Ao ‘no help’ on La Scala, court told
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evelopers of corruption-hit housing complex La Scala got no special help from jailed former government
secretary Ao Man Long, the legal defence of two Hong Kong businessmen argued yesterday. Documents presented to the Court of First Instance in the bribery trial of Joseph Lau Luen Hung and Steven Lo Kit Sing show Mr Ao denied in March 2006 a request for an extension on the land usage period for the project. Carlos Couto, architect for the housing project in the 2006-11 period, testified yesterday: “Ao Man Long did not approve the extension period but the present Secretary for Transport and Public Works [Lau Si Io] did.” Mr Lau told legislators yesterday the government would wait for the legal proceedings to be over before planning what to do with the land. More on pages 4 & 5
www.macaubusinessdaily.com
Year II
Number 319
Thursday July 4, 2013
Editor-in-chief Tiago Azevedo
Deputy editor-in-chief
Vitor Quintã
MOP 6.00
April 19, 2013
Minimum mass casino bets up 37 pct: DB
Fiscal reserve returns pass last year’s gains Page 2
I SSN 2226-8294
Junkets’ AERL could face dual listing hurdle
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Hang Seng Index 20580
Insurer back to black after takeover ING Life Insurance Co (Macau) Ltd posted a small profit for last year, after being bought in October by Richard Li Tzar Kai, a son of Asia’s richest man. The city’s fifth-biggest provider of life cover announced in its annual report yesterday that profit reached 3.97 million patacas (US$497,000) in 2012. It’s a significant improvement from the loss of 37.16 million patacas posted the previous year. Page 2
Residents of tilting block lean toward a rebuild
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Rising costs eat into money changer profits Money changers increased turnover but profits slumped last year as operating costs grew, the city’s financial regulator said. Business Daily estimates the retail exchange market is working on net margins of 0.22 percent. Growing overheads are also hitting remittance firms. The combined profit of BDO Remit (Macau) Ltd and Pacific Ace (Macau) Remittance Ltd fell by 3.8 percent last year on business turnover up 28.6 percent.
Eight months after the sudden collapse of a support pillar at apartment block Sin Fong Garden, residents are still pushing for redevelopment instead of a patchup. The latter is the government’s preferred option. On October 10, the 140 households of the Patane property had to be evacuated after a support pillar in the car park gave way, raising fears over the safety of the whole building.
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LI & FUNG LTD
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PETROCHINA CO-H
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CATHAY PAC AIR
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HUTCHISON WHAMPO
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HANG LUNG PROPER
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KUNLUN ENERGY CO
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CHINA COAL ENE-H
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CHINA SHENHUA-H
-6.85
Source: Bloomberg
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July 4, 2013
Macau
Minimum mass bets up 37 pct in year: report Now four customer segments for main floor gambling, says Deutsche Bank Michael Grimes
michael.grimes@macaubusinessdaily.com
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verage mass-market minimum bets for live dealer baccarat in Macau’s seven biggest casinos have risen by 37 percent since June last year suggests Deutsche Bank. A research paper from the bank’s analyst Karen Tang in Hong Kong, says the estimate is based on oncemonthly, eight-hour, Friday tours of the ‘Big Seven’ resorts’ mass floors. They took place over the 12 months to June 30 this year. “To be consistent, we only counted open baccarat tables. We ignored other games, such as blackjack or sic bo, which are not consistent with baccarat play limits,” said Ms Tang. “On average, we estimate that the average mass market minimum bet in the Big Seven casinos has risen by 37 percent from HK$1,185 [US$152.84 at current exchange rates] in June 2012 to HK$1,622 in June 2013,” added the paper. Casino managements in Macau have been focusing on raising yield per table via higher minimum bets and against the background of the government’s table cap policy. That theoretically limits growth in live dealer tables to around 1,890 newto-market units between now and 2023. It’s from a baseline of 5,500 tables and average annual compound
Sands Cotai Central – increasing HK$2,000-minimum tables
growth of three percent. A person with direct knowledge of the situation has told Business Daily that tables can be released as and when new venues open, rather than on a strict per annum basis. “Under the twin constraints of table cap and slower VIP growth, casinos have to focus on raising mass table yield (i.e. revenue per mass table),” stated Ms Tang. “In 1Q13, Macau’s mass table
yield on average rose 24 percent year-on-year to US$10,300 per day. Given that visitor growth was only two percent [year-on-year] in 1Q13, rising table yield is a more important driver for the mass market growth (30% in 1Q13),” she added. She indicates there are now four customer segments for mass-market table games in Macau: ‘premium’ mass, with HK$2,000 or above minimum bets; ‘high-limit’ mass
with HK$1,000 to HK$1,500 minimums; ‘middle’ mass at HK$300 to HK$800; and ‘grind’ mass at HK$200 or below. Ms Tang said the bank’s research suggests Sands Cotai Central, operated by Sands China Ltd, has been the most active during the period in increasing the number of HK$2,000 minimum bet tables. They rose from 12 percent of its mass tables in June 2012 to 32 percent in June this year, according to Deutsche Bank estimates. Rob Goldstein, executive vice president and president of global gaming operations for Sands’ parent company Las Vegas Sands Corp, conceded at an investor conference in the United States last month that Sands Cotai Central had been a “laggard” in the firm’s Macau property portfolio regarding mass table yield. He added that had been a factor in Sands China being “under the market” by “15 to 20 percent” on mass table yield.
Under the twin constraints of table cap and slower VIP growth, casinos have to focus on raising mass table yield (i.e. revenue per mass table) Karen Tang, analyst, Deutsche Bank
ING bounces back to black under Li’s control ING Life Insurance grows faster than city-wide average growth for life insurers Vítor Quintã
vitorquinta@macaubusinessdaily.com
I
NG Life Insurance Co (Macau) Ltd posted a small profit last year, the first reporting period since it was purchased by Richard Li Tzar Kai, a son of Asia’s richest man. In its 2012 annual report released yesterday, the city’s fifth biggest life insurer announced a profit of 3.97 million patacas (US$497,000) last year. That represents a significant improvement from the 37.16-millionpataca loss posted in 2011. The improvement was based on an increase in premiums, which rose to 308.3 million patacas, a 29.7-percent increase on 2011. Business also grew at a faster rate than the city’s life insurance market. The industry’s premium revenue reached 3.74 billion patacas last year, a 19.1-percent annual increase. ING Macau increased its share of the life insurance market from 7.6 percent in 2011 to 8.2 percent
last year, according to calculations by Business Daily. The company’s market share is less than 2010’s 8.3-percent market share. The new board, led by Peter Wong Leung Kwong, said ING Macau “continued to register a stable development in the life insurance operations”. The firm launched several new wealth management and savings insurance products last year, including yuan-denominated savings insurance. Claims paid to customers were 76.3 million patacas and grew at a slower rate of 21 percent, the report published in the Official Gazette shows. ING Macau was able to retain more of the money it earned from premiums. Claims accounted for 24.7 percent of the firm’s premiums, down from 26.5 percent in 2011. Despite last year’s improvement the insurer has accumulated losses
ING Macau increased its share of the life insurance market to 8.2 percent last year
of more than 132 million patacas. Netherlands-based ING Groep NV sold its insurance assets in Hong Kong, Macau and Thailand to Pacific Century Group Holdings Ltd for 1.64
billion euros (16.97 billion patacas) in October. Pacific Century is controlled by Richard Li, son of Hong Kong billionaire Li Ka Shing.
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July 2013 April4,19, 2013
Macau
Rising costs bite into money changers’ profit Industry continues to grow despite high costs and cut-throat competition Vítor Quintã vitorquinta@macaubusinessdaily.com
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usiness handled by money changers continues to rise but profits slumped last year as operating costs grew, the Monetary Authority of Macau said. The combined turnover of the city’s 12 licensed money changers was 31.5 billion patacas (US$3.9 billion) last year, up by 6.5 percent from 2011. “In tandem with the prosperous tourism industry, the money exchange sector continued to achieve growth during the year,” the authority’s annual report said. “However, profitability of the sector was hampered by the increase in operating costs.” Money changers’ net profits fell by 5.6 percent last year to 68.7 million patacas, last week’s report says. The typical money changer pocketed just 0.22 percent of their turnover, according to calculations by Business Daily. With London-based Travelex Group Ltd joining the market in January last year, the total assets of the sector increased by 10.4 percent to 413.8 million patacas.
Travelex has two outlets here: in the AIA Tower and in Macau Tower. A third is due to open in Old Taipa village. Travelex chief executive Peter Jackson said in February his company hoped to have several bureaus de change here. At present, 12 companies have money-changing licences, and the six casino operators are also authorised to change money. The strong growth registered in currency exchange volume in previous years has not been evenly distributed between casino and noncasino operators. The combined turnover of the exchange counters in casinos was 15.4 billion patacas last year, up by 8.4 percent from the previous year, the report says. Increases in operating costs drove down net profit by 14.4 percent to 65.4 million patacas. Legislative Assembly member José Pereira Coutinho said last year that the number of money changers outside casinos was insufficient to handle the volume of money brought in by tourists.
Remittance flows rise Growing operating costs have also impacted the city’s two cash remittance companies, the Monetary Authority of Macau’s annual report shows. The combined profit at BDO Remit (Macau) Ltd and Pacific Ace (Macau) Remittance Ltd fell by 3.8 percent last year although turnover increased by 28.6 percent – an increase on the 25.6-percent growth registered in 2011. The authority releases no hard figures for cash remittance firms. Official data show current transfer outflows, which include workers’ remittances, reached 7.5 billion patacas (US$939.1million) in 2011.
Travelex is preparing to open a third bureau de change in Old Taipa village (Photo: Manuel Cardoso)
In a few months, reserve outstrips last year’s results A tidy turnaround for the government’s fiscal reserve sees earnings overtake inflation during March-to-May period Vítor Quintã vitorquinta@macaubusinessdaily.com
T
he fiscal reserve has already returned more from its investments in three months than during the first year of its operation. The amount in the reserve grew to 166.33 billion patacas (US$20.83 billion) in May, a 650.66-million pataca increase in one month, according to a summary published by the Monetary Authority of Macau in yesterday’s Official Gazette. Between March and May, the reserve’s return on investment was just short of 2 billion patacas, already a bigger return than the 1.73 billion patacas from the reserve’s first 12 months of operation. The reserve was established in February last year. It has made a stronger start to its second year, with the return on investment reaching 1.2 percent between March and May. The return is also greater than the rate of inflation during that period – 0.86 percent according to official data – and shows the reserve is gaining traction. If that rate of growth was maintained, the reserve would finish its second year with a return of 4.8 percent, almost three times as much as the 1.75 percent recorded in its first year. It would also be a better performance than its predecessor, the Macau Special Administrative Region Reserve Fund, which achieved an average annual return of 2.21 percent between 2001 and 2009. The monetary authority told Business Daily in April it would “adopt an investment strategy that aims to achieve a higher return in the long term”. January’s transfer of the 2011 fiscal surplus, almost 64 billion patacas, boosted the special reserve, which is for investment, and has allowed the authority to invest in higher-risk vehicles.
