Island campus will be in operation by February, said Secretary for Social Affairs and Culture Cheong U. The facility – on Saturday officially handed to Macau – spans about 1.09 square kilometres – five percent of the entire area of neighbouring Macau, and 20 times bigger than the university’s current Taipa campus. The underwater tunnel linking Hengqin campus to Macau is already completed.

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Graft watchdog probes ‘ghost bus’ incident

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CHINA SHENHUA-H

3.13

TENCENT HOLDINGS

1.83

SANDS CHINA LTD

1.51

HSBC HLDGS PLC

1.17

HUTCHISON WHAMPO

1.08

LI & FUNG LTD

-2.36

CHINA RES LAND

-2.62

COSCO PAC LTD

-2.62

WANT WANT CHINA

-3.24

CHINA RES POWER

-4.53

Source: Bloomberg

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The city’s graft buster is probing an alleged incident involving a public bus cash box used to collect fares. The Transport Bureau, which oversees the network, could not trace the box the Commission Against Corruption said on Friday. A bus ran one day in September without any record of taking a fare despite the operator receiving government money to run the service. Page 6

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July 22, 2013

Macau

Mortgages for unbuilt flats jump before law changes Buyers rushed to borrow before the law reined in sales of unfinished housing Tony Lai

tony.lai@macaubusinessdaily.com

ortgage lending to buyers of unfinished flats in May was the highest for two years. The Monetary Authority of Macau announced on Friday that the amount of new mortgage lending approved in May for unfinished flats was 380.6 million patacas (US$47.6 million), 146.4 percent more than a year earlier and the most since at least July 2011. The authority began publishing monthly figures for new mortgage lending for unfinished flats only last year, but May’s figure was greater than the figure for the entire second half of 2011, which was about 372 million patacas. In June 2011 the government began taking measures to cool the housing market, which included imposing the special stamp duty. May’s rise in lending for unfinished flats shows that buyers rushed to borrow before the law on presales of unbuilt housing came into force in June. Of the amount banks lent buyers of unfinished flats in May, they lent 98.2 percent to residents.

Banks lent residents 166 percent more to buy unfinished flats than a year earlier. The 6.8 million patacas that banks lent non-residents to buy unfinished flats was less than a year earlier. It was 913.9 percent more than they lent non-residents less to buy unfinished flats in April, but only because April’s figure was unusually low. Since June 1 the law has allowed the sale of unfinished flats only once the foundations of the building that will contain them have been laid and the housing project has been registered. Midland Realty (Macau) Ltd chief executive Ronald Cheung Yat Fai said this month that the developers of unfinished high-end housing had made “a final push to clear their stock” before the law had come into force. New mortgage lending for unfinished flats made up 9.2 percent of all new mortgage lending for housing approved in May, having up made up 3.9 percent a year earlier. New mortgage lending for housing approved in May amounted to 4.14 billion patacas, 3.8 percent more than

a year earlier, and 97.2 percent was lent to residents. New mortgage lending for commercial property amounted to 2.64 billion patacas, one-third more, as residents spent more on such premises. Non-residents spent less on such

premises, new mortgage lending to non-residents for commercial property falling by over 70 percent to 17.8 million patacas. The Monetary Authority of Macau said the proportion of mortgage lending that had turned bad by the end of May had been 0.07 percent.

MOP 380.6 mln Mortgage lending approved in May for unfinished flats

Grand Waldo, deal closed Galaxy Entertainment bought hotelcasino last week

et Nice Holdings Ltd said last week the sale of the Grand Waldo casino resort to Galaxy Entertainment Group Ltd has been finalised. In a filing to the Hong Kong Stock Exchange, Get Nice said the deal was closed on Wednesday. The majority owner of Grand Waldo – Get Nice Holdings Ltd – said in a Hong Kong filing on June 11 it had agreed in principle to sell its controlling stake to Galaxy – the concessionaire that provides the gaming licence for the property – for up to HK$3.25 billion. Galaxy Entertainment has asked the government for a six-

month suspension of the casino operation at Grand Waldo casino hotel, according to a person with knowledge of the situation. That might suggest a reopening date for the venue – with a yet-to-be-announced use – before Chinese New Year. Galaxy confirmed to Business Daily earlier this month that as the provisional new owner of the venue it had closed the operation and was planning to renovate the property. It gave no details on its future use or deadline for reopening. An industry source had told this newspaper that it was “expected” that Galaxy would apply to the government to absorb the 38 gaming tables and 148 slots at Grand Waldo into the rest of its operations – even if only on a temporary basis until Grand Waldo reopens. Galaxy’s flagship Cotai property across the road from Grand Waldo has 450 tables and 1,500 slots according to analysts’ reports. A spokesman for the gaming concessionaire had said that most of Grand Waldo’s 800 staff had been offered and accepted alternative employment in other group properties. The firm did not give a date for the reopening of the property.

Grand Waldo – no date yet for the reopening (Photo: Manuel Cardoso)

T.A.

July April22, 19,2013 2013

Macau

SHFL reports a patent win against LT Game Local unit SHFL Entretenimento (Ásia) Lda says acquitted of infringement over Rapid Baccarat Michael Grimes

michael.grimes@macaubusinessdaily.com

Macau unit of casino equipment manufacturer SHFL entertainment Inc says it has been cleared of any wrongdoing under Macau law regarding the technology used in its popular Rapid Baccarat product. Locally-based casino supplier LT Game Ltd, a subsidiary of Hong Kong-listed Paradise Entertainment Ltd, complained that SHFL’s product – a table game with electronic bets but featuring a live dealer – infringed an LT Game patent in Macau for multi-terminal s y s tems com binin g elec tronic betting with a live dealer. In Macau patent infringement is a criminal offence. As such, the case was brought by the Public Prosecutions Office, with businessman Jay Chun – chairman of LT Game and of Paradise – as what’s known under the Criminal Procedure Code system as an “assistant” to proceedings. “We are very pleased that the court has found no patent infringement by SHFL Macau. We have consistently maintained that our Rapid Baccarat solution does not infringe Mr Chun’s patent,” said Ken Jolly, SHFL’s executive vice president, Asia, in a statement. Business Daily understands the presiding tribunal – the Court of First

Instance – issued its judgement on Friday in Chinese with a Portuguese translation. Mr Chun – currently overseas – is believed to be reserving his right to lodge an appeal against the decision, while he and his lawyers consider the judgement. There was no official comment from him or from LT Game. In Macau, judgements from the Court of First Instance are not automatically made public. It depends on one or more of the parties involved choosing to release the documents. The dispute first came to public attention at the Global Gaming Expo Asia trade show in Macau in 2009. Macau Customs officers detained several executives of the then Shuffle Master Inc. and some of the firm’s equipment – a Rapid Baccarat electronic table game unit – was seized after a complaint from Paradise. Two years later prior to G2E Asia 2011, LT Game obtained a temporary injunction from a Macau court preventing SHFL displaying the Rapid Baccarat product at the show. On the second day of the event, SHFL was granted temporary relief from that order after applying to the court. The current court case had a first hearing on April 18. While the dispute

SHFL entertainment says court found in its favour

has been awaiting adjudication, it has posed an obstacle to SHFL selling Rapid Baccarat in Macau. The firm now has a new generation product called SHFL Fusion Hybrid. Data from the local regulator the Gaming Inspection and Coordination Bureau, show that revenue from the ‘live multi-game’ segment – including the sort of electronic table game products made by LT Game and SHFL – rose 92 percent year-onyear in the second quarter from 184 million patacas (US$23 million) to 351 million patacas. Union Gaming Research Macau estimated in a report in May that LT Game had more than 50 percent of Macau’s current market for electronic table games. The research house added it believed the firm had an order backlog of “at least a few hundred additional ETG seats in Macau”.  The growth of the product segment has coincided with the rise of minimum bets on traditional live dealer tables on Macau casinos’ mass floors in the wake of the government’s table cap. Last week it was announced that fellow Nevada manufacturer Bally Technologies Inc would pay US$1.3 billion in a leveraged deal to acquire SHFL entertainment and its units.

editorial

Exporting know-how I

t’s a challenge to write opinion pieces about Macau when living and working in the city. It is easy to become entangled in the day-to-day issues that we all feel, namely those involving inflation, housing prices and government ineptitude. And sometimes you cannot see the forest for the trees, especially when you live surrounded by thorny issues. There is a trend, however, that is becoming almost impossible to ignore. About a decade ago Macau was a tiny economy with the biggest industry, gaming, controlled by a monopoly led by tycoon Stanley Ho Hung Sun. That has all changed with the opening up of the casino business in 2002, which attracted three major United States operators: MGM, Las Vegas Sands and Wynn. They brought their Las Vegas experience in gaming and entertainment and were – despite a few cultural adjustment pains – tremendously successful. But the tide has turned. One can see it now that Stanley Ho’s son Lawrence Ho Yau Lung is investing in the Philippines and in Russia, while his sister Pansy Ho Chiu King’s Shun Tak Holdings Ltd is launching its own hotel management operation. Of course we could quickly write it off as simply an expansion of the Ho family’s empire. Just recently Shun Tak bought a stake in low-fares airline Jetstar Hong Kong. Alternatively these new ventures could be seen as necessary for diversification and an outlet for some for the enormous profits the Macau gaming industry continues to generate. But it is likely a sign of how much the city has evolved. It has soaked up the integrated resort model brought in from Las Vegas and stripped it down in order to meet the demands from Chinese visitors. It’s achieved that while at the same time incorporating the traditional junket system and allowing it to develop modern business methods. Jealous eyes had already been turned on the city from elsewhere in the region, with many other jurisdictions daring to hope to copy Macau’s success in attracting Chinese gamblers – and their money. Now the territory is starting to export its specialised know-how: announcing gaming and hospitality operations targeted at a mainland Chinese audience increasingly adventurous about travelling beyond China’s borders. There are doubts, though, on how effective a Macau-style approach would be in Manila or in Vladivostok. But the knowledge reaped here had already been finding its way to Las Vegas. And that has played an important part in the rebound in gaming revenue that The United States’ casino capital is experiencing. The improvement in Las Vegas is fuelled, among other factors, by more betting by Asian high rollers on baccarat, their favourite casino game. It would be far-fetched to suggest Las Vegas is on its way to becoming North America’s Macau, but it turns out that in coming to Macau, the U.S. operators have been as much students as teachers. In globalised markets, knowledge transfer moves both ways.

