Macau Business Daily, July 3, 2013 by Business Daily

Macau Legend raises HK$2.2 bln in share offer says report

Tougher times ahead for Portuguese eyeing residency in Macau Page 5

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Year II

Number 318

Wednesday July 3, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quintã

MOP 6.00

April 19, 2013 Amax Junket investor reports HK$39.4 mln annual loss on ops

China ‘duty’ on EU wine could spur Macau sales S

ales of European wine to Chinese consumers could grow by at least 10 percent in Macau if the mainland imposes higher taxes on the sector as part of a threatened tariff war with the European Union. Macau’s role as a tax-free zone and bridge between East and West would leave it well placed to take advantage of the trade war, suggest several local wine traders. The row follows European complaints that heavily state-subsidised Chinese solar panels are being dumped on the European market. In response the Chinese Ministry of Commerce has launched a likely year long anti-dumping investigation on wines imported from the European Union. More on page 2 I SSN 2226-8294

www.macaubusinessdaily.com

Casino boom pushes city up Asia’s FDI ranking

Hang Seng Index 21010

Foreign direct investment (FDI) in Macau has grown almost six-fold since the handover, much faster than worldwide FDI expansion during the same period, a report suggests. The World Investment Report 2013 released last week estimates the territory’s existing inward FDI at US$16.35 billion (130.62 billion patacas) at the end of last year. FDI in Asia rose 4.3 times to US$4.78 trillion while worldwide investment increased threefold to US$22.8 trillion. The Asian ranking is led by Hong Kong with an inward FDI stock of US$1.42 trillion at the end of last year, followed by mainland China with US$832.88 billion. Page 3

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20858

20782

20706

20630

July 2

HSI - Movers Name

%Day

PETROCHINA CO-H

6.67

LI & FUNG LTD

3.56

POWER ASSETS HOL

2.09

‘No plans’ to sell Ao’s Supermarket aims at Late-year expansion shares in Waterleau well-heeled Chinese planned for taxi fleet

WHARF HLDG

2.07

HUTCHISON WHAMPO

1.41

WANT WANT CHINA

-3.11

HENGAN INTL

-3.43

CHINA CONST BA-H

-3.83

The Financial Services Bureau has at last taken over the shares that disgraced former government secretary Ao Man Long forfeited in Taipa wastewater plant operator Waterleau Macau Lda. The company is suing the government over the botched tender for the wastewater treatment plant on the Macau peninsula. But the government says it has no plans to sell the newly acquired 20-percent stake.

Royal Supermarket Co Ltd, the city’s largest grocery chain by outlet numbers, is planning a spin-off brand catering to high-income Chinese customers. The ‘Grand Mart’ store is to open in November or December near Macau Jockey Club with an eye on Cotai resort customers. Royal opened ‘Supreme Food Market’ – also in Taipa – in January. The latter’s selection of high value Western foods is aimed at expatriate shoppers.

CHINA RES LAND

-4.95

KUNLUN ENERGY CO

-6.25

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The Transport Bureau is to offer 100 new taxi licences via public tender by year-end. It will be for cabs hailed in the street and go ahead regardless of whether the special licence for telephone-ordered yellow taxis is renewed. Industry sources warn the new round of licensing will not meet rising demand. They call on authorities to improve taxi tender procedures or launch a concession. Page 7

Source: Bloomberg

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July 3, 2013

Macau

China ‘duty’ on EU wine could spike sales here Wine traders believe European wine sales could go up if Beijing imposes heavier duties Tony Lai

tony.lai@macaubusinessdaily.com

hopping trips by mainland Chinese could start including European wine, along with gold and milk powder, if Beijing go through with its threat to impose heavier levies on such goods. The Chinese Ministry of Commerce said in a statement on its website on Monday that it had launched anti-dumping and antisubsidy probes on wines imported from the European Union. The inquiry was expected to last at least a year, according to the ministry. It could lead to heavier taxation on such imports from the present rate of at least 48 percent. Many observers perceive this as a retort from Beijing on the dispute over the solar panels with the 28-nation bloc. The European Commission last month imposed an average tariff of 11.8 percent on Chinese solar panel imports, due to rise to more than

47 percent in August if there is no resolution between the two sides. While any duty on EU wines is still far from being applied, the Macau wine traders Business Daily spoke to see this as a potential opportunity. Luís Herédia, director of Vinomac Fine Wines Ltd, said this “may be helpful” to the sales of European wines here. “Some people [from the mainland] could buy a bottle of wine… as a souvenir,” he said, because it would be much cheaper than across the border. Solex Lam, the boss of Companhia de Bom Vinho Ltda, believes sales could grow by at least 10 percent. “The wine industry has talked about this [heavier taxation] in the last few days,” Mr Lam said. “If [it becomes] true, this could serve as an incentive for more mainlanders to consume wines here, where no wine duty is imposed.”

“They could enjoy the wines here, [which would be] the more frequent case, or take a few [bottles] back home,” said the Bom Vinho boss. Macau took in wine bottles from EU members worth 4.71 billion patacas (US$588.75 million) in the 2010-2012 period. Wine imports from the EU peaked at 2.05 billion patacas in 2011, according to data compiled by the Statistics and Census Service. In the first five months of this year the city imported wine bottles worth 535.3 million patacas.

Dear taste Mr Lam, who handles sales of European, Australian and American wines, also said mainlanders usually look for the most famous brands like Bordeaux wines from France. “Four out of every 10 bottles sold

here were acquired by mainlanders… but the mainlanders accounted for 80 percent of the sales volume as they usually want more expensive wines,” he said. “That is why there are many new wine stores opening up in the last few years.” But mainland Chinese accounted for just 10-15 percent of the customers of Vinomac, which specialises in the sales of Portuguese wines, said Mr Herédia. In 2012, most wine imports came from France at 1.24 billion patacas, followed by Portugal with 62.9 million patacas and Germany with 59.9 million patacas. The total reached 1.39 billion patacas. Judy Chan, the operational manager of Pacific Wine Cellar Ltd, is also positive about wine sales here. “It is actually not easy to bring too many wines across the border as the mainland customs have carried out strict inspections during the immigration clearance,” said Ms Chan. Each traveller can only carry 1.5 litres of duty-free alcoholic drinks across the mainland China border. On the other hand traders here do not expect a possible higher duty to drive up wine re-exports to the mainland. “There are actually not many European wines re-exported from Macau to mainland China, except to the Zhuhai-Macau Cross Border Industrial Zone,” said Mr Lam. Hong Kong is more used as a transition point between the 28-nation bloc and mainland China, he said. With Bloomberg News

Bottle shop

Value of wine imports from EU members to Macau (MOP bln)

Source: Statistics and Census Service

Macau imported 1.39 billion patacas worth of wine bottles last year

Govt keeps Ao stake in Waterleau The Financial Services Bureau has at last taken over the shares Ao Man Long forfeited in Waterleau Vítor Quintã

vitorquinta@macaubusinessdaily.com

he government has no plans to sell the 20 percent stake in Taipa wastewater plant operator Waterleau Macau Lda that belonged to disgraced former government secretary Ao Man Long. The Court of Final Appeal sentenced Mr Ao to 29 years in prison in May 2012 in what was his third trial for corruption and money laundering while he was secretary of transport and public works. In the latest trial, the court ordered him to forfeit 31.9 million patacas (US$3.99 million) and his stake in Waterleau Macau.

More than a year later, the Financial Services Bureau has finally confirmed to Business Daily that Mr Ao’s stake in Waterleau Macau “has been officially transferred to [the] Macau SAR”. The transfer took place “last year,” a bureau spokesperson said in an e-mailed reply last month, without providing any further details. The bureau had told Business Daily in September 2012 that the “relevant legal requirements regarding the forfeiting of the company’s shares” had not yet been

carried out. The Court of Final Appeal said the shares were a bribe given to Mr Ao to ensure that Waterleau Macau’s Belgian parent company, Waterleau Global Water Technology NV, won contracts for wastewater treatment plants on Coloane. Luc Vriens, the chief executive of Waterleau Global, is facing corruption charges as part of related trial currently taking place at the Court of First Instance. With the transfer complete, the government is now a shareholder in

Waterleau Macau, a subsidiary of Waterleau Group, which is suing the government over the botched tender for the wastewater treatment plant on the peninsula. The Financial Services Bureau says no steps have so far been taken to sell these newly acquired shares in Waterleau. Asked if the government would be interested in disposing of this stake, the spokesperson said: “At this moment, Macau SAR still keep[s] hold of the stake of ‘Waterleau Macau Limitada’.”

July 2013 April3,19, 2013

Macau

Casino boom thrusts city up Asia’s FDI ranking Investment in Macau grew almost twice as fast as the world average since 2000 Vítor Quintã

vitorquinta@macaubusinessdaily.com

oreign direct investment (FDI) in Macau has soared almost six-fold since the handover, much faster than the worldwide growth during that same period, a report shows. The World Investment Report 2013 released last week estimates the territory’s accumulated inward FDI at US$16.35 billion (130.62 billion patacas) at the end of last year. That amount is 5.8-times higher than the figure registered in 2000 (US$2.8 billion), when the United Nations Conference on Trade and Development compiled its previous report. That growth was faster than the overall increase in Asia and worldwide during the same 12-year period, the document released in Hong Kong shows. FDI in Asia rose 4.3 times to US$4.78 trillion while worldwide investment increased three-fold to US$22.8 trillion. As a result Macau jumped one spot to 14th among Asia’s nations with the most inward FDI stock. The city overtook North Korea and Myanmar but was passed by Iran. The Asian ranking is led by Hong

Most of the foreign direct investment in the past 12 years went into the gaming industry (Archive Photo)

Kong with an accumulated inward FDI of US$1.42 trillion at the end of last year, followed by mainland China with US$832.88 billion. Most of the investment coming in during the past 12 years went into the cultural and recreational services sector, data from the Macau Statistics and Census Service show. That sector includes the highly

profitable gaming industry, which was liberalised in 2002, leading to a 18.6-fold increase in casino revenue in just one decade.

Looking abroad After falling to its lowest level in seven years, new foreign direct investment coming into Macau bounced

580%

Growth in Macau inflow FDI from 2000-2012 back in 2012. It more than doubled to US$1.5 billion, the report estimates. Greenfield FDI projects – new ventures launched from scratch – increased even faster, with their value jumping from US$430 million in 2011 to US$2.38 billion last year. Investment is no longer just a one-way street for the territory, the document shows. Last year Macau investors’ new FDI abroad reached a record high of US$150 million, up by 25 percent from the previous year. While in 2000 the city’s investment overseas was just about non-existent, it has reached a total of US$822 million by the end of 2012, the report estimates. Macau is also the 14th most important source of FDI in Asia. On the other hand the territory remains almost immune to crossborder mergers and acquisitions, with the combined value of sales and purchases reaching just US$40 million. Nonetheless the report does single out one deal that involved Macau. ING Groep NV of the Netherlands sold ING Life Insurance Co. (Macau) Ltd and its Hong Kong and Thailand insurance operations to Richard Li Tzar Kai for 1.64 billion euros (US$17.1 billion). “European banks continued to shed their non-core – often overseas – assets in order to strengthen their capital base,” the report says.

Wynn Macau bottom of June revenue table Share of tables and slots relative to market totals a better measure, says chairman Michael Grimes

michael.grimes@macaubusinessdaily.com

ynn Macau Ltd’s share of gross gaming revenue in Macau dropped to about 10 percent last month from about 12 percent in May, according to data compiled by Lusa news agency. The figures include slot revenue as well as table games. It put Wynn in bottom place in the monthly revenue league table below MGM China Holdings Ltd on 11 percent – the only other Macau operator with a single property. Steve Wynn, chairman of Wynn Macau and its parent Wynn Resorts Ltd, argues however that his Macau operation should be judged by ‘fair share’ based on the amount of casino equipment – tables and slot machines – his operation has as a percentage of the equipment in the whole market. In its unaudited first quarter results Wynn Macau said during the period it had an average of 494 tables and 843 slots, versus total

market numbers of 5,749 tables and 16,406 slots recorded by Macau’s regulator, the Gaming Inspection and Coordination Bureau. Based on Mr Wynn’s fair share calculation, that would give Wynn Macau 8.59 percent of the table revenue and 5.13 percent of the slot revenue. If as Mr Wynn contends, his Macau operation is over performing relative to its inventory, MGM Macau is doing even better. By the Steve Wynn formula, MGM China, which had an average of 424 tables and 1,361 slots during the first quarter according to its unaudited results, would when judged by total market inventory have a table revenue share of 7.37 percent and slot revenue share of 8.29 percent. MGM China Holdings’ stock closed in Hong Kong yesterday down 0.24 percent at HK$20.65 (US$2.66). It has produced a one-year return of 86.43 percent

according to Bloomberg data. Wynn Macau’s stock actually rose 4.05 percent on the day to HK$21.85. It has produced a one-year return of 27.53 percent.