Almost 2 billion patacas was returned by the reserve in the period between March and the end of May
4
July 4, 2013
Macau
Ao was of no help for Doubts grow over La Scala, tycoons say airport land bid Project expansion was granted by current Witnesses gave different version on government secretary, defence argues Chinese Estates’ involvement in tender Tony Lai
Tony Lai
tony.lai@macaubusinessdaily.com
tony.lai@macaubusinessdaily.com
T
Ao Man Long rejected several requests from the La Scala developer
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evelopers of corruption-hit housing complex La Scala got no special help from jailed former government secretary Ao Man Long, the legal defence of two Hong Kong businessmen argued yesterday. Documents presented to the Court of First Instance in the bribery trial of Joseph Lau Luen Hung and Steven Lo Kit Sing show Mr Ao denied in March 2006 a request for an extension on the land usage period for the project. Carlos Couto, architect for the luxury housing project in the 200611 period, testified yesterday: “Ao Man Long did not approve the extension period but the present Secretary for Transport and Public Works [Lau Si Io] did.” Rui Sousa, counsel for Mr Lo, said: “Ao Man Long did not approve an extension to the usage period; he did not allow relaxing the height limit cap [on the project]; and he did not approve an expansion to the project’s land area.” Joseph Lau, chairman of developer Chinese Estates Holding Ltd, and Mr Lo are accused of paying Mr Ao HK$20 million (US$2.5 million) to ensure the success of their bid in 2005 for five plots of land near Macau airport where La Scala was being built. Mr Couto also confirmed it was Lau Si Io who gave the green light to raise the height cap and increase the construction area of the project from 39,000 to 73,000 square metres by granting eight additional plots in 2011. The veteran architect described the discussions over the project with Lau Si Io as “not difficult but taking a lot of time”. He said the developer had to submit many proposals due to “many technical difficulties”, namely a height cap linked to the airport operations and opinions from the
Civic and Municipal Affairs Bureau. Mr Ao originally set the maximum height for the La Scala buildings between 76 metres and 105 metres. Lau Si Io upped the cap to 85155 metres high in the 2011 grant, according to the Official Gazette. The current secretary refused to answer media questions about his 2011 decision on the sidelines of a Legislative Assembly session yesterday. He stressed the case was still on trial. Executive Council member and architect Eddie Wong Yue Kai told media on Tuesday he was “utterly not related to this case”. But his name was again mentioned in the hearing session yesterday. Mr Couto backed the defence’s claim that there was a development plan for the land plots near the airport – titled Macau International Airport Business City – drafted by three architects, including Mr Wong, in the 1990’s. The architect says it was “not a secret” that Lei Pou Fat Development Co Ltd had “a very strong desire to find an appropriate buyer” for the plots. Lei Pou Fat is an umbrella company, mainly controlled by the government, that oversees the five firms that held the five land plots. Mr Couto also acknowledged that Lei Pou Fat had carried out sessions in Taiwan and Hong Kong to attract buyers. The defence of the tycoons is arguing that Joseph Lau and Mr Lo were not the only ones who knew about the possibility of the airport plots being up for sale. Prosecutors have argued they knew of this intention in advance because they bribed Mr Ao. With Stephanie Lai
he Court of First Instance heard contradicting stories in yesterday’s hearing on which firm was behind the bid for the airport land where high-end project La Scala was being built. Two employees from Hong Kong-based Hsin Yieh Architects & Engineers Ltd told the court yesterday they worked with Joseph Lau Luen Hung’s Chinese Estates Holdings Ltd on drafting documents for the five plots before the tender. Mr Lau and Steven Lo Kit Sing, chairman of entertainment firm BMA Investment Group Ltd, are charged with bribing Ao Man Long, then government secretary, to ensure their success in getting the plots in June 2005. George Lew Wing Tim, Hsin Yieh’s director, said they first helped Chinese Estates create a concept plan for the plots in endFebruary of 2005. The architectural firm then received further instructions from Mr Lau’s company in June to revise the February plan, according to Leung Wah Tat, an architect at Hsin Yieh. Both witnesses said they did not know what the documents were for. But Mr Leung said he “felt” the plans were used for bidding and handed them over to Jones LaSalle Hong Kong. But Tony Lo Hing Hung, former
investment director at Jones Lang LaSalle Hong Kong, testified last week the company had only worked with Moon Ocean Co Ltd over the bidding. Moon Ocean belonged to Steven Lo at the time and was only bought by Mr Lau’s Chinese Estates in late 2005. Jones Lang LaSalle represented Moon Ocean to submit a bid for the airport land. The testimony from Hsin Yieh’s staff also contradicts remarks that Steven Lo made during the third corruption trial of Mr Ao last year. At the time Steven Lo said he was very keen on getting the land right from the beginning, unlike Mr Lau. Mr Ao has been sentenced to jail for 29 years after his third trial. Both Mr Lew and Mr Leung said the February and June plans were at a “very initial stage” and did not take much time to draft. Public prosecutors have claimed the two Hong Kong tycoons knew in advance of the sales of the plots and so were able to prepare for bidding period, which only lasted for 10 days. The court also heard the long-awaited written testimony of Castanheira Lourenço, a former director of Infrastructure Development Office now living in Portugal, has finally arrived in Macau. The hearing will continue on July 15.
The land where La Scala was being built was put up for tender in 2005
5
July 4, 2013
Macau
Airport land still not ripe for planning: Lau Govt says public housing is a possibility for corruption-tied plots Stephanie Lai
sw.lai@macaubusinessdaily.com
Legislators grilled secretary Lau Si Io over his public housing policy
T
here are no public housing plans drafted for the five plots located near the airport, Secretary for Transport and Public Works Lau Si Io told
legislators yesterday. The land is involved in an ongoing corruption trial tied to former government secretary Ao Man Long and its 2005 grant to Moon Ocean
Corporate
Tourism students on U.K. exchange visit
NagaCorp chairman joins security consultancy
Macau’s Institute for Tourism Studies is jointly organising an eight-day student exchange at Leeds Metropolitan University in the United Kingdom. It involves 25 students from Macau, Hong Kong and Japan, and started on Monday. “The Institute for Tourism Studies in Macau has partnerships with universities all over the world, so we are delighted that they selected Leeds Metropolitan University for their 2013 trip,” said Sofia Rebelo, head of the university’s Bachelor of Science (Honours) Hospitality Leadership and Management course. Students from City University of Hong Kong and Matsumo University, Japan will also take part. It includes lectures and discussion sessions with academics, tourism professionals and policy makers. There will also be group presentations on the final day, which will be assessed. Leeds – originally an industrial city – is in the county of West Yorkshire in northern England, a regional cultural centre and location of the Royal Armouries museum, Bradford Media Museum, and home of the 19th century literary family the Brontës.
Timothy McNally, chairman of Cambodian casino operator NagaCorp Ltd, has been named president of B2G Global Strategies, a corporate investigations and security consultancy based in the United States. Mr McNally has been a non-executive director of Hong Kong-listed NagaCorp since 2005. The firm operates the NagaWorld casino resort in Phnom Penh. From April 1999 until October 2005, he was executive director of security and corporate legal services for the Hong Kong Jockey Club. Prior to his move to Hong Kong, Mr McNally was a special agent for the Federal Bureau of Investigation in the U.S. for 24 years. During that time he focused on the investigation and prosecution of serious crime, including organised crime, drug trafficking, corruption and fraud matters. B2G has offices in Nevada, California and Washington D.C. It specialises in services including policy guidance, security consulting, investigations and strategy for private and public sector organisations in the U.S., Latin America, Europe and Asia.
Ltd has been revoked. The company that was developing residential project La Scala on the plots has appealed to court. Legislative Assembly member Au Kam San argued yesterday that the government should start planning what to do with the over 80,000 square metres of land or reserve them for public housing. “No party has applied to keep the land nor was there any court order to withhold it,” Mr Au said. “So that should not prevent the government from planning what to do with the five plots.” Mr Lau disagreed. “After a comprehensive assessment, we think there is a certain legal risk involved if we were to announce any land use for those plots now,” he said. “Once the whole lawsuit is over and the legal risk is cleared, it is possible that we might reserve the plots for public housing,” he continued. Several legislators expressed concern about the over-subscription of one-bedroom subsidised flats at
Seac Pai Van’s Ip Heng building – 15,038 applications were filed for the 1,544 units.
Demand in question Legislators from the business sector voiced doubts on the real demand for subsidised housing units. The government has pledged to open applications for two- and three -bedroom units by the end of this year, though no exact number was disclosed. “As the research from the Policy Research Office shows, there were about 200,000 residential units in total by 2012, of which only 13,000 units were empty,” said legislator Tsui Wai Kwan. “For every unit, which on average accommodates three household members, that implies about 560,000 people already got a home,” he added. Mr Tsui believes this data show that residents are no longer just homebuyers but also investors. Many are very keen on “securing a one-bedroom subsidised unit, even though they may not urgently need it,” he added. Kwan Tsui Hang disagreed with Mr Tsui, saying that the 16year ban on re-sales of subsidised housing meant it could not serve as an “investment tool”. Mr Lau acknowledged that the number of applicants for public housing is not always equal to the number of people who eventually move into the units. Only 16.3 percent of the 2,545 units at Taipa’s Edifício do Lago are currently occupied, even though all the flats have been allocated, the secretary said. He did not provide any reasons for this.
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July 4, 2013 April 19, 2013
Macau
Flat owners demand Sin Fong be levelled Government report from last year’s pillar collapse fails to convince owners the building is safe Stephanie Lai
sw.lai@macaubusinessdaily.com
The Ou Va and Lei Cheong buildings are located to the west of Sin Fong Garden, close to the Soho Residence site. A majority of owners at Sin Fong Garden have signed a letter of intent opting for redevelopment, Mr Wong said. The biggest omission among the owners was the Tung Sin Tong Charitable Society that owns 32 flats in the building. Mr Wong said owners were willing to pay for “part” of the cost of redevelopment if there was an agreement to go ahead.
Neighbourhood meeting
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Some 140 households were evacuated from Sin Fong Garden after October’s collapse (Photo: Manuel Cardoso)
esidents of Sin Fong Garden flats are pushing for the building to be redeveloped rather than patched up, which is the government’s preferred option. It is more than eight months since a pillar collapsed in the car park of the housing development in Patane, forcing the 140 households to be evacuated. The October 10 collapse raised fears over the structural integrity of the building. The government’s inquiry and its April report concluded the collapse was mainly due to poor quality concrete used in the car park pillars and no party has been blamed for the collapse. But residents at Sin Fong Garden say the building has “structural flaws” and are unconvinced by the government’s findings, the building’s management committee head Wong Man Sang said. “We do not think the government did a comprehensive investigation,” he told Business Daily. “It did not ascertain the fundamental flaws with Sin Fong Garden, which we think have to do with its foundation works.” The report says that neither the piling works at an adjacent construction site, Soho Residence, nor the demolition of a neighbouring industrial building affected the pillars. “But if the foundations are okay, how come you can see that Sin Fong Garden is tilting?” Mr Wong said. “Sin Fong Garden is not the only one that tilts. There is also a worrying, large crack between its adjacent residence Edifício Ou Va and Edíficio Lei Cheong.”
The government persuaded lawyer and member of the Legislative Assembly Leonel Alves to provide free legal services to owners at Sin Fong Garden. “We have had a meeting with Mr Alves, who is now collecting the accident data from us to aid the negotiation process later on,” said Mr Wong. Mr Alves told reporters yesterday that he would continue negotiations in an impartial manner. “Our utmost desire is to have the negotiations start as soon as possible,” Mr Wong says. Talks should include Sin Fong Garden’s developers, Ho Chun Kei Construction and Investment Co Ltd, government officials and representatives from the Soho Residence developers, he said. “Sin Fong owners have really seen their building structure deteriorating since the inception of the Soho project last year, the pulling down of the industrial building and piling works,” Mr Wong added. The construction of Soho Residence has been suspended since Sin Fong Garden’s pillar collapse. Earlier this week, a group calling itself “Owners of Soho Residence” published an advertisement in the Chinese-language Macao Daily News requesting a meeting with the government to discuss the construction resumption. The group refused to issue any further comments when contacted by Business Daily. The Land, Public Works and Transport Bureau said it could not provide a timeframe for when construction work at Soho Residence might resume.
