Macau Business Daily, July 5, 2013 by Business Daily

www.macaubusinessdaily.com

Year II

Number 320

Friday July 5, 2013

Editor-in-chief Tiago Azevedo

Deputy editor-in-chief

Vitor Quint達

MOP 6.00

April 19, 2013

July 5, 2013

April 19, 2013

Taxi drivers want new fare hike

taxi fares row simmering for a year has

percent inflation rate at the time. But another request

flared again and could soon hit consumers

by the local cabbies – for a 1.5 pataca additional charge

in the pocket.

to apply per additional 200 metres travelled, not per

In July last year the flag fare – the basic charge for the

230 metres as currently applies – was denied. Now the

first 1,600 metres of a journey – was increased 15.4

cabbies want that changed, pointing out that prior to

percent by the government from 13 patacas (US$1.63)

2012 they’d had no rise since 2008. More on page 4

to 15 patacas. That was nearly triple the city’s 6.04

Govt’s land concession income blossoms in boom Page 7

Tigerair Mandala still keen on Macau flights Page 8

Ownership doubts scare Hac Sa investors Lack of government recognition for Hac Sa and Ka Ho residents’ land ownership at Coloane may have protected them from developers, but the villagers claim it is also stalling tourism development. “We gave a tourism development plan to the government two years ago, in which we had a vision to develop guesthouses and agricultural tourism in our village,” Ng Kun Cheong, president of the neighbourhood association, told Business Daily. The villagers only have old land deeds – ‘Sa Chi Kai’ or silk paper in Cantonese – issued by the Qing dynasty administration, but which were never recognised by Macau’s former Portuguese administration. Page 6

I SSN 2226-8294

Hang Seng Index 20580

20490

20400

20310

20220

20130

July 4

HSI - Movers

Macau Legend Suncity VIP turnover raised HK$2.04b net hits MOP135b Casino services firm Macau in June Legend Development Ltd

Name

raised around HK$2.04 billion (US$ 263.1 million) net from its global share offering it said in a filing yesterday. Listing of the stock in Hong Kong is due today according to a supplementary prospectus filed on June 26. The filing said only 17 percent of the Hong Kong portion of the offering was taken up by local investors. Page 5

The volume of non-negotiable VIP gambling chips ‘rolled’ at junket rooms affiliated to Suncity Group Ltd reached a record 135 billion patacas (US$16.9 billion) last month according to an executive of the company. To put that number in perspective, it’s equal to the annual turnover last year of China Vanke Co Ltd, the mainland’s largest residential real estate developer. Page 5

%Day

BELLE INTERNATIO

6.02

CHINA SHENHUA-H

5.49

CHINA COAL ENE-H

5.42

CHINA RES LAND

4.53

MTR CORP

3.44

LI & FUNG LTD

SINO LAND CO

HENGAN INTL

-0.24

PING AN INSURA-H

-0.30

LENOVO GROUP LTD

-0.58

Source: Bloomberg

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2013-07-05

2013-07-06

2013-07-07

27˚ 33˚

26˚ 32˚

July 5, 2013

Macau

Cabbies to angle for fare increase Taxi drivers complain that last year’s increase did little to cover surging costs Tony Lai

tony.lai@macaubusinessdaily.com

n association of taxi drivers is to ask the government this year to increase cab fares to help them cover surging costs. The government last increased fares a year ago, but by less than the taxi industry had hoped. “The fuel price has kept rising, and some drivers have to pay more to maintain their vehicles because of the new emission standards,” Macau Taxi Driver Mutual Association chairman Tony Kuok Leong Son told Business Daily. Taxis operating under the 200 new licences issued last year must meet the Euro IV emission standards. Mr Kuok said this increased the cost of maintaining a taxi to 7,000 patacas (US$875) or 8,000 patacas per month from 3,000 patacas per month for older vehicles. Official data show that running a

car – including fuel and maintenance – was 3.47 percent more expensive at the end of May than a year earlier. The annual rate of consumer price inflation was 5.59 percent in May. “We will consult more drivers in the industry and collect some data on the costs to compile an application for the government within two or three months,” Mr Kuok said. He said his association had no new fare scale in mind. “It usually takes a long time for the government to decide on any application – it took them almost a year to review the previous application – so this can be decided only in 2014 or later,” he said.

Distance pays Last July the government increased the fare for the first 1,600

metres travelled, or the flag fall rate, to 15 patacas from 13 patacas. Mr Kuok said last year’s increase had not covered the rise in costs. “Most of drivers’ takings come from fares charged after the flag fall, but the government did not respond to a proposal to increase those fare rates last year,” he said. Last year the taxi industry asked for the fare rate after the first 1,600 metres to be increased to 1.50 patacas for each 200 metres travelled from 1.50 patacas for each 230 metres travelled. Mr Kuok said that, personally, he would like the fare rate after the first 1,600 metres to be increased to 2.00 patacas for each 250 metres travelled. The Association of Traders and Operators of Commercial Vehicles, which speaks for holders of licences

to operate taxis, is also unhappy with last year’s increase. “The increase was not ideal, and the industry has since told the government it would submit another application within a year,” said the association’s vicechairman, Leng Sai Hou.

In no rush But Mr Leng is cautious about applying for another increase. “Right now, we have not heard anything from the members of our five taxi affiliate groups about them wanting a fare increase,” he told Business Daily. He said his association would discuss the matter in its next meeting. “But we will not rush to make a decision, as we will also consider the burden on residents.” Last August, one month after the last fare increase, representatives of associations of taxi operators said they would propose increasing the flag fall rate to 17 patacas. Mr Leng belittled the cost argument put forward by Mr Kuok of the Macau Taxi Driver Mutual Association. “It is true that it is more expensive to maintain a vehicle to meet higher emission standards,” said Mr Leng. “But I do not know how this can impact Mr Kuok, as it is the owners, not the drivers, who pay the maintenance costs.” At the end of May Macau had 1,172 taxis. This number is set to grow, as the Transport Bureau intends to auction 100 more licences towards the end of this year.

The taxi flag fall rate was raised to 15 patacas for 1,600 metres last July (Photo: Manuel Cardoso)

business as usual

Missing the whole picture Paulo A. Azevedo pazevedo@macaubusinessdaily.com

ometimes is unfortunate that a court case can illuminate only some of the history of the matters that it looks into, such as the high-profile scandal of the grant of the land where La Scala, the upmarket housing project, was to have been built. This week Eddie Wong Yue Kai, the well-known member of the Executive Council and chairman of the Architects Association of Macau, told journalists that he would not testify in court about La Scala, because he had nothing to do with it. Chief Executive Fernando Chui Sai On had already said he would not allow Mr Wong to testify. Mr Wong had been summoned as a witness for the defence of one of the accused. It now appears that, before La Scala, Mr Wong was involved with another project that was to have made use of the same land, called the Macau International Airport Business City. This is according to another architect, who gave evidence on Wednesday. If Mr Wong had been allowed to testify, maybe we could have at last begun to understand why the land changed hands in the first place, for what purpose, who stood to gain, and the whole background to this mess. These are things we can now only guess at, because Macau is, indeed, a small place and silence is still the best friend of some people here.

Calls for more subsidies for low-income civil servants A

civil servants’ group has urged the government to offer a subsidy for about 2,000 low-income public sector workers, in a closed-door meeting with Chief Executive Fernando Chui Sai On yesterday. The Macau Chinese Civil Servants’ Association proposed that civil servants that earn 110 points and 150 points in the standardised civil service pay index should receive an extra financial support worth 40 points each month. With each point in this scale representing 70 patacas, public sector workers earning between 7,700 patacas (US$962.5) and 10,500 patacas a month would

get an additional 2,800 patacas. The association said in a press statement issued after the meeting that it could “help prevent the quality of life of low-income civil servants from worsening”. Lei Kong Weng, secretarygeneral of the association, estimates that about 2,000 out of 28,000 civil servants, usually employed as cleaners and clerks, could be qualified for such subsidy. The association said Mr Chui’s response to the idea was encouraging. The chief executive said he would instruct the government committee on civil servants’ remunerations to study the matter. The median month salary of civil servants was 25,600 patacas at the end of March, almost twice as much as the citywide median of 13,000 patacas, official data show. Mr Lei also said they urged the government to resume the construction of public housing for civil servants, which was suspended since the 1990’s. Many workers “cannot afford to buy private homes but do not qualify for public housing,” he told Business Daily. T.L.

