Macau Business Daily, July 23, 2013 by Business Daily

www.macaubusinessdaily.com

Year II

Number 332

Tuesday July 23, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

Inflation slows despite rise in housing costs

April 19, 2013

CEO Interview Luk Fook’s golden future When Hong Kong-based jewellery group Luk Fook Holdings (International) Ltd opened its Macau flagship store in Circle Square building on June 8, it became the biggest retailer in San Ma Lou, a road already studded with luxury shops popular with mainland Chinese tourists. Luk Fook rented the whole five-storey shop space at the downtown building, with a total area of 70,000 square feet (6,500 square metres) with an eye to expansion. It is currently only using the ground floor. “I would say, at present the market in Macau is even more prosperous than Hong Kong’s,” chairman and chief executive William Wong Wai Sheung tells Business Daily in an interview. Despite the firm’s bullishness on Macau, it also faces increased overheads as local property markets continue to heat up. Lease renewals for 13 outlets in Hong Kong and Macau this financial year are likely to mean 50 percent rises in payable rents. Luk Fook’s annual report for the financial year ended last March says its operating profit fell by 4.3 percent to HK$1.5 billion and its profit margin narrowed to 11.4 percent from 13.4 percent because of “a disproportionate increase” in rents in Hong Kong and Macau. Pages 2 & 3

nflation fell to its lowest level in more than two years in the second quarter, official data show. The average annual rate of consumer price inflation slowed to 5.13 percent in the period, 0.25 of a percentage point down on the first quarter, the Statistics and Census Service announced yesterday. A slowing in food price rises helped to offset increases in housing costs. The annual rate of food and non-alcoholic drink price inflation fell to 6.6 percent, having touched 9.5 percent a year earlier. Macau households spend about one-third of their budgets on those items. The annual rate of house price inflation in Macau was 14.3 percent last month. Housing costs, including mortgage repayments and interest, are the second-biggest outlay for Macau households. More on page 3

Improving returns for social security fund The investment return on Macau’s social security fund was below the rate of inflation last year, the fund’s annual report shows. The return was 3.73 percent in 2012, while inflation was 6.11 percent. But it was an improvement on 2011 when returns were only 1.64 percent. The fund, which supports the city’s retirement pension and several social benefits, posted revenue of 5.8 billion patacas (US$724 million), in 2012, a year-on-year hike of 17.2 percent. About 89 percent of that money came from the government. Page 5

I SSN 2226-8294

Hang Seng Index 21500

21460

21420

21380

21340

21300

July 22

HSI - Movers

Ao ‘approved’ 77 pct height boost for La Scala Now-jailed former government secretary Ao Man Long “helped” the potential profitability of the La Scala luxury housing project by approving a 77 percent increase in the height of the scheme a court heard yesterday. But lawyers for corruption trial defendant Steven Lo Kit Sing – who was present in court unlike his co-defendant Joseph Lau Luen Hung, who pleads ill health – stressed that it was not Mr Ao that relaxed the height cap. They argued it was the current secretary Lau Si Io who did so in 2011. Page 4

Name

%Day

CHINA RES POWER

5.22

BELLE INTERNATIO

4.09

AIA GROUP LTD

2.89

CHINA UNICOM HON

2.04

WANT WANT CHINA

1.57

IND & COMM BK-H

-1.22

LENOVO GROUP LTD

-1.28

TENCENT HOLDINGS

-1.86

CHINA COAL ENE-H

-2.40

CHINA SHENHUA-H

-3.04

Source: Bloomberg

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July 23, 2013

Macau

Luk Fook bullish about expansion The jewellery retailer shrugs off rent increases and the mainland’s economic slowdown Stephanie Lai

sw.lai@macaubusinessdaily.com

Photo by Eduardo Magalhães

hen Hong Kong’s Luk Fook Holdings (International) Ltd opened a flagship jewellery shop in the Circle Square building on June 8 – its largest anywhere – it become the biggest retailer in San Ma Lou, a street already studded with shops selling expensive goods much sought after by tourists from the mainland. Luk Fook chairman and chief executive William Wong Wai Sheung told Business Daily that his company had decided on a San Ma Lou shop in 2011, when retailers had been fighting fiercely for retailing space as the flow of tourists increased. “It was impossible to find a space this big in the high streets of Hong Kong,” Mr Wong said in an interview conducted in Luk Fook’s flagship store here. Then his company came across Circle Square in the city centre. “After much difficulty in finding shop space, we saw it had a place to let, and we took it,” he said. Luk Fook leased all five floors in Circle Square, which together have 6,500 square metres of shop space, but it uses only the ground floor. “If our operation on the ground floor runs out of space later, we will use the space upstairs,” Mr Wong said. “I would say, at present the market in Macau is even more prosperous than Hong Kong’s,” he said. “Even though this street is already full of competitors, the competition

At present, the market in Macau is even more prosperous than Hong Kong’s William Wong Wai Sheung, chairman, Luk Fook

is far less intense than in any district in Hong Kong,” he said.

Any price “The rent for the flagship store is still reasonable, I would say, given the long lease and good conditions offered for our long-term development.” Mr Wong declined to say how much the rent is. Last year restaurant operator Future Bright Holdings Ltd received HK$11.9 million (US$1.5 million) from Circle Square’s owner to end its lease on the building’s groundfloor premises. Luk Fook has 10 shops in Macau, most scattered around the San Ma Lou area and casinos in Cotai. Mr Wong said that like other retailers of jewellery and expensive watches, Luk Fook was worried by what high rents and the economic slowdown in the mainland might do to profits. Luk Fook’s annual report for the financial year ended last March says its operating profit fell by 4.3 percent to HK$1.5 billion and its profit margin narrowed to 11.4 percent from 13.4 percent because of “a disproportionate increase” in rents in Hong Kong and Macau. “In the past two years both Hong Kong and Macau have seen very strong retailing performance, and that led to the international brands accepting any price to snatch up shop space,” Mr Wong said.

“Rent costs have stabilised a bit,” he said. “But if rent levels spiral up further, it will become harder for us.” Luk Fook executive director Nancy Wong Lan Sze, who is Mr Wong’s daughter, said rent made up about 3 percent of the company’s operating costs.

Purchasing power Luk Fook’s annual report says the company has plans for four to five more shops in Hong Kong or Macau this year. “We are planning to add one to two more shops in Macau, possibly in casino shopping space belonging to Galaxy, the Venetian Macao or Melco Crown,” said Mr Wong.

We have already decided to open 200 more shops in the mainland, and this will be completed this coming year

“But that is not set yet. It may turn out eventually that these four to five shops will all be in Hong Kong.” Slower economic growth in the mainland will not deter Luk Fook from adding to its 1,000 shops in shopping centres or other commercial areas all over China. “We have already decided to open 200 more shops in the mainland, and this will be completed this coming year,” said Mr Wong. He said his company’s target was annual growth of 15 percent in its number of shops. He is optimistic about the purchasing power of the mainland’s huge population. “Setting up a shop in the mainland is much easier, and the cost is lower,” he said, comparing costs there with costs in Macau and Hong Kong. “A shop space like here equates to 20 to 30 shops in the mainland,” he said. “Our expansion targets there will not be first-tier or second-tier cities any more, because the sales potential there is already quite fulfilled,” Mr Wong said. His company has over 670 shops in first-tier or second-tier mainland cities, including Beijing and Shanghai. It either runs these shops itself or lets licensees run them.

Large quantities “We will be expanding shops in third-tier cities, where the jewellery competition is not yet

July April23, 19,2013 2013

Macau Inflation slows despite rise in housing costs Upward pressure on food prices diminished last month Vítor Quintã

vitorquinta@macaubusinessdaily.com

Luk Fook rents all five floors of shop space in Circle Square but uses only the ground floor

very intense,” he said. These cities include Heyuan in Guangdong, Xuzhou in Jiangsu and Chengdu in Sichuan. At the end of March Luk Fook had 326 shops in third-tier or fourth-tier cities, 80 more than a year earlier. “Customers in third-tier cities are not as keen as their peers in first-tier cities on buying diamonds,” said Mr Wong. “But they are fans of pure gold accessories, and their purchase quantities are quite large.” At the end of last month Luk Fook had 133 shops that it ran itself, including 40 in Hong Kong, 10 in Macau, 79 in the mainland and four in foreign countries. The company had 979 shops run by licensees in the mainland, making a total of 1,112 shops worldwide. The slump in the international price of gold in the middle of April set off a buying binge by visitors and residents alike in Hong Kong and Macau. The sales of Luk Fook’s established shops in Hong Kong and Macau jumped by 83 percent in the second quarter of this year. The sales of the company’s shops in the mainland jumped by 117 percent. Mr Wong does not expect the buying binge to last. “Even if the gold price continues to slump, the drop may not be as large as what we saw in April and May,” he said.

Above expectations “The gold price will still be buoyed by mining costs and the purchasing power of Chinese and Indian buyers.” UBS AG says in a research report it issued this month that the appetite for gold has faded and that a similar gold rush will not occur in this financial year. In the past financial year Luk Fook had revenue of HK$13.4 billion, 12.6 percent more than the year before. But its gross profit margin

narrowed by 2.1 percentage points to 21.1 percent. The rate of growth in same-store sales in the mainland, Hong Kong and Macau slowed by almost onethird to 7.4 percent. “The final performance was actually better than what we and some analysts had expected,” said Ms Wong. “The year 2011 was a particularly good year for our trade, as tourists opted to shop in Hong Kong or Macau because of the Thai floods and the earthquake and tsunami that hit Japan,” she said. “So the decline we saw in the past financial year was actually a drop from a high base reached in the previous year,” she said. “We would say the result we achieved was still quite good.”

verage inflation fell to its lowest in over two years in the second quarter of this year, official data show, as rises in food prices slowed, offsetting increases in housing costs. The average annual rate of consumer price inflation slowed to 5.13 percent in the second quarter, 0.25 percentage point less than in the first quarter, the Statistics and Census Service announced yesterday. The second-quarter average rate of inflation is was the lowest since the beginning of 2011. The average annual rate of inflation in the 12 months ended June fell for the fourth consecutive month to 5.52 percent, the lowest since October 2011. The second-quarter slowdown was due mainly to slower increases in prices of food, on which Macau households spend about one-third of their budgets. The annual rate of food and nonalcoholic drink price inflation fell to 6.6 percent, having touched 9.5 percent a year earlier. The price of rice from the mainland even fell by 1.4 percent, and price of rice from Vietnam fell by 3.8 percent. While increases in prices of food have been slowing here, the annual rate of food price inflation in the

mainland – Macau’s biggest supplier – accelerated to 4.9 percent last month from 3.2 per cent in May. The annual rate of housing cost inflation in Macau was 14.3 percent last month. Housing costs, including mortgage repayments and interest, are the second-biggest outlay for Macau households. Housing costs have risen because home prices have increased, even though borrowing to buy a home is cheap because interest rates are low. The benchmark six-month interest rate was about 0.54 percent in June. The average price of residential space rose to a record 98,187 patacas (US$12,289) a square metre in May, according to the Financial Services Bureau. Increases in prices of other goods and services also sustained inflation. Health care cost inflation was 7.3 percent, the highest since 2008. Transport cost inflation was 4.5 percent, the highest for 15 months, owing to a rise of 14 percent in the cost of running a car. The cost of employing a domestic servant rose by 2.7 percent in just one month, which meant domestic service cost inflation was 10.1 percent. Macau is due to begin importing housemaids from the mainland soon.