Buy list Cameron McKnight of Wells Fargo in New York said in a note that Macau-focused casino stocks Wynn, Las Vegas Sands Corp and Melco Crown Entertainment Ltd remain on the bank’s ‘buy’ list. He cited additional infrastructure, hotel and table supply in Macau and an increasing share of “high spending, longer staying, northern Chinese” as reasons for thinking Macau would continue to track toward 16 percent year-on-year gaming revenue growth, despite a “challenging” macroeconomic situation in China. Macau’s casino gross gaming revenue for June grew by 21 percent

year-on-year to 28.3 billion patacas (US$3.5 billion). Yesterday June revenue leader SJM Holdings Ltd (24.5 percent, but shared in some cases with affiliates) closed the trading session down 2.55 percent to HK$18.38; a year return of 34.44 percent. Second place Sands China Ltd (a 20.5 percent revenue share) rose 1.23 percent in trading to HK$37.00, a year return of 56.33 percent. Third-placed Galaxy Entertainment Group Ltd (a 19 percent Macau revenue share) slipped 1.32 percent in Hong Kong, to HK$37.50, a year return of 95.72 percent. Fourth spot Melco Crown (a 14.5 percent revenue share) gained 0.60 percent in Hong Kong to close at HK$59.00, a one year return of 102.05 percent.

July 3, 2013

Macau

Royal Supermarket heads upmarket with Grand Mart

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HOSPITALITY

Macau’s biggest operator of supermarkets plans a store meant especially for the wealthy

Distant Europe Macau’s economic growth depends increasingly on the number of visitors from mainland China. Efforts to diversify our sources of tourists have focused mainly on Asia, but have failed to stem the increase in the predominance of mainlanders among our visitors. That predominance just keeps growing, not so much because the number of visiting mainlanders is growing, but rather because the numbers of visitors from elsewhere are growing more slowly or, in a few cases, contracting. A surprisingly low number of Europeans visit Macau. The commercial and historical links between Macau and Europe and the large number of Europeans living in this part of the world do not entail much of a flow of European tourists into Macau.

Tony Lai

tony.lai@macaubusinessdaily.com

Royal Supermarket intends to open a Grand Mart on Taipa to complement its Supreme Food Market (Photo: Manuel Cardoso)

Our main sources of European visitors are Britain, France, Germany, Italy, Spain and Switzerland, in that order of importance. Together visitors from these six countries made up fewer than 0.6 percent of all visitors in the past two calendar years. That is equivalent to fewer than 450 visitors per day, on average, from those countries. The most striking thing about their numbers, apart from their paucity, is their stability. The numbers of visitors from these countries are generally steady throughout the year, peaking noticeably only in the fourth quarter of each year. The average number of British visitors since the beginning of 2011 has hovered around 150 per day in the first three quarters of each year, before jumping to about 190 in the fourth quarter and then falling back to about 150 in the first quarter of the following year. J.I.D.

0.24 %

Britons as proportion of all visitors, 2011-2012

oyal Supermarket Co Ltd is aiming to fill a gap in the grocery market with a new sort of supermarket meant for wealthier customers, to be called Grand Mart. Royal Supermarket general manager Jeff Chang Hing Cheng told Business Daily that his company would open its first Grand Mart supermarket for “big spenders” in November or December. Royal Supermarket, Macau’s biggest operator of grocery and household goods stores, already runs the Royal Supermarket and Supreme Food Market supermarkets. “While Supreme aims for expatriates and Royal Supermarket is targeted at the mass market, Grand Mart will sell more high-end products,” Mr Chang said. “The customers can be locals or tourists.” He said the first Grand Mart would be near the Macau Jockey Club on Taipa, in an area with “residents with higher incomes and several casinos nearby”. The store will occupy about 1,400 square metres of floor space. Mr Chang said the Grand Mart store would sell products from all over the world. He acknowledged that it would have rivals at the high end of the market, including Hong Kong supermarket chain PARKnSHOP.

PARKnSHOP re-branded its outlet in Taipa’s Flower City this year, calling it Fusion by PARKnSHOP. “An international superstore concept that combines the freshest produce with a wide selection of Western delicacies,” is how PARKnSHOP described it.

Fertile ground “Every shop has its own positioning,” said Mr Chang, “and we see there are still opportunities in the market, which has yet to reach saturation.” Sales of supermarket goods amounted to 889 million patacas (US$111.1 million) in the first quarter of this year, 5 percent more than a year earlier and 70 percent more than three years earlier, official data show. Mr Chang believes the opening of several new casino resorts in Cotai will make Cotai fertile ground for the expansion of Grand Mart. “But it depends on whether there are suitable locations,” he said. He said it also depended on how fast the market developed. Mr Chang said Royal Supermarket had yet to put a final figure on its investment in the first Grand Mart. The company is waiting for more information on the cost of renovating the premises.

But he said it would invest more than it did in its Supreme Food Market on Taipa.

Owner-occupier Mr Chang said Royal Supermarket had put between 6 million patacas and 7 million patacas into the Supreme Food Market store. The store occupies 460 square metres of floor space. It is meant for expatriates. Mr Chang declined to disclose figures for the Supreme Food Market store’s performance so far, saying only that its results were “okay”. Royal Supermarket has no plans to open a second Supreme Food Market this year. The company has 29 Royal Supermarket stores. Mr Chang said the surge in rents for commercial premises had so far failed to trouble his company, as it owned most of the premises that its stores occupied. But he said the shortage of suitable labour had caused difficulty. Royal Supermarket told Business Daily in May that it had a high turnover rate among its 500-strong workforce, losing about 10 employees per month. The company said it had had to import 80 workers earlier this year to fill vacant positions.

July 3, 2013

Macau

Amax reports HK$39.4 mln annual loss Blames lack of access to Greek Mythology Casino results Michael Grimes

michael.grimes@macaubusinessdaily.com

acau junket investor Amax Holdings Ltd made a net loss for the financial year ended March 31, of approximately HK$39.40 million (US$5.1 million), compared to a net profit of approximately HK$161.10 million in the previous 12 months. General and administrative expenses leapt by 46 percent year on year to HK$34.37 million, compared to HK$23.51 million in the prior period. Losses per share amounted to around 19 HK cents compared to the prior year earnings per share of approximately 78 HK cents. Amax warned of the annual loss in a filing last month citing its failure to get access to the results of Greek Mythology Casino, a gaming venue inside the New Century Hotel on Taipa. “The 2013 annual results of the group reflects the impact of the failure in accessing the associate’s financial information in a timely manner, but does not reflect the actual performances of the associate and the group,” said Amax in its results filing to the Hong Kong Stock Exchange.

Greek Mythology (Photo: Manuel Cardoso)

“The company will make further announcement once relevant financial information of the associate is obtained,” it added. In September last year Ng Man Sun – also known as Ng Wai or ‘Kai Tze Wai’ – a veteran of junket operations from the days of Stanley Ho Hung Sun’s casino monopoly, was appointed chairman and chief executive of Amax, at the same time relinquishing a claim over Greek

Mythology. That appeared to put an end to a dispute with his former domestic and business partner businesswoman Chan Mei Fun. In June last year Mr Ng was attacked by masked men while in a private dining room at the New Century. He needed prolonged hospital treatment after the incident. No arrests have so far been reported in connection with the attack. Mr Ng was also the target of a drive-by shooting at the New Century in 1997. In August, gambling concessionaire Sociedade de Jogos de Macau SA, which supplies the current gaming licence for Greek Mythology, announced it was taking back 40 tables from the SJM satellite property. On Monday – outside the results reporting period – Amax said in a regulatory filing it has signed a nonbinding letter of intent to acquire 10 percent of the Lara Park Hotel in the Turkish Republic of Northern Cyprus and operate a casino there. The self-proclaimed republic in the northern portion the Mediterranean island is only recognised by Turkey.

Packer-linked casino wins prime Sri Lanka land The Sri Lankan government has approved the lease of prime Colombo real estate to local gaming operator Rank Holdings (Pvt) Ltd to develop a US$350-million (2.8 billion patacas) entertainment complex with Crown Ltd, headed by gaming mogul James Packer. Rank is expected to build a 400room lakefront luxury hotel with gaming facilities, AFP reports. The government there earmarked the area as an exclusive gaming area. While the partnership between Rank and Crown has not been formally announced, investment promotion officials in Sri Lanka have linked the two companies. Mr Packer is co-chairman of Macau casino operator Melco Crown Entertainment Ltd.

Correction In yesterday’s edition we published an article titled ‘Airport passengers hit new record last quarter’ that said the Macau International Airport handled nearly 2.3 million passengers in the second quarter, quoting a press statement by the airport operator. The 2.3 million figure, however, refers to the first half of the year. The more than 23,000 aircraft movements mentioned in the story also refer to the first six months of 2013. For that inaccuracy we apologise to our readers.

July 3, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Unemployment fades The number of people in employment was 358,600 at the end of the first quarter of this year – over 35,000 or almost 11 percent more than three years earlier. If employment were to continue to grow at such a rate, the number of workers with jobs would double in roughly 21 years. But the growth in employment has not been the same for both sexes.

In the first quarter of this year, the number of men in employment was lower than in the preceding quarter for the first time in the period represented in the chart. The decline was small. About 1,000 fewer men had jobs than three months before. There was a similar decline in the number of women in employment in the second quarter of last year. Then, about 1,200 fewer women had jobs than three months before. In the third quarter of last year, a rise of 1,700 in the number of women in employment more than made up for the decline. All the while, unemployment kept falling, to almost negligible levels. The unemployment rate dropped by nearly one-third in the period under review to 1.8 percent in May, the lowest ever. Macau had 6,400 unemployed in May, two-thirds of them men. So negligible is unemployment that you have to peer closely at the chart to make out the plots for unemployed men and unemployed women. J.I.D. The content of this column is the work of Business Daily’s journalists.

360,700 People with jobs in May, the most ever

Portuguese find a new life here is no cakewalk Finding a job in Macau far from being a sure thing for Portuguese migrants

conomic crisis is impelling more Portuguese to try to make a new start in Macau, but the small labour market and high cost of living here make it hard for them. João (pseudonym), a 31-year-old arrived in February last year, without a job in prospect. “I was looking for a job for about two-and-a-half months. I went to a lot of interviews and I was already getting worried,” he told Portuguese news agency Lusa. João found a job as a cultural events organiser, just before his three-month visa expired. He then applied to become a Macau resident.