July 5, 2013

Macau

Macau Legend raises HK$2.04 bln net Only 17 pct of HK portion of global share offering taken by local investors Michael Grimes

michael.grimes@macaubusinessdaily.com

asino services firm Macau Legend Development Ltd has raised around HK$2.04 billion (US$ 263.1 million) net from its global share offering, it said in a Hong Kong filing yesterday. Listing of the stock in Hong Kong is due today according to a supplementary prospectus filed on June 26. The net proceeds figure is after deduction of a one percent brokerage fee, a transaction levy by Hong Kong’s Securities and Futures Commission and a stock exchange trading fee. The filing said only 17 percent of the Hong Kong portion of the offering – around 34.9 million shares out of 204.8 million available – was taken up. The 169.9 million unsold Hong Kong shares were reallocated to international investors. The firm said that after that reallocation, a total of 899,928,000 international shares were in the global offering, and around 96.3 percent of them found subscribers. In all, approximately 901.5 million shares were sold. Yesterday’s filing confirmed the offer was priced at HK$2.35. That’s near the bottom of the indicative range of HK$2.30 to HK$2.98

Smaller than hoped share offer will limit Fisherman’s Wharf plans

mentioned in filings. The revised prospectus said around 63.5 percent of net proceeds would be used to build and fit a new hotel called Prague Harbor View at Macau Fisherman’s Wharf, a waterside leisure development on Macau peninsula controlled by

Macau Legend. The supplementary prospectus made no mention of the 350 extra gaming tables Macau Legend had said in its original offer prospectus filed on June 17 it was seeking as part of its expansion plans. The firm already runs a combined

Suncity monthly VIP gambling volume hits MOP135 bln June chip roll equal to annual turnover of mainland’s biggest real estate firm China Vanke Staff Reporter

newsdesk@macaubusinessdaily.com

Number one junket investor – Suncity Group (Photo: Manuel Cardoso)

he volume of non-negotiable VIP gambling chips ‘rolled’ at junket rooms affiliated to Suncity Group Ltd reached a record 135 billion patacas (US$16.9 billion) last month according to an executive

of the company. To put that number in perspective, it’s equal to the annual turnover last year of China Vanke Co Ltd, the mainland’s largest residential real estate developer. Suncity is the “number one junket

operation in Macau in terms of scale”, said Maggie Lei Siu Wai, the group’s vice president of human resources in comments to Chinese language Macao Daily News published yesterday. She added the company had interests in the profits of 250 gaming tables in 17 VIP rooms. Ms Lei added that the consolidation of different junket rooms under the management of a few big junket investors is “a general trend based on the limited human resources” of the city. It’s likely it is also driven by business factors including the spread of credit risk and smoothing of trading volatility. The more junkets rooms, the more sub-agents recruiting players from China, the more players, the more cross-subsidy of the business and the greater the smoothing effect in the credit trading cycle, say industry sources. The few players winning on a large scale won’t hurt the overall liquidity of the operation, as there will be plenty of other players losing big and repaying their credit-fuelled losses on time, a junket industry insider tells Business Daily. Macau’s casino regulator the Gaming Inspection and Coordination

total of around 150 gaming tables at Babylon Casino at Fisherman’s Wharf, and the Pharaoh’s Palace Casino at The Landmark Macau hotel. Those operations are via a gaming licence from local casino concessionaire Sociedade de Jogos de Macau SA, founded by former gaming monopolist Stanley Ho Hung Sun. A source with direct knowledge of the process has confirmed to Business Daily the existence of a so-called ‘comfort letter’ from the authorities to Macau Legend on the tables question, without disclosing the precise contents of the letter. A HK$6.11 billion gross target figure for Macau Legend’s global offering was mentioned in a term sheet three weeks ago – before equities markets dipped globally on fears of a liquidity crisis in China’s formal banking system. It led Macau Legend, co-chaired by local businessman David Chow Kam Fai, to postpone its offer by more than a week and cut the initial number of shares for overseas (non-Hong Kong) investors by 60 percent. CLSA, CITIC Securities International and Credit Suisse were joint bookrunners for the deal.

Bureau said in March the city had 235 licensed junket operators – an increase of 7.3 percent year-onyear. But a deceleration in growth rates for the VIP segment – against a background of a more challenging macroeconomic picture in mainland China and a new national political leadership apparently committed to reducing corruption and the volume and speed at which money passes through the city’s junket system – has in turn created tougher trading conditions for junkets. That’s especially the case for smaller operations with only a few rooms and a small roster of players. The loss or migration to a rival junket of one big ‘whale’ can result in a significant downturn in rolling chip volume. Industry observers report that recently the scramble for alliances and consolidation in the junket sector has gathered pace. Suncity’s Ms Lei told Macao Daily: “Apart from the group actively seeking cooperation, some [alliances] are proposed from other VIP rooms.” Spreading risk in the junket sector, also includes diversifying the business. On Tuesday Business Daily carried a Reuters article that chronicled the growth of Suncity beyond its 2007 beginnings as a Macau junket operator at Wynn Macau Ltd into a conglomerate with interests including mainland real estate and iron ore mining in Indonesia. Earlier this year there were rumours that Suncity Group was planning an initial public offering and share listing in Hong Kong, in the manner of junket market rivals Neptune Group Ltd and Dore Holdings Ltd. Since then trading conditions on global equities markets have deteriorated markedly, leading several companies to delay their listings. With Tony Lai

July 5, 2013 April 19, 2013

Macau

Legal ownership doubts scare Hac Sa investors away

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HOSPITALITY

Lack of recognition of old land deeds worries long-time Coloane residents

Guangdong party The data on visitors from mainland China for the past three months suggest the proportion travelling on individual visas is settling around 40 percent. Some mainlanders are allowed visas to travel to Macau as individuals rather than as members of tour groups, who travel on collective visas. In February, when the Lunar New Year holidays fell, the proportion travelling on individual visas peaked around 50. Since February, the proportion each month has been lower than the average in the preceding 12 months. This is largely because of a slight increase in the number of package tourists. The number of visitors from the mainland travelling on individual visa is rising, albeit slowly. It just happens that the number travelling on collective visas is rising faster. The coming months will show whether the latest figures constitute a proper trend.

Stephanie Lai

sw.lai@macaubusinessdaily.com

he lack of government recognition for Hac Sa and Ka Ho residents’ land ownership may have protected them from developers, but the villagers claim it is also stalling tourism development. The Hac Sa Village Neighbourhood Association heard in June of an unidentified investor’s plan to buy two homes there. Meanwhile other residents have been asked whether they would be interested in selling their homes, said association president Ng Kun Cheong. Investors’ interest for the village has been “rare” since the 1999 handover, he told Business Daily, due to legal complications. Even though most villagers have been living in Hac Sa “for generations,” says Mr Ng, the MSAR government does not recognise their property ownership. They only have old land deeds (‘Sa Chi Kai’ or silk paper in Cantonese) issued by the Qing dynasty administration, but which were never recognised by Macau’s former Portuguese administration. Prior to the 1970s, long-time residents paid an annual housing tax that served as an informal ownership proof. But most did not apply to register their property ownership with the Portuguese administration as they lacked knowledge and could not afford the charges involved, Mr Ng said. Currently there are about 70 homes in Hac Sa, of which 40 have been

empty for a long time and become rundown. Around 20 households are still living in the village. “Developers used to be very active in the 1950s and 60s, when farmers in the village were willing to sell their farmlands to developers from mainland China and Macau,” Mr Ng told. “This purchased land was never developed, it was mostly re-sold to other parties,” he added. “And after the handover the government has been taking some of these plots back.”

Out of reach solution In contrast there was little investor interest for Ka Ho village, located in northeast Coloane, even during Portuguese administration, the neighbourhood association says. “Ka Ho was just a poor village,” Cheong Kok Choi, head of the Ka Ho Neighbourhood Association, told Business Daily. “Even if residents were offered a purchase plan, no matter how much money, they would not have liked it because most were very insistent in staying in their village homes and keeping their households intact,” he said. “Besides, Ka Ho is not like Hac Sa, which has more tourism potential with its location right next to a long bay,” Mr Cheong said. “We have less appeal for developers.” João Afonso, director of property developer Sniper Capital (Macau)

The rising trend in the number of visitors from the mainland travelling on individual visas is already clear. There were 13.8 percent more in May than a year earlier. The chart shows that the number from the province of Guangdong and the total are rising almost in parallel, reflecting that, typically, between 65 percent and 70 percent of all mainlanders travelling on individual visas are from Guangdong. The other four main sources of mainlanders travelling on individual visas – Fujian, Zhejiang, Beijing and Shanghai – together seldom send Macau more than one-fifth of the number Guangdong sends. Only in December did the proportion they send reach 26 percent to 27 percent. J.I.D.

598,790

Visitors from mainland on individual visas in May

Hac Sa village has about 70 homes but only 20 households living there

Ltd, said both Coloane villages remain off-limits to most investors. “The MSAR government has made it clear that these villages’ [residents] do not have the rightful ownership of the property,” Mr Afonso told Business Daily. “That means it is impossible for us to conduct any purchase deals there now,” he said. With no legal ownership, Coloane village residents can only alter or repair their houses with government approval or else any changes could be considered “illegal structures”. Since October 2009, the Land, Public Works and Transport Bureau has implemented a plan to try to solve the silk paper issue, allowing longtime Coloane village residents to apply for a 25-year renewable land lease. The bureau suggested to media last year that the plan might be extended to Ka Ho and Hac Sa villages, though no further information has since been disclosed. “It would be good if we could at least apply for this special lease,” said Mr Ng. “We gave a tourism development plan to the government two years ago, in which we had a vision to develop guesthouses and agricultural tourism in our village,” he added. The Hac Sa village association never received a response to this plan. “But without legalising the property status of our homes, it will never be possible to realise this tourism plan,” Mr Ng said.