It’s far-fetched to suggest Las Vegas is becoming North America’s Macau, but the U.S. operators have been as much students as teachers

July 22, 2013

Macau

Antenna companies demand assurances

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HOSPITALITY

Talks on settling Macau Cable TV’s dispute with public antenna companies continue

The usual suspects The tourist price index is published quarterly, unlike the consumer price index, which is published monthly, because inflation in the costs incurred by visitors is considered lesser important than inflation in the costs incurred by residents. What visitors typically buy is naturally different from what residents typically buy. Visitors spend more in hotels and restaurants, on buying expensive goods and on buying food that can be taken home to be given as gifts. But the pressure that demand by visitors puts on the prices of some goods and services influences the prices residents pay for similar goods or services.

Tony Lai

tony.lai@macaubusinessdaily.com

Macau Cable TV has the cable television monopoly until next year (Photo: Manuel Cardoso)

The tourist price index for the second quarter shows the annual rate of tourist price inflation was 6 percent, suggesting tourist price inflation is slowing. The average annual rate of tourist price inflation, indicated in the chart by the red line, has been 8 percent since the second quarter of 2010. What drove tourist price inflation were the usual suspects: the costs of eating in restaurants, staying in hotels, and food, drink and tobacco products all rose at rates faster than the average. Prices of clothes and shoes and of miscellaneous goods and services rose at rates about the same rate as the average. The costs of other sorts of goods and services did not rise so fast, pulling down the average rate. Prices of medicine and personal care products and of transport and communications rose at rates that were roughly half the average. J.I.D.

9.6 pct Annual rate of food and drink price inflation for tourists in Q2

he public antenna companies say they have yet to agree to a government proposal for ending their dispute with Macau Cable TV Co Ltd by allowing them to relay Macau Cable TV transmissions through their networks. They are calling for government safeguards before talks on settling the dispute can progress. “People are saying we have agreed,” a spokesperson for the 15 antenna companies, Yeung Ka Ke, said on Friday. “It is not like an agreement has been reached. We have only agreed to the main principles,” Mr Yeung told reporters before a meeting behind closed doors of representatives of the antenna companies, Macau Cable TV and the Bureau of Telecommunications Regulation. “There are still a lot of problems in the proposal,” he said. “There could be many disputes in the future.” The Bureau of Telecommunications Regulation said on July 10 that it was proposing that the public antenna companies relay Macau Cable TV transmissions through their networks under the cable company’s brand name, and that the government pay Macau Cable TV accordingly. Last month the Court of Second Instance gave the government 90 days to stop the antenna companies

from illegally relaying cable television transmissions. Macau Cable TV has had the monopoly of cable television since 1999. Its monopoly ends next year. The court ruling may lead to a television blackout, because 70 percent of households get their television programming from the antenna companies. After Friday’s meeting Mr Yeung reported “no real progress”, saying the parties had yet to get down to details. The Bureau of Telecommunications Regulation said the meeting had been meant to discuss how to put settlement it had proposed into effect, and the technical aspects. The bureau said it would ensure “that the right of the public to watch TV channels would not be seriously affected”.

Network secrets Before the meeting, Mr Yeung, the owner of an antenna company, said: “The most important thing we want to discuss is how to protect our assets and our customers.” He said the antenna companies wished the two landline telecommunications companies – Companhia de Telecomunicações de Macau SARL (CTM) and Companhia de Telecomunicações de MTEL Ltda – to be involved in any settlement.

He said the antenna companies were worried that if they relayed Macau Cable TV transmissions direct, Macau Cable TV might be able to identify some of their “network secrets”. He gave no hint of what these secrets are. Mr Yeung said the antenna companies were proposing that CTM and MTEL act as middlemen, relaying Macau Cable TV transmissions to the antenna company networks. “CTM has an extensive existing network which can also relay TV signals,” he said. He said the antenna companies were also worried that the settlement proposed might allow Macau Cable TV to poach their subscribers. Mr Yeung said the antenna companies were demanding that Macau Cable TV deposit 500 million patacas (US$62.5 million) with the government as security for compensation in the event of Macau Cable TV encroaching on their rights. He said the settlement proposed would increase the workload of the antenna companies, putting their staff under strain. Business Daily asked the Bureau of Telecommunications Regulation about the demands of the antenna companies but we had received no reply by the time we went to press.

July 22, 2013

Macau Tunnel site cave-in report out soon

The University of Macau’s new campus is designed to house 10,000 students (Photo: Manuel Cardoso)

Hengqin campus seen in full swing next year The University of Macau’s new home is handed over

The undersea tunnel connecting the University of Macau’s new campus on Hengqin Island to Macau was opened on Saturday. Infrastructure Development Office assistant coordinator Chau Vai Man told reporters that an official report on a cave-in last July at the tunnel construction site “will be out soon”. Mr Chau insisted that the tunnel’s structure is safe. He said that only a retaining structure at the tunnel construction site had collapsed. He declined to say if the contractor, Guangdong’s Nam Yue Group Corp Ltd, had paid any penalty for the cave-in.

Stephanie Lai

sw.lai@macaubusinessdaily.com

he University of Macau’s new campus on Hengqin Island will be in full operation and open to the public by February, according to Secretary for Social Affairs and Culture Cheong U. Mr Cheong was speaking on Saturday, at the official handover of the campus to Macau. Mr Cheong, Secretary for Transport and Public Works Lau Si Io and representatives of the Infrastructure Development Office

led a tour of the campus. The campus covers 1.09 square kilometres, 20 times more than the old campus on Taipa. The National People Congress has allowed Macau to lease the land the new campus stands on until December 2049, and to have jurisdiction over the facility. Macau police, firefighters and customs will have posts on the campus. “In August we will have some of

our staff, professors and students piloting operations on the Hengqin campus and begin to live there,” said University of Macau rector Wei Zhao. “In September, we expect that a first batch of 2,000 students will move there,” Mr Zhao told reporters. He said the university was still busy moving teaching facilities to the new campus. The University of Macau has 8,000 students.

Every year it enrols about 1,500 Macau students, who make up 80 percent of freshmen. The new campus was designed to house 10,000 students, Mr Wei said. He said the ratio of Macau students to students from elsewhere would remain four to one. Mr Cheong said he expected the Taipa campus to be reserved for “cultural or education purposes” and that it would not be turned over to property developers.

July 22, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Sparkling business In recent years a few sorts of merchandise that were not so prevalent before have become more conspicuous in Macau’s external trade statistics. One is jewellery, designated by Code 71 in Macau’s commodity coding system. The jewellery category covers precious metals, pearls, diamonds and other sorts of gems, coins and so on. Imports account for most of our external trade in jewellery. Visitors in general and mainlanders in particular are avid buyers of jewellery and other expensive merchandise. In the first five months of this year the value of jewellery imports amounted to almost 5.5 billion patacas (US$688 million) – roughly 1 billion patacas worth per month. The value of jewellery exports was 345 million patacas. All of these exports were re-exports. These figures suggest that the value of this year’s external trade in jewellery will surpass last year’s. Last year, imports were worth close to 9.5 billion patacas and re-exports were worth 271 million patacas.

Graft busters investigating the bus that took no fares The Commission against Corruption looks into a public transport mystery Tony Lai

tony.lai@macaubusinessdaily.com

The government pays the bus operators up to 25 patacas per kilometre of bus route served

Some of the data on jewellery exports are unavailable because of statistical confidentiality. Of the jewellery exports we know about between the beginning of 2010 and May this year, over 95 percent went to Hong Kong. Because of the degree of Hong Kong’s predominance as a market for jewellery exports, the table uses a logarithmic scale. Of the jewellery exports to Hong Kong, over 95 percent were diamonds or jewellery made of precious metals mounted with diamonds and other gems. J.I.D. The content of this column is the work of Business Daily’s journalists.

MOP315.5 mln

Re-exports of jewellery to Hong Kong in the first five months

he Commission against Corruption is investigating the seeming failure of one of the bus operators to hand to the Transport Bureau a cash box for bus fares. The commission said on Friday that the Commission of Audit had drawn attention to the case in a report on the bus services released in May. The Commission of Audit’s report says that last September a bus ran all day without leaving any record of any fares taken, and that the government paid the bus operator for running the service. The report describes this as an “unusual situation”. The three bus operators collect fares and hand them to the government, which then pays each operator between 9.60 patacas (US$1.20) and 25 patacas per kilometre of bus route served. The Commission against Corruption told a TDM radio programme on Friday that it was investigating the case. The commission said it had “retrieved large amount of information for analysis”.

A spokesperson for the Transport Bureau declined to tell Business Daily whether the bureau had asked the Commission against Corruption for help. The spokesperson said the bureau was conducting its own investigation, and that the commission’s investigation was separate. The commission’s only word on the case came in a written statement, which said: “As it is still undergoing investigation, it is not appropriate to disclose more details at the current stage.” The commission told Business Daily that it had nothing to add.

Blanket denials Transport Bureau director Wong Wan said in May that his bureau would look into any financial anomalies in the bus services. The three bus operators – Transportes Urbanos de Macau SARL (Transmac), Sociedade de Transportes Colectivos de Macau SARL (TCM) and Reolian Public Transport Co – have all denied any wrongdoing.

Mr Wong said his bureau would check the bus services run by all three operators between August 2011 and March this year. The Transport Bureau spokesperson said the bureau hoped to finish its checks this year. The government began this month using a new system for evaluating the performance of the bus operators. The government will use the results of the evaluations as references in deciding whether to give the bus operators new routes, or to pay them more for running the buses. The most recent data from the Transport Bureau show the government paid 890 million patacas (US$111 million) to the bus operators between August 2011 and February this year. The Commission against Corruption also said it was looking into the collapse of a pillar in the Sin Fong Garden housing development in Patane, which meant 140 households occupying the development had to be moved to safety. The commission’s remit is to counter not only corruption but also inefficiency in public service.