“They told me I would get a reply within two months, but it took about 10 months,” he said. His employer allowed him to work without an identity card, even though it is illegal. João said that, otherwise, he would have been unable to survive here. “Macau is not the easiest place to come to seek a job,” he said. “It is difficult to find work, to get residency – and the cost of living is not that cheap.” João knows Portuguese that left Macau after three months because they spoke no English. “It is almost impossible to live in Macau if one speaks only

Builder’s revenue here shrinks despite resort deal Chevalier signed contract for works at Galaxy Macau’s second phase Vítor Quintã

vitorquinta@macaubusinessdaily.com

ong Kong-based conglomerate Chevalier International Holdings Ltd saw the revenue from its Macau operations shrink during the 12 months ended March 31. The company told the Hong Kong Stock Exchange its income here reached HK$296.4 million (US$38.2 million) in the last financial year, down by 7.7 percent from the previous period. Chevalier’s business in the territory involves construction and engineering services, as well as sales of food and beverage. Macau accounted for just 4 percent of the conglomerate’s revenue, down from 5 percent a year earlier, according to the filing released last week. This drop comes even though Chevalier signed a new contract to

provide electrical and mechanical works to the second phase of Cotai resort Galaxy Macau. The amount of this contract was not disclosed. Work on Galaxy Macau’s second phase has begun and is due to finish in 2015. Francis Lui Yiu Tung, the vicechairman of resort developer Galaxy Entertainment Group Ltd, said last month the budget for the second phase had increased by HK$3.6 billion to HK$19.6 billion. At the end of March Chevalier had construction and engineering contracts worth HK$1.92 billion, down by 5.4 percent from a year earlier. With revenue in Macau falling, the group’s non-current assets here – property and equipment – also decreased by 16.1 percent to HK$27.7 million. The conglomerate’s overall

Portuguese,” he said. Another Portuguese, 29-yearold Sara, left Macau when she was 14 but came back less than a year ago after failing to find work as a physician in Portugal. She had to wait over two months to get a medical licence, and only in February was she able to find a parttime job in a private clinic. “If I did not have relatives in Macau, it would have been very difficult to survive here, given the high cost of living,” Sara said. Jorge Neto Valente, head of the Macau Lawyers Association, warns Portuguese against coming here without the offer of a job. “I would not advise anybody to do it unless they have very specific and technical qualifications,” Mr Valente said. Just 122 Portuguese applied to become Macau residents in the first four months of this year, 301 fewer than in the equivalent period of last year, according to the Public Security Police. Lusa quoted a police spokesperson as saying that deciding on an application “takes, on average, between three and four months – a bit longer than before, due to the increase in the number of requests”.

construction and engineering revenue increased by 9 percent to HK$3.87 billion, mainly due to higher sales of aluminium windows, curtain walls and building materials. This segment’s profit increased even faster by 44.5 percent to HK$302 million. The construction and engineering business was one of the majors contributors for Chevalier’s total revenue, which increased by 10.9 percent to HK$7.09 billion, the company said. The group’s financial results “reached a record high in this financial year,” Chevalier said. Profit got a 53.8 percent boost to HK$1.08 billion.

Chevalier is providing electrical and mechanical works to Cotai resort Galaxy Macau

July 2013 April3,19, 2013

Macau

Govt to allow more taxis on the road The Transport Bureau is putting 100 black taxi licences up for auction Stephanie Lai

sw.lai@macaubusinessdaily.com

n auction of 100 more licences for conventional taxis will be held near the end of this year in an effort to meet public demand for cabs, the Transport Bureau has announced. If all the licences are used, 1,180 conventional taxis, known as black taxis, could be on the road next year. Transport Bureau director Wong Wan said earlier this year that another auction was the government’s ultimate option if yellow taxis, which can be ordered by phone, failed to do their job. Vang Iek Radio Taxi Co’s special licence to operate yellow taxis expires on February 6 next year. The government has warned Vang Iek that if it fails to perform properly, its licence will not be renewed. The Transport Bureau told Business Daily that whether or not yellow taxis were allowed to carry on, it would auction more licences for black taxis at the end of the year. The president of the Macau Taxi Driver Mutual Association, Tony Kuok Leong Son, believes the main purpose of the auction is to anticipate the expiry in 2015 of taxi licences granted in 2005. The Transport Bureau said it had yet to decide if this year’s auction

would be different from last year’s. The vice-president of the General Association of Macau Taxi Owners, Ben Leng Sai Vai, believes the bids will be lower than the average bid of 850,000 patacas (US$106,400) made last year. “Bidders underestimated the maintenance costs for the cars that have to meet the Euro [European Union] IV emission standards, which hurts their returns,” said Mr Leng. “They have learned their lesson.” He said 100 more taxis would be insufficient to meet demand for cabs

among tourists and residents. “Given the existing bidding rules, drivers will try any means to quickly cover the high bidding cost, and that induces many irregularities in their practices,” he said. Mr Leng said that instead of auctioning taxi licences, the government should put concessions to run taxi services out to tender. “At least the companies could have their contract renewal linked with their service quality,” he said. Mr Kuok, who is also a member of the advisory Transport Services

Macau could have 1,180 conventional taxis plying its streets next year

Committee, insists that auctions of licences to operate taxis should continue, but that the auctions should be open only to holders of a licence to drive a cab.

Vang Iek angles for drivers Vang Iek Radio Taxi Co had 40 yellow taxis, which can be ordered by phone, on call last month, according to a member of the advisory Transport Services Committee, Tony Kuok Leong Son. In an effort to get and keep drivers, Vang Iek has begun paying them fixed amounts, making social security contributions for them and insuring them. Usually, cab drivers simply rent taxis from the owners. Vang Iek executive director Eugenio Cheng Wing Chiu said the results of his company’s offer of new terms to drivers were “better than expected”, but he declined to say how many drivers the company had recruited on the new terms. He said a shortage of drivers remained a problem.

July 3, 2013 April 19, 2013

Greater China PetroChina gains on revised gas tariffs PetroChina Co Ltd, the country’s biggest natural gas supplier, had its biggest gain in four years in Hong Kong trading after Beijing announced it will raise prices for non-residential users. The stock advanced 6.67 percent to close at HK$8.80. China will raise non-residential natural gas prices on July 10 to 1.95 yuan per cubic metre, from 1.69 yuan, the National Development and Reform Commission said in a statement on its website. The nationwide roll-out of the increase takes effect after a pricing reform plan was announced in December 2011 and tested in local provinces.

Beijing probes companies on milk powder pricing Foreign sellers under investigation for alleged anti-monopoly law violations

hina is investigating foreign milk powder sellers including Danone SA and Mead Johnson Nutrition Co. on suspected antimonopoly violations, the official People’s Daily reported yesterday, citing a government agency. The National Development and Reform Commission, the country’s top economic planning agency, started a probe into the pricing of infant formula sold by Danone, Mead Johnson, Nestle SA’s Wyeth brand, Abbott Laboratories, Dutch producer Royal FrieslandCampina NV, as well as local firm Biostime International Holdings Ltd, the newspaper reported. The NDRC has evidence to show the companies had sold products at higher pricing in China, with prices increasing about 30 percent since 2008, according to yesterday’s report, which cited the agency’s price monitoring and anti-monopoly unit. Safety scares such as a melaminetainted milk powder scandal in 2008 which killed at least six infants have increased Chinese consumers’

distrust of local milk and driven up their purchases of foreign brands at home and overseas. “Prices of milk powder, particularly from foreign brands, have gone up because of the far greater trust Chinese consumers have in the brands,” said James Roy, an analyst at China Market Research Group. “Chinese consumers see the higher price point partly as an assurance of the product safety.” Spokespeople for Mead Johnson, Danone, Nestle, Biostime and Abbott couldn’t be reached immediately for comment. Jan-Willem ter Avest, a spokesman from Royal FrieslandCampina, said he has no information on the probe and will look into the matter.

Industry consolidation The investigation follows a bid by China to consolidate its milk formula industry and create strong domestic brands in the sector. China targets creating 10 large companies in the industry within two years, each

with annual revenue of more than 2 billion yuan (US$326 million), China National Radio reported last month, citing Gao Fu, an official at the Ministry of Industry and Information. China Mengniu Dairy Co., the country’s largest dairy producer, led gains by Chinese dairy companies after the report from the People’s Daily, which is published by the Chinese Communist Party.

KEY POINTS Regulator probes pricing of infant formula Foreign sellers suspected of breaching anti-monopoly law Consumers have greater trust in foreign brands – analyst

Regulator checking if companies sold products at hig

Mengniu shares surged as much as 3.60 percent to HK$28.75 in Hong Kong trading yesterday. Inner Mongolia Yili Industrial Group Co. rose as much as 1.69 percent in Shanghai trading. Biostime’s Hong Kong-listed shares declined the most in almost two years last Friday after the Chinese baby-care products provider said one of its units was under investigation for alleged anti-monopoly law violations. It’s shares rose as much as 2.2 percent to HK$44.45 in Hong Kong after the Guangzhou-based company said yesterday it would subscribe for a 20 percent stake in French agricultural co- operative Isigny Sainte Mere. Mengniu Dairy offered HK$12.5 billion (US$1.6 billion) to buy

Hong Kong estate industry ‘crying for help’ Realtors may lose jobs on property curbs, Midland says Kelvin Wong

bout a third of Hong Kong’s property agents may lose their jobs over the next year if the government persists with its real estate curbs, according to realtor Midland Holdings Ltd. “For the industry, we’re probably looking at the lowest point for over two decades,” Angela Wong, deputy chairman and the daughter of Midland chairman and founder Freddie Wong, said. “The worst thing is that it’s now a stagnant market so we’re not sure whether we should expand or contract. This is tough.” Home prices have more than doubled since early 2009 on an influx of mainland Chinese buyers, near record-low interest rates and a lack of new supply, prompting the government to introduce a raft of measures to quell concerns of an asset bubble. The total number of property deals has probably fallen 44 percent to 13,960 in the second

quarter from the previous three months, the lowest level since 1991, according to Midland. There were 37,016 individual real estate agents and sales-person licence holders in the city at the end of May, up from 34,919 a year earlier, according to government figures. Midland had 8,110 sales staff at the end of 2012, according to its annual report. The company declined to provide updated figures. The loss of agents “is only the first phase,” Ms Wong said in an interview. “And it’s not just the agents, but developers, lawyers and the advertisers as well. Every profession related to the real estate industry is crying for help.”

More curbs Shares of Midland, which has about a 30 percent market share of all property sales in Hong Kong,

have declined 21 percent since July 1, 2012, when Hong Kong Chief Executive Leung Chun Ying was sworn in after pledging to bring home prices down to more affordable levels. The benchmark Hang Seng Index has gained 7 percent during the period. Midland was neutral yesterday, closing at HK$2.90. Since taking over, Mr Leung has imposed extra taxes on non- resident homebuyers, doubled the stamp duty on all property transactions, raised minimum mortgage down-payment requirements, and sped up the approval process of new home sales permits for developers. The government won’t ease the curbs until there’s a steady supply of new properties, Mr Leung said in an interview with Bloomberg News in June. Financial Secretary John Tsang said the city may introduce more curbs if needed, the Hong Kong Economic Journal reported yesterday.

Curbs to stay put until there’s a steady supply of new p

To counter the measures, Midland has in the past year encouraged its agents to look for transactions across different classes of properties, and to help Hong Kong investors buy overseas properties, Ms Wong said. It is also shifting many of its more than 380 branches to “less expensive locations” to cut costs as retail rents in the city rise, she said. Hong Kong’s home prices, the world’s highest according to Savills Plc, have fallen 2 percent from

July 2013 April3,19, 2013

Greater China Beijing sets rare earth export quota China has announced its closely watched export quota for rare earth minerals in the second half of this year, bringing the full-year total to 31,001 tonnes. China produces more than 95 percent of the world’s rare earths, 17 elements critical to manufacturing everything from iPads to low-emission cars. The Ministry of Commerce said China will allow exports of 15,500 tonnes of rare earths in the six months to December, according to a statement released late on Monday. The quota for the first half had been set at 15,501 tonnes.