July 2013 April5,19, 2013

Macau

Land grant money continues to flow in Approval of Cotai integrated gaming resorts boosts public coffers Vítor Quintã

vitorquinta@macaubusinessdaily.com

he government is getting more money from land grants than ever before, official data show, as the authorities approved several concessions for big-scale gaming resorts in Cotai. In the first three months of this year the authorities have received 461.1 million patacas (US$57.7 million) from property income, the Financial Services Bureau said. This figure is twice as high as in the same period of 2012, the review published last month shows. The growth “is due to the increase in land concession premium collected during the period,” the bureau told Business Daily in an e-mailed reply. The first quarter is traditionally a slow period for land concessions.

200.8%

Year-on-year increase in property income for January-March

The Macau government finished last year with a total of 3.15 billion patacas in revenue from land premiums, even though it had collected just 153.3 million patacas in the first quarter. If the growth recorded in the January-March period were to remain unchanged during the rest of the year, public revenue from land grants would eclipse the previous record high of 3.54 billion patacas set in 2011. The bureau did not provide any reasons why the land premium income had grown so fast in the first quarter. The increase is likely linked to several big plots in Cotai recently granted to casino operators for the construction of large-scale integrated gaming resorts. In January MGM China Holdings Ltd was formally granted a casino resort on a 71,833-square metre (773,204 square feet) site on the Cotai land reclamation area. A subsidiary, MGM Grand Paradise, SA, is due to pay the government a total land premium of 1.29 billion patacas, most of which in eight half-year instalments. In May rival gaming concessionaire Sociedade de Jogos de Macau, SA was

Two rival operators have been granted land plots in Cotai since December

officially allowed to develop 70,468 square metres of land, close to the Macao Dome. The firm founded by casino tycoon Stanley Ho Hung Sun paid the

government an initial land premium of 800 million patacas in late December. The remaining land premium – 1.35 billion patacas – will be paid in eight half-year instalments.

July 5, 2013 April 19, 2013

Macau Brought to you by

Financial Monitor Blue-collar blues Twice a year, the Statistics and Census Service carries surveys on manpower needs in most sectors of the economy – their jobs, needs and wages. However, some surveys are conducted in March and September; others are conducted in June and December. The manufacturing, hospitality and finance industries, and the utilities – comprising electricity, gas and water – were all last surveyed in March, so they can be compared more accurately. Since 2011 the statisticians have divided the finance industry into three: banking, insurance and all other sorts of financial intermediation. For convenience, the chart puts together the figures for insurance and other sorts of financial intermediation, because they are so small.

Tigerair Mandala still keen to fly to Macau But the reincarnated Indonesian low-cost carrier will begin by flying to Hong Kong Vítor Quintã

vitorquinta@macaubusinessdaily.com

The manufacturing, hospitality and finance industries, together with the utilities, had almost 87,000 employees in March, about one-quarter more than a year before. About 69,000, or 80 percent, worked in hotels or restaurants. The hotel and restaurant industry was by far the biggest contributor to growth in employment, adding more than 20,000 jobs in the year ended March. This made up, a little, for the loss of over 4,000 jobs in manufacturing – or almost one-third of the manufacturing workforce. The finance industry and the utilities made much smaller contributions to employment.

ndonesian low-cost carrier Mandala Airlines has changed its name to Tigerair Mandala and will begin flying to Hong Kong. But the company says its flights to Hong Kong do not mean it has given up on resuming its flights to Macau, which were suspended in 2011. Tigerair Mandala is jointly owned by Indonesian private equity firm Saratoga Group and Singapore’s state-controlled Tigerair Group, which runs Tiger Airways. Tiger Airways has renamed itself Tigerair, and Mandala Airlines followed suit on Wednesday by renaming itself Tigerair Mandala. Tigerair Mandala will start new international services, including the first low-cost direct flights between Indonesia and Hong Kong, which will begin on July 24. Asked by Business Daily if this meant Mandala Airlines flights to

Macau were history, a spokesperson for Tigerair Group said: “That’s not true. We are still interested.” An e-mail requesting further information from the airline was unanswered by the time we went to press. Mandala Airlines began flying between Macau and Jakarta in July 2010, forging the city’s first direct air link with Indonesia. But it suspended the service six months later, after the airline turned out to be a loss-maker. Mandala Airlines was saved by investment by Saratoga and Tiger Airways. Saratoga bought 51 percent and Tiger Airways 33 percent, and the airline’s creditors approved a debtto-equity swap for the remainder of its stock. Mandala Airlines resumed operations early last year, linking

Indonesia to Malaysia, Singapore and Thailand. The airline is now spreading its wings. “We are continuing to open new routes and increasing flight frequencies,” Indonesian media quoted the company’s president director, Paul Rombeek, as saying. Macau remains without any direct flights to Indonesia, even though official data show the city had almost 4,150 non-resident workers from Indonesia at the end of May. Over 209,000 Indonesians visited last year. In the first five months of this year, Macau had 1 percent more Indonesian visitors than in the equivalent period of last year. The Civil Aviation Authority of Macau told Business Daily that it had received no formal application by any airline to fly between here and Indonesia.

which was originally due to be finished by end-2014. Lee Kam Cheong, director of Macau Prison, said yesterday he “cannot confirm any completion date due to the delays”. Mr Lee did say he “expect” the first of the project’s four phases to be wrapped up before the end of the year, much later than the original projection of February 2012. As for the second phase, the government “could open a tender” by year-end, said the director. He gave no timeframe for the third and fourth phases. The first phase began in August

2010 and the remaining phases were supposed to take place in the following three years. Mr Lee told the Legislative Assembly last November the delays were caused by typhoons and problems with the quality of the construction materials. Speaking to reporters yesterday, he did not say whether any penalty would be imposed on the contractor. The official also did not say whether the project budget would be increased. The new prison in Ka-Ho, Coloane, is planned to accommodate up to 2,700 inmates.

J.I.D. The content of this column is the work of Business Daily’s journalists.

28 %

Loss of manufacturing jobs in the three years ended March

No deadline for new prison opening W

ith several delays hitting the construction works of the new prison, the government has given up on keeping track of the progress of the project,

T.L.

July 2013 April5,19, 2013

Greater China Economy seen growing at 7.6 pct in second half The Chinese economy is expected to grow 7.6 percent in the second half of 2013, but risks of bad local government loans, slowing growth of central government revenue, diminished export competitiveness and industrial capacity are growing, the official China Securities Journal reported yesterday. Economists have been cutting their forecasts for the world’s second-largest economy following a string of weak data recently, with some predicting the government will not be able to meet it full-year target of 7.5 percent. China’s economy expanded 7.8 percent last year, the slowest pace in 13 years. The report, which was authored by an economic research unit at the State Information Centre, said that China’s economic growth model remained fundamentally stable. Whole year inflation was expected to clock in at a moderate 2.5 percent, and China should maintain its growth targets and stable financial and monetary policy stances. The report said local government debt was posing increasing risks to economic recovery, and so was industrial overcapacity, increasing investment in real estate that is pushing up housing prices, and the increase in the value of the yuan against other currencies which has hurt export competitiveness. The report recommended that China make minor adjustments to monetary and financial policy to sustain growth while “eliminating waste”.