Shop rents to jump Luk Fook Holdings (International) Ltd must renew its leases on 13 outlets it rents in Hong Kong and Macau in the financial year ending next March, and it expects the rents for these shops to rise by over 50 percent, according to Luk Fook executive director Nancy Wong Lan Sze. Ms Wong told Business Daily that the company had invested HK$300 million (US$38.7 million) in the financial year ended last March, spending HK$200 million of it on expanding its administrative facilities in the mainland. Luk Fook expects to invest HK$110 million in this financial year, spending HK$80 million of it on renovating shops and the rest on expanding its factory in Nansha in Guangdong. The price of rice has decreased in the past year (Photo: Manuel Cardoso)

With Bloomberg News

July 23, 2013

Macau Lau controlled Moon Ocean ‘behind scenes’: graft buster

Height limit for La Scala project was raised from 90 metres to 160 metres

Ao ‘approved’ 77 pct height boost for La Scala But graft watchdog’s claim rejected by lawyers for defendants in land corruption trial Tony Lai

tony.lai@macaubusinessdaily.com

ow-jailed former government secretary Ao Man Long “helped” the potential profitability of the La Scala luxury housing project by approving a 77 percent increase in the height of the scheme, a court heard yesterday. The claim was made by Lei Tong Leong, chief of the investigative division of the city’s anti-graft watchdog the Commission Against Corruption. Hong Kong businessmen Joseph Lau Luen Hung, chairman of Chinese Holdings Estates Ltd, and Steven Lo Kit Sing are accused of bribing Mr Ao with HK$20 million (US$2.5 million) in June 2005 to ensure the success of their bid for land next to Macau International Airport where La Scala was to be built. Mr Lei quoted the Land, Public Works and Transport Bureau saying they would usually “directly reject” proposals that did not conform with the 90-metre height limit for

that area, because of the proximity to the airport and the proximity of the Meteorological and Geophysical Bureau’s headquarters. The developer had proposed 158-metre towers in early 2006. Mr Ao, then secretary for transport and public works, asked his bureau to continue to follow up on the case in May 2006, said Mr Lei. The Civil Aviation Authority and the Meteorological and Geophysical Bureau had “a 180-degree” change of heart after later meeting with the developer, said Mr Lei. Land bureau officials described the meeting as “unusual” as representatives from the Infrastructure Development Office were present as well, he added. The meeting led to a proposal drafted by the land bureau in November 2006 that would allow the project to reach a height of 160 metres, Mr Lei said. But lawyers for Steven Lo –

who was present in court unlike his co-defendant Joseph Lau, who pleads ill health – stressed that it was not Ao Man Long that relaxed the height cap. They argued it was the current secretary Lau Si Io who did so in 2011. “So do you mean the documents were sent to the prison for the secretary [Mr Ao] to approve?” lawyer Jorge Neto Valente asked the Commission’s Mr Lei. Mr Lei explained Mr Ao was the moral author of the decision but not the one to implement it as he was arrested a few days later, on December 6, 2006. Mr Valente said that Mr Ao did not approve a request filed by the developer in 2006 to extend the land development period. “So what help did he [Mr Ao] give? He helped them [the defendants] to not get their requests granted?” asked Mr Valente. The case continues tomorrow.

Losing bidder financed La Scala land costs A losing bidder for land plots near the airport loaned money to the winner, Moon Ocean Ltd, to pay for the land premium, the Court of First Instance heard yesterday. Lei Tong Leong, an investigator at the Commission Against Corruption, testified that Moon Ocean signed two loan deals with a firm called “Silver Point” in late 2005, after Moon Ocean won the tender. Hong Kong-based Silver Point offered loans of up to HK$717 million (US$91.9 million) for Moon Ocean to

pay for the land premium, said the watchdog’s chief investigator. Mr Lei said the head of Silver Point was “the same person” that headed another company called “Apex”. Apex was one of the three bidders for the airport land, as part of a joint venture with CB Richard Ellis. But the investigator gave no information on why that losing bidder lent money to Moon Ocean. He also did not reveal the full name of Apex or Silver Point, the identity of the head of the companies or whether Apex was related to Moon

Ocean, now owned by Hong Konglisted developer Chinese Estates Holdings Ltd. Joseph Lau Luen Hung, chairman of Chinese Estates, and businessman Steven Lo Kit Sing are accused of bribing Ao Man Long, then a government secretary, with HK$20 million (US$2.5 million) to ensure the success of their bid for the airport land in June 2005. Chinese Estates was to build high-end housing project La Scala in those plots. T.L.

ong Kong-listed developer Chinese Estates Holdings Ltd did control the winning bidder for the corruptionhit airport land plots, said an official from the Commission Against Corruption yesterday. That’s contrary to the claim of defence lawyers for Chinese Estates’ chairman Joseph Lau Luen Hung. Chinese Estates “controlled Moon Ocean behind the scenes though the equity warrant was not enacted,” the graft watchdog’s Lei Tong Leong told a Macau court. Target Power, a Chinese Estates’ subsidiary, signed an equity warrant with the shareholders of Moon Ocean Ltd on June 24, 2005, days before the deadline for the airport land tender, said Mr Lei. The warrant allowed Chinese Estates to acquire 70.01 percent of Moon Ocean’s shares at any time, the watchdog’s investigation division chief told the Court of First Instance. Mr Lau and fellow Hong Kong businessman Steven Lo Kit Sing are accused of bribing Ao Man Long, then a government secretary, with HK$20 million (US$2.5 million) to ensure their on bidding the airport land. The legal defence of the two Hong Kong tycoons has argued Mr Lau only bought Moon Ocean – which was previously controlled by Mr Lo – in December 2005 after the company won the tender. Mr Lei also said both businessmen were “aware” of the bribes transferred to a bank account held by Mr Ao in October 24, 2005 as they met with the now-jailed official three days later. Mr Lei cited immigration records and a restaurant bill as evidence of the meeting. But lawyers for the two entrepreneurs yesterday claimed the watchdog misinterpreted information in Mr Ao’s “friendship notebooks”. The prosecution has argued the books were used by Mr Ao to record bribes he accepted. The hearing will continue tomorrow with Mr Lei testifying for the third day. But Mr Lo will be absent tomorrow afternoon as he has “a very important meeting related to football”, according to a defence submission read out by the judge. That day South China Football Club – which he owns – plays in the Barclays Asia Trophy in Hong Kong against English Premier League 201213 runners-up Manchester City. T.L.

July 23, 2013

Macau

Meagre returns for growing social security Social security fund remains heavily reliant on revenue from gaming tax Stephanie Lai

sw.lai@macaubusinessdaily.com

acau’s social security fund is still enjoying everincreasing revenues but little of it comes from workers’ contributions. The government is still doing the heavy lifting to sustain the fund, as its investment return was lower than the inflation last year, the fund’s annual report shows. The fund, which supports the city’s retirement pension and several social benefits, posted revenue of 5.8 billion patacas (US$724 million), an annual hike of 17.2 percent. About 89 percent of that money came from the government, which must reserve 1 percent of its budget to the fund, as well as to transfer part of the gaming tax revenue. On the other hand the resident workers’ contributions – 180 million patacas – accounted for just 3.1 percent for the fund’s income. The government transferred over 4 billion patacas from the gaming tax revenue to the fund last year, up by 18.5 percent, the report noted. The government has also reserved 1.3 billion patacas for the fund, which is about 1 percent for the 2012 fiscal budget. “We saw a continued, stable growth in every income source for

the social security,” the fund noted in the annual report. The growth “was particularly notable” in the levy for employers of imported labour, gaming tax revenue transfers and interest from deposits, the report stated.

Inflation hit The imported labour levy revenue reached 188 million patacas in 2012, a rise from 128.9 million patacas in 2011. However the fund registered a drop of about 40 percent in the contributions from reside n t wo r k er s . That was mainly due to fewer people making backdated contributions to the fund in order to secure a higher retirement pension. Such contributions fell from 143.9 million patacas in 2011 to 4.6 million patacas last year. The expenses of the fund have gone up by 18.6 percent to 1.4 billion patacas in 2012. Almost all of that money went to pay for various social benefits and subsidies, about 1.3 billion patacas. Early pension withdrawals alone reached 1.1 billion patacas. Last year almost 31,000 people

SMEs scramble for govt-backed loans The government lent more money to fewer businesses in the first half Vítor Quintã

vitorquinta@macaubusinessdaily.com

mall and medium enterprises received almost 184 million patacas (US$23 million) in interest-free loans from the government in the first half of this year. The Portuguese-language Tribuna de Macau, citing Macau Economic Services data, reported that the government lent 120 million patacas in the first half of last year. The newspaper said the money lent so far this year had gone to fewer businesses. About 360 of the 452 applicants for loans were successful. A year earlier 380 applicants were successful. According to Business Daily’s calculations, this means the size of the average loan granted rose to 510,000 patacas from 315,000 patacas. The government increased the maximum that it will lend under its SME Aid Scheme to 600,000 patacas in March last year. The government handed out 118.7 million patacas in interestfree eight-year loans to 331

enterprises under the SME Aid Scheme in the first half. Shopkeepers received about 35 million patacas of the total. Builders received about 24 million patacas. The SME Aid Scheme is the mostused of the three Macau Economic Services loan schemes. Under one scheme, the government guarantees 70 percent of bank loans up to 3.5 million patacas. The government guaranteed loans of this kind to 30 enterprises in the first half. Under another scheme, the government guarantees loans for specific development projects. It guaranteed loans of this kind to three enterprises, together worth 2.9 million patacas, in the first half. The government also intends to lend entrepreneurs aged between 21 and 44 up to 300,000 patacas, free of interest, to start new businesses. It will begin taking applications for such loans on August 1.

Almost 31,000 residents withdrew their pension capital in advance (Photo: Manuel Cardoso)

below 65 years old withdrew their pension capital in advance, up by 22 percent. The fund has better luck with its investments last year but it still lost money. The investment return rate was only 3.73 percent in 2012, which is

lower than the inflation rate of 6.11 percent. In 2011 the fund’s return rate had been only 1.64 percent. The report noted that the social security fund is placing most of its capital, 88 percent, in bank deposits, with the remaining going for low-risk investment vehicles.