Malls waive rents as higher vacancies loom Boom in shopping-mall construction meets weaker shop demand

gher prices

a local infant formula maker Yashili International Holdings Ltd on June 18. The acquisition was part of a government-led push for consolidation in the industry, Mengniu chief executive Sun Yiping has said. COFCO, the state-backed agricultural and food industry supplier, owns 19 percent of Mengniu, according to data compiled by Bloomberg. Mead Johnson had a 14 percent share in China’s 77.9 billion yuan milk formula market last year, according to industry researcher Euromonitor International. Hangzhou Beingmate Group Co. was second with a 10 percent share followed by Danone’s 9.2 percent and 7.8 percent by Yili.

hinese landlords are forgoing rent and paying to outfit stores for mass-market fashion brands including Zara and H&M, a bid to blunt the impact of a boom in shopping-mall construction that threatens to push up vacancies. Preferential leasing terms were reserved until recently for luxury brands such as Louis Vuitton and Gucci, which are coveted because they bring shoppers into malls. Now moderately priced labels are being enticed with offers as landlords work harder to fill shops, according to Cushman & Wakefield Inc. and RET Property Consultancy Ltd. Consumer demand is cooling as China’s economy slows and President Xi Jinping reins in lavish spending by officials. Big mall operators, including China Resources Land Ltd and Hang Lung Properties Ltd, can withstand the slowdown at the expense of smaller ones such as Golden Eagle Retail Group Ltd, according to Credit Suisse Group AG and Haitong International Securities Ltd. Landlords focused on lower-tier

Bloomberg News

30 %

Vacancy rates may reach in some less affluent cities next year, Cushman forecasts

markets will be under more pressure as smaller cities add retail space at a faster rate than larger ones. “Competition in China’s commercial property market is very fierce, especially at those new malls at non-central locations in second- and third-tier cities,” said Carrie Liu, Shanghai-based general manager for development at Shui On Development Ltd, a subsidiary of Shui On Land Ltd. The company, which built the city’s Xintiandi restaurant, bar and retail district, has never offered subsidies such as free rents, Ms Liu said.

Mall building Chinese developers built more malls and expanded into smaller cities as consumer spending and incomes grew, elevating China’s economy to the largest in the world after the U.S. Half of the 32 million square metres (344 million square feet) of shopping centres under construction around the world are in China, according to CBRE Group Inc. About 21 million square metres of retail space is expected to be completed by next year, a 38 percent increase in supply, according to broker Cushman, which tracks 20 cities in China. That’s setting up a test for developers as retailers including LVMH Moet Hennessy Louis Vuitton SA and Gucci-owner Kering SA respond to slowing growth by scaling back expansion plans in the world’s most populous country. Second-tier cities, including Chengdu, Shenyang, Hangzhou and Qingdao, may be stuck with the highest vacancy rates in 2014, according to Cushman. The financial

DeMark, short H sales signal HK gain

properties

a historic high in March, while transactions have been near the lowest level since early 2009. Midland will probably post a loss in the first half because of the slowdown in property transactions, the company said in a June 28 statement to Hong Kong’s stock exchange. The company’s profit in 2012 rose 87 percent to HK$250 million (US$32 million). Bloomberg News

Kana Nishizawa

ANALYSIS

ong Kong’s Hang Seng Index may be poised for a rebound as a gauge of short selling reached a record high while an indicator of turning points from Tom DeMark’s Market Studies LLC signalled a bottom. The worst-performing developed-market benchmark gauge may climb after DeMark’s Combo chart showed potential trend exhaustion last week, producing a buy signal, according to Ayush Nagaraj, a Hong Kong-based sales trader at Sanford C. Bernstein & Co., a division of New York-based AllianceBernstein LP. Separately, a gauge of short selling as a percentage of shares traded also climbed to a record, indicating a potential market bottom, said Mr Nagaraj. DeMark’s Combo indicator completed a “13 countdown” for the Hang Seng Index on June 25. The 10-day moving average of total short sales to turnover last week reached its highest level since Bloomberg began tracking the data in 1998. When similar patterns formed in October 2011 and June 2012, the Hang Seng Index climbed about 30 percent. The gauge rose 4.4 percent to noon today in Hong Kong from June 25, when the signal formed.

hub of Shanghai, the capital Beijing and the southern industrial cities of Guangzhou and Shenzhen are considered the first-tier cities. Vacancy rates in some less affluent cities could surge to more than 30 percent by next year from as low as 6.8 percent in the first quarter this year, Cushman forecasts. “The problem we see today in China is that there’s really no proper planning,” Sigrid Zialcita, Singapore-based managing director for Asia-Pacific research at Cushman, said in a phone interview. “There are really a number of cities prone to having periods of oversupply.” Mall space in China’s four major cities will grow about 40 percent by the end of 2015, while in 16 smaller cities it will double in the period, according to Steven McCord, China retail research director at property brokerage Jones Lang LaSalle Inc. Developers of some new malls may struggle to reach even 70 percent occupancy, forcing delays in opening, said Michael Zhang, executive director and co-founder of Beijingbased RET Property Consultancy. Bloomberg News

Mall operators finding it harder to fill shops

“Market tops and bottoms are usually associated with extremes in bullish and bearish sentiment, with the vast majority betting on the trend to continue, in line with typical herding behaviour,” said Mr Nagaraj. “One of the indications of this is spikes in short sells right at market bottoms, implying the majority is always wrong at market turning points. A rally, as seen since the ‘13 countdown’ appeared, will also send short sellers scurrying for cover, pushing up prices further.” In general, DeMark’s “countdown” study involves comparing a security’s closing price to its highest or lowest levels two periods earlier, with cycles of “exhaustion” forming when a pattern continues 13 times. In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. The Hang Seng Index dropped 8.2 percent through the first six months of this year, the biggest drop among 24 developed-market benchmark measures tracked by Bloomberg. Bloomberg News

10 10

July 3, 2013 April 19, 2013

Asia

India urges citizens to resist gold lure As curbs fail to stem currency slump and trade deficit keeps widening Jeanette Rodrigues

ndian policy makers are urging citizens to resist buying gold and boosting scrutiny of speculative currency trades after import curbs and dollar sales failed to stem the world’s biggest currency loss. The rupee fell 4.9 percent last month, the worst performance among 78 global currencies tracked by Bloomberg, as the U.S. Federal Reserve signalled it may pare stimulus measures this year. The currency plunged to an all-time low of 60.7650 per dollar on June 26. Standard Chartered Plc and Credit Suisse Group AG predict a decline to around 62 in a year. Global funds pulled US$7.1 billion from Indian stocks and bonds last month through June 27, leaving the rupee vulnerable to a record current-account deficit, even as the government allowed them to buy more sovereign debt. Graft allegations delayed plans to allow foreign companies to invest more in Asia’s third-biggest economy. Some jewellers plan to stop selling gold coins and bars after Finance Minister Palaniappan Chidambaram asked the biggest bullion-consuming nation to forego the “temptation”

Australia holds rates at record-low Central bank says currency may slide further

ustralia’s central bank left its key interest rate at a record low, saying a slide in the currency may continue. Governor Glenn Stevens and his board kept the overnight cash-rate target at 2.75 percent, the Reserve Bank of Australia said in a statement yesterday. The Aussie “remains at a high level” and may “depreciate further over time, which would help to foster a rebalancing of growth,” Mr Stevens said. “The Board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand,” he added. “The Australian dollar has depreciated by around 10 percent since early April, although it remains at a high level.” A 12 percent decline in the Australian dollar last quarter has helped buoy manufacturing sentiment, easing pressure on the governor to cut rates again. Policy makers lowered borrowing costs by 2 percentage points since late 2011, seeking to shift growth toward employment-intensive industries

and help rein in imports that hurt the currency. “Policy makers have been resorting to persuasive techniques to stem the rupee’s fall, while much bolder, reformist, steps need to be taken,” Manik Narain, a strategist at UBS AG in London, said in an e-mail interview. “There is a real worry among foreign investors that the government will implement meaningful reforms only glacially ahead of elections next year.”

‘Produce mandate’ The Reserve Bank of India said on June 26 overseas funds must “produce a clear mandate” from their clients to hedge exposure to the rupee using derivatives, and banks must verify that investors hold the underlying local securities. The statement indicated that the central bank is seeking to check currency speculation, according to IndusInd Bank Ltd. The RBI has also enquired about foreign banks’ open positions involving the rupee, though the lenders haven’t been asked to unwind the trades, said two people

Gold imports account for 80 pct of the trade deficit, the central bank says

familiar with the matter, who asked not to be named as the information isn’t public. “The RBI wants to be seen to be doing something,” J. Moses Harding, executive vice president at IndusInd in Mumbai, said in a telephone interview. The authority “can do nothing” about such trades as long as rules are being followed, he said. Finance Minister Chidambaram

estimates India needs more than US$75 billion in the fiscal year through March 2014 to finance its current-account deficit. The shortfall in the broadest measure of trade widened to a record 4.8 percent of gross domestic product in the year ended March 31 from 4.2 percent in the previous period, official data show. The RBI has said gold imports account for 80 percent of the gap.

…The inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand Glenn Stevens, governor, Reserve Bank of Australia

such as construction as mining investment wanes. “The RBA is in no hurry to move interest rates and will wait for the data to push them into action,” said Joshua Williamson, a senior economist at Citigroup Inc. in Sydney. “They’re not worried about inflation, despite the fall in the exchange rate, so if needed that will allow them to cut rates.” The currency dropped, trading at 91.69 U.S. cents in Sydney, from 92.21 cents before the RBA’s statement. The nation’s three-year bond yield fell to 2.77 percent from 2.79 percent before the RBA’s decision.

Recent data Australia’s unemployment rate unexpectedly dropped to 5.5 percent

in May from a revised 5.6 percent in April, government data showed, and consumer confidence jumped 4.7 percent last month as optimists outweighed pessimists in a private survey. Home prices in Australia’s state and territory capitals rose 3 percent in the first six months of 2013, and 1.9 percent in June, according to the RP Data-Rismark home value index. “The economy has been growing a bit below trend over the recent period,” Mr Stevens said yesterday. “This is expected to continue in the near term as the economy adjusts to lower levels of mining investment.” “A reassessment by the market of the outlook for monetary policy in the United States has seen a noticeable rise in sovereign bond yields from

exceptionally low levels,” Mr Stevens said in the statement. “Volatility in financial markets has increased and there has been some widening of credit spreads.” Prime Minister Kevin Rudd, who returned to office last week after a three-year hiatus, has picked up the China risk. “The China resources boom is over,” Mr Rudd told parliament on June 27, a day after ousting Julia Gillard as leader of the ruling Labor party. “The China trade itself represents such a huge slice of the Australian national economy that we are looking at one huge adjustment for this nation’s standard of living in the future unless we continue to act with appropriate policy responses.” Reuters/Bloomberg News

11 11

July 2013 April3,19, 2013

Asia Tata to Ambani vie for bank permits Tata Sons Ltd, which manages India’s biggest business group, and firms controlled by billionaires Anil Ambani and Kumar Mangalam Birla are among 26 seeking the country’s first new banking licences in more than a decade. The companies yesterday met the Reserve Bank of India’s deadline to apply for the permits, it said in a statement published on its website. New banks will help tap rural savings and bolster loan growth in an economy that’s grown at the slowest pace in 10 years, Dolly Parmar, a Mumbai-based banking analyst at IFCI Financial Services Ltd, said. Banks will be required to open within 18 months and one out of four branches must be located in towns with fewer than 10,000 people, the RBI said when calling for applications

Mitsubishi UFJ seeks deal for Bank of Ayudhya

itsubishi UFJ Financial Group Inc. is seeking to strike a deal for control of Thailand’s Bank of Ayudhya Pcl as soon as this month, two people with knowledge of the matter said. Japan’s biggest bank plans to acquire about half of Bank of Ayudhya through a tender offer to shareholders including General Electric Co, which owns about 25 percent of the lender, the people said, asking not to be identified as the information is private. Its Bank of Tokyo-Mitsubishi UFJ Ltd unit is planning to hold a board meeting to approve the plan, one person said.

The tender offer could be made around September, although that timeline depends on approval for the purchase from Thai authorities, according to the people. The purchase would give Mitsubishi UFJ a bigger platform to expand retail and corporate banking in Southeast Asia. The deal would be the largest for a Thai bank, based on Bank of Ayudhya’s market value of more than US$7 billion, data compiled by Bloomberg show. Japan’s biggest banks are buying assets in faster-growing markets to counter shrinking loan profitability at home. Mitsubishi UFJ wants to ally with the Ratanarak family, which owns a 25 percent stake, to manage Bank of Ayudhya after a deal is sealed, the people said. Mitsubishi UFJ is in talks with the Ratanarak family to gain seats on the bank’s board, another person with knowledge of the matter said. Bloomberg News

The central bank estimates the sustainable level of the deficit at 2.5 percent of GDP and says the gap is the biggest risk to India’s economy, which grew 5 percent in the last fiscal year, the least in a decade. Standard & Poor’s has said weakness in growth and investment put the nation at risk of losing its investment-grade credit rating.