Li wants fiscal funds to stabilise growth Regulator approves Shanghai new yuan pilot zone

hinese Premier Li Keqiang said fiscal funds should be used to redevelop shantytowns and improve basic infrastructure as part of efforts to stabilise the world’s second-largest economy. Money should also be allocated to transform the structure of the economy to focus more on domestic consumption, the State Council said in a statement on its website yesterday, after a meeting led by Mr Li. Recent economic data signal the nation’s growth slowdown may be deepening. China’s service industries expanded at the slowest

pace in nine months in June and two manufacturing indexes declined last month, according to data this week. Banks including Goldman Sachs Group Inc. have pared their growth projections this year to 7.4 percent, below the government’s 7.5 percent goal disclosed at the March conference at which Mr Li became premier. The government yesterday also approved a trial plan to set a free trade zone in Shanghai to boost the economy and deepen reforms. Shanghai, China’s financial hub, plans to set up a pilot free trade zone in the Pudong district

this year, the first of its kind on the mainland if approved, the official Xinhua News Agency reported in January. The zone would encourage cross-border financing and international trade settlement. China already has a financial zone in the Qianhai district of the southern city of Shenzhen. The National Development and Reform Commission said last year companies there will be encouraged to sell yuandenominated bonds in Hong Kong and to experiment with cross-border loans in the Chinese currency. Bloomberg News

Rongsheng halts trading after report on job cuts Trading in shares of China Rongsheng Heavy Industries Group Holdings Ltd, one of China’s largest shipbuilders, was suspended yesterday pending a clarification of news articles, according to a filing to the Hong Kong Stock Exchange. China Rongsheng, suffering from a downturn in the global shipping industry, has laid off about 8,000 people in recent months, according to media reports. The Wall Street Journal said the cuts represented some 40 percent of the firm’s workforce. The cuts reportedly sparked a series of protests by employees earlier this week. No further details of the share suspension were immediately available and China Rongsheng declined to comment. On Wednesday, its shares closed 10 percent down at HK$1.06. China Rongsheng is the country’s largest private shipbuilder by accumulated order books, and is the third largest shipbuilder in the world, according to its website. China Rongsheng is largely based in eastern Jiangsu province and is one of the major heavy industrial conglomerates in the area. It posted a net loss of 572.6 million yuan (US$92 million) in 2012, its worst-ever loss due to a vessel supply glut and the weak global economy.

Regulator probes drugmaker GSK China’s top economic planning agency has opened an investigation into pharmaceutical giant GlaxoSmithKline Plc’s operations in China, an official newspaper reported yesterday, as foreign firms come under pressure from Beijing for possible price-fixing. The National Development and Reform Commission (NDRC) has begun a survey on production costs at 60 firms, including Britain’s GlaxoSmithKline and 10 China-listed firms, the official Securities Daily said. The investigation could focus on the difference in prices of imported products sold by foreign firms, such as GlaxoSmithKline, in China compared with those in other markets, the paper said citing unidentified sources. The NDRC did not reply to a request from Reuters for more details. Officials at GlaxoSmithKline could not be immediately reached for comment. The NDRC probe into GlaxoSmithKline comes as high-level Chinese staff at the firm are being investigated by police in the south-central Chinese city of Changsha on suspicion of economic crimes. A GSK spokeswoman in London said investigations by Chinese authorities into the firm’s operations in China were ongoing, but added it was unclear what the investigations were about.

Nestle says average reduction will be 11 percent

Foreign baby milk firms cut prices Price pledges for infant formula follow regulators’ probe

wiss food company Nestle SA and French rival Danone SA are cutting the price of infant formula milk in China after Beijing launched an investigation into possible price-fixing and anticompetitive behaviour in the sector. Wyeth Nutrition, which Nestle bought last year, said on Wednesday it had been cooperating with a probe by China’s National Development and Reform Commission (NDRC) and was responding by cutting prices and improving sales and marketing practices. Danone said in an e-mail to Reuters that its Dumex business had also been cooperating with the NDRC and was preparing a pricecut proposal whose details would be disclosed later. Both companies, along with Mead Johnson Nutrition Co Ltd and Abbott Laboratories, said on Tuesday they were being investigated by the NDRC. Analysts see the probe as possibly part of a broader Chinese plan to boost consumption of local infant milk products. Mothers turned away from Chinese milk powder in 2008 when infant formula tainted with

the industrial compound melamine killed at least six babies and made thousands sick with kidney stones. “Wyeth Nutrition decided to implement a price reduction of key products from July 8 through 2014. The average reduction will be at 11 percent with the biggest single product price reduction at 20 percent,” it said without giving more details. The company said it would not raise prices on any new products over the next year. Analysts said the investigation could result in fines and tougher rules governing imports into an infant milk market set to grow to US$25 billion by 2017. The firms could face fines ranging from 1 percent to 10 percent of their annual sales, the state-run Xinhua news agency quoted experts as saying. “It was a bit of a surprise, and it may trigger further pressure on prices for all of the players in that market,” Jon Cox, head of Swiss equities at Kepler, said. “That’s probably going to have an impact on the profitability of these companies. It’s not positive, that’s for sure.” “It is part of the whole idea of a

consolidation process,” said Renee Tai, a Hong Kong-based analyst at regional brokerage UOB Kay Hian. “It is pointing the same direction of supporting local producers, making it difficult for importers.” Some Chinese infant formula companies have started forming partnerships with foreign firms to try to boost brand recognition and gain technical know-how. Foreign brands may also soon have to rely on their Chinese partners if they want greater access to the Chinese market. The Chinese government has expressed an interest in bringing the supply chain under the control of Chinese firms as part of its goal of reducing the number of local infant formula producers to 10 from more than 200 within two years. The Ministry of Industry and Information Technology said in June that the integration of the milk powder industry was expected to involve 10 large companies with revenues exceeding 2 billion yuan in two years, according to the China Daily. “They have to boost local consumption before they can proceed with the consolidation more smoothly,” said one retail analyst at a regional brokerage, who was not authorised to speak to the media. As part of this consolidation, China Mengniu Dairy Co Ltd signed a second takeover deal in a month in June to buy Carlyle-backed Yashili International Holdings Ltd in a deal worth about HK$12.5 billion (US$1.6 billion) as part of a plan to expand its milk powder business. Reuters

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July 5, 2013 April 19, 2013

Greater China/Asia Hong Kong June PMI hits 19-month low The Hong Kong Purchasing Managers Index, compiled by HSBC Holdings Plc and Markits Economics, fell to a 19-month low of 48.7 in June from 49.8 in May, as both output and new orders dropped amid the weak global economy, showed a report released yesterday. A reading below 50 indicates contraction. The June PMI reading is the third consecutive month of contraction and is the lowest since November 2011, indicating the further weakening of the business conditions, HSBC said. “Persistent weakness in the West and more importantly China’s reform-induced slowdown is inevitably cooling Hong Kong’s economy,” HSBC Greater China economist Donna Kwok said.

China, India gas reforms may boost LNG imports Price hikes to narrow gap between LNG, domestic prices

oves by China and India to raise local gas prices will pave the way for increased imports of liquefied natural gas (LNG), as the two nations try to ensure they can meet rapidly increasing demand for the fuel. Gas prices in both countries have been kept artificially low at levels well below globally traded LNG costs, meaning either LNG importers suffer a loss or local LNG users have to pay a big premium to domestic prices. India last week nearly doubled the price from around US$4.20 per million British thermal units (mmBtu) to a pricing formula that will bring prices to around US$8.40 per mmBtu from April 1, 2014. China made a more modest reform, increasing non-residential natural gas prices by 15 percent, but prices will be higher at up to US$10-US$12 per mmBtu in many coastal provinces. Chinese and Indian gas demand is expected to soar in the coming decade, driven by growing energy

demand and efforts by China in particular to increase the amount of cleaner burning natural gas in its energy mix. Higher gas prices will make LNG imports more attractive and provide incentives for domestic gas developments. “It’s broadly positive for LNG, as most [Chinese] LNG players are nervous of low [cost] competing gas sources,” said Beijing-based senior gas analyst Gavin Thompson of Wood Mackenzie. “We’ll start to see a little more of the China influence in the spot, short-term LNG markets than the past few years.” LNG spot prices into China are around US$14.50 per mmBtu, while India’s gas imports are at US$13 to US$14 per mmBtu. “I am expecting there will be some change in [India’s] consumer psychology and demand pattern,” said R.K. Garg, the head of finance at Petronet LNG. India imported 15.17 million tonnes of LNG in 2012, which is

expected to rise to 50 million tonnes by 2020, while demand in China, which bought 14.7 of LNG last year, is expected to hit 60 million tonnes by 2020, said consultancy Tri Zen International. “We had assumed higher prices in the forecasts so don’t think the latest hikes in the two countries will trigger any changes to the forecasts,” said Tri Zen analyst Tony Regan. The price hikes will also provide an incentive for investment in LNG importing infrastructure. “A formal indication of a hike in domestic prices will give regasification terminal developers more clarity about future supply potential,” said Gautam Sudhakar, senior analyst with IHS in Washington DC. Within days of the gas price hike, Indian firm H-Energy called for bids from EPC contractors for building an 8 million tonnes-per-year LNG terminal in Maharashtra state. India has plans for an additional 83 million tonnes of LNG import capacity on the books for 2020,

Temasek’s assets surge to record

emasek Holdings Pte’s holdings jumped to a record as surging global stock markets bolstered the assets of Singapore’s state-owned investment company. The value of Temasek’s holdings increased by 8.6 percent to S$215 billion (US$169 billion) in the year to March 31 from S$198 billion, the investment company said in its annual report yesterday. Total

shareholder return, which includes dividends, widened to 8.9 percent from 1.5 percent in the previous year. Temasek, led by chief executive Ho Ching, the wife of Singapore’s Prime Minister Lee Hsien Loong, benefited from a recovery in stocks around the world with 73 percent of its holdings in publicly traded assets. The MSCI World Index gained 9.3 percent in the year to March 31,

while Singapore’s Straits Times Index climbed 9.9 percent. “We are almost entirely invested in