July April22, 19,2013 2013

Macau

Chow Tai Fook named in China gold-fixing probe Jeweller with Macau roots denies any price manipulation in its operations

how Tai Fook Jewellery Group Ltd, the world’s biggest jewellery retailer by equity market value, is among a number of gold shops with mainland operations being investigated for price fixing, the online edition of the official People’s Daily newspaper reported. Chow Tai Fook was founded in Guangzhou in 1929, but moved operations to Macau in 1931 when the Japanese invaded the mainland. The first Hong Kong shop opened in 1946. The venture grew dramatically under Hong Kong businessman Cheng Yu Tung, the son-in-law of the founder. According to a filing with the Hong Kong Stock Exchange, the firm had 1,731 outlets as of March 31 – around 100 in Hong Kong and Macau, and the balance mostly on the mainland. An investigation would mark the sector as the latest to come under scrutiny in China. Authorities are currently looking into companies supplying infant formula milk and pharmaceuticals. Shares of Hong Kong-based Chow Tai Fook and other jewellery stores named in the report, including Chow Sang Sang

International Holdings Ltd, fell on Friday following the report. People’s Daily, citing unidentified sources, said China’s National Development and Reform Commission was probing price manipulation by some jewellery shops in the commercial capital of Shanghai. In a statement, Chow Tai

Fook said it follows “its own gold pricing mechanism, and is not subject to the constraints or restrictions of any association or other jewellery retailers.” The online newspaper report, which was later reposted on a website controlled by the Ministry of Commerce, said several shops had admitted to authorities that they

colluded on prices. “It looks like the investigation is targeting the Shanghai Gold & Jewellery Trade Association and the Shanghai-based jewellery retailers,” said Larry Cho, a Hong Kong-based analyst at CIMB Securities. “Chow Tai Fook being a member of that trade union may inevitably be dragged into the probe.” A spokeswoman for Chow Sang Sang, which has a market value of just over HK$11.49 billion (US$1.5 billion), said it did not know why it had been named in the report. “We don’t understand why we got involved in the story,” spokeswoman Cathy Tam said. “We set the gold price every day based on the New York market close. The gold price is the same within the whole region of China and we don’t have district differences.” Chow Tai Fook has a market value of just under HK$94.8 billion. Its mainland China revenue reached HK$30.3 billion in the year ended March 31, representing more than half of its total business. Eighty percent of its China business was characterised as retail. Chow Tai Fook Enterprises Ltd, the company that controls the jewellery retailer, in 2009 invested more than HK$4 billion in the hotel and condominium portion of Casino L’Arc Macau – licensed by casino concessionaire SJM Holdings Ltd – on the Macau peninsula. Until May 31 this year, Mr Cheng was a non-executive director of SJM Holdings. In SJM’s interim 2012 report filed in April this year, Mr Cheng was listed as a 0.11 percent shareholder of the casino developer. M.G. with Reuters/Bloomberg News

July 22, 2013 April 19, 2013

Macau

CTM is not a charity, says chief exe Citic Telecom International Holdings Ltd completed its takeover of Companhia de Telecomunicações de Macau SARL (CTM) last month, paying US$1.16 billion (9.27 billion patacas) to buy out Cable & Wireless Communications Plc and Portugal Telecom SGPS SA. CTM chief executive Vandy Poon Fuk Hei told Business Daily in an interview that it was the right time for the deal. Citic Telecom said it would invest an average of 400 million patacas a year in CTM. Although CTM is trying to reduce its tariff, Mr Poon said it should not be regarded as a charity. He said the government should extend the company’s licence and lower taxes if it wished the tariff to be reduced. Luciana Leitão

leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

What benefits will come from Citic Telecom’s takeover? Citic Telecom has always been one of CTM’s major shareholders. Citic Group Corp has different telecommunications investments across China. Through Citic Telecom, they have also started to expand into the global arena. Because CTM has been one of the group’s major investments, expanding their stake here will create more synergies. The Citic group has operations everywhere, and I’m sure that CTM’s experience in telecommunications will bring some valuable input to the group. At the same time, Citic Group is one of the major state-owned enterprises, and, besides their financial strength, they’ve also pledged to invest more in Macau, showing they are here for the long term. It’s a good match. It happened at the right time. The acquisition happened at the same time that CTM lost the monopoly of fixed-line operations. The timing of the deal had nothing to do with that? Market liberalisation is not a new thing for CTM or for its shareholders. CTM worked and supported the government in successfully liberalising mobile telecommunications 12 years ago, ahead of the boom in the gaming industry. We saw no problem with the liberalisation of the Internet business. The Macau government extended our licence until 2021 for fixed lines. Liberalisation was part of the agreement that we pledged to support when we renewed our agreement in 2009. So, this was just a coincidence. The two previous shareholders and Citic Telecom are listed companies. Their prices actually went up at the same time. That means everyone got a good piece of the action. The Citic Telecom takeover was a fair deal for all shareholders. We are pleased that Citic Telecom has pledged to fully support CTM

to better serve Macau – so much so that we are planning to invest in a state-of-the-art data centre to improve the service here. Not only is Citic Group developing its business in Macau, but it is also eyeing opportunities on Hengqin Island. Through this deal, Citic Telecom is to invest 1.2 billion patacas in CTM every three years. What kind of developments can we expect? This 1.2 billion patacas investment, every three years, is actually a number for a highly complex investment plan of how much we need to spend in which areas and what kind of networks. The roughly 400 million patacas to 500 million patacas a year

will enable CTM to respond to the demands of a growing and prospering economy and, at the same time, to build a buffer so that Macau becomes one of the more advanced territories in terms of using technology for economic development. But if new opportunities and initiatives arise, the shareholders are willing to invest even more in CTM and Macau. Users frequently complain of slow broadband services and high prices. Will this cash injection improve the situation? I am as proud as sinful for how the current service of CTM is perceived. I believe and I will argue that CTM has been doing its

July April22, 19,2013 2013

Macau

ecutive job well. People who have the opportunity to travel to different places can see that our telecommunications service is not below the world standard. If people go to Europe, the prices of some of the major European Union countries are even heftier. But CTM needs to improve. In the past, CTM was able to do a better job, because we held the monopoly, so we were able to build our capability and capacity with a planned figure. The development was clearer to anticipate. But Macau is changing with its integration with China. With its hyper-growth, the overall Macau market size has grown, but not tremendously, like the gaming industry. We end up competing for resources with mighty operators in these other industries – hospitality, gaming and other industries are hungry for human resources. We have spent time training telecom experts, but the turnover rate is high and they end up in other industries. Once they’ve left, we have to start the process all over again. With the current unemployment rate, we face some difficulties in finding people. We have always applied market prices, which is why we still have enough workforce. But we are doing things in a different way to stabilise our workforce, reviewing our salaries more often. We have also re-established an encouraging and motivating engineering trainee programme.

If the government lowers the tax on revenues, we could pass those benefits to the customer

If CTM improves its services, will that be reflected in the rates it charges? CTM prices are not that high. Like I said earlier, the market size of Macau is quite small and, also, we pay royalty taxes on every sale, profit taxes. We are good taxpayers to the Macau government treasury. What we are trying to do is to agree on a solution with the government on what conditions are needed to enable us to lower prices. If the government lowers the tax on revenues, we could pass those benefits to the customer. At the same time, investing in a big network means we have to invest first and then hope really hard that our customers adhere to the service, so that we can have a return on the investment. But then we have a licence term with a deadline. If our licence could be longer, that would be better for business.

With Macau’s economic growth and also with the commitment of Citic Telecom, we actually started to review some of the pricing packages we have. This year we have lowered our IDD prices on 050, we have lowered charges on our international circuits this month, and we are further looking at reviewing other prices. But we will not become Tung Sin Tong[a local charity]. What we are aiming at is to make CTM a trusty and reliable service provider to Macau. But we also need to earn enough money, so we can continue to invest in new technologies. We’ve been reviewing Internet prices every year. I don’t rule out the possibility that we will continue to do that, but the Internet is about connecting to the world. The cost of connecting Macau to major hubs is higher, and also the market here is smaller. But we will continue to look for ways to improve our efficiency and to manage our costs better. Our prices now are only onefifth of when we launched our services. At the same time, we are introducing more sophisticated services for Internet users, with higher speeds, trying to balance that with our prices. One of your targets is to extend optical fibre to every household by 2015. Will it be possible within that timeframe? It is on track. In 2015, we’re talking about actually going into the home. We are now heavily promoting our fibre broadband services and those are not homepassing, those are into the home. We are currently almost 80 percent to-the-home, and we are on schedule for reaching every home by 2015. There has been talk also about 4G networks. Is there any date when it will be introduced to Macau? The sooner the better. While we are still working with the government on finalising the policy, I would say it’s not up to us. I am still not sure whether the government will need to go through processes like tendering, selecting new operators, or if the existing operators will be able to upgrade the network into 4G. Of course, for CTM, the best way to go is to allow all the existing operators to naturally evolve into the next generation, but it’s not my call. I would be disappointed if the government chooses to complicate things. My expectation is that if we can launch it by the end of this year or beginning of next year, it will be good news.

Not only is Citic Group developing its business in Macau, but it is also eyeing opportunities on Hengqin Island

CTM’s monopoly of fixed lines has expired, and you now have Companhia de Telecomunicações de MTEL Ltda as a competitor. How do you see the business moving forward? I don’t have any expectations. I will be treating MTEL the same way I treat the other mobile operators. The fact is that it is the government who issues licences, and the other operators have earned the right to be in the market. MTEL is looking to serve customers just as we do. So there will be no trick, no harmful act. What we have to do is to show that we can do better, showing to customers that we are offering a better-quality service.

The Citic Telecom takeover was a fair deal for all shareholders

Even though the Internet market was liberalised in 2001, there is still no other player in the market. MTEL has just applied for an Internet licence. Are you prepared for the competition? We have done an okay job, and it is a business opportunity. It’s not a charity. In the end, they want a share of the action. CTM created the Internet services from zero to 80 percent penetration. We have provided networks for enterprises that can travel fast in gigabyte data. There is a market potential for newcomers who can pledge that they can do a better job than CTM. But we will not be sidelined, because we are also expanding in that market. Why did it take so long for a second player to show interest in this market? My personal point of view is that the market size was not big enough, and Internet services require a huge investment with a long payback period. Now, maybe because they have secured the fixed-line licence, they might be in a better position. In 2010, CTM was doing tests on a service that included TV, Internet and telephone access, and was hoping to introduce it soon. Why hasn’t this been possible? Because we are a law-abiding company and nothing has changed on the regulatory front. Macau

Cable TV is still the exclusive licensee in the market and the current licence is not going to expire until mid-next year. We still anxiously, positively, but quietly, anticipate that when that changes, CTM will actively be seeking a licence. Since last year CTM has had a few blackouts. How have these impacted the company? The systems are getting more and more complicated. We have admitted that those blackouts involved some mishandling on our part. Of course, we did not want this to happen. We are so determined to prevent it from occurring again that we did a massive amount of work reviewing our procedures and processes in the finest detail. I’m not trying to blame it on external conditions – the pressure we have from the lack of resources or the changing dynamic of the workforce. But we are determined not to be a victim of it, which is why we have more stringent procedures now. What precautions have you taken? We have spent all the time in better managing our processes. In this field, I cannot guarantee that we will not fail again, but if it fails, what I want to be sure of is that it’s not a CTM mistake. When it fails, we have the knowledge to bring it back up, through our different layers of network and offering alternative services to our customers. That’s why in this one and a half years we have almost duplicated our core mobile network, and we’re still in the process of installing the home location register, which is the major core element, so that it does not fail. The system is now working at 200 percent, so when one goes down the other one will continue and vice-versa. We’re also revamping Wi-Fi in different places, and our Internet protocols. That’s why we are heavily investing in fibre, so we can fix the problem quicker.