BOJ mulls upgrading Japan assessment The Bank of Japan will discuss upgrading its assessment of the nation’s economy by using the word “recover” for the first time in more than two years, people familiar with the central bank’s discussions said. The bank, which says the economy has been “picking up” in its current assessment, will consider stronger language at a two-day policy meeting ending July 11, according to the people, who asked not to be named because the talks were private.

UBS starts gold-vault service in Singapore UBS AG, Switzerland’s biggest bank, started storing gold for wealthmanagement clients at a facility in Singapore, citing interest from investors in the region even after the metal slumped into a bear market. The leased vault in the Singapore FreePort is available for clients in the city-state and Hong Kong, according to Peter Kok, regional market manager for wealth management in Singapore and Malaysia. While bullion is heading for the first annual drop in 13 years, client interest persists, Mr Kok said.

Goldman Sachs names Hitchner as Asia president Goldman Sachs Group Inc. said Ken Hitchner will become president of the Asia-Pacific region excluding Japan, replacing David Ryan, who is retiring later this year. Mr Hitchner, now co-head of Goldman Sachs’s technology, media and telecommunications group and head of health-care banking, will be based in Hong Kong, the New York-based bank said in a statement. Ryan will step down as president after more than two years in the role and become a senior director.

Bloomberg News

World Bank cuts Indonesia growth forecast Risk of a more pronounced slowdown ‘is high’, says global lender

he World Bank yesterday lowered its forecast for economic growth in Indonesia this year due to a slower-than-expected recovery in exports, a weaker outlook for foreign investment and softer commodity prices. In its quarterly economic outlook, the World Bank also forecast a significant pick-up in inflationary pressures in Southeast Asia’s largest economy following a fuel price hike in late June. The World Bank now expects Southeast Asia’s largest economy to grow 5.9 percent in 2013, down from its previous forecast of 6.2 percent in March. “While the World Bank’s base case is for a moderate slowdown in Indonesia’s growth in 2013, picking up again in 2014, the risk of a more pronounced growth slowdown is high,” it said. “The recovery in exports is expected to be more subdued and import growth is expected to be weaker, reflecting the weaker outlook for investment.” Indonesia’s central bank said last month that it expected the economy to expand by 6.1 percent in 2013 and by around 6.4 to 6.8 percent next year. Last month’s fuel price hike is expected to boost inflationary pressures and hurt

Brambles to float data management unit Australian pellet supplier Brambles Ltd has revived a plan to exit its US$2 billion data management business, saying it will spin off the unit and list it on the Australian Securities Exchange (ASX). The proposal to spin off the unit, which Brambles expects to post a profit decline, comes at a time when several Asia-Pacific initial public offerings have been pulled or cut. Shareholders will vote on the plan in December, with a listing of Recall Holdings expected soon after, Brambles said yesterday.

Fuel price hike to add to inflationary pressures

domestic consumption. Inflation in Southeast Asia’s largest economy is now expected at 7.2 percent this year and 6.7 percent in 2014, the World Bank projected. In March, it forecast inflation at 5.5 percent in 2013 and 5.2 percent in 2014. On Monday, the statistics bureau reported annual headline inflation in June at lower-than-expected 5.9 percent as the full impact of the fuel price hike has yet to be felt. Some analysts expect the central bank could raise interest rates again when it meets next week to contain the expected pick-up in inflation and support the weak rupiah.

“Indonesia’s policy setting will likely need to adjust to somewhat less buoyant economic conditions and potentially to more difficult external financing conditions,” the World Bank said. In mid-June, Bank Indonesia surprised the market by raising both the overnight deposit facility rate and benchmark rate by 25 basis points. The World Bank also estimated Indonesia’s current account deficit at 2.7 percent of gross domestic product this year and 2.1 percent in 2014. In March, it estimated the current account deficit at 2.5 pct of GDP for this year. Reuters

Singapore starts cleaning up oil spill Singapore deployed anti-pollution craft and patrol vessels to clean up an oil spill caused by the collision of two bulk carriers. About 100 metric tons of fuel oil leaked after a bunker tank on the South Korean-registered Oriental Pioneer was damaged in the collision with the Bahamas-registered Atlantic Hero, the Maritime and Port Authority of Singapore said in a statement. The accident occurred about 6.6 kilometres (4 miles) south-west of Tanah Merah Ferry Terminal, it said yesterday.