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July 2013 April4,19, 2013
Macau
AERL could face dual listing hurdle Junket investor said in May was seeking Hong Kong listing Michael Grimes
michael.grimes@macaubusinessdaily.com
M
acau junket room investor Asia Entertainment & Resources Ltd could face hurdles in seeking a listing in Hong Kong to complement its New York one. In preparation for the Hong Kong listing the firm stated in a May press release to Nasdaq that it was offering subscription rights to raise US$63 million (503.2 million patacas). That it said at the time, was in order to “comply with Hong Kong listing requirements relating to the financial independence of the company,” by paying off existing shareholder loans. Since AERL’s May 24 Nasdaq announcement, trading conditions on global equities markets have deteriorated markedly. Business Daily reported yesterday that casino services company Macau Legend Development Ltd raised only 36 percent of the HK$6.11 billion gross target mentioned in a term sheet three weeks ago for its global offering. On July 1 AERL announced in another Nasdaq press release that its rights offering had closed, and had raised US$63.5 million gross. But it conceded that the offering had been
Nasdaq in New York
undersubscribed, and nearly half the 19.5 million shares had been bought by “standby” purchasers. It added some of these were in fact existing shareholders of the company. Business Daily yesterday asked for clarification from the Hong Kong Stock Exchange as to whether AERL’s application for Hong Kong listing was still active, and whether
the use of existing shareholders as standby purchasers in the rights offering overseas would satisfy the requirements of the Hong Kong Listing Committee. The HKSE told us it “does not make announcements on behalf of companies regarding their listing plans or schedules”. It declined to comment on the requirements question. No
comment was available from AERL before press time. AERL operates four VIP rooms in Macau and last week announced it had acquired controlling rights to the profits of a fifth, at Casino Le Royal Arc. AERL said in a Nasdaq website press release on Tuesday United States time that its rolling chip turnover for June fell three percent year-on-year, to US$1.33 billion, compared to US$1.37 billion a year earlier. In the same period gross gaming revenue in Macau rose 21 percent. For the first six months of 2013, AERL’s rolling chip turnover was US$8.54 billion (an average of US$1.42 billion per month), down 15 percent year-on-year, compared to US$10.07 billion (an average of US$1.68 billion per month) for the first six months of 2012, said the release. Macau gross gaming revenue increased 15 percent for the first six months of 2013. AERL’s four existing VIP rooms are at StarWorld Macau, Galaxy Macau, Sands Cotai Central and City of Dreams. The firm is chaired by Macau junket room veteran Lam Man Pou.
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July 4, 2013 April 19, 2013
Greater China Stocks slump on growth concern
Mainland China
Yuan offshore trade race picks u
ECB could get a swap deal with China’s central bank, says financia Angela Cullen and Ye Xie
China’s stocks fell for the first time in four days, led by financial and industrial companies, as growth in services industries slowed and investors speculated initial public offerings will resume this quarter. Industrial & Commercial Bank of China Ltd, the nation’s biggest lender, lost 2 percent and developer Gemdale Corp sank 3.1 percent. Sany Heavy Industry Co., the largest machinery maker, slid to the lowest level in three years as oil surged in New York. The Shanghai Composite Index retreated 0.6 percent to 1,994.27 at the close, halting a threeday, 2.9 percent rally. The measure pared losses in the last 30 minutes of trading as PetroChina Co Ltd, the most heavily weighted stock in the index, rallied to close 2.2 percent higher. “Leading indicators like PMI suggest the economy is still weak,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co. “Uncertainty over when IPOs will be resumed also weighs on sentiment. The earlier rebound isn’t sustainable.” The CSI 300 Index declined 0.8 percent to 2,203.83 yesterday, while the Hang Seng China Enterprises Index retreated 2.6 percent, taking its loss this year to 22 percent. The ChiNext index of small-cap companies jumped 2 percent. The slowdown in service industries underscores Premier Li Keqiang’s challenge in achieving sustainable growth across the world’s second-biggest economy through increasing consumption and reducing reliance on exports and investment.
Hong Kong Hong Kong stocks were dragged down, with the benchmark equity index heading for a second day of declines, after the city’s home sales plunged. Sun Hung Kai Properties Ltd, Hong Kong’s biggest developer, decreased 2.3 percent. Luk Fook Holdings International Ltd, a jewellery retailer, dropped 2.9 percent after the city’s retail sales missed estimates in May. The Hang Seng Index sank 2.5 percent to 20,147.31 at the close in Hong Kong, with all but three stocks falling. Volume on the gauge was 10 percent higher than the 30-day average. The Hang Seng China Enterprises Index, which capped its worst first half since 2008 last month, slid 3.3 percent to 8,900.25. “Market sentiment remains weak amid concern about slowing growth in China and tapering of Federal Reserve policy,” said Ng Soo Nam, Singapore-based chief investment officer at Nikko Asset Management Asia Ltd. “Chinese equities are extremely cheap.” The Hang Seng Index posted its biggest monthly decline in a year last month, declining 7.1 percent as China’s money-market rates surged to record and after U.S. Fed Chairman Ben S. Bernanke said policy makers may start dialling down stimulus if the U.S. economy shows sustained improvement.
Taiwan Taiwan stocks fell 0.64 percent yesterday as market sentiment was weighed down along with other regional bourses. The main TAIEX index dropped to 7,964.77 points, extending a 0.25 percent dip in the prior session. The financial sub-index shed 1.4 percent, with Fubon Financial Holding Co Ltd 4.6 percent lower. Fubon, parent of Taiwan’s No.2 life insurer, launched a share offering valued at up to US$886 million, IFR reported. Among other losers, touch panel maker TPK Holding Co Ltd shed 2.2 percent, and contract chip maker Taiwan Semiconductor Manufacturing Co Ltd was 0.5 percent lower. The Taiwan dollar had climbed T$0.052 to stand at T$30.068 to the U.S. dollar. Last Friday, Taiwan’s stocks jumped in the last minute of trading, capping the benchmark index’s biggest gain in seven months. The Taiex index closed at 8,062.21, with about half of those gains coming just before the close. “There’s a chance foreigners are doing window dressing” to boost net asset values for their semi-annual reports, Diana Wu, a vice-president at Capital Securities Corp, said. The Taiex index jumped 3.5 percent last week as Taiwan lawmakers voted to roll back provisions of a capital gains tax on certain stock sales and removed an index price threshold that depressed shares and dragged down market trading volume.
By 2015 the yuan might be the third most-traded currency worldwide, says HSBC
T
he race is on to corner the overseas trade in China’s yuan, with an organisation that represents Frankfurt’s predicting the European Central Bank will get a swap deal valued at four times that obtained last week by the U.K. The ECB, based in the German finance capital, may obtain a swap agreement with the People’s Bank of China valued as much as 800 billion yuan (US$130 billion), according to lobby group Frankfurt Main Finance. A deal would give euroarea central banks access to yuan
funds to backstop companies doing business in the world’s second-largest economy, and would dwarf the 200 billion-yuan agreement signed June 24 by the Bank of England. Policy makers and bankers were meeting with executives of companies from carmaker Volkswagen AG to industrial-gas producer Messer Group GmbH in Frankfurt yesterday to discuss establishing the city as an offshore trading centre for the yuan. It’s the latest chapter in China’s push for greater use of its currency outside the mainland.
“This has been an issue for our clients for years,” Dirk Schmitz, co-head of the German investmentbanking arm of Deutsche Bank AG, the biggest currency trader, said in a phone interview. “German companies have a good commercial relationship with China. Companies often come to us to ask for hedging.”
Swapping yuan A swap agreement would see the ECB put up euros in exchange for the Chinese currency, which it could
Services sector expands, but fails to soothe worries Separate surveys show June services PMI expanding modestly Xiaoyi Shao and Koh Gui Qing
C
hina’s services sector expanded modestly in June with the vast construction industry acting as a drag on output, in a further sign that the world’s second-largest economy is losing momentum. A lacklustre services sector will not help buffer a deeper slowdown in manufacturing at a time when China’s top leaders appear reluctant to loosen the policy reins to shore up growth. A pair of Purchasing Managers Indices (PMIs) yesterday stayed above the watershed line of 50, which divides expansion from contraction but the readings were not strong enough to calm worries about China’s slowdown. Asian shares extended losses after the surveys.
“The underlying growth momentum is likely to be softening for services sectors, along with the slowdown of manufacturing growth,” said Qu Hongbin, HSBC Holdings Plc’s China chief economist. The headline services PMI published by the National Bureau of Statistics slipped to a 9-month low of 53.9 in June from May’s 54.3, and the reading from a Markit Economics/HSBC survey improved a touch to 51.3 from 51.2 in May. “The slight drop in the services sector was mainly caused by a seasonal fall in the construction industry,” said Cai Jin, a vice president at the China Federation of Logistics and Purchasing (CFLP), in a statement accompanying the data.
The sub-index for construction fell to 59.3 from 62.2 in May. The CFLP conducts the official survey together with the NBS. China’s services sector accounted for 46 percent of the economy in 2012. It overtook manufacturing as the biggest employer in the country in 2011 and so far service businesses have fared better than Chinese factories which are hurting from slackening foreign and domestic demand, as well as excess capacity.
Under pressure However, economists warned sooner or later the slackening of manufacturing activity and toughening economic conditions will also catch up with the service economy.
99
July 2013 April4,19, 2013
Greater China
up with Frankfurt bid Huawei woos carriers al industry lobby group with research boost then lend to companies. Germany is China’s biggest trading partner in Europe. By 2015, a third of the Asian country’s crossborder business will be settled in yuan, making the currency the third most-traded after the U.S. dollar and euro, according to HSBC Holdings Plc, Britain’s biggest lender. The three-year swap agreement that BOE Governor Mervyn King signed with his Chinese counterpart Zhou Xiaochuan last month is half the size of Hong Kong’s 400 billionyuan deal. The accords provide companies with a safety net that aims to give them more confidence in doing business with their Chinese partners. GEA Group AG, the Dusseldorfbased supplier of technology to food and energy companies in countries including China, is among Germany’s small- and medium-sized companies that stand to gain from Frankfurt’s push for a yuan-swap agreement. “The free convertibility would speed up business and make transactions more secure,” chief financial officer Helmut Schmale
RMB800 bln
Potential value of the swap agreement, according to Frankfurt Main Finance
said. “China has always been a growth market for us and will remain such for the foreseeable future. In a few years, the yuan will become the third global currency, with the dollar and euro.”
Overseas trade Frankfurt is basing its push for the offshore yuan business on Germany’s close ties with China, the nation’s third-biggest trading partner. The two countries imported and exported goods and services worth 144 billion euros (US$186 billion) between them last year, according to the Federal Statistics Office in Wiesbaden, Germany. Transactions in yuan jumped to 8.2 percent of trade deals between Germany and China in May, the biggest month-on-month increase among 20 nations using the Chinese currency, according to the Society for Worldwide Interbank Financial Telecommunication. The Belgiumbased group, known as Swift, provides messaging services to banks. “A swap agreement is absolutely crucial,” Hubertus Vaeth, the managing director of Frankfurt Main Finance, which is backing the German city’s push to be a yuan trading centre, said in a phone interview. “If we had Frankfurt as a trading hub then” business between Germany and China “could double or triple,” he said. Mr Vaeth said Frankfurt can corner the market for offshore trading in the Chinese currency for the euro region. “In the euro area, it’s going to be Paris or Frankfurt,” he said. “Germany is China’s leading trade partner, the prime investment destination for Chinese investors in Europe.” Bloomberg News
H
uawei Technologies Co Ltd, China’s largest maker of networking equipment, is ready to outspend Ericsson AB of Sweden in research and development in a race to win over clients not only with cheaper products. After investing some 30 billion yuan (US$4.9 billion) in 2012, Huawei is boosting its research budget this year to improve mobile and fixed network performance as well as audio and video transmissions, Li Yingtao, its head of R&D, said in an interview. The privately held company is seeking to work more closely with carriers to jointly develop products from radio- access networks to miniaturised antennas. “The bottom line when you talk to customers about building a network is that they will ask: ‘can you do it or not?’” Mr Li said this week in Geneva. “That ability depends mostly on innovation capacity. That’s why we will continue to increase our investments.” The comments underscore China’s latest efforts to move upscale from low-cost manufacturing. While it still ranks low – 35th place – on the list of the most innovative countries, China is at the forefront of emerging economies measured by growth in patent filings and is among the highest rated for research and development spending, according to a World Intellectual Property Organisation report presented this
Re-launch of govt bond futures green-lighted
Services industry accounted for 46 percent of the economy last year
“Employment will only worsen in the next few months, it won’t improve,” said Hao Zhou, an economist with Australia & New Zealand Banking Group Ltd in Shanghai. “Company profits are declining and they are investing less. How can employment improve?” he added. Two separate PMI surveys on Monday showed China’s manufacturing growth plumbed multi-month lows in June as foreign and domestic demand waned. China’s economic downturn, shaping up to be the worst in at least 14 years, is starting to bite. Many analysts believe the economy is backsliding into another downturn
Huawei invested US$4.9 bln in R&D last year
after a short-lived recovery lasting only around three months, with growth p o s s i b l y ev en m i s s i n g Beijing’s 7.5 percent target this year. “With sluggish growth of new orders, employment growth is under pressure,” HSBC’s Qu said. “Growth in the services sector slowed, but didn’t slide,” said Wei Yao, China economist of Societe Generale SA in Hong Kong. “It explained why the labour market has so far remained healthy.” “It … leaves Beijing more room to tolerate economic slowdown and press ahead with structural reforms,” she added. Reuters
C
hina’s cabinet has approved the re-launch of government bond futures after an 18-year suspension, state media reported yesterday, as the country moves towards a more liberalised interest rate regime. The approval by the State Council paves the way for the China Securities Regulatory Commission (CSRC) to re-start trading as soon as it wants. The market widely expects the resumption will occur around mid-September, the official China Securities Journal said. Authorities suspended government bond futures trading in 1995 after a major trading scandal caused heavy losses to a statecontrolled securities brokerage.
week at the United Nations in Geneva.