Red alert The e-mail accounts of at least 34 subscribers of Companhia de Telecomunicações de Macau SARL (CTM) have been hacked, the company has confirmed. The accounts of some public bodies were among those suspected to have been hacked, the government said. CTM chief executive Vandy Poon Fuk Hei said his company’s systems were now on red alert. The company has hired a security company to help detect the weaknesses in its network, Mr Poon said. “It is an expert firm that does things like simulating hacking, trying to identify the weaknesses of any network,” he said. “The protection systems and mechanisms before the incident were as good as the major carriers have around the world.” Mr Poon said the subscribers hacked had not been fully exposed and that the network had not collapsed because the hacking had been detected in good time. He declined to give details because the police are still investigating. “We are now on full and high alert in our security. We have always been, but with this incident we have increased our level of awareness.”

10 10

July 22, 2013 April 19, 2013

Greater China Huawei denies spying claims of ex-CIA director Huawei Technologies Co, China’s largest maker of telecommunications equipment, denied that it poses a security threat after the former director of the U.S. Central Intelligence Agency said it spies for China. Huawei is a “proven and trusted” company, spokesman Scott Sykes said in an e-mailed statement Friday. Michael Hayden, the former head of the CIA and now a director at Motorola Solutions Inc, told the Australian Financial Review: “At a minimum, Huawei would have shared with the Chinese state intimate and extensive knowledge of the foreign telecommunications systems it is involved with”.

Beijing frees up lending rates in major reform Cheaper credit could support economic growth, after June ‘shadow banking’ turmoil

reduce the chances for deposit-rate liberalisation in the near term.” China is not yet ready for freeing up deposit rates, the “most risky” part of interest-rate liberalisation, the central bank said, adding that the nation lacks a deposit insurance system. The lending-rate change will probably weigh on shares of Chinese lenders this week, according to Macquarie Capital Securities Ltd. “Sentiment wise this is definitely bad for China banks, as many will comment that banks’ net interest margin will be under further pressure,” Victor Wang, a Hong Kong-based analyst at Macquarie, said in an e-mail.

‘Full Confidence’

This move will have ‘very limited impact’ on China’s credit squeeze, analysts say

hina eliminated the lower limit on lending rates offered by the nation’s financial institutions as economic growth slows and premier Li Keqiang expands the role of markets in the world’s second-biggest economy. The change, effective Saturday, removes a floor set at 30 percent below the current 6 percent benchmark, giving banks freedom

to set their own lending rates. The People’s Bank of China made the announcement on Friday. The shift follows renewed calls by the International Monetary Fund for China to boost financial sector reform to help contain risks. While the move temporarily jolted world stocks higher, the central bank acknowledged that it was a limited step and said that freeing up deposit

rates would be more important. “While deposit-rate liberalisation is still possible, the fact that a decision was made to just remove the lending-rate floor suggests that more aggressive liberalisation proposals were defeated, or at least delayed,” said Ken Peng, senior economist at BNP Paribas SA in Beijing. “This decision shows that some reform is being done, but may actually

Chinese banks’ valuations are already close to their lowest on record as a cash crunch in the interbank market exacerbated investors’ concerns that earnings growth will stall and defaults may surge as the economy slows. China’s economy grew 7.5 percent in the second quarter from a year earlier, down from 7.7 percent in the first three months, and is at risk of the weakest expansion in 23 years. The government has “full confidence” it will reach its 2013 growth target of 7.5 percent, Zhu Guangyao, a vice finance minister, said Saturday. The central bank’s action was “just one element” of a master plan of the new Chinese leadership encompassing monetary, market and fiscal policies, Mr Zhu said in an interview at the G-20 meeting in Moscow. “This is not the same as a rate cut and the impact will be very limited,” said Helen Qiao, chief Greater China economist at Morgan Stanley in Hong Kong. “Liquidity conditions are very tight – we weren’t seeing companies getting funding at anything close to the lower band before this change.” Bloomberg News

China imposes duties on US, S.Korea solar material No decision on tariffs on European Union exports has been made

hina, the world’s biggest solar-module maker, plans to impose tariffs of as much as 57 percent on polysilicon shipped from the United States and South Korea, saying it wants to stop the product from being sold below cost. The U.S. units of Renewable Energy Corp ASA are among companies to receive the highest rate of tariff and South Korea’s OCI Co will have the lowest at 2.4 percent, according to a statement on the Chinese commerce ministry website. Importers of the raw material to make solar panels must pay the duties beginning Wednesday. The decision marks the preliminary ruling of a probe opened last year.

The investigation is a response to a U.S. decision in 2012 to impose tariffs of as much as 250 percent on Chinese solar panels after a plunge in prices led to the bankruptcy of American manufacturers. The Chinese ruling is “positive” for domestic polysilicon manufacturers such as GCL-Poly Energy Holdings Ltd. because it may reduce supplies from abroad, boosting prices for the raw material in China, Timothy Lam, a Hong Kong-based analyst with Citigroup Inc. said in a note to investors. It may also spur further talks between China and the 28-nation European Union to iron out a separate trade dispute over solar pricing, the analyst said.

China’s polysilicon industry suffered “material damage” because of the dumping of polysilicon, according to the ministry. The average price of modules fell 20 percent last year, and polysilicon was down 40 percent. The United States said it was very disappointed with the Chinese government’s decision. “As we have noted, we are in discussions with China related to global issues in solar technology, including panels and polysilicon, and are dismayed that China would take this step in the midst of those conversations,” a spokeswoman for the U.S. Trade Representative’s office said. Bloomberg News / Reuters

Polysilicon is a key material for China’s solar power industry

11 11

July April22, 19,2013 2013

Asia “This is a rare occasion for Japan to be able to proudly talk about its economy after decades of stagnation at an international meeting,” said Naoki Iizuka, an economist at Citigroup Inc in Tokyo. Japanese officials “probably want to help Abe’s election by emphasizing their success in reviving the economy.” The G-20 said in a communique that “there are signs of strengthening activity in the U.S. and Japan” while the global economy remains too weak.

Improved sentiment

Kuroda confident in easing drive before Japan election Japanese voters went to the polls in an election expected to boost economic reforms Toru Fujioka

ank of Japan governor Haruhiko Kuroda signaled confidence among Group of 20 finance chiefs in the monetary easing he championed as Japan prepares for a national election yesterday. “Understanding is deepening for the BOJ’s qualitative and quantitative easing,” Mr Kuroda

said in Moscow after a two-day meeting of G-20 finance ministers and central bankers. “While it takes time to achieve the 2 percent inflation target, monetary easing is steadily achieving” its goal of boosting the economy, he added. Japan is ready to help offset weakness in the global economy,

Finance minister Taro Aso said Saturday as the G-20 discussed the potential effects faced by emerging economies if the U.S. Federal Reserve scales back its stimulus. The comments from Japanese officials also signal support for prime minister Shinzo Abe, forecast to win yesterday’s upper house election.

The stimulus program dubbed Abenomics has buoyed the economy since Mr Abe took office in December by weakening the yen, raising corporate profits and improving sentiment with monetary stimulus and 10.3 trillion yen (US$102 billion) spending package. The International Monetary Fund this month raised its 2013 economic forecast for Japan to 2 percent from 1.6 percent in April, while reducing global-growth projections. Mr Abe is set to win control of both houses of parliament at the election, the Nikkei newspaper predicted. A victory would give his Liberal Democratic Party-led coalition the strongest grip on power since 2007. A focal point of the post-election would be whether Mr Abe is able to raise a sales tax in April 2014. Mr Aso said he wants to increase the levy as planned, while Koichi Hamada, Mr Abe’s adviser for reflationary policy, this week said the increase threatens to roil the economy amid a recovery. Mr Kuroda renewed a pledge to continue the central bank’s “powerful easing” to achieve the 2 percent inflation target while he said it’s natural for the Fed to start to slow asset purchases amid a solid recovery. The governor has held a steady course since the central bank doubled its monthly bond purchases to more than 7 trillion yen in April after Mr Abe urged it to take steps to beat 15 years of deflation. Bloomberg News

No shift in India’s stance after surprise rate move Government says it is confident in 6-percent growth for this year Olga Tanas

he Reserve Bank of India’s move to raise two of its interest rates while keeping the main repurchase rate unchanged does not signal a shift toward a tightening bias, Finance minister Palaniappan Chidambaram said. “What I think the central bank did a few days ago is not to be understood as affecting the policy rate one way or another,” Mr Chidambaram said in an interview in Moscow, where he’s attending a meeting of Group of 20 finance ministers and central bankers. “That decision will be taken separately.” India’s government is trying to steady the nation’s currency, which has weakened about 7 percent versus the dollar in 2013, as the possibility of reduced U.S. monetary stimulus undercut demand for emerging-

market assets. Central bank governor Duvvuri Subbarao increased the bank rate and the marginal standing facility rate on July 15 and capped daily fund injections via repo contracts. India’s government has changed policies since September to fight the weakest economic growth in a decade and avert a credit-rating downgrade before a general election due by May 2014. The rupee sank to a record low 61.2125 per dollar on July 8 and was the world’s worst performing currency in June. The central bank’s move to increase two of its rates was met with warnings by some economists that it will result in tightened liquidity conditions at a time of

lackluster growth. The central bank’s next policy meeting is on July 30.

‘Good chance’ “We think there’s a good chance we can grow close to 6 percent,” Mr Chidambaram said. “Basically next only to China, India is the largest growing economy.” Asia’s third-biggest economy expanded 5 percent last fiscal year, the weakest pace since 2003, and below the 10-year average of about 8 percent. The economy will probably grow 6.1 percent to 6.7 percent in the year through March 2014, according to a survey by India’s Finance Ministry in February.