July 3, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

33.1

0.761035

31288670

CHINA UNICOM HON

ALUMINUM CORP-H

2.37

-5.2

12172913

CITIC PACIFIC

BANK OF CHINA-H

3.11

-2.507837

336570244

BANK OF COMMUN-H

4.89

-2.2

51381348

27.55

-1.431127

3305878

BELLE INTERNATIO

10.4

-2.439024

31609145

BOC HONG KONG HO

23.9

0.2096436

10534408

CATHAY PAC AIR

13.28

-2.064897

CHEUNG KONG

BANK EAST ASIA

NAME

DAY %

VOLUME

10.38

0.776699

23055548

NAME

8.17

-1.802885

7602780

SANDS CHINA LTD SINO LAND CO SUN HUNG KAI PRO

POWER ASSETS HOL

DAY %

68.3

2.092676

VOLUME 4627410

1.23119

11778347

10.76

-1.465201

11910931

99.95

-0.1498501

5238763

93.4

-0.5324814

1465334

301.8

-0.7889546

4078327

20.2

5612286

62.7

-0.07968127

4119573

-1.671733

63744339

9.93

-1.488095

5545979

SWIRE PACIFIC-A

ESPRIT HLDGS

11.78

1.903114

7731738

TENCENT HOLDINGS

HANG LUNG PROPER

26.65

-1.478743

8223573

TINGYI HLDG CO

4029332

HANG SENG BK

114.3

-0.3487358

1319024

WANT WANT CHINA

10.58

-3.113553

26649234

HENDERSON LAND D

46.6

0.6479482

5478563

WHARF HLDG

66.55

2.070552

6841332

HENGAN INTL

81.6

-3.431953

2963000

HONG KG CHINA GS

18.84

-0.6329114

11380504

HONG KONG EXCHNG

117.4

0.2561913

3926581

HSBC HLDGS PLC

81.5

0.3076923

13998162

104.4

-0.7604563

3807629

3.95

-2.70936

50902788

CHINA CONST BA-H

5.28

-3.825137

513493527

CNOOC LTD COSCO PAC LTD

MOVERS

CHINA LIFE INS-H

18.08

-1.73913

34693237

CHINA MERCHANT

23.45

-2.898551

3746445

CHINA MOBILE

80.65

-0.4320988

27455025

HUTCHISON WHAMPO

82.7

1.410178

10009293

CHINA OVERSEAS

19.84

-2.506143

33018818

IND & COMM BK-H

4.75

-2.862986

419288460

5.33

-2.380952

173368962

11.04

3.564728

28472956

HIGH

21004.56

28.2

-1.398601

3232344

LOW

20407

CHINA PETROLEU-H

PRICE

12.94

CHINA COAL ENE-H

CLP HLDGS LTD

PRICE

LI & FUNG LTD MTR CORP

CHINA RES ENTERP

24.05

-1.434426

3967078

CHINA RES LAND

20.15

-4.95283

12854642

NEW WORLD DEV

10.72

-0.1862197

15590058

CHINA RES POWER

18.36

-0.6493506

9569592

PETROCHINA CO-H

8.8

6.666667

309719758

CHINA SHENHUA-H

19.56

-1.212121

36261600

PING AN INSURA-H

51.45

-1.436782

13980094

PRICE

DAY %

VOLUME

24.75

27572004 173368962

1 21010

INDEX 20658.65

52W (H) 23944.74 (L) 18710.58984

20400

27-June

2-July

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.15

-1.5625

153145972

AIR CHINA LTD-H

5.36

-3.942652

10521614

CHINA PETROLEU-H

5.33

-2.380952

ALUMINUM CORP-H

NAME CHINA PACIFIC-H

2.37

-5.2

12172913

CHINA RAIL CN-H

6.56

-2.670623

7277320

ANHUI CONCH-H

20.55

-2.142857

13330987

CHINA RAIL GR-H

3.5

-2.234637

13155992

BANK OF CHINA-H

3.11

-2.507837

336570244

CHINA SHENHUA-H

19.56

-1.212121

36261600

BANK OF COMMUN-H

4.89

-2.2

51381348

CHINA TELECOM-H

3.74

1.081081

43052307

BYD CO LTD-H

28.5

10.89494

12045141

DONGFENG MOTOR-H

10.22

-1.351351

19168433

CHINA CITIC BK-H

3.46

-3.351955

51851265

GUANGZHOU AUTO-H

7.43

1.364256

12035308

CHINA COAL ENE-H

3.95

-2.70936

50902788

HUANENG POWER-H

7.84

2.083333

42382300

CHINA COM CONS-H

6.08

0.1647446

20638322

IND & COMM BK-H

4.75

-2.862986

419288460

CHINA CONST BA-H

5.28

-3.825137

513493527

JIANGXI COPPER-H

12.94

-1.52207

10039344

CHINA COSCO HO-H

3.46

1.764706

12544500

PETROCHINA CO-H

8.8

6.666667

309719758

18.08

-1.73913

34693237

PICC PROPERTY &

8.55

-2.285714

22334635

8.1

0.7462687

17464648

PING AN INSURA-H

51.45

-1.436782

13980094

CHINA MERCH BK-H

12.82

-1.080247

25924538

SHANDONG WEIG-H

8.73

2.948113

13299317

CHINA MINSHENG-H

7.53

-0.7905138

93624757

SINOPHARM-H

CHINA NATL BDG-H

6.63

-4.604317

59803383

TSINGTAO BREW-H

CHINA OILFIELD-H

14.8

-2.503294

7035470

WEICHAI POWER-H

CHINA LIFE INS-H CHINA LONGYUAN-H

NAME

PRICE

DAY %

YANZHOU COAL-H

5.55

-0.1798561

28593822

ZIJIN MINING-H

1.46

6.569343

102082127

5.24

-5.755396

14046020

12.58

0.64

6717322

ZOOMLION HEAVY-H ZTE CORP-H

MOVERS

1 9410

HIGH

9402.05

LOW

9115.99

-2.464066

8051822

55.65

1.192446

1931196

(L) 8640.85

2.401747

INDEX 9203.85

52W (H) 12354.22

23.45

VOLUME

9110

27-June

3998540

2-July

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.5

0.4016064

124937306

AIR CHINA LTD-A

4.1

-1.204819

16572816

NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

CHINA YANGTZE-A

6.75

2.427921

13793888

RISESUN REAL -A

14.18

-1.11576

8894473

CHONGQING CHAN-A

9.02

0.7821229

41586449

SAIC MOTOR-A

13.17

0.3810976

19779438

NAME

VOLUME

3.16

9816285

CITIC SECURITI-A

10.19

0.09823183

66951960

SANAN OPTOELEC-A

20.68

3.763171

17701915

ANHUI CONCH-A

13.12

-0.3039514

17583405

CSR CORP LTD -A

3.56

-1.657459

44297108

SANY HEAVY INDUS

7.28

-1.886792

35213390

BANK OF BEIJIN-A

7.78

-1.39417

21256614

DAQIN RAILWAY -A

5.7

-1.724138

34411157

SHANDONG DONG-A

41.58

6.017338

11065461

BANK OF CHINA-A

2.7

-0.7352941

36787890

DATANG INTL PO-A

5.44

0.1841621

13209361

SHANDONG GOLD-MI

25.89

-10.01043

4279400

4.03

-0.4938272

63784571

EVERBRIG SEC -A

10.17

0.0984252

20154357

SHANG PHARM -A

11.39

3.639672

15105787 84019573

ALUMINUM CORP-A

BANK OF COMMUN-A

3.92

0.2557545

23811584

GD MIDEA HOLDI-A

11.82

-3.035275

29178788

SHANG PUDONG-A

8.15

-0.244798

BEIJING SL -A

61.85

1.8107

3952684

GD POWER DEVEL-A

2.33

-0.8510638

45278626

SHANGHAI ELECT-A

3.36

-0.591716

2071488

BEIJING TONGRE-A

23.25

4.073411

12430204

GEMDALE CORP-A

6.86

50652291

SHANXI LU'AN -A

11.45

-1.969178

25800954

BYD CO LTD -A

35.17

6.899696

18746333

GF SECURITIES-A

11.13

0.180018

24543162

SHENZEN OVERSE-A

5.05

-2.509653

41164180

CHINA AVIC ELE-A

23.11

8.142255

10620752

GREE ELECTRIC

24.72

-0.9218437

16787095

SICHUAN KELUN-A

56.15

4.757463

1822751

CHINA CITIC BK-A

3.69

-0.2702703

17887912

GUANGHUI ENERG-A

13.12

-0.4552352

20458871

SUNING COMMERC-A

4.99

-0.2

31902030

CHINA CNR CORP-A

3.75

-1.315789

37349480

HAITONG SECURI-A

9.5

1.06383

91894266

TASLY PHARMAC-A

43.3

4.918827

12180617

HANGZHOU HIKVI-A

38.03

3.174173

7879420

TSINGTAO BREW-A

38.76

-0.4878049

3320477

HENAN SHUAN-A

42.26

4.345679

12246474

WANHUA CHEMIC-A

17.13

4.19708

17214692

BAOSHAN IRON & S

CHINA COAL ENE-A

4.93

-0.2024291

8857884

CHINA CONST BA-A

4.34

0.9302326

45492720

CHINA COSCO HO-A

3.05

6671424

HONG YUAN SEC-A

8.85

1.724138

60629181

WEICHAI POWER-A

17.66

3.882353

12146569

CHINA EAST AIR-A

2.57

-0.7722008

5642932

HUATAI SECURIT-A

8.07

0.2484472

20040571

WULIANGYE YIBIN

20.4

2.15323

21851794

CHINA EVERBRIG-A

2.87

-1.37457

65350377

HUAXIA BANK CO

8.88

-0.4484305

16458997

YANZHOU COAL-A

9.41

-0.8429926

5628847

CHINA INTERNAT-A

30.56

0.8913833

6399156

IND & COMM BK-A

4.02

-0.248139

173295894

YUNNAN BAIYAO-A

93.99

6.818957

7003456

CHINA INTL MAR-A

10.17

-1.070039

5489256

INDUSTRIAL BAN-A

14.28

-2.258727

90398571

ZHONGJIN GOLD

9.3

0.867679

11476045

CHINA LIFE INS-A

13.62

0.1470588

10008233

INNER MONG BAO-A

20.78

-2.303714

27319085

ZIJIN MINING-A

2.45

1.659751

39821157

CHINA MERCH BK-A

11.21

-1.493849

63906564

INNER MONG YIL-A

34.37

1.686391

17422166

ZOOMLION HEAVY-A

5.3

-1.486989

56055002

CHINA MERCHANT-A

10.39

-0.3835091

15105619

INNER MONGOLIA-A

3.99

-0.9925558

30951018

ZTE CORP-A

13.41

5.011746

96962941

CHINA MERCHANT-A

24.02

-1.879085

13659847

JIANGSU HENGRU-A

28.49

5.401406

15192774

CHINA MINSHENG-A

8.48

-1.280559

146425373

5328654

CHINA NATIONAL-A

10.34

3.607214

36325751

CHINA OILFIELD-A

14.16

-0.2114165

CHINA PACIFIC-A

15.61 4.24

CHINA PETROLEU-A

JIANGSU YANGHE-A

54.17

1.785043

JIANGXI COPPER-A

15.98

-0.3119152

7705220

3923152

KANGMEI PHARMA-A

20.34

1.093439

35661331

-0.1279591

24825795

KWEICHOW MOUTA-A

197.95

1.883782

3345317

-0.7025761

79692018

LUZHOU LAOJIAO-A

24.2

2.672889

11317971

CHINA RAILWAY-A

4.2

-0.9433962

12331885

METALLURGICAL-A

1.62

0.621118

31843898

CHINA RAILWAY-A

2.43

-0.4098361

19329714

NARI TECHNOLOG-A

15.65

1.55743

26508563

6437890

PETROCHINA CO-A

7.85

2.080624

30883700

PING AN BANK-A

9.6

-1.538462

81375374

34.42

-0.2318841

26967307

CHINA RESOURCE-A

29.6

CHINA SHENHUA-A

16.93

0.1775148

7386983

CHINA SOUTHERN-A

2.81

-0.3546099

23725473

CHINA STATE -A

3.22

-1.226994

82237274

POLY REAL ESTA-A

9.87

-1.201201

52918978

CHINA UNITED-A

3.07

-0.3246753

97758738

QINGDAO HAIER-A

11.06

1.74793

8093039

QINGHAI SALT-A

16.92

0.1776199

5452281

NAME

PRICE DAY %

Volume

CHINA VANKE CO-A

9.72

-1.619433

110995668

PRICE DAY %

Volume

PING AN INSURA-A

MOVERS 161

126

13 2230

INDEX 2221.984 HIGH

2222.9

LOW

2149.03

52W (H) 2791.303 (L) 2023.171

2140

28-June

2-July

FTSE Taiwan 50 Index NAME

NAME

PRICE DAY %

ACER INC

22.7

-1.304348

22421265

FORMOSA PLASTIC

ADVANCED SEMICON

25.5

0.3937008

24026006

FOXCONN TECHNOLO

ASIA CEMENT CORP

35.9

-1.237964

5400650

FUBON FINANCIAL

39.05

-1.761006

ASUSTEK COMPUTER

259.5

-2.443609

13908111

HON HAI PRECISIO

73.3

AU OPTRONICS COR

10.9

-2.242152

60276748

HOTAI MOTOR CO

CATCHER TECH

155

-3.125

5863531

-5.411255

24599736

CATHAY FINANCIAL

40.4 -0.6150062

12111710

HUA NAN FINANCIA

16.6 -0.5988024

3502768

YUANTA FINANCIAL

CHANG HWA BANK

16.6

5852326

LARGAN PRECISION

976 -0.8130081

878958

YULON MOTOR CO

93 -0.1074114

2961986

LITE-ON TECHNOLO

CHENG SHIN RUBBE

HTC CORP

69.7

5422407

TAIWAN MOBILE CO

115

1.321586

73 -0.6802721

2565915

TPK HOLDING CO L

488

1.035197

2948300

29357985

TSMC

110

1.851852

44745283

-1.079622

25108847

UNI-PRESIDENT

57.6

-1.200686

6671434

325 -0.6116208

530511

UNITED MICROELEC

14.7

-2.325581

136519527

28.85

-2.037351

17128067

15.7

0.3194888

17433797

47.85

-2.346939

2643698

218.5

-1.328273

341.5

-1.014493

5920307

12490627

15.4

-2.531646

56847401

MEDIATEK INC

CHINA DEVELOPMEN

8.55

-1.497696

35155989

MEGA FINANCIAL H

23.75

-1.041667

13624948

NAN YA PLASTICS

59.2

-2.47117

7178836

18.5 -0.5376344

28459017

PRESIDENT CHAIN

198.5

0.7614213

2085391

CHINATRUST FINAN CHUNGHWA TELECOM

97.9 -0.1020408

7312373

QUANTA COMPUTER

0.619195

5472990

COMPAL ELECTRON

18.25

3.107345

52124438

SILICONWARE PREC

38.35

-1.666667

11749595

DELTA ELECT INC

145.5

2.464789

8824846

SINOPAC FINANCIA

14.05

-1.056338

10977696

FAR EASTERN NEW

32.5

0.308642

3888084

SYNNEX TECH INTL

39.45 -0.2528445

5126343

FAR EASTONE TELE

78.5 -0.1272265

2133127

TAIWAN CEMENT

FIRST FINANCIAL

35.6

WISTRON CORP

4441321

6990359

CHIMEI INNOLUX C CHINA STEEL CORP

Volume

-1.830986

-3.783784

15477243

17.75

0.5665722

6425682

TAIWAN COOPERATI

16.55

6384433

FORMOSA CHEM & F

70.6

0.2840909

5686252

TAIWAN FERTILIZE

71.5

-1.243094

2824427

FORMOSA PETROCHE

74.6

-0.400534

3195937

TAIWAN GLASS IND

26.5 -0.7490637

591102

MOVERS

3 5620

INDEX 5549.86 HIGH

5613.94

LOW

5468.31

52W (H) 5896.71 5460

(L) 4719.96 28-June

2-July

July 3, 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 38.0

37.5

Max 38

average 37.437

Max 37.5

average 36.781

Min 37.05

37.0

Last 37.5

Min 36.25

Max 59.45

PRICE

20.50

59.0

20.25

58.8

Max 20.95

average 20.470

Min 20.05

Last 20.65

19.35

22.4

36.90

19.00

36.55

18.65

22.2 22.0

Max 19.6

average 18.510

DAY %

YTD %

(H) 52W

Min 18.36

Last 18.38

(L) 52W

0.142871722

4.660836177

99.98000336

86.29000092

BRENT CRUDE FUTR Aug13

103.13

0.126213592

-3.499578928

115.1699982

96.70999908

GASOLINE RBOB FUT Aug13

275.09

0.474816465

-1.110791574

311.8400097

244.7299957

GAS OIL FUT (ICE) Aug13

876.5

-0.227660785

-3.575357536

983.5

829.25

NATURAL GAS FUTR Aug13

3.583

0.167738328

-0.194986072

4.525000095

3.354000092

287.76

0.139198218

-3.987187615

320.449996

270.7499981

Gold Spot $/Oz

1264.41

1.8691

-24.0348

1796.08

1180.57

Silver Spot $/Oz

19.7712

0.8426

-34.3368

35.365

18.2208

NY Harb ULSD Fut Aug13

18.30

Platinum Spot $/Oz

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

1383

2.0107

-8.8783

1742.8

1294.18

Palladium Spot $/Oz

688.45

1.3798

-1.6022

786.5

553.75

LME ALUMINUM 3MO ($)

1827.5

3.073886069

-11.84273999

2200.199951

1758

LME COPPER 3MO ($)

6979

3.392592593

-12.00353045

8422

6602

LME ZINC

1891

2.050728548

-9.086538462

2230

1779

13965

1.859956236

-18.14185229

18920

13525

15.405

-0.291262136

16.47500038

14.60000038

503.75

0.498753117

-16.00666945

665

500.25

WHEAT FUTURE(CBT) Sep13

659.75

0.72519084

-18.24659232

905.75

652.75

SOYBEAN FUTURE Nov13

1248.25

0.402171727

-4.183458069

1409.75

1186.5

COFFEE 'C' FUTURE Sep13

122.35

0.616776316

-19.74417842

203.8499908

117.0999985

NAME

16.47999954

ARISTOCRAT LEISU

74.34999847

CROWN LTD

3MO ($)

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

SUGAR #11 (WORLD) Oct13

16.69

COTTON NO.2 FUTR Dec13

85.12

0 -0.490998363

-16.7996012 8.102616205

22.8599987 89.55999756

World Stock Markets - Indices

21.8 Max 22.55

average 21.839

Min 21.7

Last 21.85

21.6

CROSSES

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

0.9202 1.5214 0.9476 1.3041 99.72 7.988 7.7552 6.1335 59.475 30.91 1.265 30.017 43.32 9936 91.754 1.23575 0.85716 8.0032 10.4173 130.04 1.0301

0.2724 -0.0526 -0.2322 -0.0153 -0.1003 0 0.0064 -0.0082 0.0799 0.2265 0.2213 -0.0366 -0.4617 -0.0805 -0.3684 -0.2112 -0.0315 -0.085 0.0192 -0.0769 -0.0097

-11.3317 -5.9471 -3.3981 -1.1296 -13.6582 -0.0601 -0.0593 1.5831 -7.5326 -1.0676 -3.4466 -3.2781 -5.344 -1.4392 -2.6451 -2.2877 -4.8696 2.6777 1.0857 -12.6653 -0.0194