Nokia, Ericsson The net R&D spending by European technology companies such as Ericsson, the largest supplier of wireless networks, and Nokia Oyj, the former leader in handset manufacturing, grew last year at the slowest pace in three years, according to data compiled by Bloomberg. With 21,400 employees in research, Ericsson’s R&D spending last year was almost the same size as Huawei’s, at 32.8 billion kronor (US$4.9 billion), and accounted for 14.4 percent of the Stockholm-based supplier’s sales. The ratio for Huawei, where almost half of its 150,000 workforce is in R&D, was 13.7 percent. Huawei, which is expanding its smartphone businesses – which Ericsson has exited – reported 2012 revenue of about US$35.4 billion. At the start of this year, Ericsson said that its 2013 R&D spending will decrease “somewhat”. Since then, the company has agreed to take back some assets following a breakup of its wireless chip venture with STMicroelectronics NV. “Ericsson has been the technology leader in the industry for 137 years and remains committed to investing into this leadership,” said Ola Rembe, a spokesman in Stockholm. Bloomberg News
The re-introduction of a government bond futures market has been expected since the CSRC began simulated futures trading in February 2012. Officials have said that the derivatives are likely to be launched this year. The move is part of efforts by Chinese regulators to develop China’s bond market, which has grown rapidly in recent years but remains underdeveloped. Bond futures will improve price discovery and offer new hedging tools to dealers and investors. Bond futures will also support China’s gradual move to liberalise interest rates. Unlike bank loans, government and corporate bonds are not subject to the benchmark deposit and lending rates set by the People’s Bank of China for maturities up to five years. China had 8.07 trillion yuan (US$1.30 trillion) worth of government bonds outstanding at the end of 2012, up 9 percent from 2011, official data showed. Reuters
10 10
July 4, 2013 April 19, 2013
Asia
RBA warns of challenges as mining boom wanes Australian central bank ready to support shift to new source of growth
A
ustralia’s central bank Governor Glenn Stevens said his nation will need improved confidence to manage the end of a resource boom, a transition that would also likely be aided by a decline in the currency if needed. “We have to negotiate the downward phase of the investment boom over the next few years, which appears likely to pose significant challenges,” he said yesterday in the text of a speech in Brisbane. “Much depends on ‘confidence’ – that intangible thing that is hard to measure and very hard to increase.” The Reserve Bank of Australia has left the overnight cash rate target unchanged at a record-low 2.75 percent for the past two meetings as the currency slid 12 percent last quarter, easing pressure on the economy. Policy makers lowered
KEY POINTS Transition from mining investment boom challenging Central bank ready to act as mining boom peaks Board deliberated for a long time on rate decision - Stevens Aussie falls to fresh three-year low below US$0.91
borrowing costs by 2 percentage points between November 2011 and May to spur industries including residential construction as mining investment wanes and China’s outlook remains clouded. The Australian dollar dropped to 90.96 U.S. cents, the lowest since September 2010, after Me Stevens said the currency has been too high for many areas of the economy. “Previous handovers have occurred, largely successfully. That doesn’t guarantee the next one will, though it does mean that we shouldn’t assume that it won’t occur,” Mr Stevens told the Economic Society of Australia Business Luncheon in Brisbane. “If the economy ‘needs’ a lower exchange rate, it will probably get it.”
Reshaping economy Mr Stevens said growth in China, Australia’s biggest trading partner, “has moderated” over the past year or two to closer to 7.5 percent than the past 10 percent rate. “Most of the data we are seeing from China are consistent with that pace. This is what the Chinese authorities have been saying they want to achieve.” Two gauges of Chinese manufacturing fell in June, reports showed this week, as well as services, while a cash squeeze in the banking system adds to odds that Li Keqiang will become the first Chinese premier to miss an annual growth target since the 1998 Asian financial crisis. Prime Minister Kevin Rudd, who returned to office last week after a three-year hiatus, is reshaping the government’s economic message and abandoning the optimism of his predecessor Julia Gillard, warning the end of the China boom may mean
The Australian dollar fell to its lowest since September 2010
swelling unemployment unless it’s managed carefully. “Confidence seems pretty subdued right now,” Mr Stevens said. “We are talking here about confidence that the future will be characterised by growth, that there will be customers for products, that innovations are worth a try, and so on.” The Australian economy, which bucked the global recession in the wake of Lehman Brothers Holdings Inc.’s 2008 collapse, grew at its slowest annual pace in almost two years in the first three months of 2013. The Australian Industry Group’s gauges for manufacturing, services and construction have all shown a contraction since at least March 2012. Mr Stevens also urged the nation’s political parties to maintain their “strong commitment” to fiscal responsibility. “The importance of that commitment will, if anything, be
heightened in the future, given that significant challenges exist over the medium term in funding government initiatives that the community appears to want,” he said. The RBA board deliberated for a very long time on Tuesday on their decision to maintain borrowing costs, Mr Stevens said. Since the central bank unexpectedly cut rates on May 7, the Aussie has dropped about 10 percent and suffered the biggest worldwide slide last quarter after the Syrian pound. “The exchange rate was somewhat too high for a period,” Stevens said. The governor said pressure from the sustained strength of the currency meant “efforts to improve productivity have been stepped up,” in Australia. “But we should still be asking whether there are things in the way of faster improvement,” he said. Bloomberg News/Reuters
Mitsubishi UFJ to buy control of Thai’s Bank of Ayudhya Bid likely to win regulatory approval, seen paving way for others
A
US$5.6 billion bid by Japan’s Mitsubishi UFJ Financial Group Inc. (MUFG) for a majority stake in Thailand’s Bank of Ayudhya Pcl may pave the way for more foreign acquisitions of Thai banks as regulatory restrictions ease. Thailand’s central bank wants to boost the competitiveness of its banking sector to attract more foreign investment into Southeast Asia’s second-largest economy. For foreign lenders keen to tap the region’s booming economies, gaining control is key to make their investments worthwhile. MUFG’s deal to buy up to 75 percent of the mid-sized Ayudhya appears likely to win Thai regulatory approval, burnishing the appeal of a US$1.1 billion stake in TMB Bank Pcl that Dutch financial services company ING Groep NV is seeking to sell.
Potential buyers for ING’s 31 percent stake in TMB have previously shied away from pursuing the deal because they were unsure about gaining control, financial sources said. “The outlook of Thai banks is interesting given their strong performance,” said Adisorn Muangparnchon, an analyst at Phillip Securities. Major Thai banks posted record net profit in the latest January-March quarter due to strong loan growth of about 13 percent from a year earlier. “For foreign banks, buying a stake in existing banks will be a quicker way for them to enter the Thai market, rather than applying a licence from the central bank,” he added. Under the current regulations, foreign banks can buy up to 25 percent of a Thai bank without
central bank approval but that changes if the stake rises to up to 49 percent. More than that requires the approval of the finance ministry. MUFG, Japan’s largest bank, told a briefing it believes Bangkok would “take a favourable view” of its deal to buy the Ayudhua stake. It also said it was considering merging its Thai operations with the domestic lender to comply with Thailand’s single presence policy on bank ownership. Thailand’s central bank said it had received notification of MUFG’s purchase of Ayudhya. Any Thai approval of the deal would contrast with Indonesia’s attempts to rollback foreign ownership of its banks. “Given the fact that the largest banks in Thailand are still in majority-Thai ownership, Thailand is more relaxed about foreigners taking over some of the next-tier banks in terms of size,” said PK
US$5.9 bln
MUFG will pay for a 75 pct stake in Bank of Ayudhya
Basu, regional head of research and economics at Maybank Kim Eng in Singapore. “I think there will be more activity.” Reuters
11 11
July 2013 April4,19, 2013
Asia Suspended jail for ex-Olympus executives
Pyongyang suspended operations at Kaeseong on April 8
S. Korean firms threaten to abandon Kaesong Managers considering moving abroad, eye mainland China
D
ozens of South Korean firms yesterday threatened to withdraw from a shuttered joint industrial zone in North Korea, complaining they fell victim to political bickering between the two Koreas. Representatives of the 123 South Korean companies with factories in Kaesong have repeatedly urged North and South Korea to open talks to revive the moribund industrial park. Of the 123 companies, 46 are manufacturers of electronics and machinery parts whose facilities are especially vulnerable to humidity in the current monsoon weather in the absence of maintenance. “The manufacturers of machinery and electronics parts cannot wait any longer. Kaesong must be reopened… or they have to move elsewhere”, Kim Hak-kwon, who represents the 46 companies, told journalists. “It has been 92 days since the complex came to a halt… our patience has been stretched beyond its limit”, he said. Mr Kim urged Seoul and Pyongyang to lose no time in allowing company managers to visit the zone for maintenance. Several companies have been in talks to move facilities out of Kaesong
to relocate them abroad including mainland China, hesaid. North Korean officials yesterday said they would allow company managers from the South to visit the park. Established in 2004 as a rare symbol of inter-Korean cooperation, the Kaesong industrial estate was the most high-profile casualty of months of elevated tensions that followed the North’s nuclear test in February. Operations at the complex just north of the border ground to a halt soon after the North banned entry by southerners on April 3 amid soaring military tensions with Seoul. About a week later Pyongyang pulled all its workers out, prompting Seoul to withdraw its managers and officials soon afterwards. Born out of the “Sunshine Policy” of inter-Korean conciliation initiated in the late 1990s, Kaesong was a crucial hard currency source for the impoverished North. Neither side has declared the complex officially closed despite the paralysis for the past three months, calling it a temporary shutdown. Cross-border talks scheduled last month to discuss the fate of the complex were cancelled due to disputes over protocol.