The central bank left the monetary-policy benchmark, the repurchase rate, unchanged in June after the rupee’s drop threatened to make imports costlier. Consumer-price inflation was 9.87 percent last month, while wholesale inflation accelerated to a three- month high of 4.86 percent. The government is trying to combat the slowdown with reforms that included loosening foreign investment rules in the aviation and retail businesses and easing caps and levies on purchases of local bonds by investors abroad. Restrictions in other industries are also set to be eased. “We expect that inflows will resume,” Mr Chidambaram said. Bloomberg News

12 12

July 22, 2013 April 19, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

34.55

1.023392

26578287

ALUMINUM CORP-H

2.48

-0.8

6254000

BANK OF CHINA-H

3.14

-0.9463722

236470942

BANK OF COMMUN-H

4.94

-0.8032129

22367713

BANK EAST ASIA

27.7

-0.3597122

1108500

10.76

-1.284404

11665835

24.1

-0.2070393

13825808

CATHAY PAC AIR

13.24

-0.3012048

CHEUNG KONG

AIA GROUP LTD

BELLE INTERNATIO BOC HONG KONG HO

PRICE

DAY %

VOLUME

POWER ASSETS HOL

68.7

-0.2178649

1219751

7987861

SANDS CHINA LTD

40.4

1.507538

8065627

-0.1569859

1588129

SINO LAND CO

10.88

-0.1834862

4772853

13.86

0.2894356

38178431

SUN HUNG KAI PRO

102.1

-0.1955034

2757423

10.4

-2.621723

3870457

SWIRE PACIFIC-A

92.5

-0.3769521

1203139

ESPRIT HLDGS

12.02

0.1666667

3001349

TENCENT HOLDINGS

333.8

1.830384

5014014

HANG LUNG PROPER

24.65

-1.202405

4987943

TINGYI HLDG CO

18.92

-0.9424084

3667098

2561715

HANG SENG BK

115.8

-0.1724138

762486

WANT WANT CHINA

10.16

-3.238095

16651106

HENDERSON LAND D

48.85

-0.9127789

3060786

WHARF HLDG

64.15

-1.079414

2009906

80.6

-1.707317

1597482

107.1

1757896

CHINA COAL ENE-H

4.17

0.4819277

35449181

CHINA CONST BA-H

5.49

-0.5434783

195023330

NAME

PRICE

DAY %

VOLUME

CHINA UNICOM HON

10.8

-1.098901

15900938

CITIC PACIFIC

8.67

0.4634994

CLP HLDGS LTD

63.6

CNOOC LTD COSCO PAC LTD

HENGAN INTL HONG KG CHINA GS

19.04

-1.142264

5912463

HONG KONG EXCHNG

120.5

-0.08291874

1919950

86.7

1.166861

18925444

84.55

1.075912

5612306

4.92

187953153

CHINA LIFE INS-H

18.36

-0.4338395

23467411

CHINA MERCHANT

23.5

0.8583691

2066330

HSBC HLDGS PLC HUTCHISON WHAMPO

CHINA MOBILE CHINA OVERSEAS CHINA PETROLEU-H CHINA RES ENTERP

NAME

MOVERS

81.7

-0.1222494

8974555

-2.122642

25386192

IND & COMM BK-H

5.58

62625258

LI & FUNG LTD

10.74

-2.363636

25422878

HIGH

21453.46

MTR CORP

28.85

2050271

LOW

21248.31

52W (H) 23944.74

23.2

-0.8547009

4130637

19.72

-2.617284

19864336

NEW WORLD DEV

11.08

-0.8944544

6615378

CHINA RES POWER

16.86

-4.530011

52609271

PETROCHINA CO-H

9.24

52156417

CHINA SHENHUA-H

23.05

3.131991

40799395

PING AN INSURA-H

49.75

-0.9950249

14986378

1 21460

INDEX 21362.42

20.75

CHINA RES LAND

(L) 18710.58984

21240

17-July

19-July

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.08

-1.282051

134690816

AIR CHINA LTD-H

5.32

0.5671078

11157320

ALUMINUM CORP-H

2.48

-0.8

6254000

ANHUI CONCH-H

22.55

-2.169197

16281534

BANK OF CHINA-H

3.14

-0.9463722

236470942

BANK OF COMMUN-H

4.94

-0.8032129

22367713

BYD CO LTD-H

31.1

-2.354788

2874934

CHINA CITIC BK-H

3.62

-0.5494505

CHINA COAL ENE-H

4.17

CHINA COM CONS-H

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

CHINA PACIFIC-H

25.4

-1.359223

10199268

YANZHOU COAL-H

5.62

-0.5309735

26017040

CHINA PETROLEU-H

5.58

62625258

ZIJIN MINING-H

1.64

5.128205

55106219

CHINA RAIL CN-H

7.4

0.6802721

19875061

ZOOMLION HEAVY-H

5.13

-1.156069

7033592

CHINA RAIL GR-H

3.91

1.822917

31146636

ZTE CORP-H

11.58

CHINA SHENHUA-H

23.05

3.131991

40799395

CHINA TELECOM-H

3.68

-0.8086253

28588447

DONGFENG MOTOR-H

9.82

2.61233

17347851

32107555

GUANGZHOU AUTO-H

7.34

-1.344086

4232453

0.4819277

35449181

HUANENG POWER-H

8.2

-0.7263923

23088182

5.73

0.7029877

22753816

IND & COMM BK-H

4.92

187953153

CHINA CONST BA-H

5.49

-0.5434783

195023330

JIANGXI COPPER-H

12.7

-0.3139717

6090835

CHINA COSCO HO-H

3.32

-1.190476

3735577

PETROCHINA CO-H

9.24

52156417

18.36

-0.4338395

23467411

PICC PROPERTY &

8.73

-0.4561003

8130018

8.2

-0.1218027

13626520

PING AN INSURA-H

49.75

-0.9950249

14986378

CHINA MERCH BK-H

13.06

-1.060606

13032936

SHANDONG WEIG-H

7.78

0.3870968

6446000

CHINA MINSHENG-H

7.84

-4.039168

96073637

SINOPHARM-H

18.94

-1.661475

3796000

CHINA NATL BDG-H

6.82

-0.1464129

31474000

TSINGTAO BREW-H

57.45

-1.457976

1342250

CHINA OILFIELD-H

16.1

-0.2478315

6485245

WEICHAI POWER-H

CHINA LIFE INS-H CHINA LONGYUAN-H

NAME

23.55

-0.8421053

NAME

MOVERS

3 9560

INDEX 9448.51 HIGH

9552.66

LOW

9383.68

52W (H) 12354.22 9380

(L) 8640.85 17-July

1675335

19-July

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

8.6

-3.479237

47590742

QINGHAI SALT-A

16.61

-3.317811

9289601

CITIC SECURITI-A

10.12

-2.222222

71525570

RISESUN REAL -A

13.87

-7.656458

18715414

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.52

80342455

CHONGQING CHAN-A

AIR CHINA LTD-A

3.86

-1.78117

14691975

NAME

VOLUME

3.1

-2.208202

11770732

CSR CORP LTD -A

3.52

-3.561644

72688053

SAIC MOTOR-A

12.21

-3.325416

28831636

ANHUI CONCH-A

13.81

-3.291317

24890560

DAQIN RAILWAY -A

5.72

-1.208981

26751289

SANAN OPTOELEC-A

22.12

5.383516

38287313

AVIC AIRCRAFT-A

9.64

-2.626263

18099107

DATANG INTL PO-A

5.23

-1.506591

9676168

SANY HEAVY INDUS

6.84

-3.116147

25638176

BANK OF BEIJIN-A

7.91

-1.494396

28933617

EVERBRIG SEC -A

10.75

-3.240324

18886700

SHANDONG DONG-A

39.86

-5.275665

14907990

BANK OF CHINA-A

2.64

-0.7518797

26443100

GD MIDEA HOLDI-A

12.33

-0.8842444

19385915

SHANDONG GOLD-MI

21.01

-1.592506

14261226

BANK OF COMMUN-A

3.84

-1.790281

79325793

GD POWER DEVEL-A

2.26

-0.877193

40697738

SHANG PHARM -A

10.96

-2.317291

7967821

-1.477833

14348073

GEMDALE CORP-A

6.56

-5.065123

92890143

SHANG PUDONG-A

8.03

-2.073171

76242268

57.55

0.104366

3393665

GF SECURITIES-A

11.53

-4.156276

38823632

SHANGHAI ELECT-A

3.25

-1.812689

3744474

GREE ELECTRIC

23.22

-5.301794

27991891

SHENZEN OVERSE-A

5.4

-2.877698

54034972

54.85

-4.125153

1241739

5.9

10.07463

304362637 4883731

ALUMINUM CORP-A

BAOSHAN IRON & S BEIJING SL -A BEIJING TONGRE-A

22.5

-1.660839

7270985

BYD CO LTD -A

35.31

0.2555366

12242303

GUANGHUI ENERG-A

9.04

-9.960159

120088145

SICHUAN KELUN-A

CHINA AVIC ELE-A

22.53

-5.574183

5444716

HAITONG SECURI-A

10.09

-2.793834

125093734

SUNING COMMERC-A

CHINA CITIC BK-A

3.56

-1.928375

19615458

HANGZHOU HIKVI-A

20.29

16864169

TASLY PHARMAC-A

46.45

-2.333894

40.1

-2.075702

3445209

TSINGTAO BREW-A

38.71

-1.149132

1444595

-4.63065

104784847

WANHUA CHEMIC-A

15.86

-4.227053

10020727

CHINA CNR CORP-A

4.04

-1.703163

42543509

HENAN SHUAN-A

CHINA COAL ENE-A

4.85

-0.8179959

11777674

HONG YUAN SEC-A

8.65

CHINA CONST BA-A

4.36

0.4608295

42906357

HUATAI SECURIT-A

8.26

-3.61727

30486155

WEICHAI POWER-A

16.57

-3.269119

10099124

CHINA COSCO HO-A

2.82

-1.398601

8974205

HUAXIA BANK CO

9.03

-1.526718

23540852

WULIANGYE YIBIN

19.3

-3.015075

25736999