1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7664 6.3964 60.765 32 1.2814 30.228 44.181 10174 105.433 1.265 0.88151 8.4957 10.9254 133.8 1.032

0.911 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1203 51.3863 28.56 1.2152 28.913 40.54 9338 79.408 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

Macau Related Stocks PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.23

1.682692

34.28571

4.49

2.29

VOLUME CRNCY 1447703

12.17

2.961083

14.05811

13.75

8.28

1416510

AMAX HOLDINGS LT

1.19

-1.652893

-15

1.72

0.75

635975

BOC HONG KONG HO

23.9

0.2096436

-0.8298771

22.6

10534408

CENTURY LEGEND

0.3

-1.639344

13.20755

0.42

0.22

268000

CHEUK NANG HLDGS

5.3

-2.752294

-11.5192

6.74

2.89

3000

CHINA OVERSEAS

19.84

-2.506143

-14.11256

25.6

16.761

33018818

CHINESE ESTATES

13.86

-0.2877698

14.26764

14.12

8.031

15500

CHOW TAI FOOK JE

8.27

2.098765

-33.5209

13.4

7.44

6182700

EMPEROR ENTERTAI

2.79

3.333333

47.61905

3.07

1.34

2193000

FUTURE BRIGHT

2.23

-0.4464286

83.98943

2.76

0.924

2976000

GALAXY ENTERTAIN

37.5

-1.315789

23.55848

44.95

16.98

16198558 1319024

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

14974.96

0.4383753

14.27656

15542.4

12471.49

NASDAQ COMPOSITE INDEX

3434.49

0.918035

13.74315

3532.038

2810.8

FTSE 100 INDEX

6280.88

-0.4264575

6.49512

6875.62

5478.02

HANG SENG BK

114.3

-0.3487358

-3.706821

132.8

104.2

DAX INDEX

7909.46

-0.9326246

3.902451

8557.86

6324.53

HOPEWELL HLDGS

25.35

-1.934236

-23.7594

35.3

20.727

1034870

HSBC HLDGS PLC

81.5

0.3076923

0.2459987

90.7

61.1

13998162

NIKKEI 225

14098.74

1.777585

35.62767

15942.6

8328.019531

HANG SENG INDEX

20658.65

-0.6952746

-8.819687

23944.74

18710.58984

CSI 300 INDEX

2221.984

0.3915842

-11.9292

2791.303

2023.171

TAIWAN TAIEX INDEX

8015.86

-0.2506222

4.108837

8439.15

KOSPI INDEX

1855.02

-0.03825988

-7.111991

S&P/ASX 200 INDEX

4834.003

2.626463

4732.588

FTSE Bursa Malaysia KLCI

NZX ALL INDEX PHILIPPINES ALL SHARE IX

JAKARTA COMPOSITE INDEX

20.00

37.25

98.13

NAME

59.2

22.6

WTI CRUDE FUTURE Aug13

CORN FUTURE

20.75

Currency Exchange Rates

NAME

METALS

Last 59

59.4

19.70

Commodities ENERGY

Min 58.85

21.00

37.60

36.20

Last 37

average 59.160

59.6

4.3

4.878049

20.78652

4.66

2.98

4486000

LUK FOOK HLDGS I

HUTCHISON TELE H

17.92

-0.6651885

-26.55738

30.05

16.16

2538956

MELCO INTL DEVEL

14.46

-1.364256

60.48834

18.18

5.12

5426300

6922.73

MGM CHINA HOLDIN

20.65

-0.2415459

55.51714

21.6

9.509

4781830

2042.48

1758.99

MIDLAND HOLDINGS

2.9

-21.62162

2.77

5640000

3.980527

5249.6

4062.3

NEPTUNE GROUP

0.177

3.508772

16.44737

0.23

0.084

14215000

-0.939078

9.634725

5251.296

3963.469

NEW WORLD DEV

10.72

-0.1862197

-10.81531

15.12

9.16

15590058

1771.62

-0.1982942

4.89476

1826.22

1590.67

1.23119

8.983797

43.7

20.65

11778347

SHUN HO RESOURCE

1.43

4.379562

2.142859

1.67

1.03

104000

954.333

0.8428109

8.194523

998.487

759.797

SHUN TAK HOLDING

3.64

-3.191489

-13.12649

4.65

2.62

5653500

3943.73

-0.6932309

6.616689

4571.4

3410.76

SJM HOLDINGS LTD

18.38

-2.545069

3.562962

22.382

12.995

6358487

12.8

-0.621118

-9.090909

17.38

12.3

753218

21.85

4.047619

4.295939

26.5

14.62

6256373

SANDS CHINA LTD

SMARTONE TELECOM

HSBC Dragon 300 Index Singapor

598.44

-0.25

-3.65

STOCK EXCH OF THAI INDEX

1461.96

0.6928852

5.031137

1649.77

1172.11

HO CHI MINH STOCK INDEX

489.84

2.041497

18.39605

533.15

372.39

ASIA ENTERTAINME

4.25

1.190476

50.99392

4.7647

2.2076

269675

BALLY TECHNOLOGI

57.25

1.47111

28.04742

57.86

41.74

723088

Laos Composite Index

1283.9

-4.24802

5.69079

1455.82

987.62

BOC HONG KONG HO

3.04

0.9966777

-0.9771965

3.6

2.85

434

GALAXY ENTERTAIN

4.9385

1.19877

24.39547

5.77

2.25

20223 3965017

WYNN MACAU LTD

INTL GAME TECH

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

1.735488

19.97177

18.81

10.92

JONES LANG LASAL

92.56

1.558043

10.26924

101.46

61.39

272673

LAS VEGAS SANDS

52.97

0.07557151

14.75303

60.54

32.6127

4952979

MELCO CROWN-ADR

23.01

2.906977

36.63895

25.2

9.13

3251153

MGM CHINA HOLDIN

2.503

35.2973

2.71

1.36

550

MGM RESORTS INTE

15.08

2.02977

29.55326

15.95

8.83

9221834

SHFL ENTERTAINME

18.27

3.162055

18.57

12.35

405310

SJM HOLDINGS LTD

2.45

0.8230453

7.568614

2.9481

1.7255

200

128.46

0.3829022

14.19682

144.99

84.4902

1082599

WYNN RESORTS LTD

AUD HKD

USD

14 14

July 3, 2013 April 19, 2013

Opinion

De-risking revisited Nouriel Roubini

Chairman of Roubini Global Economics and Professor of Economics at NYU’s Stern School of Business

ntil the recent bout of financial-market turbulence, a variety of risky assets (including equities, government bonds, and commodities) had been rallying since last summer. But, while risk aversion and volatility were falling and asset prices were rising, economic growth remained sluggish throughout the world. Now the global economy’s chickens may be coming home to roost. Japan, struggling against two decades of stagnation and deflation, had to resort to Abenomics to avoid a quintuple-dip recession. In the United Kingdom, the debate since last summer has focused on the prospect of a triple-dip recession. Most of the euro zone remains mired in a severe recession – now spreading from the periphery to parts of the core. Even in the United States, economic performance has remained mediocre, with growth hovering around 1.5 percent for the last few quarters. And now the darlings of the world economy, emerging markets, have proved unable to reverse their own slowdowns. According to the IMF, China’s annual GDP growth has slowed to 8 percent, from 10 percent in 2010; over the same period, India’s growth rate slowed from 11.2 percent to 5.7 percent. Russia, Brazil, and South Africa are growing at around 3 percent, and other emerging markets are slowing as well. This gap between Wall Street and Main Street (rising asset prices, despite worsethan-expected economic performance) can be explained by three factors. First, the tail risks (low-probability, high-impact events) in the global economy – a euro zone breakup, the U.S. going over its fiscal cliff, a hard economic landing for China, a war between Israel and Iran over nuclear proliferation – are lower now than they were a year ago. Second, while growth has been disappointing in both developed and emerging markets, financial markets remain hopeful that better economic data will emerge in the second half of 2013 and 2014, especially in the U.S. and Japan, with the U.K. and the euro zone bottoming out and most emerging markets

returning to form. Optimists repeat the refrain that “this year is different”: after a prolonged period of painful deleveraging, the global economy supposedly is on the cusp of stronger growth. Third, in response to slower growth and lower inflation (owing partly to lower commodity prices), the world’s major central banks pursued another round of unconventional monetary easing: lower policy rates, forward guidance, quantitative easing (QE), and credit easing. Likewise, many emergingmarket central banks reacted to slower growth and lower inflation by cutting policy rates as well.

Market turbulence This massive wave of liquidity searching for yield fuelled temporary asset-price reflation around the world. But there were two risks to liquiditydriven asset reflation. First, if growth did not recover and surprise on the upside (in which case high asset prices would be justified), eventually slow growth would dominate the levitational effects of liquidity and force asset prices lower, in line with weaker economic fundamentals. Second, it was possible that some central banks – namely the Fed – could pull the plug (or hose) by exiting from QE and zero policy rates.

This brings us to the recent financial-market turbulence. It was already evident in the first and second quarters of this year that growth in China and other emerging markets was slowing. This explains the underperformance of commodities and emergingmarket equities even before the recent turmoil. But the Fed’s recent signals of an early exit from QE – together with stronger evidence of China’s slowdown and Chinese, Japanese, and European central bankers’ failure to provide the additional monetary easing that investors expected – dealt emerging markets an additional blow. These countries have found themselves on the receiving end not only of a correction in commodity prices and equities, but also of a brutal re-pricing of

currencies and both local- and foreign-currency fixed-income assets. Brazil and other countries that complained about “hot money” inflows and “currency wars,” have now suddenly gotten what they wished for: a likely early end of the Fed’s QE. The consequences – sharp capital-flow reversals that are now hitting all risky emerging-market assets – have not been pretty.

Choppy economies Whether the correction in risky assets is temporary or the start of a bear market will depend on several factors. One is whether the Fed will truly exit from QE as quickly as it signalled. There is a strong likelihood that weaker U.S. growth and lower inflation will force it to slow the pace of its withdrawal of liquidity support. Another variable is how much easier monetary policies in other developed countries will become. The Bank of Japan, the European Central Bank, the Bank of England, and the Swiss National Bank are already easing policy as their economies’ growth lags that of the U.S. How much further they go may well be influenced in part by domestic conditions

and in part by the extent to which weaker growth in China exacerbates downside risks in Asian economies, commodity exporters, and the U.S. and the euro zone. A further slowdown in China and other emerging economies is another risk to financial markets. Then there is the question of how emerging-market policymakers respond to the turbulence: Will they raise rates to stem inflationary depreciation and capital outflows, or will they cut rates to boost flagging GDP growth, thus increasing the risk of inflation and of a sudden capital-flow reversal? Two final factors include how soon the euro zone economy bottoms out (there have been some recent signs of stabilisation, but the monetary union’s chronic problems remain unresolved), and whether Middle East tensions and the threat of nuclear proliferation in the region – and responses to that threat by the U.S. and Israel – escalate or are successfully contained. A new period of uncertainty and volatility has begun, and it seems likely to lead to choppy economies and choppy markets. Indeed, a broader de-risking cycle for financial markets could be at hand. © Project Syndicate

A new period of uncertainty and volatility has begun, and it seems likely to lead to choppy economies and choppy markets

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

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15 15

July 2013 April3,19, 2013

Opinion Business

wires

Li Keqiang’s bottom line

Leading reports from Asia’s best business newspapers

Jakarta Post Indonesian banks are facing greater credit risks as local companies now appear to be avoiding long-term loans when expanding their businesses, says international ratings agency Standard & Poor’s (S&P). Many companies were now opting for short-term loans, S&P stated in its latest report, saying that the trend, which has been on the rise since 2011, suggested that companies “are increasingly experiencing repayment difficulties”. S&P still maintained its stable outlook for Indonesian banks despite the warning.

Taipei Times Taiwan’s Purchasing Managers’ Index (PMI) posted a 49.5 reading last month, up from 47.1 in May. It still shows a marginal deterioration in the business climate, but the pace of decline is slowing, according to the survey from HSBC Holdings Plc and Markit Economics. “Taiwan’s manufacturing contraction eased a little last month, but businesses are still feeling the weight of China’s slowdown and weak Western demand,” HSBC Greater China economist Donna Kwok said in the report.