July 23, 2013 April 19, 2013

Macau

Okada’s man altered document from Manila bribery probe Made it seem US$25 mln payment to former casino regulator’s confidante approved by Universal Entertainment board

Kazuo Okada – own report critical of his executives

director of Universal Entertainment Corp altered minutes of a m e e t i n g to suggest executives had collectively approved a US$25 million (200 million patacas) payment a company-commissioned report claims. The money is under

investigation by law enforcement agencies in the United States and the Philippines as possible bribery linked to a Manila casino project. Japanese firm Universal Entertainment is controlled by Kazuo Okada, a former investor in Wynn Resorts Ltd. He was ejected

as a shareholder of Wynn Resorts and as a board member of Wynn Macau Ltd in February last year. It followed the filing of a Wynncommissioned report that found Mr Okada was “unsuitable” as a partner and a threat to the casino company’s Nevada licence because of the way he was pursuing the Manila casino deal. The U.S. dollar billionaire, who made his initial fortune from pachinko machines in Japan, strongly denies any wrongdoing and has filed several lawsuits in Nevada and one in Japan, to defend his position. Last week the Philippine Department of Justice said investigators there have recommended filing criminal cases against Mr Okada and 25 others for putting up dummy companies to acquire land for the planned US$2 billion Manila casino. Officials there also told Business Daily the entrepreneur could lose his Manila provisional casino licence if any bribery were proven in relation to how it was acquired. According to Reuters the Universalcommissioned report states that in October 2012 the then president of Universal Entertainment Hajime Tokuda altered the minutes of a

November 2009 company meeting. It says the purpose was to indicate that a decision to make a US$25 million payment to Filipino consultant Rodolfo Soriano was by a board of Universal executives. Mr Soriano has worked closely with Efraim Genuino, until June 2010 the chairman of the Philippine gaming regulator Pagcor. By late 2012 the U.S. Federal Bureau of Investigation and the state gaming regulator in Nevada – where a Universal unit has a gaming licence – had begun to investigate the disputed US$25 million as part of US$40 million in payments the company made to Mr Soriano. The authors of the Universalcommissioned report are Yoshiyuki Kaneshige, a former police agency official in Japan who now heads a management consultancy, and attorneys Teruki Uchida and Takujiro Hamada, said Reuters. Last month, Universal released a summary of the findings, which concluded that there was no evidence to support allegations of bribery. It was critical of the company’s governance though, blaming a lack of oversight on overseas operations for allowing payments to be made in error. The Nevada Gaming Control Board confirmed it had received the Universal report. “We do have that report. It’s another piece that we will have to review,” board chairman A.G. Burnett said. “I don’t have any comment on the substance.” A U.S. Department of Justice inquiry into Mr Okada and his companies over the Philippines project was announced in November. M.G. with Reuters

Macau Legend’s over allotment option lapses A

n option to sell an over allotment of 140,224,000 shares in Macau casino services company Macau Legend Development Ltd has not been exercised, according to a filing yesterday. The option lapsed on July 20. A global offering by the company – which is co-chaired by former Macau legislator David Chow Kam Fai – raised around HK$2.04 billion (US$263.1 million) net said a Hong Kong filing on July 4. It added that only 17 percent of the Hong Kong portion of the offering – around 34.9 million shares out of 204.8

million available – was taken up. The 169.9 million unsold Hong Kong shares were reallocated to international investors. The offering was priced at HK$2.35; near the bottom of the indicative range of HK$2.30 to HK$2.98 mentioned in the prospectus. Around 63.5 percent of net proceeds are to go on a new casino hotel called Prague Harbor View at Macau Fisherman’s Wharf, a waterside leisure development on Macau peninsula controlled by Macau Legend. M.G.

Court rejects residents’ complaint on Sands trademarks T

he Court of Second Instance has rejected a complaint filed by three Macau residents against 260 trademarks using the words ‘Cotai’ or ‘Strip’, many of which registered by Las Vegas Sands Corp. In a June 20 judgement that was only released late last week, the judges ruled that the residents “did not reveal in which way they would be hindered” by these trademarks. The residents had argued that ‘Macau Strip’ and ‘Cotai Strip’ were part of the territory’s intangible

cultural heritage and public domain but the court disagreed. The judgement does agree that the expressions “refer to areas of the MSAR territory, which are not available for registration” but says the residents are not the right party to complain about it. Las Vegas Sands and rival casino operator Melco Crown Entertainment Ltd have been tangled in a court dispute over trademarks that use the words ‘Cotai Strip’. So far the courts have sided with Melco Crown. V.Q.

April 19, 2013

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José Braz-Gomes

Henry Brockman Lionel Leong Vai Tac

Paul Tse

Vong Kok Seng

Franklin Willemyns

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Albano Martins

Frederico Rato

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Paul Tse

Vong Kok Seng

Henry Brockman

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Lau Pak Hung Lionel Leong Vai Tac

Amber Li

Albano Martins

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Franklin Willemyns

ADVISORY BOARD

Paulo A. Azevedo

Lau Pak Hung Lionel Leong Vai Tac

JUDGING PANEL MEMBERS

Bruno Ascensão

Paulo A. Azevedo

José Braz-Gomes

José I. Duarte

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July 23, 2013 April 19, 2013

Greater China

Rate reform adds to concerns China Resou for bank investors shareholder Rising cost of funds will hit banks’ interest margins

Parent company being au

Pete Sweeney and Gabriel Wildau

Aibing Guo

Move signals lifting of deposit-rate cap draws near

eijing’s move to scrap the floor on lending rates is not yet a game-changer for Chinese banks, but it may have just started the countdown to an eventual industry overhaul which will deprive the banks of virtually risk-free profits. Any liberalisation is seen as positive for China’s financial sector and the

Stocks rise as small companies rally China’s stocks rose for the first time in four days as investors speculated looser interest-rate controls will benefit smaller companies, overshadowing concern banks’ lending margins will shrink. Goertek Inc., an Apple Inc. supplier, led a gauge of technology companies to the biggest advance among industry groups, while the ChiNext index of smaller companies surged 3.4 percent. Bank of Communications Co and Bank of Beijing Co fell at least 1.3 percent after the People’s Bank of China ended a floor on borrowing costs while keeping a cap on deposit rates. The Shanghai Composite Index added 0.6 percent to 2,004.76 at the close, erasing a loss of as much as 1.1 percent. The removal of China’s interest-rate floor may make higher-yielding loans to small companies more attractive for banks as they seek to bolster net interest margins, according to Tang Yonggang, an analyst at Hongyuan Securities Co in Beijing. Lenders “will turn to smaller companies for profits and offer more attractive packages to them,” Mr Tang said. Only 3 percent of China’s 42 million smalland medium-sized firms currently borrow from banks, according to Citic Securities Co, a Beijing-based brokerage.

world’s second-largest economy. But many Chinese investors fear the nation’s banks, which for years have made easy profits from statemandated spreads between borrowing and lending rates, will struggle to benefit from more competition. Reflecting such scepticism, the Shanghai-listed banks trade at a median price-to-earnings ratio of 4.98 based on projected twelve-month earnings and a median price-to-book of 0.97, Thomson Reuters data shows. Some economists believe nimble banks can reap some benefits after the People’s Bank of China (PBOC) announced on Friday that banks could lend at any rate they wanted, enabling them to lure more business by offering lower rates. However, with few loans extended at or near the previous lending limits, the latest change is seen as having little practical impact. It could, though, be a prelude to much bigger reform – removing the cap on deposit rates, currently set at 3 percent for one-year deposits – which would dismantle the system that enables lenders to effectively make guaranteed profit margins. “China has removed almost all controls on lending rates, and rates in the money market and capital market are also effectively free. The next and more important step is, of course, the ceiling on deposit rates,” said Wang Tao, head of China research at UBS AG in Beijing.

Risky step That may take some time. The central bank has made it clear it considered lifting the deposit cap as the “most risky” step and promised to proceed with caution and only after implementing various safeguards, including a deposit insurance scheme. Bank of America Merrill Lynch economist Lu Ting said that as an interim step – just like Japan in late 1970s – China could

allow banks to issue floating-rate negotiable certificates of deposits, which could also be traded in the secondary market. In the meantime, the latest move might help boost confidence in the sector’s overall competitiveness and efficiency on the assumption that more reform would follow. Barclays Plc analysts said that it could be positive for bank stocks in the near term. The ability to offer lower rates would also allow banks to provide an attractive alternative to short-term bond issues, Bank of America Merrill Lynch said in a research note. How retail Chinese investors will react is an open question, however. Investors have been wary of Chinese financial firms, which many believe are saddled with underperforming loans dating back to China’s stimulus-driven spending spree in the aftermath of the 2008-2009 global financial crisis. And economists say the latest initiative could give some big, influential state-owned companies leverage to secure lower borrowing costs at the banks’ expense. That could put some pressure on China’s biggest banks, such as Industrial & Commercial Bank of China Ltd, China Construction Bank Corp, Bank of China Ltd and Agricultural Bank of China Ltd. For smaller banks, which rely more on short-term interbank funding, the immediate concern is that their costs will rise even before the final leg of the rate liberalisation kicks in. Last month, the central bank engineered a cash crunch in the interbank market out of concerns that credit was being funnelled into speculative real estate investments and poorly conceived local government investment projects. Though interbank rates have since retreated from peaks near 30 percent, dealers expect cash to stay tight in coming months. Reuters

hina Resources Power Holdings Co Ltd, the electricity generator accused of deliberately overpaying for coal assets in 2010, scrapped a plan to combine with a sister company after shareholders rejected the proposal. Sixty-four percent of the company’s minority shareholders voted against the integration with China Resources Gas Group Ltd, China Resources Power said in a statement to the Hong Kong stock exchange yesterday. The deal had been expected to fail, with the gas unit trading 14 percent higher than the value of the offer shortly after the shareholder vote ended in Hong Kong yesterday, indicating investors considered the bid too low. “It should be next to impossible for the power unit to pitch another merger with the gas unit, as shareholders have already made their attitude crystal clear,” Shi Yan, an analyst at UOB-Kay Hian Ltd in Shanghai, said by phone. “The power unit has to find a way to disconnect itself from all the negatives from the Shanxi coal mine purchase and convince investors to focus on its money-making power generation business.” The deal’s failure follows a controversy last week over the company’s 2010 purchase of stakes in three coal mines in Shanxi province. All five of the parent company’s units traded in Hong Kong sank after allegations against it and Song Lin, the parent’s chairman, were posted by the official Xinhua news agency to its website on July 17. The government is now auditing the

HK broking

As mainland Chinese riva Eleni Himaras and Stephanie Tong

ong Kong, Asia’s secondbiggest stock market, may see 25 percent of its local brokerages close as trading and fees plunge, and competition from banks intensifies, a securities association said. The number of local broking firms may decline to 300 from about 400 in the next five years, Mofiz Chan, a spokesman of the Hong Kong Securities & Futures Professionals Association, said in a telephone interview. “There are many people taking part-time jobs or completely moving out of the industry,” Mr Chan said. “Many of our members have needed to shift into other jobs such as security, taxi drivers or tutors for primary school students.” Fees have dropped since bourse

July April23, 19,2013 2013

Greater China

urces Power rs snub merger

udited over stakes in coal mines

parent company, Xinhua reported last Friday. Xi Jinping, who became China’s president in March, has pledged to investigate and clean up graft that’s threatening to undermine the economy and the government’s grip on power.

Merger doubts The deal had valued China Resources Gas at HK$24.64 a share,

or HK$54.8 billion (US$7.1 billion), including debt, a 13 percent premium to its closing price of HK$21.85 on May 9. China Resources Power shares had since tumbled from HK$25.40 on May 9 to HK$16.86, valuing the gas unit at HK$38.56 billion at the July 19 close of trade. China Resources Power rose 5.22 percent to HK$17.74 a share in Hong Kong trading yesterday, while China Resources Gas was up 1.88 percent at HK$19.54, leaving the gas unit

almost 15 percent above the value of the offer. China Resources Holdings, the state-run parent, is being audited by the State-owned Assets Supervision and Administration Commission, which has started reviewing company accounts, Xinhua reported, citing an unidentified official at the agency. SASAC will severely punish any misconduct, according to the report. “The SASAC investigation just provided one more reason for independent shareholders to kill the deal,” said UOB’s Mr Shi. “The key factor preventing the vote from getting passed was failure to explain why shareholders need this merger at all.” China Resources Holdings employs more than 400,000 people and controls businesses spanning power generation, cement production, real estate and finance. In 2012, China Resources Holdings had HK$41.2 billion of profit on HK$404.6 billion of sales, according to its website. Bloomberg News