The complex employed more than 53,000 North Koreans working for 123 South Korean companies. Production has generated US$100 million in annual profits for North Korea and four times that for the South, according to Yang Moo-jin, a professor at the University of North Korean Studies in Seoul. AFP
The manufacturers of machinery and electronics parts cannot wait any longer. Kaesong must be reopened… or they have to move elsewhere Kim Hak-kwon, representative of 46 companies
Asia Pacific nations lag on social spending: ADB Problem growing as inequality widens in the region, lender says
A
sia-Pacific nations need to boost spending on social protection as widening income inequality risks stoking unrest, the Asian Development Bank said. Only in Japan, South Korea, Mongolia and Uzbekistan out of 35 countries in the region does spending on social protection equal at least 5 percent of per capita gross domestic product, the ADB said in a report released yesterday, using 2009 data. Insurance and pensions dominate such expenditure, while few governments focus on labour, the report said. “Governments are underspending on social protection and this is a problem because there is widening
inequality in the region,” Bartlet Edes, a director at ADB’s regional and sustainable development department, said in an interview in Manila. “If the benefits of Asia’s remarkable growth continues to be distributed in an unequal way, it’s going to weaken the social fabric and lead to social tension.” Nations from Brazil to Turkey have battled growing unrest in past months as citizens rallied against unemployment and rising costs. Even as incomes climbed quickly on the back of economic expansion, income inequality in China rose to 0.474 in 2012 as measured by the Gini coefficient, above the 0.4 level analysts use as
a gauge for social unrest. South Korea’s social-protection spending, which is about 5 percent of per capita GDP, is a reasonable target for middle-income countries, ADB said in the report. China spends 3.5 percent, the Philippines 2 percent, and Indonesia 1.1 percent, according to data obtained separately from the ADB. Numerous factors, such as a death in the family, illness, old age, natural disasters, financial crises, and unemployment can affect a large proportion of the population and adequate systems need to be in place to deal with such situations, the ADB said. Bloomberg News
A Japanese court yesterday handed suspended sentences to three former Olympus Corp executives accused of engineering a massive accounting fraud at the camera and medical equipment maker. Prosecutors had asked that sacked company president Tsuyoshi Kikukawa be jailed for five years and lesser terms given to ex-vice president Hisashi Mori and auditor Hideo Yamada. The sentences from the Tokyo District Court, ranging from three-years for Mr Kikukawa and Mr Yamada to two-and-a-half years for Mr Mori, carry no immediate jail time. A court spokesman also confirmed that Olympus itself was fined 700 million yen (US$6.9 million) for its role in the affair, which badly damaged Japan’s corporate governance image and turned the company’s first foreign leader into a highprofile whistleblower. Prosecutors had asked for a one-billion-yen fine against the company. “The accused Tsuyoshi Kikukawa and Hideo Yamada were both sentenced to three years of imprisonment while the accused Hisashi Mori was sentenced to a jail term of two and a half years,” the court spokesman told AFP. “Those sentences will be suspended for five years and four years, respectively.” According to their indictment, the men were key figures in a complicated fraud to hide about US$1.7 billion in losses using outsized consulting fees and buying unrelated companies.
SoftBank bid for Sprint gets regulator nod SoftBank Corp’s US$21.6 billion bid for mobile carrier Sprint Nextel Corp won the support it needs from the last U.S. regulatory body reviewing the transaction, said people familiar with the matter. Two of three members of the Federal Communications Commission have voted for the deal, said the people, who asked not to be identified because the matter hasn’t been made public. The approval also covers Sprint’s offer to buy the half of wireless operator Clearwire Corp it doesn’t already own. The approval sanctions a re-ordering in the U.S. market by boosting No. 3 Sprint against larger rivals Verizon Wireless and AT&T Inc. as SoftBank billionaire founder Masayoshi Son seeks to create the world’s largest carrier. “This clears a hurdle, so it’s almost finalised,” said Masamitsu Ohki, a fund manager at Stats Investment Management Co., a hedge fund in Tokyo. “The acquisition makes sense to fulfil Son’s expansion strategy.” Justin Cole, an FCC spokesman, declined to comment. SoftBank won a bidding war for Sprint and trumped a run at Clearwire by Englewood, Colorado-based Dish Network Corp.
Suntory climbs on debut after soft drink IPO Suntory Beverage & Food Ltd gained on its Tokyo trading debut after raising almost US$4 billion in Asia’s largest public offering this year. The soft-drinks unit of Osaka-based Suntory Holdings Ltd closed 1.45 percent higher at 3,145 yen after rising as much as 3.1 percent to 3,195 yen. The benchmark Topix gained 0.2 percent to 1,173.81. The seller of Orangina soda and Boss coffee last week priced its shares near the low end of a projected range after volatile markets curbed demand. The company aims to double sales to 2 trillion yen (US$19.9 billion) by 2020 as it expands overseas. “There is always uncertainty in supply and demand when there are big IPOs, but investors are paying more and more attention to stocks with good business performance such as Suntory Beverage,” said Yoshihiro Ito, chief strategist at Okasan Online Securities Co. Suntory Beverage expects net income to rise 50 percent to 35 billion yen this year. Suntory last week set the final price for the IPO near the lower end of an earlier indicative range of 3,000-3,800 yen.
12
July 4, 2013
Markets Hang Seng Index NAME
PRICE
DAY %
VOLUME
AIA GROUP LTD
32.1
-3.021148
34343531
CHINA UNICOM HON
ALUMINUM CORP-H
2.29
-3.375527
15910768
BANK OF CHINA-H
3.02
-2.893891
373013034
BANK OF COMMUN-H
4.74
-3.067485
56760592
27.05
-1.814882
2960993
BELLE INTERNATIO
9.96
-4.230769
BOC HONG KONG HO
23.3
CATHAY PAC AIR
13.26
CHEUNG KONG
BANK EAST ASIA
PRICE
DAY %
VOLUME
POWER ASSETS HOL
66.6
-2.489019
2036755
6368299
SANDS CHINA LTD
35.8
-3.243243
8412613
-1.275917
2182716
SINO LAND CO
10.38
-3.531599
7721937
12.54
-3.09119
62639169
97.7
-2.251126
5113777
COSCO PAC LTD
9.71
-2.215509
6782290
SWIRE PACIFIC-A
91.55
-1.980728
1393206
48051587
ESPRIT HLDGS
11.7
-0.6791171
5295082
TENCENT HOLDINGS
298.8
-0.9940358
4772972
-2.51046
13535101
HANG LUNG PROPER
25.45
-4.502814
8098324
TINGYI HLDG CO
20
-0.990099
4565574
-0.1506024
2574292
HANG SENG BK
112.5
-1.574803
1866827
WANT WANT CHINA
10.32
-2.457467
11204614
HENDERSON LAND D
WHARF HLDG
64.3
-3.380917
5696860
102.2
-2.10728
4142642
CHINA COAL ENE-H
3.69
-6.582278
74981317
CHINA CONST BA-H
5.15
-2.462121
358882623
CHINA LIFE INS-H
17.5
-3.207965
61176651
CHINA MERCHANT
22.8
-2.771855
1854757
CHINA MOBILE CHINA OVERSEAS CHINA PETROLEU-H
NAME
PRICE
DAY %
VOLUME
10.18
-1.926782
19249658
CITIC PACIFIC
8.04
-1.591187
CLP HLDGS LTD
61.9
CNOOC LTD
44.9
-3.648069
4587821
HENGAN INTL
82.05
0.5514706
3001961
HONG KG CHINA GS
18.62
-1.167728
10365060
HONG KONG EXCHNG
115.1
-1.959114
3731828
79.8
-2.08589
15128559
82
-0.8464329
8188618
4.56
-4
502070680
HSBC HLDGS PLC
78.4
-2.789833
21459043
HUTCHISON WHAMPO
19.04
-4.032258
37663239
IND & COMM BK-H
5.12
-3.939962
115659175
NAME
SUN HUNG KAI PRO
MOVERS
1
11.04
0
19747441
HIGH
21004.56
MTR CORP
27.65
-1.950355
4060861
LOW
20147.31
23.05
-4.158004
3970758
CHINA RES LAND
19.42
-3.622829
15264274
NEW WORLD DEV
10.3
-3.91791
21547391
CHINA RES POWER
18.12
-1.30719
6062356
PETROCHINA CO-H
8.8
0
192252980
CHINA SHENHUA-H
18.22
-6.850716
34701065
PING AN INSURA-H
49.75
-3.304179
29572728
PRICE
DAY %
VOLUME
24.05
-2.828283
32486633
2 21010
INDEX 20147.31
LI & FUNG LTD
CHINA RES ENTERP
47
52W (H) 23944.74 (L) 18710.58984
20140
28-June
3-July
Hang Seng China Enterprise Index NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.01
-4.444444
275785775
AIR CHINA LTD-H
5.14
-4.104478
11457057
CHINA PETROLEU-H
5.12
-3.939962
115659175
ALUMINUM CORP-H
2.29
-3.375527
15910768
CHINA RAIL CN-H
6.06
-7.621951
ANHUI CONCH-H
19.52
-5.012165
21837616
CHINA RAIL GR-H
3.26
BANK OF CHINA-H
3.02
-2.893891
373013034
CHINA SHENHUA-H
NAME CHINA PACIFIC-H
PRICE
DAY %
VOLUME
YANZHOU COAL-H
5.21
-6.126126
30236476
ZIJIN MINING-H
1.44
-1.369863
88334573
19767075
ZOOMLION HEAVY-H
5.03
-4.007634
11643458
-6.857143
28499581
ZTE CORP-H
12.06
-4.133545
4948152
18.22
-6.850716
34701065
4.74
-3.067485
56760592
CHINA TELECOM-H
3.68
-1.604278
43003835
27.85
-2.280702
8927488
DONGFENG MOTOR-H
9.93
-2.837573
13059134
CHINA CITIC BK-H
3.39
-2.023121
60146087
GUANGZHOU AUTO-H
6.91
-6.998654
13289952
CHINA COAL ENE-H
3.69
-6.582278
74981317
HUANENG POWER-H
7.6
-3.061224
33650930
CHINA COM CONS-H
5.41
-7.4646
49957616
IND & COMM BK-H
4.56
-4
502070680
CHINA CONST BA-H
5.15
-2.462121
358882623
JIANGXI COPPER-H
12.36
-4.482226
14010510
CHINA COSCO HO-H
3.27
-5.491329
8130882
PETROCHINA CO-H
8.8
0
192252980
CHINA LIFE INS-H
17.5
-3.207965
61176651
PICC PROPERTY &
8.41
-1.637427
22635344
CHINA LONGYUAN-H
7.84
-3.209877
25674905
PING AN INSURA-H
49.75
-3.304179
29572728
CHINA MERCH BK-H
12.34
-3.74415
31958023
SHANDONG WEIG-H
8.85
1.37457
9643933
CHINA MINSHENG-H
7.21
-4.249668
104481699
CHINA NATL BDG-H
6.26
-5.580694
59153233
TSINGTAO BREW-H
CHINA OILFIELD-H
14.4
-2.702703
8271909
WEICHAI POWER-H
BANK OF COMMUN-H BYD CO LTD-H
SINOPHARM-H
NAME
MOVERS
HIGH
9402.05
LOW
8900.25
19
0
4986682
55.15
-0.8984726
2356186
(L) 8640.85
-3.198294
37
2 9410
INDEX 8900.25
52W (H) 12354.22
22.7
1
8890
28-June
2815065
3-July
Shanghai Shenzhen CSI 300 NAME
PRICE
DAY %
VOLUME
PRICE
DAY %
CHONGQING CHAN-A
8.62
-4.43459
38582150
QINGHAI SALT-A
16.64
-1.654846
5462231
8268269
CITIC SECURITI-A
9.97
-2.158979
69997108
SAIC MOTOR-A
12.91
-1.974184
22774103
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.47
-1.2
111485860
AIR CHINA LTD-A
4.04
-1.463415
ALUMINUM CORP-A
NAME
NAME
VOLUME
3.11
-1.582278
10192518
CSR CORP LTD -A