CHINA EAST AIR-A

2.4

-0.4149378

13279536

IND & COMM BK-A

3.95

0.5089059

113155438

YANZHOU COAL-A

9.29

-4.522097

9551399

CHINA EVERBRIG-A

2.73

-2.150538

59383427

INDUSTRIAL BAN-A

9.37

-3.302374

114368920

YUNNAN BAIYAO-A

99.5

-0.5795364

1122169

CHINA INTERNAT-A

29.88

-1.51615

3372549

INNER MONG BAO-A

22.06

-6.841216

45473979

ZHONGJIN GOLD

9.02

-1.204819

13345971

ZIJIN MINING-A

2.41

-2.03252

42669015

ZOOMLION HEAVY-A

5.16

-2.824859

47793838

13.69

50775008

9.85

-1.401401

7480230

INNER MONG YIL-A

34.58

-1.284613

6858851

CHINA LIFE INS-A

13.04

-1.954887

13008310

INNER MONGOLIA-A

3.81

-3.544304

45575680

CHINA MERCH BK-A

10.92

-2.325581

55832848

JIANGSU HENGRU-A

32.54

-1.899307

7863548

CHINA MERCHANT-A

10.72

-2.986425

22190884

JIANGSU YANGHE-A

49.9

-3.313311

4708787

CHINA MERCHANT-A

25.13

-6.753247

25780270

JIANGXI COPPER-A

15.68

-2.850062

8685629

CHINA MINSHENG-A

8.41

-3.665521

182287874

KANGMEI PHARMA-A

19.87

-3.403014

20916648

CHINA NATIONAL-A

10.06

-2.330097

41181922

KWEICHOW MOUTA-A

CHINA INTL MAR-A

176.01

-4.895445

7331922

22.94

-2.961083

11458394

CHINA OILFIELD-A

14.61

-0.814664

4712203

LUZHOU LAOJIAO-A

CHINA PACIFIC-A

16.36

-1.028433

15684765

METALLURGICAL-A

1.58

-1.863354

28827762 24863552

CHINA PETROLEU-A

4.45

1.136364

75464903

NARI TECHNOLOG-A

15.28

0.3282994

CHINA RAILWAY-A

4.54

-0.4385965

22347794

NINGBO PORT CO-A

2.02

-1.463415

9261553

25165003

OFFSHORE OIL-A

7.14

-1.244813

39786160

8.02

1.647655

32408155

9.43

-3.971487

82736795

CHINA RAILWAY-A CHINA SHENHUA-A CHINA STATE -A

2.5

-0.7936508

15.92

-1.118012

10682739

PETROCHINA CO-A

3.22

-1.829268

93124488

PING AN BANK-A

CHINA UNITED-A

3.07

88686570

PING AN INSURA-A

33.39

-0.4175365

40416334

CHINA VANKE CO-A

9.56

-5.533597

138749304

POLY REAL ESTA-A

10.18

-5.565863

89574833

CHINA YANGTZE-A

6.95

-1.836158

24961467

QINGDAO HAIER-A

11.36

-2.068966

7832119

PRICE DAY %

Volume

NAME

ZTE CORP-A

MOVERS

261

10 2330

INDEX 2190.478 HIGH

2322.14

LOW

2190.26

52W (H) 2791.303 (L) 2023.171

2180

17-July

19-July

FTSE Taiwan 50 Index NAME

PRICE DAY %

Volume

22.05

-2

10135090

FORMOSA PLASTIC

74.3 -0.8010681

6862691

TAIWAN MOBILE CO

ADVANCED SEMICON

24.5

-2

28812176

FOXCONN TECHNOLO

74.1

-1.331558

3808202

TPK HOLDING CO L

382

-2.55102

8117231

ASIA CEMENT CORP

37.1

-1.721854

4777349

FUBON FINANCIAL

40.35 -0.4932182

35795350

TSMC

98.2

-6.919431

117739486

ASUSTEK COMPUTER

268.5

1.704545

6019635

HON HAI PRECISIO

77.4 -0.7692308

32966578

UNI-PRESIDENT

AU OPTRONICS COR

10.45

0.4807692

83959266

HOTAI MOTOR CO

399

0.7575758

407200

135

-6.896552

20839245

HTC CORP

168.5

-6.906077

19265961

42.75

-2.285714

33005402

HUA NAN FINANCIA

17.35 -0.8571429

7065777

CHANG HWA BANK

17.3 -0.5747126

7461874

LARGAN PRECISION

867

-6.974249

4001680

YULON MOTOR CO

CHENG SHIN RUBBE

96.7

0.1035197

5105256

LITE-ON TECHNOLO

51.2

-1.538462

6825453

CHIMEI INNOLUX C

ACER INC

CATCHER TECH CATHAY FINANCIAL

13.35

-4.301075

143654871

MEDIATEK INC

322.5

-2.567976

11151439

CHINA DEVELOPMEN

8.59

-1.490826

74567746

MEGA FINANCIAL H

24.95

-0.2

20865675

CHINA STEEL CORP

25.7 -0.9633911

20498187

NAN YA PLASTICS

12898383

CHINATRUST FINAN

19.1

0.5263158

49806398

PRESIDENT CHAIN

217.5

1.162791

1491634

CHUNGHWA TELECOM

95.5 -0.2089864

12480383

QUANTA COMPUTER

67.7

-1.167883

9827884

COMPAL ELECTRON

18.9

-1.04712

16440743

SILICONWARE PREC

32.2

-2.424242

13549279

DELTA ELECT INC

147

4056643

SINOPAC FINANCIA

14.8

-1.66113

14960809

FAR EASTERN NEW

33.5

0.4497751

5802377

SYNNEX TECH INTL

39.35

-1.992528

6542396

FAR EASTONE TELE

79.5

-2.930403

4150679

TAIWAN CEMENT

38.6

0.6518905

8816815

17.15 -0.2906977

11729155

FIRST FINANCIAL

18.35 -0.5420054

13489774

FORMOSA CHEM & F

78.3 -0.8860759

6905129

TAIWAN FERTILIZE

FORMOSA PETROCHE

81.2

1586682

TAIWAN GLASS IND

0.1233046

TAIWAN COOPERATI

72.9

-0.951087

2825490

28.15 -0.7054674

1114575

NAME

PRICE DAY %

Volume

110.5 -0.4504505

4182013

65.7 -0.1519757

UNITED MICROELEC

11925037

12.75

-4.494382

171041937

WISTRON CORP

27.6

-2.473498

23890646

YUANTA FINANCIAL

15.9

-1.547988

18241168

49.65 -0.6006006

1985368

MOVERS

2 5710

INDEX 5503.23 HIGH

5700.86

LOW

5493.64

52W (H) 5896.71 5490

(L) 4719.96 17-July

19-July

13 13

July April22, 19,2013 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 62.5

39.6 39.4

21.9 21.8

62.0

21.7

39.2

Max 39.5

average 39.295

Min 38.85

21.5

38.8

Last 39.1

Max 62.5

average 61.877

Min 61

Last 61.5

40.5

40.4

40.3

Max 40.45

average 40.345

Min 40.2

40.2

Last 40.4

Max 19.04

average 18.944

Commodities PRICE

DAY %

YTD %

(H) 52W

107.77

-0.249907442

14.94240614

108.4300003

86.29000092

BRENT CRUDE FUTR Sep13

108.53

-0.156393744

2.126658511

114.3699951

96.65000153

GASOLINE RBOB FUT Aug13

312.09

0.356936137

12.18994895

316.3199902

262.5799894

GAS OIL FUT (ICE) Sep13

927.75

-0.080775444

2.203249793

980

832.5

3.794

-0.472193075

5.682451253

4.525000095

3.354000092

310.57

0.16125391

3.623502719

320.449996

273.759985

NY Harb ULSD Fut Aug13 Gold Spot $/Oz

1288.07

0.5362

-22.6133

1796.08

1180.57

Silver Spot $/Oz

19.3898

-0.3239

-35.6035

35.365

18.2208

Platinum Spot $/Oz

1419.75

0.4116

-6.4569

1742.8

1294.18

Palladium Spot $/Oz

744.1

1.2932

6.3517

786.5

553.75

LME ALUMINUM 3MO ($)

1805

0.083171611

-12.92812349

2200.199951

1758

LME COPPER 3MO ($)

6905

0.217706821

-12.93657799

8422

6602

LME ZINC

1857

0.161812298

-10.72115385

2230

1779

14000

0.214745884

-17.93669402

18920

13205 14.60000038

3MO ($)

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

Last 18.86

(L) 52W

WTI CRUDE FUTURE Aug13

NATURAL GAS FUTR Aug13

METALS

Min 18.78

Dec13

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

Max 21.85

average 21.668

Min 21.4

Last 21.45

21.20

19.0

20.95

18.9

20.70

18.8

20.45

18.7

ASIA PACIFIC

CROSSES

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

0.552306693

0.454397923

16.47500038

497.25

-0.698951573

-17.09045436

665

489.5

664.5

0.605601817

-17.65799257

905.75

652.25

Max 21

average 20.804

Min 20.3

Last 21

20.20

1266.25

0.039502271

-2.801765496

1409.75

1186.5

129.2

1.293610349

-15.25090194

202.0500031

117.0999985

NAME

15.92999935

ARISTOCRAT LEISU

74.34999847

CROWN LTD

84.69

0.185414091 -0.188568061

-19.19242273 7.556515113

22.8599987 89.55999756

World Stock Markets - Indices

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9178 1.5241 0.9426 1.3126 100.31 7.9903 7.7576 6.1385 59.7175 31.08 1.2654 29.959 43.331 10129 92.065 1.23715 0.86124 8.0603 10.4904 131.67 1.03

-0.0218 0.1446 0.1379 0.1985 -0.2293 0.0038 0.0026 0.0407 -0.0712 0.0322 0.0474 0.0401 0.0854 -0.6812 -0.202 -0.0533 -0.0592 -0.0918 -0.203 -0.4253 0

-11.5629 -5.7802 -2.8856 -0.4852 -14.1661 -0.0889 -0.0902 1.5004 -7.9081 -1.6088 -3.4772 -3.0909 -5.368 -3.3172 -2.974 -2.3983 -5.3202 1.9503 0.3813 -13.7465 -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 10205 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 9448 79.408 1.20066 0.77553 7.7018 9.6245 94.12 1.0289