Reform to encourage investment in LNG infrastructure

much of which may hinge on whether developers feel they can get market prices for LNG. Chinese importers may be more willing to sign up short-term supplies with export facilities planned in East Africa, Canada and the United States, as well as the more traditional suppliers such as Australia and Qatar, experts say. Reuters

equities,” Ms Ho said in a statement. “This means a lot more year to year volatility, as we have seen over the last 10 years. We are prepared to ride through the large mark to market volatility on our portfolio value, because a portfolio of mostly equities also means we expect higher returns over the long term.” Temasek, which invests mainly in Asia, said its net profit edged down to S$10.6 billion from the previous year’s S$10.7 billion. The fund also said it does not expect last month’s liquidity crunch in Chinese banks to have an impact on its banking investments in the world’s second-largest economy. Reuters

7-Eleven owner sees profit jump in Q1

apan’s Seven & I Holdings Co Ltd, owner of the 7-Eleven convenience store chain, posted a 9.5 percent rise in first-quarter profit which was its highest on record for the traditionally dull March-May period. Japan’s biggest convenience store operator, buoyed by an expansion of its store network, left its full-year operating profit forecast for the year

to February unchanged at a record 340 billion yen (US$3.41 billion), in line with forecasts. Japanese convenience store operators are now reaping the rewards of aggressively opening new outlets in recent years and taking business from supermarkets by expanding their line-up of prepared foods and private-label products. Prime Minister Shinzo Abe’s

aggressive monetary and fiscal stimulus policies, and a rallying stock market, have also spurred consumer spending, but the benefits to the retail sector have so far centred on high-end department stores. Seven and I’s Sogo and Seibu department stores account for only a tiny share of its profit. Seven and I has been generating annual record profits for two years,

but the first-quarter result marked its first record high for that specific period since 2007. Seven and I’s shares ended flat before the earnings announcement. They have surged nearly 60 percent since mid-November when the Japanese market began rallying, in line with the benchmark Nikkei average’s 62 percent rise. Reuters

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July 2013 April5,19, 2013

Asia India expands cheap food plan India’s cabinet enacted proposals to expand the provision of cheap food to the poor, approving a rarely used executive ordinance to pursue a central plank of the government’s re-election strategy. Deemed a vote winner ahead of an election scheduled for early 2014, the ordinance will be sent to President Pranab Mukherjee for his assent, Food Minister K.V. Thomas told reporters. Under the food bill, 67 percent of India’s 1.2 billion people may be entitled to buy wheat, rice and coarse grains at subsidised rates. The plan involves estimated spending of 1.25 trillion rupees (US$20.7 billion) in a full financial year at current prices, according to yesterday’s briefing document.

Kuroda upbeat on economy outlook Bank of Japan governor Haruhiko Kuroda claimed some success for the central bank’s aggressive monetary stimulus yesterday, saying that the economy is on track to a steady recovery with signs inflation expectations are picking up. “Japan’s economy is steadily heading towards a recovery since we adopted our qualitative and quantitative monetary easing in April,” Mr Kuroda said. “We’re seeing the effect of our policies, such as indicators suggesting an increase in inflation expectations.” Mr Kuroda also said core consumer inflation, which has remained largely flat, will gradually turn positive reflecting improvements in the economy.

Packer closer to operate second Sydney casino Crown beats Echo over US$912 million project

rown Ltd, the gaming company controlled by Macau casino investor James Packer, moved a step closer to developing a A$1 billion ($912 million) casino in Sydney, beating a rival proposal from Echo Entertainment Group Ltd. Crown’s plan for a hotel and casino complex west of the city’s main business district will proceed to the third stage of a government approval process, New South Wales state premier Barry O’Farrell said yesterday. The plan was superior to Echo’s proposal for a A$1.1 billion redevelopment of its existing Star Casino with two new hotels and more than 50 bars and restaurants, the state government said. “It’s very negative for Echo,” Stan Shamu, a market strategist at IG Markets Ltd, told Bloomberg. “You might have a situation where they will struggle to attract the tourists they want.” Shares in Echo fell as it faces losing its monopoly as Sydney’s only casino operator. “We are disappointed that the

Samsung acquires start-up Boxee Samsung Electronics Co Ltd, the world’s largest television maker, acquired Boxee Inc., a New Yorkbased start-up whose set-top box can record broadcasts and stream online video. Terms weren’t disclosed. Boxee makes video-streaming applications for phones and tablets based on Google Inc.’s Android and Apple Inc.’s iOS operating systems, in addition to the software that powers its connected TV box. Samsung said closely held Boxee can help it develop Internet-enabled devices. “This will help us continue to improve the overall user experience across our connected devices,” a spokeswoman for the company said .

Dentsu to sell shares to pay Aegis deal debt Dentsu Inc., the Japanese advertising company that bought Aegis Group Plc, will raise as much as 120.1 billion yen (US$1.2 billion) in a public share sale to help pay for the deal. The stock plunged the most since March 2011. The company will offer as many as 29 million shares it owns and 8 million new shares to investors in Japan and overseas, Dentsu said in a statement. The proceeds will be used to repay part of its 200 billion yen short-term debt from the acquisition that was completed in March, it said. Dentsu paid 3.16 billion pounds (US$4.8 billion) for Aegis.

The Crown Sydney Hotel Resort will feature VIP gaming facilities

S. Korea proposes Kaesong talks S

outh Korea has offered workinglevel talks with the North on reopening the jointly-run Kaesong industrial zone. Seoul made the proposal a day after Pyongyang said South Korean officials could visit the closed complex to inspect and maintain equipment. Work at the factory park, which was a rare symbol of North-South co-operation, was halted in April amid high regional tensions. Attempts to hold high-level talks last month failed on procedural grounds. “The government wants talks

New South Wales government does not share our vision,” Echo chairman John O’Neill said in a regulatory statement. The company looks forward to “exploring other initiatives” to develop its Star resort, he said. Crown and Echo are competing for tourist dollars from high-rolling Asian gamblers who’ve doubled Macau’s gaming revenues over the past three years. “The decisive factor was the opportunity to introduce competition into the market,” Mr O’Farrell said in an e-mailed statement. An independent committee appointed by the government found “a competitive casino market would deliver increased tourism and broader economic benefits for New South Wales.” Echo shares fell 4.3 percent to A$2.91 at 1.05 pm in Sydney before trade in the securities was halted. Crown shares were halted at 12.55 pm ahead of the announcement, when they were up 2.2 percent at A$12.21. “Crown has the track record and experience to deliver something v er y s p eci a l fo r S y dn e y s i d e r s and visitors from interstate and overseas,”chairman Packer said in a statement. Mr Packer is a joint venture player in the gaming market here via Melco Crown Entertainment Ltd. Crown’s Sydney casino will not be allowed to include poker machines and no low limit bets on table games. The government said it will move to stage three of the approval process provided that Crown agrees to an upfront licence payment of A$100 million and a number of other conditions, including that the total licence fee and gaming tax payments made to the government over the first 15 years of operation exceeds A$1 billion. The independent committee found that the Crown proposal, which caters only for high-rolling gamblers, would increase gross state product by A$442 million a year in 2025.

Indonesian outflows spur pressure for more tightening I

to be held at the truce village of Panmunjom,” South Korea’s Ministry of Unification said in a statement. “Seoul’s stance remains consistent and centres on government authorities resolving all outstanding issues through dialogue.” It said the offer of talks was made via a North-South hotline that was cut by Pyongyang in June but has now been restored. North Korea has yet to respond to the offer. South Korea proposed that the talks take place on Saturday. On Wednesday, North Korea said it would allow South Korean companies to enter the complex, which is located just inside North Korea, to protect their equipment from damage in the rainy season. The offer came after some South Korean firms threatened to abandon the zone entirely and relocate their equipment. Representatives of the companies have repeatedly urged the two sides to open talks to revive the moribund industrial park.

ndonesia’s policy makers delivered the country’s first benchmark interest-rate increase since 2011 and first fuel-price boost in five years in June. Capital outflows since then have spurred pressure for further moves. The rupiah remains among the worst performers in Asia in the past year, falling about 0.6 percent after Indonesia on June 13 became the region’s first major economy to raise rates this year. Global funds sold 2.5 trillion rupiah (US$250 million) of local-currency government bond holdings in the week after the June 22 fuel adjustment, aimed at containing a current-account deficit that has hurt the currency. “The mood among investors is still to wait and see,” said Eric Alexander Sugandi, a Standard Chartered Plc economist in Jakarta. “Further rate increases will help restore market confidence and manage accelerating inflation, which affects the real rate of return on investing in Indonesia.” The finance minister signalled yesterday he wouldn’t be too concerned with higher rates, after the central bank pledged to strengthen its policy mix against inflation at the July 11 meeting. Costlier fuel and monetary tightening could push full-year expansion below 6 percent for the first time since 2009, according to Credit Suisse Group AG, underscoring President Susilo Bambang Yudhoyono’s failure to wean the economy off subsidies and fix infrastructure gaps that spur price pressures. “There was a time window in which the government could ride on the positive momentum and push through more concrete measures to take growth to the next level beyond 7 percent, but it’s now gone,” said Wellian Wiranto, an investment strategist at the wealth management unit of Barclays Plc in Singapore. A recovery in the currency has hitherto been thwarted by the prospect of a scaling back in U.S. monetary stimulus, which spurred outflows from emerging markets in recent weeks. The country will need to undertake even harder measures to improve investor confidence, including further fuel subsidy cuts and boosting infrastructure spending, according to Royal Bank of Scotland Group Plc.