3.51
-1.404494
26241511
SANAN OPTOELEC-A
20.02
-3.191489
16391730
ANHUI CONCH-A
13
-0.9146341
24256079
DAQIN RAILWAY -A
5.64
-1.052632
25099376
SANY HEAVY INDUS
7.06
-3.021978
31983349
BANK OF BEIJIN-A
7.6
-2.313625
24512475
DATANG INTL PO-A
5.43
-0.1838235
10296177
SHANDONG DONG-A
42.5
2.212602
8579523
BANK OF CHINA-A
2.66
-1.481481
31060092
EVERBRIG SEC -A
10.01
-1.573255
24712344
SHANDONG GOLD-MI
23.99
-7.338741
71539515
4
-0.7444169
57169593
GD MIDEA HOLDI-A
12.05
1.945854
32475191
SHANG PHARM -A
11.4
0.08779631
9024726
3.94
0.5102041
33148608
GD POWER DEVEL-A
2.25
-3.433476
140126885
SHANG PUDONG-A
8.04
-1.349693
69690313
BEIJING SL -A
61.41
-0.7113985
2774432
GEMDALE CORP-A
6.65
-3.061224
46417839
SHANGHAI ELECT-A
BEIJING TONGRE-A
23.79
2.322581
10853594
GF SECURITIES-A
10.79
-3.054807
24107932
SHANXI LU'AN -A
BYD CO LTD -A
35.96
2.246233
19278584
GREE ELECTRIC
24.81
0.3640777
14128438
CHINA AVIC ELE-A
24.38
5.495457
13992719
GUANGHUI ENERG-A
12.59
-4.039634
45428977
CHINA CITIC BK-A
3.61
-2.168022
18658691
HAITONG SECURI-A
9.29
-2.210526
CHINA CNR CORP-A
3.73
-0.5333333
18956610
HANGZHOU HIKVI-A
BANK OF COMMUN-A BAOSHAN IRON & S
HENAN SHUAN-A
3.3
-1.785714
3339460
11.64
1.659389
24119616
SHENZEN OVERSE-A
4.94
-2.178218
29048063
SICHUAN KELUN-A
55.2
-1.691897
1965996
74061460
SUNING COMMERC-A
4.96
-0.6012024
32118153 10531224
39.2
3.076519
10346517
TASLY PHARMAC-A
44.57
2.933025
42.45
0.4495977
5286437
TSINGTAO BREW-A
38.87
0.2837977
2081331
WANHUA CHEMIC-A
17
-0.7589025
11152699
CHINA COAL ENE-A
4.84
-1.825558
7716515
CHINA CONST BA-A
4.34
0
44461869
HONG YUAN SEC-A
8.48
-4.180791
53946611
3
-1.639344
8023333
HUATAI SECURIT-A
7.95
-1.486989
21946995
WEICHAI POWER-A
17.29
-2.09513
7248564
CHINA EAST AIR-A
2.51
-2.33463
5877396
HUAXIA BANK CO
8.68
-2.252252
24566432
WULIANGYE YIBIN
20.16
-1.176471
12258511
CHINA EVERBRIG-A
2.79
-2.787456
54509685
IND & COMM BK-A
3.94
-1.99005
198895491
YANZHOU COAL-A
9.17
-2.550478
7983506
9.02
-1.31291
81409644
YUNNAN BAIYAO-A
95.7
1.819342
3137748
-3.849856
28201855
ZHONGJIN GOLD
9.49
2.043011
23449065
CHINA COSCO HO-A
CHINA INTERNAT-A
30.34
-0.7198953
3669851
INDUSTRIAL BAN-A
CHINA INTL MAR-A
9.97
-1.966568
5768978
INNER MONG BAO-A
19.98
CHINA LIFE INS-A
13.48
-1.0279
6489157
INNER MONG YIL-A
35.53
3.375036
18814704
ZIJIN MINING-A
2.48
1.22449
51534390
CHINA MERCH BK-A
11.35
1.248885
60519634
INNER MONGOLIA-A
3.94
-1.253133
46082248
ZOOMLION HEAVY-A
5.16
-2.641509
50782699
CHINA MERCHANT-A
10.16
-2.213667
20170266
JIANGSU HENGRU-A
28.91
1.474201
9963972
ZTE CORP-A
13.7
2.162565
79123221
JIANGSU YANGHE-A
53.28
-1.642976
3888464
JIANGXI COPPER-A
CHINA MERCHANT-A
23
-4.246461
16530479
CHINA MINSHENG-A
8.44
-0.4716981
138729820
15.77
-1.314143
8132962
CHINA NATIONAL-A
10.3
-0.3868472
33075161
KANGMEI PHARMA-A
21.1
3.73648
33486156
13.83
-2.330508
4473474
KWEICHOW MOUTA-A
197.97
0.01010356
3542464
23.83
-1.528926
6550085
CHINA OILFIELD-A
15.49
-0.768738
16567196
LUZHOU LAOJIAO-A
CHINA PETROLEU-A
4.25
0.2358491
107829581
METALLURGICAL-A
1.61
-0.617284
35891001
CHINA RAILWAY-A
4.08
-2.857143
17539479
NARI TECHNOLOG-A
15.46
-1.214058
15207887
CHINA RAILWAY-A
2.38
-2.057613
21966731
NINGBO PORT CO-A
2.03
-0.4901961
10691571
6437890
OFFSHORE OIL-A
6.65
-1.481481
33397622
8.02
2.165605
39021968
9.33
-2.8125
77115847
CHINA PACIFIC-A
CHINA RESOURCE-A
29.6
0
16.72
-1.240402
7131679
PETROCHINA CO-A
CHINA STATE -A
3.13
-2.795031
77641809
PING AN BANK-A
CHINA UNITED-A
3.12
1.628664
110460122
PING AN INSURA-A
34.01
-1.191168
24214777
CHINA VANKE CO-A
9.46
-2.674897
123077781
POLY REAL ESTA-A
9.66
-2.12766
69126988
3.259259
34029876
QINGDAO HAIER-A
11.19
1.175407
10006396
NAME
PRICE DAY %
Volume
NAME
PRICE DAY %
Volume
ACER INC
22.6 -0.4405286
17461827
FORMOSA PLASTIC
ADVANCED SEMICON
25.5
0
27152351
FOXCONN TECHNOLO
ASIA CEMENT CORP
35.5
-1.114206
5014084
FUBON FINANCIAL
CHINA SHENHUA-A
CHINA YANGTZE-A
6.97
MOVERS
91
199
10 2230
INDEX 2203.828 HIGH
2222.9
LOW
2173.94
52W (H) 2791.303 (L) 2023.171
2170
1-July
3-July
FTSE Taiwan 50 Index
ASUSTEK COMPUTER
NAME TAIWAN MOBILE CO
71.9
-1.506849
3064949
TPK HOLDING CO L
460
-5.737705
5865409
37.05
-5.121639
100491091
TSMC
107
0
44740088
-1.734104
12104801
HON HAI PRECISIO
73.2 -0.1364256
26867088
-4.12844
95558038
HOTAI MOTOR CO
324.5 -0.1538462
514330
CATCHER TECH
149
-3.870968
11178881
HTC CORP
207.5
-5.034325
30587165
CATHAY FINANCIAL
39.2
-2.970297
45757030
HUA NAN FINANCIA
16.6
0
6697294
YUANTA FINANCIAL
CHANG HWA BANK
16.5 -0.6024096
13493825
LARGAN PRECISION
953
-2.356557
1021795
YULON MOTOR CO
CHENG SHIN RUBBE
93.1
0.1075269
4411351
LITE-ON TECHNOLO
52.2
0.3846154
6824223
CHIMEI INNOLUX C
14.8
-3.896104
61126169
MEDIATEK INC
335.5
-1.756955
8268357
CHINA DEVELOPMEN
8.35
-2.339181
57047914
MEGA FINANCIAL H
23
0
17910352
CHINA STEEL CORP
23.3
-1.894737
17386478
NAN YA PLASTICS
58.1
-1.858108
7422121
CHINATRUST FINAN
18.1
-2.162162
50839661
PRESIDENT CHAIN
199.5
0.5037783
1651216
CHUNGHWA TELECOM
97.8
-0.102145
10973273
QUANTA COMPUTER
63.5
-2.307692
3404768
COMPAL ELECTRON
19.2
5.205479
110707567
SILICONWARE PREC
37.8
-1.434159
18148403
145.5
0
4219634
SINOPAC FINANCIA
13.8
-1.779359
21110758
32.2 -0.9230769
3647235
SYNNEX TECH INTL
38.2
-3.168568
13344622
7563292
TAIWAN CEMENT
36.05
1.264045
13263882
DELTA ELECT INC FAR EASTONE TELE FIRST FINANCIAL
79
0.6369427
17.65 -0.5633803
8917337
4529904
255
FAR EASTERN NEW
Volume
114.5 -0.4347826
-1.004304
10.45
AU OPTRONICS COR
PRICE DAY %
69
9595753
TAIWAN COOPERATI
16.45 -0.6042296
8828002
FORMOSA CHEM & F
68.8
-2.549575
4583532
TAIWAN FERTILIZE
71.1 -0.5594406
2155801
FORMOSA PETROCHE
72.5
-2.815013
1829069
TAIWAN GLASS IND
26.4 -0.3773585
529667
UNI-PRESIDENT UNITED MICROELEC WISTRON CORP
MOVERS
8
37
58
0.6944444
9742779
14.55
-1.020408
115676367
28
-2.946274
24709848
15.2
-3.184713
19191044
47.75 -0.2089864
2083799
5 5600
INDEX 5458.22 HIGH
5594.61
LOW
5531.42
52W (H) 5896.71 5440
(L) 4719.96 1-July
3-July
13
July 4, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
Max 37.75
average 36.879
Max 37.15
average 36.060
Min 36.45
59.4
37.45
58.8
37.10
58.2
36.75
57.6
36.40
Last 36.8
Min 35.65
37.80
Last 35.8
20.4
Max 59.3
average 58.395
PRICE
36.8
18.6
36.4
18.4
36.0
18.2
Max 18.8
average 18.132
DAY %
YTD %
(H) 52W
Min 18
Last 18.02
(L) 52W
WTI CRUDE FUTURE Aug13
101.2
1.606425703
7.935153584
102.1800003
86.29000092
BRENT CRUDE FUTR Aug13
104.85
0.817307692
-1.890146907
115.1699982
96.70999908
GASOLINE RBOB FUT Aug13
280.27
0.697014336
0.7513121
311.8400097
244.7299957
GAS OIL FUT (ICE) Aug13
889.25
1.281321185
-2.172717272
983.5
829.25
3.637
-0.465243569
1.309192201
4.525000095
3.354000092
292.49
0.809953815
-2.408995362
320.449996
272.6999998
NATURAL GAS FUTR Aug13 NY Harb ULSD Fut Aug13 Gold Spot $/Oz
1245.84
-1.061
-25.1505
1796.08
1180.57
Silver Spot $/Oz
19.5348
-0.5802
-35.1219
35.365
18.2208
1360
-1.342
-10.3937
1742.8
1294.18
Palladium Spot $/Oz
Platinum Spot $/Oz
683.45
-0.2961
-2.3168
786.5
553.75
LME ALUMINUM 3MO ($)
1832.5
0.273597811
-11.60154366
2200.199951
1758
LME COPPER 3MO ($)
6910
-0.988680327
-12.87353423
8422
6602
LME ZINC
1893
0.105764146
-8.990384615
2230
1779
14040
0.537056928
-17.70222743
18920
13525
15.255
-0.294117647
-0.973709834
16.47500038
14.60000038
507.25
0.895077076
-15.42309296
665
496.5
668
1.481200152
-17.22428748
905.75
652.25
3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep13 CORN FUTURE
Dec13
WHEAT FUTURE(CBT) Sep13
18.0
COUNTRY MAJOR
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
Max 20.55
average 20.175
Min 20.05
1255
1.006036217
-3.665323354
1409.75
1186.5
COFFEE 'C' FUTURE Sep13
122.6
-1.407318054
-19.58019023
203.8499908
117.0999985
NAME
16.43000031
ARISTOCRAT LEISU
74.34999847
CROWN LTD
SUGAR #11 (WORLD) Oct13
16.54
COTTON NO.2 FUTR Dec13
84.85
0.060496068 0.153446648
-17.54735793 7.759715519
22.8599987 89.55999756
World Stock Markets - Indices COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
14932.41
-0.284141
13.95185
15542.4
12471.49
NASDAQ COMPOSITE INDEX
US
3433.396
-0.03185335
13.70692
3532.038
2810.8
FTSE 100 INDEX
GB
6204.47
-1.577902
5.19956
6875.62
5478.02
DAX INDEX
GE
7774.33
-1.724737
2.127321
8557.86
6324.53
21.7
21.6
Max 21.7
average 21.604
Min 21.5
Last 21.6
21.5
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
0.9085 1.5209 0.9512 1.2938 100.02 7.9857 7.7533 6.1305 60.265 31.09 1.2729 30.09 43.47 9991 90.866 1.23075 0.8507 7.9308 10.3318 129.4 1.03
-1.078 0.0987 -0.3785 -0.6984 -0.2699 0.0288 0.0039 0.0489 -0.9956 -0.4503 -0.4635 -0.2426 -0.3451 -0.5605 0.8221 0.312 0.7958 0.9129 0.7317 0.4328 0.0291
-12.459 -5.978 -3.7637 -1.9105 -13.9172 -0.0313 -0.0348 1.6328 -8.7447 -1.6404 -4.0459 -3.5128 -5.6706 -1.9818 -1.6937 -1.8907 -4.1472 3.615 1.9222 -12.2334 -0.0097
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
0.9053 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
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
4.28
1.182033
35.87301
4.49
2.29
2138330
11.95
-1.807724
11.99625
13.75
8.28
1798232
AMAX HOLDINGS LT
1.12
-5.882353
-20
1.72
0.75
394775
BOC HONG KONG HO
23.3
-2.51046
-3.319504
28
22.6
13535101
CENTURY LEGEND
0.3
0
13.20755
0.42
0.22
12000
CHEUK NANG HLDGS
5.3
0
-11.5192
6.74
2.89
0
CHINA OVERSEAS
19.04
-4.032258
-17.57576
25.6
16.761
37663239
CHINESE ESTATES
13.68
-1.298701
12.78364
14.12
8.031
70633
CHOW TAI FOOK JE
8.11
-1.934704
-34.80707
13.4
7.44
7064499
VOLUME CRNCY
1118639
EMPEROR ENTERTAI
2.79
0
47.61905
3.07
1.34
FUTURE BRIGHT
2.17
-2.690583
79.03905
2.76
0.924
1703400
GALAXY ENTERTAIN
36.8
-1.866667
21.25206
44.95
16.98
15461794
HANG SENG BK
112.5
-1.574803
-5.223249
132.8
104.2
1866827
HOPEWELL HLDGS
24.85
-1.972387
-25.26316
35.3
20.727
2446559
HSBC HLDGS PLC
79.8
-2.08589
-1.845022
90.7
61.1
15128559
HUTCHISON TELE H
4.25
-1.162791
19.38202
4.66
2.98
2324000
LUK FOOK HLDGS I
17.4
-2.901786
-28.68852
30.05
16.16
1294300
MELCO INTL DEVEL
13.74
-4.979253
52.49722
18.18
5.12
5239000
20.2
-2.179177
52.12815
21.6
9.509
3711879
NIKKEI 225
JN
14055.56
-0.3062685
35.21228
15942.6
8328.019531
HANG SENG INDEX
HK
20147.31
-2.475186
-11.07657
23944.74
18710.58984
CSI 300 INDEX
CH
2203.828
-0.8171076
-12.64883
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
7911.42
-1.302917
2.752385
8439.15
6922.73
MGM CHINA HOLDIN
KOSPI INDEX
SK
1824.66
-1.63664
-8.632233
2042.48
1758.99