HK$54.8 bln

China Resources Gas would been valued if the deal had been approved

The company has been accused of overpaying for coal assets

Glaxo to reform business in China

laxoSmithKline Plc’s head of emerging markets said after meeting with government officials in Beijing some employees may have broken China’s laws and pledged corporate changes that will deliver cheaper medicines. Abbas Hussain, who was sent to China to help with the probe, said he had a “very constructive meeting” with officials from the Ministry of Public Security. Glaxo faces allegations of economic crimes involving 3 billion yuan (US$489 million) of spurious travel and meeting expenses as well as trade in sexual favours, the ministry said last week. “Certain senior executives of GSK China who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law,” Mr Hussain said in an e-mailed statement. “We have zero tolerance for any behaviour of this nature.” China detained four senior Glaxo executives on suspicion of economic crimes, the ministry said on July 15. Glaxo’s executives “violated China’s laws and damaged markets by engaging in bribery to raise drug prices, expand sales and reap inappropriate profits,” the Public Security Ministry said in a statement posted on its website yesterday. Glaxo, which made about 1 billion pounds (US$1.5 billion) of revenue in China last year, is reviewing how it operates in the mainland, according to Mr Hussain. “Savings made as a result of proposed changes to our operational model will be passed on in the form of price reductions, ensuring our medicines are more affordable to Chinese patients,” he said. The probe may widen, given that at least six other global drugmakers, including Merck & Co, Novartis AG, Roche Holding AG and Sanofi, used the same travel agency to make arrangements for events and conferences in the last three years, the New York Times reported yesterday, citing documents it obtained. Reuters/Bloomberg News

g firms ‘forced’ out of the market

als expand operations

Hong Kong Exchanges had 511 stock trading members last year

operator Hong Kong Exchanges & Clearing Ltd in 2003 removed a brokerage commission floor of 0.25 percent of the value of transactions, squeezing profits for brokers as mainland Chinese rivals expand operations. The competition has claimed foreign equity traders, with South Korea’s Mirae Asset Securities Co and Japan’s Daiwa Securities Group Inc, among brokerages that have cut jobs. Eleven brokerages have ceased trading this year, according to filings posted on the website of the Hong Kong stock exchange. King Fook Securities Co, established in 1971, said it will close at the end of this month. “King Fook Securities was one of the founding members of the stock exchange before it became listed,” parent King Fook Holdings

Ltd said in an e-mailed reply to questions. “We’ve been seeking to keep operating despite booking losses. High rentals and labour costs, together with the fact that banks are offering zero commission have made it difficult for us to survive.” The securities-broking business at King Fook group reported a loss of HK$6.02 million (US$776,000) for the year ended March 31, on top of a HK$13.2 million loss a year earlier, according to an exchange filing.

Grim outlook Brokers have been hurt after the average value of stocks traded daily plunged to HK$53.7 billion in 2012 from HK$69.5 billion in 2011, according to data from the exchange. Tokyo is Asia’s biggest stock market.

“If there is no improvement in our operating environment, more and more owners of long-established local brokerages will get frustrated and exit the market,” said Christopher Cheung, founder of Christfund Securities Ltd and a lawmaker representing the industry. Hong Kong Exchanges should reinstate the broker commission floor, Mr Chan and Mr Cheung said. China’s big five banks all offer securities trading services in Hong Kong via their local units. Chinese Securities Association of Hong Kong, which comprises mainly China-backed brokerages in the city, has increased its members to more than 65 from 19 when it was founded in October 2009, according to its website. Commissions at Bank of China (Hong Kong) Ltd, the largest Hong

Kong-based Chinese lender, have dropped to as low as 0.18 percent of the transaction value if trades are done via internet banking, according to its website. That compares with the 0.25 percent floor removed a decade ago. Brokers backed by banks or larger international competitors appear more credible and are increasing market share as they offer lower commissions, Mr Cheung said. Hong Kong Exchanges had 511 stock trading members, according to its 2012 annual report. The biggest 65 accounted for 90 percent of transactions in June, according to the bourse. This compares with 82 percent in June 2003. Bloomberg News

10 10

July 23, 2013 April 19, 2013

Asia Dispute with unions cost US$2 mln in damages: Hyundai Hyundai Motor Co, South Korea’s largest automaker, said 82 employees at its biggest assembly plant were hurt in a clash with labour activists demanding better conditions for temporary workers. The three-hour dispute on July 20 between activists from the Korean Confederation of Trade Unions, an umbrella group of labour unions, and Hyundai’s security guards and managers caused about 2.2 billion won (US$2 million) in damage, the Seoul-based automaker said yesterday. About 100 people were injured in total, the trade union said in a statement on its website. Workers at Hyundai, the subject of periodic wage protests including an August 2012 walkout that cost the company a record 1.7 trillion won (US$1.5 billion) in lost production, weren’t part of the activist group in the brawl. Some members of the group tried to use force to enter the plant in Ulsan, throwing bamboo sticks and stones at Hyundai security personnel, who used fire hoses to keep them at bay, the automaker and labour body said. The activists demanded Hyundai convert all 6,800 of its temporary workers, hired by subcontractors, into regular employees to enjoy better benefits and pay. The carmaker said in December that it will convert 3,500 workers by the first half of 2016, an offer that was rejected by the union.

Nansei to delay refinery restart Nansei Sekiyu KK, has been ordered to delay the restart of its 100,000-barrel-per-day Nishihara refinery in Okinawa, southwestern Japan, indefinitely following a gas explosion at a furnace, the fire department said yesterday. The incident – which occurred on Friday morning during preparation for restart of the refinery after maintenance – damaged one of the walls of a furnace used in the production of gasoline, the department added. The fire department has ordered all operations at the refinery to be suspended, said an official, adding that repair work on the furnace will likely take at least a month. “On account of the circumstances, resumption of refining operations will be postponed for a while,” Nansei Sekiyu said in a statement on the incident. The explosion had no impact on the refinery’s 100,000-bpd crude distillation unit (CDU), which is located away from the furnace. The fire department said it is likely to grant an earlier restart of the CDU if Nansei requests to do so. The timing of such a restart remains unclear. The refinery, wholly owned by Brazil’s Petrobras, had been under maintenance since July 2 and was scheduled to be restarted on July 20.

LDP sweeps to upper house victory Result strengthens hand of Japan’s PM Shinzo Abe Linda Sieg

apanese Prime Minister Shinzo Abe’s ruling coalition scored a decisive victory in an election on Sunday – so big that there are suspicions he will lose interest in difficult economic reforms and pursue his nationalist agenda instead. The victory in the vote for parliament’s upper house gives Mr Abe a stronger mandate for his prescription for reviving the stagnant economy. Coincidentally, it could also give lawmakers in his own party, some of whom have little appetite for painful but vital reforms, more clout to resist change. Public broadcaster NHK said yesterday Mr Abe’s Liberal Democratic Party (LDP) and its coalition partner, the New Komeito party, had won 76 of the 121 seats up for grabs in the 242-seat upper house. With the coalition’s uncontested 59 seats, that ensures it a comfortable majority, tightening Mr Abe’s grip on power and raising the chances of a longterm Japanese leader for the first time since the reformist Junichiro Koizumi’s rare five-year term ended in 2006. It also ends a parliamentary

deadlock that began in 2007 when Mr Abe, then in his first term as premier, led the LDP to a humiliating upper house defeat that later forced him to resign. The LDP fell short of a majority on its own on Sunday. Mr Abe, who returned to power after his coalition’s big win in a December lower house poll, repeated on Sunday that he would focus on fixing the world’s third-biggest economy with his “Abenomics” mix of hyper-easy monetary policy, fiscal spending and a growth strategy including reforms such as deregulation. “We’ve argued that our economic policies aren’t mistaken, and the public gave us their support. People now want to feel the benefits. The economy indeed is improving,” a weary but confident-sounding Mr Abe said at LDP headquarters late on Sunday after his ruling coalition’s

BoJ will act if needed: Sato Central bank’s 2 pct inflation goal a flexible one, says board member Leika Kihara

Nintendo rises as new titles spur sales Nintendo Co Ltd rose to its highest level in almost two years in Tokyo trading on speculation new video game titles are boosting overseas revenue and the shares may join the Nikkei 225 Stock Average. The world’s largest video-game console maker jumped 4 percent to 14,050 yen, the highest close since July 2011. Games including “Animal Crossing: New Leaf,” released in the U.S. last month, helped Nintendo’s 3DS handheld player maintain its position as the best-selling game platform in the country, according to market researcher NPD Group Inc. The stock may be included in the Nikkei index following the merger of exchanges in Tokyo and Osaka while a report that a ban on consoles may be lifted in China is also boosting the shares, said Takashi Oba, a senior strategist at Okasan Securities Co. “The stock is up from mixing all these factors,” said Mr Oba. “The stock is in a upward trend. There may be some investors who are forced to buy back the shares.” Nintendo is trying to revive sales by adding new titles for the 3DS and Wii U home consoles. The Japan-based company said last week it had sold 225,000 of its 3DS handheld consoles in the U.S., the world’s biggest video-game market.

he Bank of Japan is prepared to inject more stimulus if the economy’s recovery is threatened, board member Takehiro Sato said yesterday as he pointed to risks such as the slowdown in Chinese growth. He also said the central bank’s 2 percent inflation target was a flexible one that does not necessarily have to be achieved rigidly in two years – a timeframe that had been outlined by BoJ Governor Haruhiko Kuroda. Mr Sato, an economist who joined the BoJ board last year, said Japan was headed for a sustainable recovery as household sentiment and exports improve, but he was concerned about slowing growth in China and other emerging economies. “A high degree of uncertainty remains concerning the global economy, and I see risks to the economic outlook as somewhat tilted to the downside,” Mr Sato said. Under Mr Kuroda’s leadership, the BoJ unleashed an intense burst of monetary stimulus in April, pledging to double the supply of money in two years to meet its inflation target, and has since held off on any further easing. While that ‘big bang’ approach was a shift from the previous one of incremental policy steps, Mr Sato

said the BoJ would respond if the recovery in world’s third-largest economy was threatened. “The BoJ does not exclude the implementation of additional measures and will not hesitate to fine-tune its policies flexibly when unexpected tail risks materialise,” he said in a speech to business leaders in Fukushima, northeastern Japan. Mr Sato, considered to be among those more cautious on the economy’s outlook on the nine-member board, has doubts that 2 percent inflation can be specifically achieved in two years, and said there should be some flexibility in interpreting it. “If the inflation rate is projected to stabilise within a certain range with the median being 2 percent price growth, the main objective of the BoJ’s policy will have been fulfilled,” he said. Many private-sector analysts also see the BoJ’s two-year timeframe as too ambitious for a country mired in deflation for 15 years. Mr Sato said annual consumer inflation rate will likely turn positive in the summer, partly due to rising electricity bills and the weak yen that inflates the cost of energy imports. Reuters

victory was assured. “We’d like to do our best to generate a positive cycle – in which job conditions improve and wages rise, boosting personal consumption and prompting companies to invest more – as soon as possible,” he said.

Policy priorities But some, including Japanese businesses with a big stake in the matter, worry the hawkish leader will shift to focus on the conservative agenda that has long been central to his ideology.

11 11

July April23, 19,2013 2013

Asia That agenda includes revising the post-war pacifist constitution, strengthening Japan’s defence posture and recasting Tokyo’s wartime history with a less apologetic tone. Despite the hefty win, the strength of Mr Abe’s mandate was diluted by low voter turnout. Media reported turnout was 52.61 percent, more than 5 percentage points below the turnout in the last upper house poll in 2010. That could keep up pressure to stay focused on the economy.

KEY POINTS Ruling bloc win ends parliamentary deadlock PM victory sets stage for stable govt Concerns simmer over Abe’s post-election policy priorities

For now, many experts suggest, Mr Abe is unlikely to turn his back on economic matters as he tries to beef up his so-far disappointing economic reform plans. He also confronts a decision on whether to go ahead with raising the 5 percent sales tax to 8 percent next April, part of a planned doubling by October 2015 aimed at reining in Japan’s massive public debt. “My understanding is that Abesan has three faces: Abe as rightwing, Abe as a pragmatist, Abe as the economic reformer,” said Shinichi Kitaoka, president of the International University of Japan. “He has been showing the third face so far and will try to do the same after the election.” Still, Mr Abe is moving toward security policy changes that mark a big shift in a country that has prided itself on pacifist ideals even as it built up a military bigger than Britain’s. Among those changes are an expected reinterpretation of the constitution to end a self-imposed ban on exercising the right of collective self-defence, or aiding an ally under attack, such as if an unpredictable North Korea launched a missile attack on security ally the United States. Another is a review of defence policies that include a consideration of acquiring the capability to attack enemy bases when an attack is imminent and no other options exist, and creation of a Marines division to protect remote islands such as those at the core of a heated territorial row with China.