AFP

Bloomberg News

T.A. with Bloomberg News

12 12

July 5, 2013 April 19, 2013

Markets Hang Seng Index NAME

PRICE

DAY %

VOLUME

AIA GROUP LTD

32.5

1.246106

9903514

ALUMINUM CORP-H

2.36

3.056769

12431510

BANK OF CHINA-H

3.05

0.9933775

238329298

BANK OF COMMUN-H

4.79

1.054852

25077446

BANK EAST ASIA

27.4

1.2939

724219

BELLE INTERNATIO

10.56

6.024096

23120308

BOC HONG KONG HO

23.55

1.072961

CATHAY PAC AIR

13.34

0.6033183

CHEUNG KONG

103.5

CHINA COAL ENE-H CHINA CONST BA-H

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

10.38

1.964637

9795755

POWER ASSETS HOL

68.05

2.177177

1582678

CITIC PACIFIC

8.19

1.865672

5564000

SANDS CHINA LTD

36.65

2.374302

5811256

CLP HLDGS LTD

62.6

1.130856

1273119

SINO LAND CO

10.38

2897479

CNOOC LTD

12.8

2.073365

46222572

SUN HUNG KAI PRO

98.65

0.9723644

4555585

COSCO PAC LTD

10.02

3.192585

5053687

SWIRE PACIFIC-A

92.6

1.146914

567010

ESPRIT HLDGS

11.82

1.025641

2855777

TENCENT HOLDINGS

306.4

2.543507

2919265

4988014

HANG LUNG PROPER

25.45

4790113

TINGYI HLDG CO

2258592

HANG SENG BK

112.5

937769

1.272016

1511037

HENDERSON LAND D

45.2

0.6681514

3808807

3.89

5.420054

54209248

HENGAN INTL

81.85

-0.2437538

1347570

5.24

1.747573

158501029

HONG KG CHINA GS

18.86

1.288937

2156970

HONG KONG EXCHNG

116.1

0.8688097

2061254

HSBC HLDGS PLC

81.05

1.566416

7569106

82.75

0.9146341

5627358

4.67

2.412281

266307588

11.04

8804137

HIGH

21004.56

28.6

3.435805

2988280

LOW

20147.31

52W (H) 23944.74

CHINA LIFE INS-H

17.58

0.4571429

24997313

CHINA MERCHANT

23.35

2.412281

2656569

CHINA MOBILE CHINA OVERSEAS CHINA PETROLEU-H

NAME CHINA UNICOM HON

80.1

2.168367

12897407

HUTCHISON WHAMPO

19.52

2.521008

24013096

IND & COMM BK-H

5.25

2.539062

113940384

LI & FUNG LTD

CHINA RES ENTERP

23.2

0.6507592

3264781

MTR CORP

CHINA RES LAND

20.3

4.531411

9070498

NEW WORLD DEV

10.38

0.776699

7122561

CHINA RES POWER

18.4

1.545254

4280230

PETROCHINA CO-H

8.96

1.818182

124428024

CHINA SHENHUA-H

19.22

5.488474

32684883

PING AN INSURA-H

49.6

-0.3015075

18119963

NAME

20.1

0.5

2659402

WANT WANT CHINA

10.38

0.5813953

8791410

WHARF HLDG

65.15

1.321928

1996880

MOVERS

3 21010

INDEX 20468.67

(L) 18710.58984

20140

2-July

4-July

Hang Seng China Enterprise Index NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.03

0.6644518

144018960

AIR CHINA LTD-H

5.24

1.945525

5704837

ALUMINUM CORP-H

NAME

PRICE

DAY %

VOLUME

CHINA PACIFIC-H

24.2

0.6237006

17978474

CHINA PETROLEU-H

5.25

2.539062

113940384

2.36

3.056769

12431510

CHINA RAIL CN-H

6.19

2.145215

6058500

ANHUI CONCH-H

19.54

0.102459

19713310

CHINA RAIL GR-H

3.29

0.9202454

12849726

BANK OF CHINA-H

3.05

0.9933775

238329298

CHINA SHENHUA-H

19.22

5.488474

32684883

4.79

1.054852

25077446

CHINA TELECOM-H

3.74

1.630435

23361315

29.05

4.308797

7439500

DONGFENG MOTOR-H

9.92

-0.1007049

8480564

CHINA CITIC BK-H

3.44

1.474926

24750111

GUANGZHOU AUTO-H

6.76

-1.81105

7353820

CHINA COAL ENE-H

3.89

5.420054

54209248

HUANENG POWER-H

7.49

-1.447368

35987412

CHINA COM CONS-H

5.45

0.7393715

28488622

IND & COMM BK-H

4.67

2.412281

266307588

CHINA CONST BA-H

5.24

1.747573

158501029

JIANGXI COPPER-H

12.66

2.427184

11635532

CHINA COSCO HO-H

3.23

-1.223242

5622000

PETROCHINA CO-H

8.96

1.818182

124428024

BANK OF COMMUN-H BYD CO LTD-H

17.58

0.4571429

24997313

PICC PROPERTY &

8.38

-0.3567182

7917421

CHINA LONGYUAN-H

7.69

-1.913265

13541588

PING AN INSURA-H

49.6

-0.3015075

18119963

CHINA MERCH BK-H

12.66

2.593193

21318054

SHANDONG WEIG-H

8.27

-6.553672

10726886

CHINA LIFE INS-H

NAME

ZTE CORP-H

MOVERS

58660446

1.6

11.11111

108903762

5.04

0.1988072

8092667

11.92

-1.160862

6260038

VOLUME

0 9410

INDEX 9024.01 HIGH

9402.05

LOW

8900.25

7.3

1.248266

104181710

SINOPHARM-H

18.94

-0.3157895

4891716

CHINA NATL BDG-H

6.25

-0.1597444

58199570

TSINGTAO BREW-H

56.65

2.719855

2172317

(L) 8640.85

14.42

0.1388889

3646855

WEICHAI POWER-H

-1.982379

4.798464

ZOOMLION HEAVY-H

CHINA MINSHENG-H

22.25

DAY %

5.46

ZIJIN MINING-H

52W (H) 12354.22

CHINA OILFIELD-H

PRICE

YANZHOU COAL-H

8890

2-July

2003196

4-July

Shanghai Shenzhen CSI 300 PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.47