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.42

0.6833713

40.31746

4.49

2.29

VOLUME CRNCY 3757838

12.77

-0.234375

19.68135

13.75

8.28

1521223

AMAX HOLDINGS LT

1.06

0.952381

-24.28571

1.72

0.75

359651

BOC HONG KONG HO

24.1

-0.2070393

22.85

13825808

CENTURY LEGEND

0.315

18.86793

0.42

0.22

5.73

0.7029877

-4.340564

6.74

2.95

60000

CHINA OVERSEAS

20.75

-2.122642

-10.17316

25.6

16.761

25386192

CHINESE ESTATES

13.14

-3.947368

8.331658

14.12

8.253

2500

CHOW TAI FOOK JE

9.48

-1.659751

-23.79421

13.4

7.44

22570235

EMPEROR ENTERTAI

2.63

1.544402

39.15344

3.07

1.34

590000

FUTURE BRIGHT

2.09

72.43853

2.76

0.964

1586400

CHEUK NANG HLDGS

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15548.54

0.504314

18.65365

15589.4

12471.49

NASDAQ COMPOSITE INDEX

3611.277

0.03537396

19.59797

3624.538

2810.8

39.1

0.3851091

28.83031

44.95

16.98

9267594

FTSE 100 INDEX

6603.6

-0.4636468

11.96698

6875.62

5478.02

HANG SENG BK

115.8

-0.1724138

-2.443131

132.8

104.2

762486

DAX INDEX

8295.53

-0.4984953

8.974056

8557.86

6324.53

HOPEWELL HLDGS

24.75

-0.2016129

-25.56391

35.3

20.727

848500

HSBC HLDGS PLC

86.7

1.166861

6.642062

90.7

61.1

18925444

NIKKEI 225

14589.91

-1.476112

40.35265

15942.6

8328.019531

HANG SENG INDEX

21362.42

0.0805801

-5.713486

23944.74

18710.58984

CSI 300 INDEX

2190.478

-2.44285

-13.17797

2791.303

2023.171

TAIWAN TAIEX INDEX

8062.03

-1.621134

4.708485

8439.15

KOSPI INDEX

1871.41

-0.2170111

-6.29128

S&P/ASX 200 INDEX

4972.093

-0.4271619

4721.139

FTSE Bursa Malaysia KLCI

NZX ALL INDEX

PHILIPPINES ALL SHARE IX

JAKARTA COMPOSITE INDEX

21.4

19.1

COUNTRY MAJOR

15.475

16.21

COTTON NO.2 FUTR Dec13

NAME

61.0

Currency Exchange Rates

NAME ENERGY

21.6

61.5

39.0

GALAXY ENTERTAIN

HUTCHISON TELE H

4.44

1.834862

24.7191

4.66

2.98

1106000

LUK FOOK HLDGS I

21.1

-2.764977

-13.52459

30.05

16.28

3057800

MELCO INTL DEVEL

15.04

-0.1328021

66.92563

18.18

5.12

2502497

6922.73

MGM CHINA HOLDIN

21.45

-1.830664

61.54202

9.509

1254600

2042.48

1758.99

MIDLAND HOLDINGS

3.04

-0.3278689

-17.83784

2.68

798000

6.950871

5249.6

4084.4

NEPTUNE GROUP

0.167

-1.183432

9.868425

0.23

0.131

3849000

0.01491388

9.369504

5251.296

3964.808

NEW WORLD DEV

11.08

-0.8944544

-7.820303

15.12

9.38

6615378

1799.52

0.4454268

6.546675

1826.22

1590.67

SANDS CHINA LTD

40.4

1.507538

18.99852

43.7

20.65

8065627

SHUN HO RESOURCE

1.46

4.285716

1.67

1.03

970.993

-0.5324778

10.08329

998.487

767.748

SHUN TAK HOLDING

3.49

-1.133144

-16.70645

4.65

2.62

3480000

4032.08

-0.4753983

9.005188

4571.4

3410.76

SJM HOLDINGS LTD

18.86

1.835853

6.267544

22.382

12.995

10556500

SMARTONE TELECOM

12.74

0.7911392

-9.517045

17.38

12.28

401000

4.738155

0.2386598

26.5

14.62

5531567

ASIA ENTERTAINME

4.18

0.2398082

48.50696

4.7647

2.2076

126155

BALLY TECHNOLOGI

70.2

4.573216

57.01186

70.2

41.74

1154622

HSBC Dragon 300 Index Singapor

612.8

-0.03

-1.33

STOCK EXCH OF THAI INDEX

1482.9

-0.2884635

6.535527

1649.77

1172.92

HO CHI MINH STOCK INDEX

503.76

1.392803

21.76057

533.15

372.39

Laos Composite Index

1273.74

0.5629199

4.854414

1455.82

996.61

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

WYNN MACAU LTD

BOC HONG KONG HO

3.18

3.583064

3.6

2.99

1000

GALAXY ENTERTAIN

5.11

1.792829

28.71536

5.77

2.25

29019 10562522

INTL GAME TECH

20.17

5.934874

42.34298

20.25

10.92

JONES LANG LASAL

95.43

0.4632067

13.68835

101.46

61.39

132995

LAS VEGAS SANDS

56.17

2.294664

21.68544

60.54

32.6127

4224496

MELCO CROWN-ADR

24.24

2.321655

43.94299

25.2

9.13

2870845

MGM CHINA HOLDIN

2.55

37.83784

2.71

1.36

2700

MGM RESORTS INTE

16.18

3.123008

39.00343

16.25

8.83

9544136

SHFL ENTERTAINME

22.75

56.89655

22.88

12.35

5727947

SJM HOLDINGS LTD

2.43

1.25

6.690503

2.9481

1.7255

100

WYNN RESORTS LTD

133.1

1.209034

18.32163

144.99

84.4902

953770

AUD HKD

USD

14 14

July 22, 2013 April 19, 2013

Opinion

How many European recessions? Jeffrey Frankel

Professor of Capital Formation and Growth at Harvard University

he release of revised GDP data by the United Kingdom’s Office for National Statistics in late June seemed like an occasion for cheer, because growth had not quite been negative for two consecutive quarters in the winter of 201112, as previously thought. The point, as it was reported, is that a second U.K. recession following the global financial crisis in 2008 (a “double dip”) had now been erased from the history books, and that the Conservative government would take some satisfaction from this fact. But it should not. The right question is not whether there have been double (or triple) dips; the question is whether there has been one big recession all along. As the British know all too well, their economy since the low point of mid-2009 has not yet climbed even halfway out of the post-crisis hole: GDP is still almost 4 percent below its previous peak. If European countries used similar criteria to those used in the United States

for determining economic cycles, the Great Recession in Britain would quite possibly not have been declared over in the first place. Recent reports that Ireland entered a new recession in early 2013 would also read differently if American criteria were applied. Irish GDP since 2009 has not yet recovered more than half of the ground lost between the peak of late-2007 and the bottom two years later. Following U.S. methods, Ireland would not be judged to have escaped the initial recession. As it is, one minirecovery after another has been heralded, only to give way to “double dips.” Similarly, it was recently reported that Finland had entered its third recession since the global financial crisis. But the second one would be better described as a continuation of the first. Italy, judged according to U.S. standards, has been mired in a five-year recession: the recovery in 2010 was so tepid that by 2011, before a new downturn set in, the economy had barely

recovered one-third of the output lost after the recession began. And the new downturn has been severe: Italy’s GDP is now about 8 percent below its 2008 level.

Real-world impact These measurement issues may sound like minor technical details; but they can have significant realworld implications. So, what are the differences between European and U.S. criteria for judging recessions? Economists generally define a recession as a period of declining economic activity. European countries, like most, use a simple rule of thumb: a recession is declared following two consecutive quarters of falling GDP. In the U.S., the arbiter of when recessions begin and end is the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER). Unlike European countries, the Committee uses no quantifiable rule in determining the U.S. economy’s peaks and troughs. It looks beyond

the most recently reported GDP numbers to include employment and a variety of other indicators, in part because output measures are often subject to errors and revisions. Furthermore, the Committee sees nothing special in the two-quarter rule of thumb. For example, it generally would say that a recession had occurred if GDP had fallen very sharply in two quarters, even if they were separated by one quarter of weak growth. Similarly, if a trough were subsequently followed by several quarters of positive growth, the Committee would not necessarily announce that the recession had ended; it would wait until the economy had recovered sufficiently that a hypothetical future downturn would count as a new recession, not a continuation of the first one. Fortunately, the U.S. economy has recorded positive growth for 15 consecutive quarters, so recession-dating is not a salient issue currently. But things are not always so quiet. For example, according to revised data, the U.S. economy contracted three quarters in a row in 2001. At the time, the NBER Committee declared that there had been a recession in 2001 (based on employment and various other indicators), even though the initial GDP data did not show two consecutive quarters of declining output, let alone three. The Committee has never yet found it

The right question is not whether there have been double (or triple) dips; the question is whether there has been one big recession all along

necessary to revise the date of an economic turning point, let alone erase a recession. The NBER is not the only institution that looks beyond a two-quarter rule and undigested GDP data. An analogous Euro Area Business Cycle Dating Committee was created ten years ago by the Centre for Economic Policy Research in London. The CEPR Committee declared that the Great Recession ended in the euro zone after the second quarter of 2009, the same time as in the U.S. It declared that a second recession started in the latter part of 2011 – and continues to this day. These were probably the right judgments: growth in the quarters between the two slumps was sufficiently strong in countries like Germany that economic activity on average across the euro zone had by mid-2011 recovered about two-thirds of the ground lost in 2008-09. One cannot say that the two-quarter rule of thumb used by individual countries in Europe and elsewhere is “wrong”. There are unquestionably big advantages to having an automatic procedure that is simple and transparent, especially if the alternative is delegating the job to a committee of unelected, unaccountable ivory-tower economists. But there are also disadvantages to the rule of thumb. One is the need to revise cyclical dating when data are revised. Claims made in good faith in last year’s speeches by U.K. politicians – and by economic researchers – have now been rendered false. In May, France, too, revised away an earlier recession, which would otherwise have been counted as the second since 2008. There is a potentially more far-reaching and serious disadvantage as well. Because citizens in Ireland and Italy have been told that their economies have entered new recessions, they are likely to conclude that their political leaders must have done something wrong recently. But if these countries have been in the same recession for five years, the implication may be that the leaders have been doing the same wrong things throughout that period. That is hardly an insignificant difference. © Project Syndicate

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July April22, 19,2013 2013

Opinion

The myth of China’s wires economic reform Business

Leading reports from Asia’s best business newspapers

Jakarta Post

William Pesek

Bloomberg View columnist

Indonesia’s largest banks are cutting their loan growth target this year as the economy begins to feel the pinch from the high inflation stemming from the increase in fuel prices. Budi Gunadi Sadikin, the president of publicly listed Bank Mandiri, the largest bank by assets, said it had revised down the loan growth target to between 19-20 percent from the previous target of between 20 percent and 22 percent. With a lower target, the bank’s loans are expected to reach between 462.67 trillion rupiahs (US$45.99 billion) and 466.56 trillion rupiahs by year’s end.