Indonesia worries about slowdown Inflows into mining and metal sectors push up FDI

Growth may be more or less comparable to that we had in the last quarter Chatib Basri, Indonesia’s Finance Minister

Reuters

‘This is going to be a good cycle to be felt by our people,’ said Shinzo Abe

ndonesia, southeast Asia’s largest economy, sees strong foreign direct investment in the second quarter but is worried that its forecast of 23 percent growth this year may suffer due to recent financial market volatility. “Growth may be more or less comparable to that we had in the last quarter. It is still quite impressive,” Finance Minister Chatib Basri told Reuters after a meeting of finance ministers from the Group of 20 economies in Moscow. In the first three months of the year, FDI grew 27.2 percent to 65.5 trillion rupiah (US$6.8 billion), driven by inflows into mining, base chemicals and metal sectors. Indonesia will publish second quarter figures next week. Mr Basri said that, however, Indonesia needs to look into the tendency of slowing growth

Temasek names Lim Boon Heng as chairman

ingapore state investor Temasek Holdings Pte Ltd said it has named Lim Boon Heng as its next chairman, giving the nonexecutive role to a former government minister as the firm’s long-serving chairman retires next month. Mr Lim joined Temasek’s board a year ago and will replace S. Dhanabalan, who will retire on August 1. Mr Dhanabalan turns 76 next month and has held the chair for 17 years. The reshuffle will have little impact on day-to-day operations because the chairman is less influential than the chief executive

around the world. Indonesia targets annual FDI growth of around 23 percent this year but the figure could be negatively affected by volatility emerging markets are now facing as the United States plans to wind down its monetary stimulus measures, he also said. G20 nations, including Indonesia, on Saturday called for more cooperation in exchanging information on how monetary stimulus of each particular country may affect global markets. Indonesia has been targeting economic growth of 6.3 percent this year but the figure may reach around 6.1 percent in the first half of the year, affected by global economic volatility due to the Fed’s plans, Mr Basri added. Reuters

in the running of Temasek. Ho Ching, the wife of Singapore’s prime minister, has been chief executive since 2004. Temasek, a major global investor with stakes in Standard Chartered Bank Plc and large Chinese banks, reported an 8.6 percent rise in its portfolio size to a record S$215 billion (US$170 billion) in its last financial year that ended in March, helped by a rebound in Asian shares. Mr Dhanabalan, a former chairman of Singapore Airlines Ltd and of DBS Group Holdings Ltd, Southeast Asia’s biggest bank, had expressed his desire to retire for some time, people familiar with the matter said. Mr Lim was a government minister from 2001 to 2011 and is a former chairman of the People’s Action Party that has ruled Singapore since independence in 1965. He is also a former unionist with the National Trades Union Congress. Reuters