67818764

CITIC SECURITI-A

10.06

0.9027081

89553198

RISESUN REAL -A

14.22

3.947368

14244937

AIR CHINA LTD-A

4.13

2.227723

13192081

CSR CORP LTD -A

3.57

1.709402

34250192

SAIC MOTOR-A

13.35

3.408211

35624774

ALUMINUM CORP-A

3.17

1.92926

21191856

DAQIN RAILWAY -A

5.76

2.12766

33418169

SANAN OPTOELEC-A

19.46

-2.797203

15090820

ANHUI CONCH-A

13.18

1.384615

30004759

DATANG INTL PO-A

5.22

-3.867403

14153326

SANY HEAVY INDUS

7.16

1.416431

37492308

BANK OF BEIJIN-A

7.64

0.5263158

17662732

EVERBRIG SEC -A

10.14

1.298701

28958172

SHANDONG DONG-A

41.5

-2.352941

8457131

BANK OF CHINA-A

2.65

-0.3759398

19796727

GD MIDEA HOLDI-A

12.5

3.73444

30025495

SHANDONG GOLD-MI

23.42

-2.37599

43844297

BANK OF COMMUN-A

4.07

1.75

86875580

GD POWER DEVEL-A

2.26

0.4444444

72853221

SHANG PHARM -A

11.2

-1.754386

6994214

BAOSHAN IRON & S

3.94

28015911

GEMDALE CORP-A

6.97

4.81203

64681203

SHANG PUDONG-A

8.12

0.9950249

85794489

3.32

0.6060606

5523689

12.03

3.350515

38441888 38813393

NAME

BEIJING SL -A

58.99

-3.940726

3813050

GF SECURITIES-A

10.92

1.204819

25076984

SHANGHAI ELECT-A

BEIJING TONGRE-A

23.11

-2.858344

7347579

GREE ELECTRIC

25.77

3.869407

21237288

SHANXI LU'AN -A

BYD CO LTD -A

38.55

7.202447

25970782

GUANGHUI ENERG-A

12.39

-1.588562

44986795

SHENZEN OVERSE-A

5.01

1.417004

CHINA AVIC ELE-A

24.27

-0.4511895

10597779

HAITONG SECURI-A

9.51

2.368138

107453801

SICHUAN KELUN-A

55.46

0.4710145

2201625

CHINA CITIC BK-A

3.62

0.2770083

16010710

HANGZHOU HIKVI-A

38.58

-1.581633

6851591

5.12

3.225806

59990777

CHINA CNR CORP-A

3.86

3.485255

46103171

HENAN SHUAN-A

41.5

-2.237927

6245573

TASLY PHARMAC-A

-1.278887

6163530

8.09

-4.599057

250080132

TSINGTAO BREW-A

39.33

1.183432

1744810 9148681

SUNING COMMERC-A

CHINA COAL ENE-A

4.93

1.859504

18011549

HONG YUAN SEC-A

CHINA CONST BA-A

4.36

0.4608295

25392915

HUATAI SECURIT-A

8.09

1.761006

38372525

WANHUA CHEMIC-A

17.19

1.117647

CHINA COSCO HO-A

3.01

0.3333333

10053285

HUAXIA BANK CO

8.75

0.8064516

25616741

WEICHAI POWER-A

17.57

1.619433

8873045

CHINA EAST AIR-A

2.55

1.593625

11682541

IND & COMM BK-A

3.91

-0.7614213

89915383

WULIANGYE YIBIN

20.1

-0.297619

14325098

CHINA EVERBRIG-A

2.81

0.7168459

56065285

INDUSTRIAL BAN-A

9.13

1.219512

113315066

YANZHOU COAL-A

9.44

2.944384

15813624

21.4

7.107107

64798072

YUNNAN BAIYAO-A

95.7

1409755

35.28

-0.7036307

18927952

ZHONGJIN GOLD

9.55

0.6322445

23379251

CHINA INTL MAR-A

10.53

5.616851

10306021

INNER MONG BAO-A

CHINA LIFE INS-A

13.51

0.2225519

12682349

INNER MONG YIL-A

CHINA MERCH BK-A

11.24

-0.969163

53058539

INNER MONGOLIA-A

3.97

0.7614213

73948701

ZIJIN MINING-A

2.53

2.016129

55452102

CHINA MERCHANT-A

10.15

-0.0984252

23904094

JIANGSU HENGRU-A

28.27

-2.213767

6259893

ZOOMLION HEAVY-A

5.24

1.550388

80055432

CHINA MERCHANT-A

24.2

5.217391

19695160

JIANGSU YANGHE-A

-0.5255255

4731576

ZTE CORP-A

13.38

-2.335766

47950077

CHINA MINSHENG-A

8.48

0.4739336

112073858

16.3

3.360812

13095453

CHINA NATIONAL-A

10.29

-0.09708738

26277585

8.31

4.265997

16295673

CHINA OILFIELD-A

14.29

3.326103

9702062

KANGMEI PHARMA-A

20.64

-2.180095

20291738

CHINA PACIFIC-A

15.59

0.6455778

26063240

KWEICHOW MOUTA-A

196.62

-0.6819215

2421452

-0.7058824

56541281

LUZHOU LAOJIAO-A

23.96

0.5455308

7181182

CHINA PETROLEU-A

4.22

JIANGXI COPPER-A JINDUICHENG -A

CHINA RAILWAY-A

4.13

1.22549

16863912

METALLURGICAL-A

1.62

0.621118

47143737

CHINA RAILWAY-A

2.41

1.260504

24448050

NARI TECHNOLOG-A

15.21

-1.617076

14923905

CHINA RESOURCE-A

29.6

6437890

CHINA SHENHUA-A

17.2

2.870813

OFFSHORE OIL-A

6.93

4.210526

51082327

16788313

PETROCHINA CO-A

8.04

0.2493766

27540507

9.37

0.4287245

80515991

34.23

0.6468686

30184604

CHINA STATE -A

3.18

1.597444

73278693

PING AN BANK-A

CHINA UNITED-A

3.1

-0.6410256

72359285

PING AN INSURA-A

CHINA VANKE CO-A

9.8

3.59408

132003811

POLY REAL ESTA-A

9.94

2.898551

73867584

CHINA YANGTZE-A

7.01

0.5738881

23143643

QINGDAO HAIER-A

11.49

2.680965

9612383

1.62413

44232935

QINGHAI SALT-A

18.09

8.713942

18093585

PRICE DAY %

VOLUME

NAME

PRICE DAY %

VOLUME

CHONGQING CHAN-A

8.76

MOVERS 210

11 2250

INDEX 2221.979 HIGH

2240.23

LOW

2178.17

52W (H) 2791.303 (L) 2023.171

2170

2-July

4-July

FTSE Taiwan 50 Index NAME ACER INC

22.05

-2.433628

9678373

25.5

13817503

ASIA CEMENT CORP

35.8

0.8450704

1938676

FUBON FINANCIAL

ASUSTEK COMPUTER

256.5

0.5882353

5610903

HON HAI PRECISIO

10.4 -0.4784689

44605786

HOTAI MOTOR CO

CATCHER TECH

145

-2.684564

15868307

CATHAY FINANCIAL

39.8

1.530612

21259694

CHANG HWA BANK

16.55

0.3030303

CHENG SHIN RUBBE

93.5

ADVANCED SEMICON

AU OPTRONICS COR

CHIMEI INNOLUX C

PRICE DAY %

VOLUME

69.7

1.014493

3024381

TAIWAN MOBILE CO

114.5

7049733

FOXCONN TECHNOLO

71.7 -0.2781641

2013646

TPK HOLDING CO L

408.5

-6.947608

10728509

24314705

37.15

0.2699055

39826514

TSMC

107

72.6 -0.8196721

20039555

UNI-PRESIDENT

57.9 -0.1724138

325.5

0.3081664

285155

HTC CORP

201

-3.13253

23292390

HUA NAN FINANCIA

16.5 -0.6024096

1970905

YUANTA FINANCIAL

3595746

LARGAN PRECISION

917

-3.777545

2029351

YULON MOTOR CO

0.4296455

4916492

LITE-ON TECHNOLO

52.5

0.5747126

3477070

14.75 -0.3378378

39052725

MEDIATEK INC

330

-1.639344

5784101

8.35

20813173

MEGA FINANCIAL H

23.4

1.73913

24033178

CHINA STEEL CORP

23.45

0.6437768

10830711

NAN YA PLASTICS

58.1

5113697

CHINATRUST FINAN

17.9

-1.104972

40847994

PRESIDENT CHAIN

199 -0.2506266

946885

CHUNGHWA TELECOM

98.1

0.3067485

9441159

QUANTA COMPUTER

COMPAL ELECTRON

18.6

-3.125

43966418

SILICONWARE PREC

DELTA ELECT INC

144.5 -0.6872852

4137758

SINOPAC FINANCIA

FAR EASTERN NEW

32.25

0.1552795

3384961

SYNNEX TECH INTL

FAR EASTONE TELE

2173264

TAIWAN CEMENT

36.3

CHINA DEVELOPMEN

NAME

FORMOSA PLASTIC

2.362205

5171906

37.3

-1.322751

9172170

13.8

7498049

37.25

-2.486911

9765775

0.6934813

4313383

16.35 -0.6079027

6163092

FIRST FINANCIAL

17.5 -0.8498584

5248887

TAIWAN COOPERATI

FORMOSA CHEM & F

70.2

2.034884

3626049

TAIWAN FERTILIZE

71.1

1043216

FORMOSA PETROCHE

73.6

1.517241

1614892

TAIWAN GLASS IND

26.7

1.136364

421365

UNITED MICROELEC

14.65

WISTRON CORP

MOVERS

108114214

27.9 -0.3571429

11780705

15.25

8020146

0.6872852 0.3289474

10909488

47.5 -0.5235602

1606132

8 5590

INDEX 5447.08 HIGH

5587.62

LOW

5436.07

52W (H) 5896.71 5430

(L) 4719.96 2-July

4-July

13 13

July 5,19, 2013 April 2013

Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange) 57.3

37.3 37.1

20.7 20.6

57.2

20.5

36.9

Max 37.3

Average 36.860

Min 36.55

Last 36.8

36.5

20.3 Max 57.25

Average 57.112

Min 57.05

36.6

36.5

Average 36.522

Min 36.4

Last 36.65

36.4

Max 18.34

Average 18.231

Commodities PRICE

DAY %

YTD %

(H) 52W

100.96

-0.276570525

7.679180887

102.1800003

86.29000092

BRENT CRUDE FUTR Aug13

105.33

-0.406580938

-1.441003088

115.1699982

96.70999908

GASOLINE RBOB FUT Aug13

283.39

-0.151504475

1.872888058

311.8400097

244.7299957

GAS OIL FUT (ICE) Aug13

NY Harb ULSD Fut Aug13

896

-0.472091086

-1.430143014

983.5

829.25

3.669

-0.569105691

2.200557103

4.525000095

3.354000092

294.17

-0.321902955

-1.848453505

320.449996

272.6999998

Gold Spot $/Oz

1248.58

0.0593

-24.9859

1796.08

1180.57

Silver Spot $/Oz

19.532

-0.2451

-35.1312

35.365

18.2208

1338.62

-1.7382

-11.8023

1742.8

1294.18

Platinum Spot $/Oz

678

-0.5355

-3.0958

786.5

553.75

LME ALUMINUM 3MO ($)