MIDLAND HOLDINGS
2.79
-3.793103
-24.5946
5
2.74
7650000
S&P/ASX 200 INDEX
AU
4744.125
-1.859287
2.047232
5249.6
4062.3
NEPTUNE GROUP
0.173
-2.259887
13.81579
0.23
0.084
29640000
ID
4586.954
-2.99765
6.260984
5251.296
3963.469
FTSE Bursa Malaysia KLCI
MA
1771.93
0.002257476
4.913118
1826.22
1590.67
NZX ALL INDEX
NZ
952.819
-0.1586448
8.022873
998.487
PHILIPPINES ALL SHARE IX
PH
3953.3
0.2426637
6.875411
4571.4
JAKARTA COMPOSITE INDEX
20.0
Last 20.2
Macau Related Stocks
SOYBEAN FUTURE Nov13
NAME
57.0
20.2
Currency Exchange Rates
NAME
METALS
Last 57.05
18.8
Commodities ENERGY
Min 57.05
37.2
35.6
20.6
NEW WORLD DEV
10.3
-3.91791
-14.30949
15.12
9.16
21547391
SANDS CHINA LTD
35.8
-3.243243
5.449188
43.7
20.65
8412613
SHUN HO RESOURCE
1.42
-0.6993007
1.428573
1.67
1.03
30000
765.479
SHUN TAK HOLDING
3.6
-1.098901
-14.08115
4.65
2.62
4364750
3410.76
SJM HOLDINGS LTD
18.02
-1.958651
1.534525
22.382
12.995
4895151
SMARTONE TELECOM
12.42
-2.96875
-11.78977
17.38
12.3
1284500
21.6
-1.144165
3.102622
26.5
14.62
15239528
HSBC Dragon 300 Index Singapor
SI
602.89
0.74
-2.93
NA
NA
STOCK EXCH OF THAI INDEX
TH
1444.5
-1.330619
3.776766
1649.77
1172.92
HO CHI MINH STOCK INDEX
VN
487.35
-0.5083293
17.79421
533.15
372.39
ASIA ENTERTAINME
4.03
-5.176471
43.17776
4.7647
2.2076
183606
BALLY TECHNOLOGI
57.42
0.2969432
28.42765
57.86
41.74
411971
Laos Composite Index
LO
1244.22
-3.090583
2.424323
1455.82
987.62
BOC HONG KONG HO
3.04
0
-0.9771965
3.6
2.85
35500
GALAXY ENTERTAIN
4.9385
0
24.39547
5.77
2.25
20223
INTL GAME TECH
16.69
-1.823529
17.78405
18.81
10.92
2218623
JONES LANG LASAL
91.81
-0.8102852
9.375741
101.46
61.39
206987
LAS VEGAS SANDS
51.79
-2.227676
12.19671
60.54
32.6127
6736960
MELCO CROWN-ADR
22.16
-3.694046
31.59145
25.2
9.13
3857532
MGM CHINA HOLDIN
2.61
4.27487
41.08108
2.71
1.36
3969
MGM RESORTS INTE
14.87
-1.392573
27.74914
15.95
8.83
8793838
SHFL ENTERTAINME
18.14
-0.711549
25.10345
18.57
12.35
405328
SJM HOLDINGS LTD
2.4
-2.040816
5.373337
2.9481
1.7255
28644
126.18
-1.774872
12.16997
144.99
84.4902
1674387
Shanghai Shenzhen Composite index is listing the biggest companies by market capitalisation. All data supplied by Bloomberg unless otherwise indicated.
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14 14
July 4, 2013 April 19, 2013
Opinion
Ireland and the austerity debate
Mohamed A. El-Erian
CEO and co-CIO of PIMCO, and the author of When Markets Collide
B
oth sides of the austerity debate that is now gripping economists and policymakers cite Ireland’s experience as evidence for their case. And, however much they try to position the country as a poster-child, neither side is able to convince the other. Yet this tug-of-war is important, because it illustrates the complex range of arguments that are in play. It also demonstrates why more conclusive economic policy making is proving so elusive. Here is a quick reminder of Ireland’s sad recent economic history. Lulled into complacency and excess by ample supplies of artificially cheap financing, Irish banks went on a lending binge. Irresponsible risk-taking and excessive greed outpaced prudential regulation and supervision. The banking system ended up fuelling massive speculation, including a huge run-up in real-estate prices, only to be brought to its knees when the bubbles popped. Unlike the many Irish households that lost jobs and part of their wealth, the banks were deemed to be “too big to fail,” so Ireland’s political elites intervened with state funding. But, by under-estimating both the domestic and international aspects of the problem, the authorities transformed a banking problem into a national tragedy. Rather than restoring the banks to financial health and ensuring responsible behaviour, the Irish economy as a whole was dragged down. Growth collapsed; unemployment spiked. Lacking opportunities, emigration increased – a vivid reminder of how economic crises have wreaked havoc on the country’s demographics throughout its history. Investors withdrew in droves from what was once deemed the “Celtic Tiger”. The government had no choice but to request a bailout from the “troika” – the International Monetary Fund, the European Central Bank, and the European Commission – thereby transferring an important component of national economic governance to an
ad hoc, fragile, and sometimes feuding group of institutions.
Opposing views While other struggling euro zone members also turned to the troika, Ireland stands out in at least two notable ways. First, two democraticallyelected governments have steadfastly implemented the agreed austerity programmes with little need for waivers and modifications – and thus without the associated political drama. Second, despite enduring considerable pain, Irish society has stuck with the programme, staging few of the street protests that have been common in other austerity-hit countries. All of this puts Ireland in the middle of three important issues raised in the austerity debates: whether orthodox policy, with its heavy emphasis on immediate budget cuts, can restore conditions for growth, employment gains, and financial stability; whether the benefits of euro zone membership still outweigh the costs for countries that must restructure their economies; and how a small, open economy should strategically position itself in today’s world. Austerity’s supporters point to the fact that Ireland is on the verge of “graduating”
Indeed, Irish society seems remarkably hesitant to change course. Right or wrong, Ireland will stick with austerity
from the troika’s programme. Growth has resumed, financialrisk premia have fallen sharply, foreign investment is picking up, and exports are booming. All of this, they argue, provides the basis for sustainable growth and declining unemployment. Ireland, they conclude, was right to stay in the euro zone, especially because small, open economies that are unanchored can be easily buffeted by a fluid global economy. “Not so fast,” says the other side. The critics of austerity point to the fact that Irish GDP has still not returned to its 2007 level. Unemployment remains
far too high, with alarming levels of long-term and youth joblessness. Public debt remains too high as well, and, making matters worse, much more of it is now owed to official rather than private creditors (which would complicate debt restructuring should it become necessary). The critics reject the argument that small, open economies are necessarily better off in a monetary union, pointing to how well Switzerland is coping. And they lament that euro zone membership means that Ireland’s “internal devaluations,” which involve significant cuts in real wages, have not yet run their course.
‘Irish experiment’ The data on the “Irish experiment” – including the lack of solid counterfactuals – are not conclusive enough for one side to declare a decisive victory. Yet there is some good analytical news. Ireland provides insights that are helpful in understanding how socio-political systems, including economically devastated countries like Cyprus and Greece, have coped so far with shocks that were essentially unthinkable just a few years ago. On my current visit, most
of the Irish citizens with whom I have spoken say that the country had no alternative but to follow the path of austerity. While they appreciate the urgent need for growth and jobs, they believe that this can be achieved only after Ireland’s finances are put back on a sound footing. They also argue that, given the banks’ irresponsibility, there is no quick way to promote sustained expansion. They are still angry at bankers, but have yet to gain proper retribution. Ireland’s accumulation of wealth during its Celtic Tiger period, when the country surged toward the top of Europe’s economic league table, has also been an effective shock absorber. This, together with fears about being left out in the geopolitical cold (despite the country’s historical links with Britain and America), dampens Irish enthusiasm for economic experiments outside the euro zone. Indeed, Irish society seems remarkably hesitant to change course. Right or wrong, Ireland will stick with austerity. Efforts to regain national control of the country’s destiny, the Irish seem to believe, must take time. In some of Europe’s other struggling countries, however, citizens may well prove less patient. © Project Syndicate
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 April4,19, 2013
Opinion
China’s slowdown could wires slam Hong Kong Business
Leading reports from Asia’s best business newspapers
Asahi Shimbun General Motors Co. and Honda Motor Co. are joining forces to develop hydrogen fuel cell vehicles. The two companies said they plan to develop new hydrogen storage and fuel cell technologies by 2020. They will also push for more hydrogen fuelling stations. Fuel cell vehicles have electric motors that are powered by a chemical reaction between hydrogen and oxygen. GM and Honda already have more than 1,200 fuel cell patents between them, and both companies have experimental vehicle fleets.
Wall Street Journal Japan’s public pension fund, the world’s largest, said it earned a whopping 11.2 trillion yen (US$112 billion) profit on its 120.5 trillion yen investments for the fiscal year ended in March. That’s more than four times the 2.6 trillion yen that GPIF earned the previous fiscal year, and is the fund’s biggest profit since it became independent in 2006. The investment profit – equal to the size of the Iraqi economy – was boosted by a rise in Japanese equities and an increase in the yen value of its returns on overseas investments as the yen weakened.
Taipei Times Commercial property transactions in Taiwan decreased further last quarter as life insurers continued to curb trading after the Financial Supervisory Commission raised yield requirements in an attempt to cool the market, CB Richard Ellis Ltd’s (CBRE) local unit said in a report. Deals totalled NT$16.3 billion (US$541.17 million) during the April-to-June period, falling 54 percent from last year’s level and 33.74 percent from the first quarter, the report said. “Though the commission lifted the purchase restrictions in May, it maintains a strict review on property investments by life insurers,” the property broker’s Taiwan managing director Joseph Lin said.