Taipei Times Daiwa Capital Markets trimmed its economic growth forecasts for Asia for this year and next, citing the deceleration of the Chinese economy as posing risks to the region. Daiwa said it is also seeing “weaker growth dynamics” for the region because of the implications of U.S. Federal Reserve saying it may wind down its stimulus programme. In a note to clients, Daiwa lowered its growth forecast for regional economies – excluding Japan – to 5.9 percent this year from its previous estimate of 6.4 percent, and to 5.8 percent from 6.5 percent for next year.

Asahi Shimbun Tired from the stress of their management positions, a growing percentage of middle managers in Japan want to return to the rank and fewer aspire to be company president, according to an Internet survey conducted by the Sanno Institute of Management. In December, the institute conducted the survey of 600 section chiefs working at listed companies with at least 100 employees. A total of 13.5 percent said they wanted to return to the normal workforce, an increase from the 9.6 percent who gave that response in a similar survey conducted two years ago.

Inquirer Business Integrated gaming and entertainment firm Travellers International Hotel Group Inc will now focus on expanding its Resorts World Manila with a fresh investment of US$600 million before going full-blast with a second, and potentially larger, project at the Pagcor Entertainment City. In a briefing, Travellers president Kingson Sian said proceeds from an IPO planned by the company would be used to fund the second- and third-phase expansion of the Resorts World complex in the 12-hectare Newport City. The group has now set its IPO sights toward the end of the year, Mr Sian said.

an we please have a moratorium on the word “Likonomics”? Premier Li Keqiang’s plans to overhaul the Chinese economy have hardly earned such a grand moniker yet. Say what you will about “Thatchernomics” or “Reaganomics,” but Margaret Thatcher and Ronald Reagan fundamentally altered the British and American economies. No one is rolling their eyes at “Aquinomics,” President Benigno Aquino’s thus-far successful prescription for the Philippines, the onetime “sick man of Asia”. By contrast, Likonomics is a ridiculously premature nod to ideas that are, at best, still on the drawing board and might never come off it. In Japan, economists and a cheerleading media now seem to realise they bought into “Abenomics” too hastily, creating the myth that Prime Minister Shinzo Abe’s revival plan is succeeding when it has only just begun. Game-changing reform efforts take several years to implement. We are a long way from knowing if Li has the skill or political will to manhandle China onto a more sustainable growth path, led by domestic demand. How will we know? There are three clues to whether Likonomics is more than a hollow slogan. First, can Li avoid further stimulus? The premier’s supposed shock-therapy programme already has its own myth: that China is engineering a sharp slowdown. Li doesn’t want growth to slide toward 5 percent – no Chinese leader in his right mind would at a time when protests are becoming commonplace. Rather, China’s export- and

investment-led growth model is burning out on Li’s watch.

Magic wand Well before Li and President Xi Jinping officially took the reins in March, exports were falling, manufacturing was contracting and economists were downgrading forecasts. Big reforms are always easier when growth is booming. If Li could wave a magic wand and get gross domestic product back into double-digit territory without pumping more air into China’s credit bubble, he would in a Shanghai minute. He needs reasonable growth to stabilise his power base and figure out how to turn the economy upside down without crashing it. At the same time, Li’s programme is about “deceleration, deleveraging and improving growth quality,” according to economist Huang Yiping of Barclays Capital Asia Ltd in Hong Kong, who is credited with coining the term Likonomics. Carrying it out will hasten China’s downshift. The premier is sure to face mounting calls for the government to throw new cash at the economy – from businesses and from 1.3 billion Chinese, who are becoming more vocal and defiant. Li himself has pledged that China’s growth and employment will stay above a certain floor. That raises doubts about whether he’s ready to accept the pain necessary to see through his reforms. Economists are already buzzing about a “Li Keqiang put” not unlike former Federal Reserve chairman Alan Greenspan’s. More stimulus would only exacerbate China’s overcapacity problem and make the eventual debt reckoning bigger and costlier.

Second, is Li ready to allow a headline-grabbing default or two? The secret to China Inc’s success has been plentiful and mispriced credit. Reckless borrowing, largely through local governmentfinancing vehicles, was the fuel behind China’s years of double-digit growth. Specialpurpose companies set up by authorities across China used this cheap money to fund giant infrastructure projects. Companies such as China Rongsheng Heavy Industries Group Holdings Ltd, China’s biggest shipyard outside state control, are already begging for bailouts. Entire cities such as Ordos – a white-elephant project in Inner Mongolia – need help, too. According to the National Audit Office, the brand of financing vehicles that got Ordos in trouble amassed totalling US$1.7 trillion at the end of 2010 (you can bet it’s much, much higher now).

the Chinese people to make sacrifices. Li must take on thousands of party stalwarts who make millions, or billions, of dollars from dodgy land grabs, insider trading and old-fashioned rent-seeking. Politics will stymie Li’s every effort to reduce the state’s role in the economy and create the vibrant private sector China needs in order to thrive. We’ll have a sense of whether he’s serious when the number of unnamed-source gripes in the official media starts to spike. We are years from knowing if Li can live up to the example set by Deng Xiaoping, who truly did revolutionise China’s economic system. If Li can, Likonomics will deserve to go down in history as a model for developing nations everywhere. Until then, let’s give the phrase a rest. Bloomberg View

Cutthroat politics Only after a big default or two will markets begin to price Chinese risk appropriately, allowing Beijing to liberalise interest rates. Is Li willing to accept the consequences – turmoil in markets, mass unemployment and credit downgrades? That’s nothing compared to the third test: inviting the Communist Party’s wrath. There’s ample reason to doubt Li’s doctorate in economics will help him navigate Beijing’s cutthroat politics. If you think Abe faces resistance from vested interests, imagine what awaits Li as he tries to get Communist Party power brokers, ambitious regional leaders, a vast network of state-owned companies and

Li doesn’t want growth to slide toward 5 percent – no Chinese leader in his right mind would at a time when protests are becoming commonplace

July 22, 2013

Closing Hutchison ponders ParknShop sale

Fed mulls ban on banks’ commodity trades

Hutchison Whampoa Limited, controlled by Asia’s richest man, Li Ka-shing, said on Saturday it is conducting a strategic review of its Hong Kong supermarket chain ParknShop but had not set a timetable for completion. It is not clear if a transaction would result from the review, it said. The Wall Street Journal had reported on Friday that Hutchison had hired Bank of America Merrill Lynch and Goldman Sachs to sell the business, which could fetch between US$1 billion and US$2 billion. ParknShop also has operations in Macau and mainland China.

The US Federal Reserve announced on Friday that it’s reviewing a 2003 precedent that let deposit-taking banks trade physical commodities. Reversing that policy would mark the Fed’s biggest ejection of banks from a market since Congress lifted the Depression-era law against them running securities firms in 1999. That reconsideration comes as a Senate subcommittee prepares for a hearing tomorrow to explore whether financial firms should continue to be allowed to store metal, operate mines and ship oil and at a time when JPMorgan faces a potential fine for alleged manipulation of US energy prices.

More Chinese G20 puts growth buying luxury before austerity overseas: LVMH

World’s biggest economies reach unusual consensus on need for growth, jobs Stuart Williams

Chong Pooi Koon

VMH Moet Hennessy Louis Vuitton SA, the world’s largest luxury-goods maker, says its sales of jewelry and watches have dropped in mainland China and are being offset by Chinese nationals buying overseas. Sales to Chinese consumers are performing “fairly well” as shoppers increasingly travel to Macau, Hong Kong, Taiwan and Dubai, as well as to traditional European destinations such as Rome, Milan and Paris, Francesco Trapani, president of its watch and jewelry division, said in a interview. “Sales to Chinese continue to be good, although it’s true things are changing a bit,” he said in Kuala Lumpur. “Sales are down but they are more than compensated by sales to Chinese outside” the country, he said, without specifying the period for the decline. Swiss watch exports to China fell 19 percent in May, according to the Federation of the Swiss Watch Industry. Sales have declined as economic growth has weakened and as the Chinese government’s austerity campaign has curbed demand for high-end products popular for business gifts. “The watch sector overall has been declining in China this year due to the economic slowdown and also off the back of the anti-corruption measures,” Aaron Fischer, an analyst at CLSA Ltd. in Hong Kong, said by phone. China’s economy grew 7.5 percent in the second quarter from a year earlier, slowing for a second straight period. Luxury companies from Prada SpA to Burberry Group Plc have been seeking to tap consumers in emerging Asia, who are purchasing more high-end bags, shoes, suits and jewelry as incomes have risen. Sales of watches and jewelry accounted for 10 percent of the LVMH group’s revenue last year, according to data compiled by Bloomberg. Bloomberg News

acing a fragile recovery and the threat of a new economic slowdown, the G20 this weekend agreed to prioritise boosting growth and jobs and for now to pay less attention to reducing swollen budget deficits. At a meeting in Moscow, 20 there was clear agreement among the finance chiefs that for now governments had to go full out to create jobs, boost demand and increase productivity. The economic recovery is “fragile and uneven”, the finance ministers and central bank chiefs said in their final statement, while unemployment was deemed “excessively high” in some countries. “Global economic conditions remain challenging,” admitted International Monetary Fund (IMF) managing director Christine Lagarde.

While the United States and Japan show signs of sustainable recoveries, growth in the eurozone remains sluggish and even Asian powerhouse China is now showing a decline in its output growth. “The debate between growth and austerity seems to have come to an end, as captured in the G20’s strong statement on growth and jobs,” said one senior United States treasury official. The official argued that the G20 had accepted that fiscal positions could only be corrected once growth and demand are put on a sustainable path. “To place the global economy on a stronger, more sustainable and more balanced growth path, we will intensify our policy actions,” the final statement said, calling for an action plan to be agreed at the Saint Petersburg G20 summit in September.

Russian Finance minister Anton Siluanov was among top officials expressing concern about US plans to scale down its quantitative easing (QE) programme. Russia and other nations are worried that a sudden about-turn by Washington could impede their own recoveries and create unwelcome headaches for national governments at a critical time. Federal Reserve chairman Ben Bernanke has said the Fed could begin cutting the QE program, which injects some US$85 billion a month into the economy via bond purchases, later this year and end the program by mid-2014. The G20 ensured there was a reassuring note in their communique that any changes to programmes like the Fed’s quantitative easing would be “carefully calibrated and reassuringly communicated”. The US treasury official said there was a recognition among the G20 members that as economies like the US strengthen, the normalisation of macro economic policy is both to be expected and welcomed. The squeeze on budgets also encouraged the G20 to “fully” endorse an action plan put forward by the OECD to clamp down in tax avoidance schemes by big multinational companies. OECD Secretary General Angel Gurria said the changes proposed would result in the “most fundamental changes to tax systems since the 1920s”. AFP