12 12

July 23, 2013 April 19, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

35.55

2.894356

19408013

ALUMINUM CORP-H

2.46

-0.8064516

6347000

BANK OF CHINA-H

3.15

0.3184713

178969706

BANK OF COMMUN-H

4.93

-0.2024291

16898024

BANK EAST ASIA

27.8

0.3610108

964827

BELLE INTERNATIO

11.2

4.089219

18156324

BOC HONG KONG HO

24.05

-0.2074689

CATHAY PAC AIR

13.34

0.755287

CHEUNG KONG

AIA GROUP LTD

PRICE

DAY %

Volume

11.02

2.037037

19969885

8.65

-0.2306805

2034820

CLP HLDGS LTD

63.75

0.2358491

1162622

CNOOC LTD

13.92

0.4329004

20501695

COSCO PAC LTD

10.5

0.9615385

1779657

SWIRE PACIFIC-A

ESPRIT HLDGS

12.3

2.329451

6377540

6515456

HANG LUNG PROPER

24.8

0.6085193

4420480

2033198

HANG SENG BK

115

-0.6908463

973441

HENDERSON LAND D

107.8

0.6535948

1431734

CHINA COAL ENE-H

4.07

-2.398082

23490916

CHINA CONST BA-H

5.44

-0.9107468

185837274

NAME CHINA UNICOM HON CITIC PACIFIC

48.4

-0.9211873

2287139

HENGAN INTL

81.35

0.9305211

612723

HONG KG CHINA GS

19.18

0.7352941

5559128

HONG KONG EXCHNG

119.9

-0.4979253

1556869

87.15

0.5190311

10374768

CHINA LIFE INS-H

18.28

-0.4357298

19565312

CHINA MERCHANT

23.3

-0.8510638

1415840

HSBC HLDGS PLC

CHINA MOBILE CHINA OVERSEAS CHINA PETROLEU-H

NAME

PRICE

DAY %

Volume

68.8

0.1455604

1037887

SANDS CHINA LTD

40.55

0.3712871

4548355

SINO LAND CO

10.94

0.5514706

2041116

SUN HUNG KAI PRO

102.1

3519127

93.1

0.6486486

1374226

TENCENT HOLDINGS

327.6

-1.8574

2966565

TINGYI HLDG CO

19.18

1.374207

3977820

WANT WANT CHINA

10.32

1.574803

13615680

64.9

1.169135

2463084

POWER ASSETS HOL

WHARF HLDG

MOVERS

82.4

0.8567931

8245117

HUTCHISON WHAMPO

85.3

0.8870491

4205856

-0.4819277

11700923

IND & COMM BK-H

4.86

-1.219512

267675180

5.6

0.3584229

38592141

LI & FUNG LTD

10.68

-0.5586592

12746976

HIGH

21498.96

29.1

0.8665511

1821291

LOW

21248.31

52W (H) 23944.74

CHINA RES ENTERP

23.55

1.508621

1735595

CHINA RES LAND

19.52

-1.014199

12497567

NEW WORLD DEV

11.18

0.9025271

5046168

CHINA RES POWER

17.74

5.219454

19262994

PETROCHINA CO-H

9.28

0.4329004

58176934

CHINA SHENHUA-H

22.35

-3.036876

22894412

PING AN INSURA-H

49.85

0.201005

12224016

PRICE

DAY %

Volume

25.7

1.181102

3220570

5.6

0.3584229

2 21500

INDEX 21416.5

20.65

MTR CORP

(L) 18710.58984

21240

18-July

22-July

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.06

-0.6493506

98858799

AIR CHINA LTD-H

5.33

0.1879699

7913681

CHINA PETROLEU-H

ALUMINUM CORP-H

2.46

-0.8064516

6347000

CHINA RAIL CN-H

7.27

ANHUI CONCH-H

22.25

-1.330377

17354955

CHINA RAIL GR-H

BANK OF CHINA-H

3.15

0.3184713

178969706

NAME

PRICE

DAY %

Volume

YANZHOU COAL-H

5.59

-0.5338078

12100889

38592141

ZIJIN MINING-H

1.64

69915500

-1.756757

11878500

ZOOMLION HEAVY-H

5.07

-1.169591

3137020

3.85

-1.534527

22552485

ZTE CORP-H

11.58

CHINA SHENHUA-H

22.35

-3.036876

22894412

CHINA TELECOM-H

CHINA PACIFIC-H

4.93

-0.2024291

16898024

3.65

-0.8152174

38624573

31.15

0.1607717

1566082

DONGFENG MOTOR-H

9.9

0.814664

27051765

CHINA CITIC BK-H

3.51

-3.038674

47537013

GUANGZHOU AUTO-H

7.31

-0.4087193

2295331

CHINA COAL ENE-H

4.07

-2.398082

23490916

HUANENG POWER-H

8.25

0.6097561

19061163

CHINA COM CONS-H

5.61

-2.094241

16220519

IND & COMM BK-H

4.86

-1.219512

267675180

CHINA CONST BA-H

5.44

-0.9107468

185837274

JIANGXI COPPER-H

12.66

-0.3149606

6516268 58176934

BANK OF COMMUN-H BYD CO LTD-H

3.24

-2.409639

3852750

PETROCHINA CO-H

9.28

0.4329004

18.28

-0.4357298

19565312

PICC PROPERTY &

8.74

0.1145475

5773912

CHINA LONGYUAN-H

8.24

0.4878049

9340171

PING AN INSURA-H

49.85

0.201005

12224016

CHINA MERCH BK-H

12.96

-0.7656968

8526569

SHANDONG WEIG-H

7.93

1.928021

7001762

CHINA MINSHENG-H

7.78

-0.7653061

53333266

SINOPHARM-H

CHINA NATL BDG-H

6.81

-0.1466276

20951000

TSINGTAO BREW-H

16.28

1.118012

4067116

WEICHAI POWER-H

CHINA COSCO HO-H CHINA LIFE INS-H

CHINA OILFIELD-H

19.16

1.161563

2657100

0.9573542

736358

23.65

0.4246285

NAME

MOVERS

2 9520

INDEX 9415.06 HIGH

9513.18

LOW

9363.86

52W (H) 12354.22 (L) 8640.85

9360

18-July

2378548

22-July

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.52

78505680

AIR CHINA LTD-A

3.85

-0.2590674

9510908

NAME

PRICE

DAY %

Volume

PRICE

DAY %

8.7

1.162791

27922862

QINGHAI SALT-A

16.8

1.143889

4814437

CITIC SECURITI-A

10.32

1.976285

57870261

SAIC MOTOR-A

12.26

0.4095004

21448305

CHONGQING CHAN-A

NAME

Volume

3.12

0.6451613

9379030

CSR CORP LTD -A

3.57

1.420455

34552477

SANAN OPTOELEC-A

22.67

2.486438

19580635

ANHUI CONCH-A

13.84

0.2172339

17154374

DAQIN RAILWAY -A

5.69

-0.5244755

27251221

SANY HEAVY INDUS

6.92

1.169591

16437931

AVIC AIRCRAFT-A

9.76

1.244813

16198165

DATANG INTL PO-A

5.18

-0.9560229

8320262

SHANDONG DONG-A

40.35

1.229303

6243605

BANK OF BEIJIN-A

7.39

-1.59787

24792939

EVERBRIG SEC -A

10.89

1.302326

17079588

SHANDONG GOLD-MI

22.04

4.902427

18246631

BANK OF CHINA-A

2.65

0.3787879

20315586

GD MIDEA HOLDI-A

12.35

0.162206

10594888

SHANG PHARM -A

11.15

1.733577

5560467

BANK OF COMMUN-A

3.79

-1.302083

80978158

GD POWER DEVEL-A

2.28

0.8849558

33061227

SHANG PUDONG-A

7.95

-0.996264

95552055 3696685

ALUMINUM CORP-A

4.04

13113122

GEMDALE CORP-A

6.57

0.152439

55385171

SHANGHAI ELECT-A

BEIJING SL -A

58.69

1.980886

2877376

GF SECURITIES-A

11.75

1.908066

22398294

SHANXI LU'AN -A

BEIJING TONGRE-A

22.55

0.2222222

6507529

GREE ELECTRIC

23.56

1.464255

11735183

BYD CO LTD -A

35.08

-0.6513735

6941560

GUANGHUI ENERG-A

9.04

120088145

CHINA AVIC ELE-A

23.25

3.195739

3964778

HAITONG SECURI-A

10.3

2.081269

94283132

CHINA CITIC BK-A

3.5

-1.685393

32935470

HANGZHOU HIKVI-A

20.69

1.971414

11694244

HENAN SHUAN-A

39.67

-1.072319

4514367 79457035

BAOSHAN IRON & S

CHINA CNR CORP-A

4.14

2.475248

26790726

CHINA COAL ENE-A

4.85

7809975

HONG YUAN SEC-A

8.94

3.352601

3.25

11.16

0.9954751

8517884

SHENZEN OVERSE-A

5.44

0.7407407

22626184

SICHUAN KELUN-A

55.84

1.804923

969976

5.9

151352078

TASLY PHARMAC-A

46.93

1.033369

4352443

TSINGTAO BREW-A

39.44

1.885818

749467

WANHUA CHEMIC-A

16.07

1.324086

3450295

SUNING COMMERC-A

CHINA CONST BA-A

4.35

-0.2293578

35318645

HUATAI SECURIT-A

8.42

1.937046

20189475

WEICHAI POWER-A

16.84

1.629451

4298493

CHINA COSCO HO-A

2.81

-0.3546099

7819655

HUAXIA BANK CO

9.03

21466572

WULIANGYE YIBIN

19.31

0.05181347

10488332

CHINA EAST AIR-A

2.38

-0.8333333

7235036

IND & COMM BK-A

3.93

-0.5063291

132711324

YANZHOU COAL-A

6356112

9.3

-0.7470651

118050617

YUNNAN BAIYAO-A

41293333

CHINA EVERBRIG-A

2.71

-0.7326007

76252611

INDUSTRIAL BAN-A

CHINA INTERNAT-A

30.4

1.740295

5067605

INNER MONG BAO-A

22.86

3.626473

9.93

0.8121827

3651137

INNER MONG YIL-A

35.37

2.284558

5853768

CHINA LIFE INS-A

13.08

0.3067485

10118198

INNER MONGOLIA-A

3.88

1.83727

25513204

CHINA MERCH BK-A

10.85

-0.6410256

56804354

JIANGSU HENGRU-A

34.66

6.515058

9923974

CHINA MERCHANT-A

10.77

1.815088

14201971

JIANGSU YANGHE-A

49.57

-0.6613226

3310328

CHINA INTL MAR-A

CHINA MERCHANT-A

-0.51731

14274079

JIANGXI COPPER-A

15.99

1.977041

6290248

CHINA MINSHENG-A

8.42

0.1189061

125572855

KANGMEI PHARMA-A

20.58

3.573226

18406538

CHINA NATIONAL-A

9.72

-3.379722

46208235

KWEICHOW MOUTA-A

174.88

-0.642009

2706232

22.92

-0.08718396

4155803

CHINA OILFIELD-A

14.48

-0.8898015

3708643

LUZHOU LAOJIAO-A

CHINA PACIFIC-A

16.26

1.561524

14235945

METALLURGICAL-A

1.58

23177109 18382929

CHINA PETROLEU-A

4.45

61540000

NARI TECHNOLOG-A

15.03

-1.636126

CHINA RAILWAY-A

4.44

0.2257336

10396054

NINGBO PORT CO-A

2.02

7272109

19899752

OFFSHORE OIL-A

7.15

0.140056

23739415

8.08

0.7481297

21526169

9.42

-0.1060445

65837734

CHINA RAILWAY-A

2.52

0.8

15.81

-0.6909548

9985559

PETROCHINA CO-A

CHINA STATE -A

3.2

-0.621118

71815570

PING AN BANK-A

CHINA UNITED-A

3.11

1.302932

91817633

PING AN INSURA-A

33.39

30121053

CHINA VANKE CO-A

9.45

-1.150628

88292652

POLY REAL ESTA-A

9.98

-1.964637

76894341

CHINA YANGTZE-A

7.08

1.870504

14093459

QINGDAO HAIER-A

PRICE DAY %

Volume

CHINA SHENHUA-A

11.6

2.112676

7157123

PRICE DAY %

Volume

9.41

1.291712

101.15

1.658291

1253686

ZHONGJIN GOLD

9.4

4.21286

19959990

ZIJIN MINING-A

2.47

2.489627

40863358

ZOOMLION HEAVY-A

5.07

2.217742

35811165

13.69

50775008

ZTE CORP-A

MOVERS 203

25 2280

INDEX 2202.189 HIGH

2272.95

LOW

2170.09

52W (H) 2791.303 (L) 2023.171

2170

18-July

22-July

FTSE Taiwan 50 Index NAME ACER INC

NAME

22.15

0.4535147

6362426

25.1

2.44898

15902048

ASIA CEMENT CORP

37.95

2.291105

2949881

ASUSTEK COMPUTER

267.5 -0.3724395

AU OPTRONICS COR

10.65

1.913876

136

0.7407407

15664458

HTC CORP

CATHAY FINANCIAL

2.923977

22034681

HUA NAN FINANCIA

CHANG HWA BANK

17.35

0.2890173

5488266

CHENG SHIN RUBBE

98.3

1.654602

5117904

CHIMEI INNOLUX C

13.5

1.123596

58253924

MEDIATEK INC

CHINA DEVELOPMEN

8.67

0.9313155

36016080

MEGA FINANCIAL H

CHINA STEEL CORP

25.85

0.5836576

14929707

NAN YA PLASTICS

CHINATRUST FINAN

19.35

1.308901

34874003

96.5

1.04712

13271827

ADVANCED SEMICON

CATCHER TECH

CHUNGHWA TELECOM COMPAL ELECTRON

FORMOSA PLASTIC

10981984

1.214575

2900958

FUBON FINANCIAL

40.8

1.115242

27447824

TSMC

2492694

HON HAI PRECISIO

77.6

0.2583979

26960263

UNI-PRESIDENT

84887753

HOTAI MOTOR CO

399

378059

168.5

12166113

17.4

0.2881844

LARGAN PRECISION

873

LITE-ON TECHNOLO

FOXCONN TECHNOLO

1.357466

388.5

1.701571

4021996

-1.221996

87030437

66.2

0.761035

15050579

1.960784

75375299

WISTRON CORP

28.05

1.630435

8261131

5430024

YUANTA FINANCIAL

16.15

1.572327

29645043

0.6920415

2439140

YULON MOTOR CO

0.7049345

1679200

51.1 -0.1953125

3752649

330.5

2.48062

5432958

0.2004008

20158783

65.4 -0.9090909

7071237

PRESIDENT CHAIN

223

2.528736

1608223

QUANTA COMPUTER

67.7

2885895

1.587302

9477420

SILICONWARE PREC

32.5

0.931677

9186872

-1.020408

4011154

SINOPAC FINANCIA

14.9

0.6756757

11910653

FAR EASTERN NEW

33.5

3384472

SYNNEX TECH INTL

39.9

1.397713

8092811

FAR EASTONE TELE

80.5

1.257862

3527564

TAIWAN CEMENT

38.8

0.5181347

7152865

FIRST FINANCIAL FORMOSA PETROCHE

18.45

0.5449591

14119220

TAIWAN COOPERATI

17.1 -0.2915452

5985641

76.6

1.591512

6950101

TAIWAN FERTILIZE

75.3

3.292181

5238749

81 -0.2463054

1032338

TAIWAN GLASS IND

27.95 -0.7104796

892991

TAIWAN MOBILE CO

Volume

112

19.2

FORMOSA CHEM & F

PRICE DAY %

2.82638

145.5

DELTA ELECT INC

NAME

76.4

TPK HOLDING CO L

UNITED MICROELEC

MOVERS

4 5690

INDEX 5527.71 HIGH

5686.82

LOW

5493.64

3810061

52W (H) 5896.71 (L) 4719.96

5490

18-July

22-July

13 13

July April23, 19,2013 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 39.5 39.4

63.2

21.9

62.6

21.8

62.0

21.7

39.3 39.2

Max 39.45

average 39.281

Max 40.55

average 40.475

Min 39.15

Last 39.25

Min 40.4

Last 40.55

39.1

Max 63.15

average 62.785

Max 21.9

average 21.75

Min 21.6

Last 21.85

PRICE

19.40

21.4

40.55

19.25

21.3

40.50

19.10

40.45

18.95

40.40

DAY %

21.2 21.1

Max 19.4

YTD %

WTI CRUDE FUTURE Aug13

108.52

0.434983804

BRENT CRUDE FUTR Sep13

108.38

GASOLINE RBOB FUT Aug13

312.59

GAS OIL FUT (ICE) Sep13

average 18.983

(H) 52W

Min 18.88

Last 19

(L) 52W

15.74232082

109.3199997

86.29000092

0.286851115

1.98550861

114.3699951

96.65000153

0.080040981

12.36968869

316.3199902

264.1299963

929

0.296896086

2.340952906

980

832.5

3.738

-1.346001584

4.122562674

4.525000095

3.354000092

310.36

0.459636175

3.553434987

320.449996

273.759985

Gold Spot $/Oz

1317.1

1.6257

-20.8692

1796.08

1180.57

Silver Spot $/Oz

19.9317

2.1222

-33.8037

35.365

18.2208

NATURAL GAS FUTR Aug13 NY Harb ULSD Fut Aug13

18.80

21.0 Max 21.35

average 20.029

Min 20.95

Last 21

COUNTRY MAJOR

ASIA PACIFIC

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

DAY %

YTD %

(H) 52W

(L) 52W

0.9195 1.5283 0.9398 1.3156 100.05 7.9908 7.7579 6.1413 59.43 30.94 1.2633 29.92 43.25 10155 91.998 1.23636 0.86085 8.0792 10.5123 131.63 1.03

0.2508 0.1048 0.1383 0.0989 0.5997 -0.0025 0.0026 -0.0456 -0.1346 0.3232 0.2454 0.1303 0.178 -0.256 0.3511 0.0307 0.0035 -0.2339 -0.3444 0.4786 0

-11.3991 -5.5205 -2.5963 -0.2578 -13.943 -0.0951 -0.0941 1.4541 -7.4626 -1.1635 -3.3167 -2.9646 -5.1908 -3.5647 -2.9033 -2.3359 -5.2773 1.7118 0.1722 -13.7203 -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

Platinum Spot $/Oz

1433.5

0.2448

-5.551

1742.8

1294.18

748.1

0.2076

6.9234

786.5

553.75

LME ALUMINUM 3MO ($)

1825

1.108033241

-11.96333816

2200.199951

1758

LME COPPER 3MO ($)

6915

0.144822592

-12.81049048

8422

6602

LME ZINC

1864

0.376952073

-10.38461538

2230

1779

14160

1.142857143

-16.99882767

18920

13205

15.54

-0.096432015

0.876338851

16.47500038

14.60000038

498.5

-0.449326011

-16.88203418

665

489.5

665.75

0.188111362

-17.50309789

905.75

652.25

1271

-0.235478807

-2.437152178

1409.75

1186.5

124.95

1.833740831

-18.03870121

197

117.0999985

NAME

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

15.92999935

ARISTOCRAT LEISU

4.37

-1.131222

38.73015

4.49

2.29

1164092

74.34999847

CROWN LTD

12.8

0.2349256

19.96251

13.75

8.28

1351971

3MO ($)