Korea Herald A total of 205 borrowers will call for the nation’s financial regulator to conduct an investigation into the nation’s first-tier banking industry on allegations that commercial banks manipulated some interest rates, the Korea Consumer Agency said. This will mark the first such case since the Financial Supervisory Service implemented the “consumerinitiated” inquiry system last May. The consumer advocate alleges that banks overcharged borrowers collectively about 4.1 trillion won (US$3.5 billion) in interest from January 2010 to June 2012 by fabricating rates for certificates of deposit.

Bangkok Post Telenor Group, the major shareholder of Thailand’s Total Access Communication, plans to introduce commercial thirdgeneration (3G) mobile service in Myanmarnextyearafterwinning a licence in a highly competitive tender. The Norwegian firm aims to complete the nationwide roll-out of its 2G and 3G network using high-speed packet access technology within five years under an undisclosed investment. “A full range of mobile services, both 2G and 3G mobile data service, will be commercially launched next year,” said Glenn Mandelid, communications director of Telenor Asia.

Zhang Jun

Professor of Economics and Director of the China Centre for Economic Studies at Fudan University, Shanghai

veryone is talking about China’s economic slowdown. Last year, Chinese GDP growth reached a 13-year low, and no upturn is in sight. But, as Premier Li Keqiang seems to recognise, this trend could actually be beneficial, spurring the structural reforms that China needs to achieve its longer-term goal of more balanced and stable GDP growth. Recent assessments have offered a downbeat picture of the world’s second-largest economy. In its latest Global Economic Prospects report, the World Bank cut its 2013 economic growth forecast for China from 8.4 percent to 7.7 percent. Moreover, recently released central-bank data show that Chinese banks increased their lending by only about 667 billion yuan (US$108 billion) in May – a roughly 125 billion yen decline from the same period last year. But simply lending more would not improve the situation. Given that outstanding loans already amount to nearly double China’s GDP – a result of the country’s massive stimulus since 2008 – new loans are largely being used to pay off old debts, rather than for investment in the real economy. Thus, the more relevant concern is that the balance of outstanding loans has not risen. In recent years, tight monetary policy and increasingly strict controls on the real-estate sector have caused the growth rate of fixed-asset investment to fall, from more than 25 percent annually before 2008 to around 20 percent today.

Restoring fundamentals Furthermore, the growth rate in China’s less developed eastern regions amounts to less than half of the national average. As a result, growth of industrial value added – which contributes almost half of China’s GDP – is slowing even faster, from an average annual rate of 20 percent during China’s boom years to less than 10 percent in 20102012 and just 7.8 percent in the first quarter of this year. The key to restoring China’s GDP growth is, therefore, returning fixedasset investment growth to at least 25 percent. With a new round of stimulus, China’s excess production capacity and underused outlays (for example, built-up real-estate assets) could be mobilised immediately, restoring 9 percent annual GDP growth. But the willingness of China’s new leadership to initiate another round of growth-securing stimulus

Li Keqiang

depends on what rate of GDP growth Li can tolerate. With China’s leaders having offered no indication that they will change current monetary policy, some economists have estimated that Li will not act until GDP growth falls below 7 percent. The reason for Li’s inaction emerged in early June, when Chinese President Xi Jinping told his American counterpart, Barack Obama, that China had deliberately revised its growth target downward, to 7.5 percent, in order to pursue structural reforms aimed at supporting stable and sustained economic development. Given that China was moving toward such reforms before the 2008 global economic crisis prompted former Premier Wen Jiabao to launch his 4 trillion yuan stimulus plan, Xi’s statement suggests that the new government will seek to restore the economy’s pre2008 fundamentals.

Moment to act In 2005, China was experiencing currency appreciation, which, as other

Now, the setting is very favourable to build the stronger, more stable economy that Li wants – and that China needs

fast-growing economies in East Asia have demonstrated, can stimulate the government and businesses to pursue structural reforms and industrial upgrading. But the subsequent increase in official fixed-asset investment – which rose by 32 percent in 2009 alone – delayed structural reforms, while over-capacity and a real-estate bubble became even larger and more deeply entrenched problems. The government must now dispel the remaining vestiges of the stimulus-fuelled overinvestment of 2008-2010, however painful it may be. This means allowing the economy to continue to slow, while maintaining relatively tight macroeconomic policies that force local governments and the business sector to find new sources of growth. The combination of external shocks and internal pressure from rising wages can serve as a powerful incentive for governments and businesses to pursue structural reforms. For example, firms in China’s export-dependent coastal regions have been burdened by renminbi appreciation since 2004. When

the economic slowdown hastened the relocation of many manufacturers to inland provinces or neighbouring countries, those in the coastal regions began to call for increased openness, deeper structural reforms, and industrial upgrading. The view that Li will tolerate slower growth only above a particular threshold is based on the belief that GDP growth below 8 percent would hurt economic development more than it helped, and lead to social instability. And, indeed, if unemployment pressure had become as acute today as it was in the 1990’s, the prolonged economic slowdown would undoubtedly have precipitated government intervention. But, over the last decade, structural changes to China’s economy have caused unemployment pressure to decline significantly – a trend that can be corroborated by across-the-board wage increases. Now, the setting is very favourable to build the stronger, more stable economy that Li wants – and that China needs. © Project Syndicate

July 3, 2013

Closing Lawrence Ho eyes Russian casino: reports

Winklevoss twins plan Bitcoin trust

A tiles and engineering company 37 percent owned by Lawrence Ho Yau Lung (pictured) has reportedly been chosen as partner for a casino resort near Vladivostok in the Russian Far East. Hong Kong-listed Summit Ascent Holdings Ltd was selected by the Primorye regional government says the Wall Street Journal. Four years ago this week, Russia shut down its existing land based casinos and restricted gambling to four zones in rarely visited regions. In early June Business Daily reported Mr Ho’s gaming investment firm Melco International Development Ltd had been invited to join a US$1 billion (8 billion patacas) gaming project in Barcelona, Spain.

Tyler and Cameron Winklevoss, famed for their legal dispute with Facebook’s Mark Zuckerberg, have unveiled plans to float a Bitcoin trust. The Winklevoss Bitcoin Trust will initially sell US$20 million worth of shares to investors, according to a filing with the U.S. regulators. The twins are among the key backers of Bitcoin, a virtual currency traded independently of monetary authorities. Its value jumped earlier this year, but has been highly volatile. In January its value surged from US$15 for each Bitcoin, to a high of US$260 on 10 April, before crashing. Bitcoins, used to buy goods and services, are now trading at a price of about US$90 each.

Macau Legend’s ‘HK$2.2 bln’ share offer Casino services firm Macau Legend Development Ltd has raised around HK$2.2 billion (US$282 million) gross from its global share offering said the Wall Street Journal, quoting a person familiar with the situation. A spokesman for Macau Legend last night confirmed to Business Daily the shares were priced at HK$2.35. That’s near the bottom of the indicative range of HK$2.30 to HK$2.98 mentioned in filings. The Journal reported 934.8 million shares were sold. The amount realised was only 36 percent of a HK$6.11 billion gross target figure mentioned in a term sheet three weeks ago – before equities markets dipped globally on fears of a liquidity crisis in China’s formal banking system. It led Macau Legend, co-chaired by local businessman David Chow Kam Fai to postpone its offer by more than a week and cut the number of shares for overseas (non-Hong Kong) investors by 60 percent. Listing of the stock in Hong Kong is due this Friday according to a supplementary prospectus filed on June 26. The revised prospectus said around 63.5 percent of net proceeds would be used to build and fit a new hotel called Prague Harbor View at Macau Fisherman’s Wharf. M.G.

Lenders unhappy with public sector reforms, such as the one involving state televison

Greece urged to reassure lenders Athens given three days to deliver or face consequences, EU officials

reece has three days to reassure Europe and the International Monetary Fund it can deliver on conditions attached to its international bailout in order to receive the next tranche of aid, four euro zone officials said yesterday. The lenders are unhappy with progress Greece has made towards reforming its public sector, a senior euro zone official involved in the negotiations said, while another said they might suspend an inspection visit they resumed on Monday. Athens, which has about 2.2 billion euros (US$2,86 billion) of bonds to redeem in August, needs the talks to conclude successfully. If they fail, the International Monetary Fund might have to withdraw from the 240-billion-euro bailout to avoid violating its own rules, which require a borrower to be financed a year ahead. That would heighten the risk that concerted efforts by policymakers over the past nine months to keep a lid on the euro zone crisis could unravel, at a time when tensions are rising in other countries on the region’s periphery. Portugal’s Finance Minister Vítor Gaspar, the architect of its austerity drive under an EU/IMF bailout, resigned on Monday in a potential blow to his country’s planned exit from an EU-IMF

rescue programme. Political tension has also increased in Italy, where Prime Minister Enrico Letta called a government meeting after a coalition partner threatened to withdraw. Athens and its creditors resumed talks on Monday to unlock 8.1 billion euros (US$10.6 billion) of rescue loans, after a two-week break during which the government almost collapsed over redundancies at state broadcaster ERT. “All agreed that Greece has to deliver [pledges] before the Eurogroup on Monday. That’s why they must present again on Friday,” a second source told Reuters. Euro zone finance ministers are scheduled to meet on July 8 and discuss the situation in Greece, which is in its sixth year of recession and has seen unemployment surge to record highs.

Missed deadlines “It is a very difficult negotiation,” a senior Greek official participating in the talks said. “We’re moving fast to wrap up as many issues as possible a soon as possible.” But Greece’s financial overseers – the IMF, the euro zone and the European Central Bank – were unlikely to be able to conclude their review in July and might need to

suspend the visit and resume it in September, a senior euro zone official said on condition of anonymity. Representatives of the “troika” have been holding serial meetings with government ministers in Athens, struggling to agree on a host of outstanding issues. If talks are not concluded by the middle of month, Athens risked missing the instalment, the Greek official added. Athens has missed a June deadline to place 12,500 state workers into a “mobility scheme”, under which they are transferred or dismissed within a year. A shortfall of more than 1 billion euros has emerged at state-run health insurer EOPYY, meaning automatic spending cuts may have to be agreed to bring it back on an even keel. Athens and the troika are also at odds over an unpopular property tax and a sales tax for restaurants. The government plans to ask its creditors to lower this year’s privatisation target of 2.6 billion euros after failing to find a buyer for natural gas company DEPA. The beleaguered government of Prime Minister Antonis Samaras has ruled out imposing any new austerity measures on a population that is going through the sixth year of recession. Reuters

China banks’ golden era fades as crunch raises default risk Chinese banks’ valuations are close to their lowest on record as the nation’s interbank funding crisis exacerbated investors’ concern that earnings growth will stall and defaults may surge as the economy slows. Industrial and Commercial Bank of China Ltd, the world’s largest lender by market value, ended Hong Kong trading last week at 5.3 times estimated earnings, data compiled by Bloomberg show. The Beijing-based bank may report profit of US$41 billion for 2013, according to the average of 17 analysts’ estimates. Investors’ disenchantment with Chinese banks reflects concern that a crackdown on shadow banking and measures to direct new credit away from repaying old loans and toward boosting economic productivity will undermine earnings and trigger a surge of bad loans. “The golden era of banking is over,” said Mike Werner, an analyst at Sanford C. Bernstein & Co. in Hong Kong who recommends clients buy shares of ICBC and divest mid-sized Chinese lenders. “Investors have to recognise that more market discipline is going to be imposed upon the banks.” Shares of ICBC and its three largest local competitors – China Construction Bank, Agricultural Bank of China Ltd and Bank of China Ltd – fell by an average 12 percent in Hong Kong last month, erasing the year’s gains and underperforming the 7.1 percent decline in the benchmark Hang Seng Index. The shares dropped by an average 9 percent in Shanghai, where the broader market of Chinese stocks also declined, with the CSI 300 Index losing 16 percent on the month and entering a bear market June 24.