The Star A massive outflow of foreign funds caused by jitters over sooner-than-expected quantitative easing (QE) tapering is not expected in the region, according to CIMB-Principal Asset Management regional chief investment officer Raymond Tang. He said this was because fundamentals in the region remain intact, adding that money would flow into Malaysia which was deemed as a safe haven and by default, a less volatile environment. He believed that Asian markets, particularly the Asean region, would remain robust as it had been overlooked by investors.
William Pesek
Bloomberg View columnist
I
n the run-up to Hong Kong’s return to China in 1997, the world wondered what officials in Beijing would do with the place. Would Hong Kong’s dynamism and openness catalyse change in China, or would the Communist Party try to remake the freewheeling city-state in its image? Sixteen years on, we know it’s more the latter than the former. Beijing has shackled Hong Kong with one bad, handpicked leader after another. China’s commissars and their local lackeys continue to push anti-sedition laws, patriotic education and Mandarin on 7 million people who seek democracy and prefer Cantonese. Now, the “one country, two systems” principle that Deng Xiaoping negotiated with U.K. Prime Minister Margaret Thatcher decades ago faces perhaps its biggest challenge: China’s wobbly economy. A downturn on the mainland threatens to erode Hong Kong’s AAA credit rating, and to alienate the city’s population once and for all. After the handover, China’s Communist Party carved out a tacit deal with Hong Kong’s citizens. It boiled down to, “We’ll make you richer with our 10 percent-plus growth, if you don’t push us too hard on this democracy stuff.” The relationship hasn’t always gone smoothly. The giant protests of 2003, one drawing more than half a million people, and many smaller ones since – including one this week that drew tens of thousands – show that the balancing act requires constant calibration. The arrangement could go very much awry as China slows. China’s credit clampdown is causing wild stock swings in Hong Kong, whose entire economy is underpinned by asset prices. Last week, Moody’s Investors Service cut its outlook for Hong Kong’s banking system to “negative” as analysts assess lenders’ growing exposure to borrowers in China.
Mainland exposure Inflation-adjusted interest rates in Hong Kong have been negative since early 2009. That has led its banks to become increasingly reliant on mainland clients – cashrich investors who have been buying all the Hong Kong property they can. Hong Kong banks boosted mainland exposure to 16.5 percent of consolidated total assets by the end of 2012, compared with 9.8 percent in 2009. Lenders mitigated some risk by requiring collateral
Leung’s job will grow even harder if Chinese economic chaos starts to drag Hong Kong down … There’s more at risk here than Hong Kong’s pristine credit rating Leung Chun Ying
and bank guarantees. Yet the timing of Hong Kong (HSF)’s shift toward mainland borrowers was as bad as it gets in banking. It came just as China’s duelling asset bubbles fostered a pre-subprime-crisis mindset – property prices will always go up – among borrowers. Now, as China reins in a shadow-banking industry that makes the U.S.’s off-balancesheet vehicles of the late 2000s seem comprehensible, Hong Kong is in a tight spot. Surging non-performing loans at Chinese banks are but one ominous sign. They rose for six straight quarters through March 31, the longest deterioration in at least nine years. The increase is sure to accelerate in the coming months as the People’s Bank of China tries to regain control of money-supply growth. That’s a huge wild card even for a banking system as well regulated and managed as Hong Kong’s. The bigger issue is economic contagion, which could undermine the AAA rating that Standard & Poor’s has given Hong Kong. That might sound like a reach considering that in a world of red ink, Hong Kong boasts a budget surplus of 1.7 percent of gross domestic product. But Hong Kong’s exposure to, and reliance on, China will change the calculus quickly and radically. Hong Kong is a fascinating proxy for how quickly and deeply Chinese GDP falls over the next one or two years. If Chinese growth slides toward 5 percent, as is likely, Hong Kong will be hit hard. A crisis would dent the goodwill that the Communist Party has long used to buy the city’s patience, and it would
inspire soul-searching about Hong Kong’s precarious place in the greater China region.
Diplomatic masterstroke That was very much on display last month with the Edward Snowden affair. Together, Hong Kong and China pulled off a diplomatic masterstroke by letting the fugitive American board a flight for Moscow. Yet Hong Kongers widely believe Beijing made the call, not their city’s chief executive, Leung Chun Ying. Since 1997, Hong Kong’s leader has been a glorified mayor beholden to the Communist Party, and Leung is barely more popular than the city’s last three. He miscalculated as soon as he took office in July 2012, when he tried to force-feed the mainland’s “patriotic education” programme to Hong Kong’s students. Leung also got terrible headlines from efforts to block personal data on company directors, a step that could enable mainland bigwigs to
hide ill-gotten gains in Hong Kong. Leung bowed to public pressure and shelved both plans, but Hong Kong’s ability to resist China’s influence is weakening. Already pressure from Beijing has had a chilling effect on the Hong Kong media, which increasingly exercise self-censorship on controversial issues. Hong Kongers are proud of their Chinese heritage; it’s the mainland’s communist system they can do without. No one envies Leung’s task. It won’t be easy to bridge the gap between a China that wants greater obedience; a Hong Kong populace that wants liberty; and international investors who view Hong Kong’s laissez-faire economy as the freest in the world. Leung’s job will grow even harder if Chinese economic chaos starts to drag Hong Kong down, as well. There’s more at risk here than Hong Kong’s pristine credit rating. If it’s not careful, China may lose 7 million votes of confidence, too. Bloomberg View
16
July 4, 2013
Closing Egypt fears push oil price over US$100
S&P downgrades three Euro banks
The price of U.S. light crude oil has risen above US$100 a barrel for the first time since September 2012 on concerns over political turmoil in Egypt. U.S. light crude rose more than 2 percent to US$101.80 a barrel in Asia trade. Brent crude also rose 1 percent to US$105.20 a barrel. Egypt’s President Mohammed Morsi has rejected an army ultimatum to resolve the turmoil by yesterday, triggering concerns that the crisis may escalate. Over recent days, thousands of protesters have gathered in Tahrir Square in central Cairo to demand that Mr Morsi step down.
Barclays Plc, Deutsche Bank AG and Credit Suisse Group AG had their credit ratings lowered by Standard & Poor’s as new rules and “uncertain market conditions” threaten their business. Long-term counterparty credit ratings for Barclays and Deutsche Bank were cut to A from A+, while Credit Suisse Group was reduced to A- from A, S&P said in a statement. S&P also affirmed its A long-term rating and A-1 short-term rating on UBS AG. The four European lenders are among the most exposed to proposed rules that could reduce revenue from trading and investment banking operations, the ratings firm said.
Greece to miss public sector reform goal Greece cannot meet targets on reforming its public sector but expects to reach agreement with its foreign lenders on all other issues by Monday’s Eurogroup meeting, finance ministry officials said yesterday. Greece’s EU and IMF lenders, unhappy with the progress it has made in reforming its bloated public sector, have given Athens a three-day ultimatum to convince them by Friday that it can deliver on its promises before unlocking 8.1 billion euros (US$10.5 billion) in aid. Athens has already missed a June deadline to place 12,500 state workers into a “mobility scheme”, under which they are transferred or laid off within a year, and officials said it would not be able to strike a deal on it by Monday. “There is no chance that we will satisfy the current demands as they are set out,” a senior finance ministry official said. Athens needs to conclude talks with its lenders by the middle of the month to ensure it receives the latest aid tranche, which it needs to redeem about 2.2 billion euros of bonds in August. Officials sought to play down fears of what would happen if Greece did not receive aid payments in time, saying in a “worst-case scenario” it could compensate by issuing additional treasury bills. “It won’t be the end of the world,” said a second finance ministry official, who spoke on condition of anonymity. “In the worst case scenario we will have to increase the issuance of T-bills, we will delay repaying arrears and it could lead to further delays to payments.”
Crisis hits Portugal borrowing costs More resignations expected as PM Coelho vows to stay on
Foreign Minister Paulo Portas, a key figure in Portugal’s centre-right coalition, quit government
T Judge approves HSBC settlement on money laundering HSBC Holdings Plc’s US$1.9 billion agreement with the U.S. to resolve charges it enabled Latin American drug cartels to launder billions of dollars was approved by a federal judge. U.S. District Judge John Gleeson in Brooklyn, New York, signed off on a deferred-prosecution agreement, a critical component of the Londonbased bank’s settlement. The order was filed more than six months after the government announced reaching an accord with the bank. HSBC was accused of failing to monitor more than US$670 billion in wire transfers and more than US$9.4 billion in purchases of U.S. currency from HSBC Mexico, allowing for money laundering, prosecutors said. In December, Judge Gleeson told prosecutors there had been “publicised criticism” of the agreement, which lets the bank and management avoid further criminal proceedings. He said he’d weigh whether to approve it. In unrelated developments, HSBC said Robin Phillips will relocate to London to lead a new group for managing relationships with clients as part of an overhaul of its investment bank. Gordon French will succeed Mr Phillips as head of global banking and markets in the Asia-Pacific region, according to an internal memo seen by Bloomberg News. The contents were confirmed by Adam Harper, a spokesman in Hong Kong.
he political crisis in Portugal immediately hit the country’s 10-year borrowing rate yesterday, pushing it up sharply to the danger level of 8.0 percent. The rate, or yield, on existing Portuguese 10-year bonds traded on the open market shot up from 6.720 percent late on Tuesday to 8.023 percent in initial trading, then eased to slightly below 8.0 percent. The surge came in response to the resignation late on Tuesday of Foreign Minister Paulo Portas, who heads the CDS-PP party in the centreright coalition. Prime Minister Pedro Passos Coelho has refused to accept the resignation in an attempt to hold the coalition together, after his Finance Minister Vitor Gaspar, the architect of drastic austerity policies, resigned on Monday. But two more Portuguese ministers from the junior ruling coalition party were ready to resign yesterday, Portuguese media said, deepening turmoil that could trigger a snap election and derail Lisbon’s exit from an EU/IMF bailout. “We see early elections as the most likely outcome at this stage, even if we cannot fully rule out support from some CDS MPs and the continuation of the government,” Barclays Plc’s economist Antonio Garcia Pascual said in a note. “We consider that the decision of the CDS leader to step down from
the government can be explained to a large extent by the fall in popular support for the government coalition.” Lisbon’s PSI 20 stock index slumped 6 percent, led by sharp losses of over 10 percent in banks’ shares. At BNP Paribas bank, bond strategist Patrick Jacq commented: “If there are more resignations, the coalition might break up and that could lead to an early general election.”
Financial credibility The borrowing rate is of critical importance to Portugal which is fighting with deep austerity measures to regain credibility in order to emerge from a bailout programme and return to borrow normally on capital markets next year. The borrowing rate indicated by 10-year bonds had fallen to 5.2 percent in May. In January 2012 it had risen to a high point of 18.0 percent. Investors are worried that the crisis could undermine the programme of reforms imposed by the International Monetary Fund and European Union in exchange for bailout funding. European financial shares slumped on concern that Portugal’s political turmoil will reignite the sovereign debt crisis and after Standard & Poor’s downgraded
several of the region’s banks. Mr Jacq, referring also to a sharp fall of stock prices on leading European markets and in Portugal, said: “The risk is limited but the risk exists and this explains the reaction of the markets.” He also noted that until now the EU, IMF and European Central Bank had approved the actions by Portugal to correct public finances and strengthen the economy. But he warned that if the tension on markets continued, the country might not be able to return to borrow normally next year and would again need rescue funding. European Commission president José Manuel Barroso urged Portugal to clarify its political crisis “as soon as possible”, to avoid jeopardising the nation’s economic credibility. Mr Barroso said in a statement that the Commission, the European Union executive, was following the political crisis in Portugal “with very serious concern”. He said: “The initial reaction of the markets shows the obvious risk that the financial credibility recently built up by Portugal could be jeopardised by the current political instability.” He warned: “If this happens it would be especially damaging for the Portuguese people, particularly as there were already preliminary signs of economic recovery.” AFP/Reuters