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

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

16.41

COTTON NO.2 FUTR Dec13

86.02

0.73664825 -0.185657925

-18.19541376 9.245618491

22.80999947 89.55999756

World Stock Markets - Indices NAME

CROSSES

Macau Related Stocks VOLUME CRNCY

AMAX HOLDINGS LT

1.08

1.886792

-22.85714

1.72

0.75

185700

BOC HONG KONG HO

24.05

-0.2074689

-0.2074705

22.85

6515456

CENTURY LEGEND

0.315

18.86793

0.42

0.22

5.67

-1.04712

-5.342233

6.74

2.95

8000

CHINA OVERSEAS

20.65

-0.4819277

-10.60606

25.6

16.761

11700923

CHINESE ESTATES

13.14

8.331658

14.12

8.253

CHOW TAI FOOK JE

9.8

3.375527

-21.22186

13.4

7.44

7437016

EMPEROR ENTERTAI

2.64

0.3802281

39.68254

3.07

1.34

450000

FUTURE BRIGHT

2.06

-1.435407

69.96333

2.76

0.964

2512000

39.25

0.3836317

29.32455

44.95

16.98

4082782

115

-0.6908463

-3.117099

132.8

104.2

973441

CHEUK NANG HLDGS

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

15543.74

-0.03087107

18.61702

15589.4

12471.49

NASDAQ COMPOSITE INDEX

3587.615

-0.6552253

18.81433

3624.538

2810.8

FTSE 100 INDEX

6622.12

-0.1289462

12.281

6875.62

5478.02

HANG SENG BK

DAX INDEX

8330.27

-0.0156033

9.430407

8557.86

6324.53

HOPEWELL HLDGS

24.85

0.4040404

-25.26316

35.3

20.727

626600

HSBC HLDGS PLC

87.15

0.5190311

7.195568

90.7

61.1

10374768

HUTCHISON TELE H

4.52

1.801802

26.96629

4.66

2.98

1284952

LUK FOOK HLDGS I

22.2

5.21327

-9.016392

30.05

16.28

4687500

MELCO INTL DEVEL

14.98

-0.3989362

66.25971

18.18

5.12

1457818 1146776

GALAXY ENTERTAIN

NIKKEI 225

14658.04

0.4669666

41.00805

15942.6

8328.019531

HANG SENG INDEX

21416.5

0.2531548

-5.474795

23944.74

18710.58984

CSI 300 INDEX

2202.189

0.5346322

-12.7138

2791.303

2023.171

TAIWAN TAIEX INDEX

8105.45

0.538574

5.272423

8439.15

6922.73

MGM CHINA HOLDIN

21.85

1.864802

64.55445

9.509

KOSPI INDEX

1880.35

0.4777147

-5.843623

2042.48

1758.99

MIDLAND HOLDINGS

3.03

-0.3289474

-18.10811

2.68

412000

S&P/ASX 200 INDEX

5001.864

0.5987619

7.591253

5249.6

4084.4

NEPTUNE GROUP

0.165

-1.197605

8.552635

0.23

0.131

2997000

4693.61

-0.6519543

8.731762

5251.296

3964.808

NEW WORLD DEV

11.18

0.9025271

-6.988356

15.12

9.38

5046168

FTSE Bursa Malaysia KLCI

1801.05

0.1841201

6.637266

1826.22

1590.67

SANDS CHINA LTD

40.55

0.3712871

19.44035

43.7

20.65

4548355

SHUN HO RESOURCE

1.46

4.285716

1.67

1.03

NZX ALL INDEX

974.306

0.3411971

10.4589

998.487

767.748

SHUN TAK HOLDING

3.42

-2.005731

-18.37709

4.65

2.62

5321007

PHILIPPINES ALL SHARE IX

4029.44

-0.06547489

8.933813

4571.4

3410.76

SJM HOLDINGS LTD

6892510

JAKARTA COMPOSITE INDEX

20.9

PRICE

Palladium Spot $/Oz

CORN FUTURE

21.6

Currency Exchange Rates

NAME

METALS

61.4

Last 61.55

40.60

Commodities ENERGY

Min 61.5

HSBC Dragon 300 Index Singapor

612.9

0.02

-1.32

STOCK EXCH OF THAI INDEX

1481.84

-0.3597388

6.45937

1649.77

1172.92

HO CHI MINH STOCK INDEX

506.16

0.4764173

22.34066

533.15

372.39

Laos Composite Index

1280.88

0.560554

5.442181

1455.82

996.61

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

SMARTONE TELECOM WYNN MACAU LTD

0.7423118

7.05638

22.382

12.995

12.78

0.3139717

-9.232954

17.38

12.28

203000

0.2386598

26.5

14.62

2520800

ASIA ENTERTAINME

4.16

-0.4784689

47.7964

4.7647

2.2076

74536

BALLY TECHNOLOGI

69.8

-0.5698006

56.1172

70.31

41.74

778639 1000

BOC HONG KONG HO

3.18

3.583064

3.6

2.99

GALAXY ENTERTAIN

5.13

0.3913894

29.21914

5.77

2.25

400

INTL GAME TECH

18.69

-7.33763

31.89838

20.25

10.92

8429121

JONES LANG LASAL

94.95

-0.5029865

13.11651

101.46

61.39

246449

LAS VEGAS SANDS

55.96

-0.3738651

21.2305

60.54

32.6127

3903053

MELCO CROWN-ADR

24.38

0.5775578

44.77435

25.2

9.13

2168308

MGM CHINA HOLDIN

2.8

9.803922

51.35135

2.8

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1960

MGM RESORTS INTE

16.18

39.00343

16.25

8.83

5955033

SHFL ENTERTAINME

22.92

0.7472527

58.06897

22.92

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1837053

SJM HOLDINGS LTD

2.46

1.234568

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2.9481

1.7255

16150

133.09

-0.007513148

18.31274

144.99

84.4902

935805

WYNN RESORTS LTD

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14 14

July 23, 2013 April 19, 2013

Opinion

‘Shadow banker’ execution turns Chinese sentimental

Other major whitecollar criminals have been handed lesser sentences, even for seemingly worse (and more expensive) crimes than those alleged against Zeng Changjie

Adam Minter

Shanghai correspondent for the World View blog

n Friday morning, Zeng Shan woke up knowing that her father, Zeng Changjie, was still alive but condemned to death row in Changsha, Hunan province. His alleged crime was “shadow banking” – the unregulated lending of private money at high interest rates to customers who China’s state-owned banks can’t or won’t serve. At the discretion of prosecutors, shadow banking practices are sometimes labelled fraud and criminal charges are filed. Zeng was arrested in December 2008 and convicted in 2011 of raising more than US$500 million from 24,000 investors. Some of those investments went bad, and when Zeng couldn’t pay out, prosecutors moved in. There was hope and precedent that Zeng’s sentence might be reduced. Other major white-collar criminals have been handed lesser sentences, even for seemingly worse (and more expensive) crimes than those alleged against Zeng Changjie. To defend her father, Zeng Shan established an account on Sina Weibo, China’s most popular microblogging service, making the case that local governments in Hunan framed her father for his money. Then, at 10.04pm last Friday night, she tweeted:

“Bad news has come: My father was executed via lethal injection this morning. We didn’t get to see him a last time! No final words! The government didn’t even notify us! I didn’t expect this to happen so quickly! My father was innocent! We will clear his name! Thank you, thank you to all who have been concerned ------- Zeng Shan, weeping blood.” Zeng didn’t specify how she learned the news but, according to her tweeted account, on July 13 she and her brother travelled to the court and verified the truth themselves. The ashes, court security told them, could be picked up Monday. On Sunday, they received a court notice clarifying that their father had been killed by firing squad.

Fact of law Zeng’s Friday-night tweet has been re-posted nearly 74,000 times and has accumulated almost 50,000 comments. Both her father’s name and the court that sentenced and oversaw his execution are trending topics on Sina Weibo. Some of China’s top newspapers weighed in with editorials about the execution, using it to explore and criticise China’s court’s system, as did many of its most prominent businessmen.

However, much of the outrage was not overtly directed at the execution itself, nor the haste with which it occurred or lack of immediate notification. Rather, what sparked the outrage – and one of the most intense Chinese discussions of capital punishment in years – was the fact that Zeng Shan and her brother weren’t invited to visit their father before he was killed. For example, on Monday, Southern Metropolitan Daily, a highly influential Guangzhou newspaper, devoted a lengthy editorial to the importance of guaranteeing the condemned a right to say goodbye to family: “Even though the criminals are so notorious that they must be sentenced to death, we should satisfy the reasonable request and guarantee relevant rights for humane reasons.” That may seem like a trivial point when discussing the execution of a shadow banker. But unlike shadow banking, a quasi-legal industry that Chinese laws and regulations largely do not address, a condemned man’s right to a final family visit is guaranteed by article 423 of China’s Criminal Procedure law and a legal interpretation of China’s Supreme Court. So, for those – like Zeng Shan and her supporters – who believe Zeng Changjie was unjustly prosecuted and

executed, the best hope is to stress this clear point of law. High-minded arguments about the death penalty in general, and whether financial crimes should be subject to it, simply don’t get very far in the personality- and controversydriven world of contemporary Chinese public opinion. In other words, undermine the legitimacy of the court or skip the debate. This approach is nothing new: China’s public discourse has always been symbol- and proxy-laden, a trend which microblogging has only exacerbated.

Untrustworthy On Saturday, 19 hours after Zeng’s tweet announcing her father’s execution, and in the midst of a growing public furore at the Changsha Intermediate People’s Court’s apparent denial of a family visit, the court used its own Sina Weibo account to repost its findings against Zeng Chenjie, and to announce (as translated in the Global Times): “There is no clear procedure in the law that allows the families of prisoners awaiting execution to be allowed to meet one last time.” This claim was provably false, and the tweet was deleted within 90 minutes of its posting (but preserved across China’s Internet, including by state-owned

newspapers such as the lawand-order Global Times). The court soon tweeted a clever replacement: “The judge informed Zeng of his right to meet family before the identification procedure in advance of the execution, but he didn’t make a request nor did he mention it in his last words.” This tweet went viral almost immediately, and as of Tuesday evening in China, it’s been re-posted more than 34,000 times and generated more than 17,000 almost universally insulting comments, including the predictable: “Your reckoning will come!” The most notable reactions came from entrepreneurs and executives, aware that law enforcement in China – especially at the local level – is unpredictable and untrustworthy. Kai-Fu Lee, the former president of Google China, and one of Sina Weibo’s most popular figures, with 49 million followers, tweeted Sunday morning (as translated by the Offbeat China blog): “If one day, I’m sentenced to death and told that I have the right to meet my family, I guarantee that I will absolutely ask to see my family. If the court claims that I didn’t make such a request after the execution, it must be a lie. Share this Weibo post to make your promise, too, in case you lose the chance to see your family one last time.” Lee’s post has been shared more than 71,000 times as of Tuesday evening. Of course, few if any of those sharing the post expect to find themselves on death row, hoping to see family. Rather, they seem to recognise that if a court can’t be trusted to ensure a banker’s right to say farewell to his children, neither can it be trusted to bother with their rights, either. Bloomberg View

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

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July April23, 19,2013 2013

Opinion

What’s in a number? wires In China, not much Business

Leading reports from Asia’s best business newspapers

China Daily The European Union is working on “flexible rules” for visa applications to woo Chinese travellers in a bid to boost the region’s tourism industry, said a top official from the European Commission. Antonio Tajani, vice-president of the European Commission, told a news conference in Beijing that the commission aims to make the visa application process easier for Chinese tourists. “It is very important for the EU to have more Chinese visitors,” Mr Tajani said, adding that the tourism industry is crucial for the EU in terms of creating jobs and boosting economic growth.

Michael Pettis

Finance professor at Peking University and author of ‘The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy’

Korea Herald Direct financing by South Korean companies shrank 9.3 percent in the first half as firms remained reluctant to raise money in bond markets on yield hikes following the U.S. signalling it would cut its stimulus, the financial regulator said. Local companies raised a total of 59.9 trillion won (US$53.4 billion) in the January-June period by selling stocks and bonds, compared with the 66.1 trillion won a year earlier, according to the Financial Supervisory Service. The first-half decline came as companies refrained from securing funds through selling corporate bonds.

The Age Australian borrowers may soon find out if interest rates could go lower, when the consumer price index is released. A survey of 12 economists reveals a median forecast for June’s CPI to show an average increase of 0.5 percent in prices over the June quarter and 2.5 percent for the year to the June quarter. Inflation is an important factor in the Reserve Bank of Australia’s decision-making when it comes to the cash rate. In the minutes of its July meeting, the RBA said the inflation outlook ‘‘could still provide some scope for further easing, should that be required to support demand’’.

The Star With so much liquidity flooding the markets yield plays are taking a back seat while investors hunt for a good capital gains especially in initial public offerings in Malaysia. Areca Capital chief executive Danny Wong believed that in the current market situation, IPOs were great opportunities for growth-stockhungry investors to plonk their money in as there was “too much liquidity and too few good stocks”. He said conglomerates – such as IOI Corp Bhd with its IOI Property Bhd spin-off, UMW Holdings Bhd with its oil and gas outfit – had been taking the opportunity to unlock the value of some of their units.

s the debate in Beijing intensifies over the quality and sustainability of China’s economic growth, a shift in thinking is taking place. China’s most thoughtful economists are increasingly sceptical about the need for high gross domestic product growth rates. China’s leadership has always put great stock in its GDP numbers. This year’s growth target is 7.5 percent; when Finance Minister Lou Jiwei said in Washington earlier this month that “the 7 percent goal should not be considered as the bottom line,” China’s state-run media first reported, and then hastily whitewashed, his statement. According to Xinhua News Agency, Lou had actually used the 7.5 percent figure – coincidentally, the exact number reported July 15 for the second quarter. Such shenanigans are pointless. GDP growth rates over the next few years of 7.5 percent, or even 7 percent, will be impossible to achieve. Until now, such gaudy statistics have been produced by ballooning investment. With so much of that investment now creating less economic value than debt, China has experienced an unsustainable expansion in credit. The country is perilously vulnerable to a chaotic adjustment. This cannot continue. Growth will drop to well below 7 percent one way or another because credit growth must slow sharply. Ultimately, though, GDP growth rates are the wrong target. For China to successfully rebalance its economy toward a healthier and more sustainable model, the measure that really matters is how fast median household income is growing.

Anaemic spending Why? Consider what it means for China to rebalance.

With household consumption at an astonishingly low 35 percent of GDP, in order to raise that figure to even 50 percent of GDP within a decade – still by far the lowest proportion of any major economy in the world – consumption growth would have to exceed GDP growth by close to four percentage points every year. An average annual growth rate of 7.5 percent, in other words, would require growth in consumption to exceed 11 percent. How could China possibly get citizens to start spending that much faster? In fact, consumption now contributes less to GDP growth in China than it did during the first half of 2012. It is now widely understood that the reason for China’s very low household consumption share is the very low household income share of GDP, which, at around 50 percent, is among the lowest ever recorded. To raise that figure while maintaining GDP growth of 7.5 percent, or even 6 percent, would require a ferocious surge in Chinese household income, even as China and the world slow down. This will be impossible to achieve without a continued, and very dangerous, surge in debt. As a number of prominent Chinese economists have noted, it is not the GDP growth rate that matters for ordinary Chinese people. Ordinary Chinese, like people everywhere, do not care about their per-capita share of GDP. They care about their real disposable income. In recent decades, real disposable income has grown at well above 7 percent a year, which, although much lower than China’s GDP growth rate, is nonetheless a tremendous feat. This is the growth rate that must be maintained. Beijing’s policies should aim for average annual growth in household income of 6 or 7 percent. This would ensure social stability and would continue to

drive China’s economy forward. It implies, however, that if China is to rebalance meaningfully, GDP must grow by “only” 3 to 4 percent, which – although low by recent Chinese standards – is consistent with rapid growth in the income of ordinary Chinese and a real and sustained rebalancing of the Chinese economy, as well as consistent with almost zero investment growth.

Biggest challenge Maintaining the growth rate in disposable household income while reducing investment will not be easy, of course. This is the biggest challenge Beijing faces. In principle, it can be done by reversing hidden transfers from the household sector to the state – raising deposit rates to a level at which household savers are fairly compensated, for instance – and transferring resources directly from the state to the household sector, as well as by changing China’s over-reliance on cheap capital to make its growth more labour-intensive. But there will be tremendous opposition from the political elite to many of these measures. Still, the critical point is

that China does not need to grow at 7.5 percent. This myth should be discarded. What matters is that ordinary Chinese people continue to improve their lives at the rate to which they are accustomed and that the Chinese economy begins to let the air out of its credit bubble. Current targets are appropriate for household income growth. They are meaningless for GDP growth. Bloomberg View

Beijing’s policies should aim for average annual growth in household income of 6 or 7 percent

July 23, 2013

Closing Portugal yields drop as president backs govt Diaoyutai MGM develops more resorts Portugal’s bond yields fell yesterday after the president ruled out a snap election following the collapse of talks among the three main political parties on a deal to support the international bailout. President Aníbal Cavaco Silva (pictured) said on Sunday he wanted the ruling centre-right coalition to stay in place to keep the rescue programme on track. Portuguese 10year yields fell 50 basis points to 6.43 percent, their lowest in three weeks and 5-year yields dropped 60 bps to 6.03 percent, on relief elections that could have prolonged uncertainty had been avoided. Portuguese bonds outpaced other euro zone debt.

China committed to reforms, says Vice Premier China remains committed to steering its economy towards consumption as the main growth driver, and away from investment and exports, and will fine-tune policies to deal with any prolonged slowdown, Vice Premier Zhang Gaoli was quoted yesterday as saying. China will stick to its prudent monetary policy, but will take decisive measures to support reasonable infrastructure and social welfare investment as well to develop the export sector, service industry and small firms, he told local officials on a weekend trip to Guizhou. His remarks came after China’s central bank scrapped the floor on lending rates, in a longawaited reform that signalled the new leadership’s determination to carry out market-oriented reforms. The move kept expectations high on how quickly China’s new government, led by President Xi Jinping, will press ahead with reforms aimed at boosting the country’s long-term growth without exacerbating a near-term slowdown. “We are committed to speeding up economic restructuring to improve the quality of growth,” Mr Zhang was quoted as saying in the statement on the government’s website. “We must make pre-emptive [policy] fine-tuning in a timely and appropriate manner,” he added. “We must take decisive fiscal, financial and pricing measures to support reasonable infrastructure investment, social welfare projects, the services sector, exporters and small- and medium-sized firms.” Mr Zhang repeated the official line that China’s growth is still within a reasonable range and that the economic environment is getting more complicated. Growth in the world’s second-biggest economy has slowed in nine of the past 10 quarters and exports fell in June for the first time in 17 months.

Taiwan export orders shrink for 5th month Taiwan’s June export orders unexpectedly contracted for a fifth straight month, slipping 3.5 percent from a year earlier, as demand from China waned. The data points to a loss of momentum for tradereliant Asian economies who are banking on a pick-up in the United States to buffer a slowdown in China. Taiwan’s government has cut the island’s growth outlook as it confronts slowing demand from China, its largest export market. Some analysts say the trend could improve in the second half while Taiwan’s Ministry of Economic Affairs expects the value of July’s export orders to be slightly more than in June. “The U.S. consumer market is slowly improving. We especially expect the consumer market to see a greater recovery in the second-half,” said Raymond Yeung of ANZ in Hong Kong. Ten economists in a Reuters poll estimated export orders would rise 0.8 percent, with forecasts ranging between growth of 2.53 percent and a contraction of 1.2 percent. Orders fell 0.4 percent in May, shrank 1.1 percent in April, and dropped 6.6 percent in March. Orders from its two biggest markets were mixed, with mainland China down 1.7 percent and the United States up 2.2 percent. Those from Europe and Japan both shed 10.4 percent and 12.8 percent, respectively. Taiwan’s export orders are a leading indicator of demand for Asia’s exports and for hi-tech gadgets, and typically lead actual exports by two to three months. Electronics and components makers are hoping for a lift from recovering U.S. consumption but regional factory data has been patchy. Reuters

MGM Resorts International – a 51 percent investor in the MGM Macau casino resort – is to help develop two new non-gaming properties on the mainland, reports China Daily. They are Diaoyutai Kunming and China Holiday - Ningbo Hangzhou Bay Project. The schemes will be via Diaoyutai MGM Hospitality Ltd – a joint venture between Diaoyutai State Guesthouse in Beijing and MGM – in concert with local developers. Union Gaming Research Macau said in a note in June the Diaoyutai MGM Hospitality joint venture was a way for MGM to connect on the mainland with high net worth customers of MGM Macau.

OECD publishes plan to cut tax evasion Tom Bergin

he Organisation for Economic Cooperation and Development has unveiled new plans to tackle tax evasion by improving the way tax authorities share information about individuals and entities like trusts. Countries are increasingly moving to a standard of sharing information on taxpayers even in the absence of any specific request. This is more likely to flag up inappropriate behaviour than the longer established practice of one tax authority starting an investigation into suspicions of wrongdoing, and then making a request for data. The European Union has estimated hundreds of billions

of euros are lost each year to tax evasion. The stashing of undeclared earnings in accounts in offshore jurisdictions has long been a favoured method for hiding cash from one’s home tax authority, aided by the veil of secrecy. The OECD, which advises its mainly rich nation members on economic and tax policy, issued an updated standard for the automatic exchange of information at the sidelines of a meeting of G20 finance ministers. The OECD has proposed a detailed description of the kinds of information that would be exchanged and proposals for common legal and technological standards to facilitate

the flow of information. The OECD hopes to have a new draft agreement ready for countries to sign in late 2013. The shift to an international standard on automatic sharing of information has been accelerated by the U.S. Foreign Account Tax Compliance Act (FATCA) which forces banks outside the United States to give Washington details of foreign accounts held by U.S. citizens. Countries like Bermuda, often labelled a tax haven by Western lawmakers, said that once they agreed to share information with the United States, other large countries pressured them for a similar deal. Reuters

Shanghai sales unaffected by probe: Chow Tai Fook Vinicy Chan

how Tai Fook Jewellery Group Ltd, the world’s largest listed jewellery chain, said the company’s sales in Shanghai have been unaffected by China’s investigation into gold pricing in the city. Prices of Chow Tai Fook’s gold products are uniform across China and there are no regional differences, managing director Kent Wong said in an interview in Hong Kong yesterday. Chow Tai Fook and other gold shops in Shanghai are being probed by the National Development and Reform Commission, China’s top economic planning agency, for possible price manipulation, the official People’s Daily reported on July 19. The investigation targets a rule by the Shanghai Gold & Jewellery Trade Association that limits the variation in gold and platinum prices to no more than 2 percent or 3 percent of the prices it sets for the products, according to the report. “Our sales were not at all affected,” Mr Wong said. “We are asked to provide information only

because we are a member of the trade association.” In a statement last week, the company said it didn’t commit any violations of anti-monopoly rules and said its pricing “is not subject to the constraints or restrictions of any association or other jewellery retailers”. Shares of the Hong Kong listedjewellery chain rose 3.4 percent to close at HK$9.8 in the city yesterday, while the benchmark Hang Seng Index gained 0.25 percent. “Such investigation may even be beneficial to the industry in the long run,” Mr Wong said, adding that it may help regulate industry practices and recover consumers’ confidence. “Chow Tai Fook has its own gold pricing mechanism,” the Hong Kongbased company said in an e-mailed statement last week. Shanghai-based gold companies Lao Feng Xiang Co and Shanghai Yuyuan Tourist Mart Co are also being probed, according to company statements last week. Lao Feng Xiang will announce the

Chow Tai Fook among gold shops being probed in Shanghai

results of the investigation as soon as possible, it said in a statement to the Shanghai stock exchange. Shanghai Yuyuan also said it will give results of the investigation as earliest as possible, the company said in a filing to the exchange. Bloomberg News