Palladium Spot $/Oz

1807

-1.39154161

-12.83164496

2200.199951

1758

LME COPPER 3MO ($)

6993

1.201157742

-11.82700794

8422

6602

LME ZINC

3MO ($)

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

Last 18.24

(L) 52W

WTI CRUDE FUTURE Aug13

NATURAL GAS FUTR Aug13

METALS

Min 18.1

Dec13

1860

-1.743264659

-10.57692308

2230

1779

13855

-1.317663818

-18.7866354

18920

13525

Average 20.456

Min 20.2

Last 20.3

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

22.0

18.3

21.8

18.2

21.6

18.1

21.4

18.0

14.60000038

ASIA PACIFIC

CROSSES

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

15.17

-0.849673203

-1.525478741

16.47500038

-16.17340559

665

496.5

665

1.025446259

-17.5960347

905.75

652.25

1250.75

0.663983903

-3.991556323

1409.75

1186.5

121.4

-2.372336148

-20.36733355

203.8499908

117.0999985

NAME

16.40999985

ARISTOCRAT LEISU

74.34999847

CROWN LTD

16.42

COTTON NO.2 FUTR Dec13

Max 21.9

Average 21.527

Min 21.2

Last 21.45

21.2

85.74

-0.665456745 1.203966006

-18.14556331 8.89001778

22.8599987 89.55999756

World Stock Markets - Indices COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

14988.55

0.3759607

14.38027

15542.4

12471.49

NASDAQ COMPOSITE INDEX

3443.67

0.2992373

14.04717

3532.038

2810.8

DAY %

YTD %

(H) 52W

(L) 52W

0.9118 1.5249 0.9487 1.3 99.7 7.9857 7.7532 6.1254 60.365 31.1 1.2732 30.042 43.43 9990 90.898 1.2332 0.85247 7.9616 10.3809 129.6 1.03

0.4074 -0.0393 0.1265 0.3086 -0.01 0.0025 0.0077 0.0833 -0.2402 -0.0643 -0.0393 0.1598 0.1036 -0.1301 -0.4026 -0.1662 -0.3425 -0.3869 -0.3131 -0.3086 -0.0097

-12.1411 -5.7307 -3.5101 -1.4405 -13.6409 -0.0313 -0.0335 1.7174 -8.8959 -1.672 -4.0685 -3.3586 -5.5837 -1.972 -1.7283 -2.0856 -4.3462 3.2142 1.4401 -12.3688 -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

0.9037 1.4832 0.9022 1.2043 77.13 7.9824 7.7498 6.1203 51.3863 28.56 1.2152 28.913 40.54 9358 79.408 1.20054 0.77553 7.7018 9.6245 94.12 1.0289

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

4.29

0.2336449

36.19047

4.49

2.29

2022015

12.21

2.175732

14.43299

13.75

8.28

348227

AMAX HOLDINGS LT

1.1

-1.785714

-21.42857

1.72

0.75

243575

BOC HONG KONG HO

23.55

1.072961

-2.282159

22.6

4988014

0.34

13.33333

28.30189

0.42

0.22

64000

5.3

-11.5192

6.74

2.89

4000

CHINA OVERSEAS

19.52

2.521008

-15.49784

25.6

16.761

24013096

CHINESE ESTATES

13.66

-0.1461988

12.61876

14.12

8.031

500

CHOW TAI FOOK JE

8.01

-1.233046

-35.61093

13.4

7.44

5645500

EMPEROR ENTERTAI

2.82

1.075269

49.20635

3.07

1.34

685000

FUTURE BRIGHT

2.16

-0.4608295

78.21398

2.76

0.924

726000

GALAXY ENTERTAIN

36.8

21.25206

44.95

16.98

7271822 937769

CHEUK NANG HLDGS

DOW JONES INDUS. AVG

PRICE

Macau Related Stocks

CENTURY LEGEND

VOLUME CRNCY

FTSE 100 INDEX

6281.01

0.8208839

6.497322

6875.62

5478.02

HANG SENG BK

112.5

-5.223249

132.8

104.2

DAX INDEX

7878.79

0.6318556

3.499557

8557.86

6324.53

HOPEWELL HLDGS

24.8

-0.2012072

-25.41353

35.3

20.727

731022

NIKKEI 225

14018.93

-0.2606086

34.85991

15942.6

8328.019531

HSBC HLDGS PLC

81.05

1.566416

-0.3075068

90.7

61.1

7569106

HANG SENG INDEX

20468.67

1.595052

-9.658197

23944.74

18710.58984

HUTCHISON TELE H

4.14

-2.588235

16.29214

4.66

2.98

2428318

CSI 300 INDEX

2221.979

0.8236124

-11.92939

2791.303

2023.171

LUK FOOK HLDGS I

17.74

1.954023

-27.29508

30.05

16.16

1537196

MELCO INTL DEVEL

13.6

-1.018923

50.94339

18.18

5.12

4467550

TAIWAN TAIEX INDEX

7893.72

-0.2237272

2.522504

8439.15

6922.73

MGM CHINA HOLDIN

20.3

0.4950495

52.88125

21.6

9.509

1330647

KOSPI INDEX

1839.14

0.7935725

-7.907165

2042.48

1758.99

MIDLAND HOLDINGS

2.72

-2.508961

-26.48649

2.68

9566000

S&P/ASX 200 INDEX

4794.741

1.06692

3.135998

5249.6

4062.3

NEPTUNE GROUP

0.172

-0.5780347

13.1579

0.23

0.084

6860000

4590.612

0.2940474

6.345718

5251.296

3963.469

NEW WORLD DEV

10.38

0.776699

-13.64393

15.12

9.38

7122561

FTSE Bursa Malaysia KLCI

1770.22

0.05708763

4.811867

1826.22

1590.67

SANDS CHINA LTD

36.65

2.374302

7.952869

43.7

20.65

5811256

SHUN HO RESOURCE

1.42

1.428573

1.67

1.03

NZX ALL INDEX

954.635

0.1905923

8.228761

998.487

767.748

SHUN TAK HOLDING

3.45

-4.166667

-17.6611

4.65

2.62

6498000

PHILIPPINES ALL SHARE IX

3955.32

0.05109655

6.930021

4571.4

3410.76

SJM HOLDINGS LTD

18.24

1.220866

2.774125

22.382

12.995

4504106

SMARTONE TELECOM

12.36

-0.4830918

-12.21591

17.38

12.3

1521697

WYNN MACAU LTD

21.45

-0.6944444

2.386631

26.5

14.62

6445040

ASIA ENTERTAINME

4.1

1.736973

45.66472

4.7647

2.2076

128857

-0.1567398

28.22635

41.74

361839 35500

JAKARTA COMPOSITE INDEX

20.2

18.4

COUNTRY MAJOR

502.75

WHEAT FUTURE(CBT) Sep13

NAME

Max 20.65

Currency Exchange Rates

NAME ENERGY

57.0

Last 57.25

36.7

Max 36.7

20.4

57.1

36.7

HSBC Dragon 300 Index Singapor

593.64

-1.53

-4.42

STOCK EXCH OF THAI INDEX

1435.58

-0.5534889

3.135926

1649.77

1172.92

HO CHI MINH STOCK INDEX

487.22

-0.02667487

17.76279

533.15

372.39

BALLY TECHNOLOGI

57.33

LAOS COMPOSITE INDEX

1288.97

3.596631

6.108148

1455.82

987.62

BOC HONG KONG HO

3.04

-0.9771965

3.6

2.85

GALAXY ENTERTAIN

4.8

-2.804495

20.9068

5.77

2.25

860

INTL GAME TECH

16.57

-0.7189934

16.93719

18.81

10.92

1169774

JONES LANG LASAL

92.39

0.6317395

10.06671

101.46

61.39

94118

LAS VEGAS SANDS

51.79

12.19671

60.54

32.6127

3350307

MELCO CROWN-ADR

21.94

-0.9927798

30.28503

25.2

9.13

3400331

MGM CHINA HOLDIN

2.55

-2.298851

37.83784

2.71

1.36

2700

MGM RESORTS INTE

14.93

0.403497

28.2646

15.95

8.83

2726528

SHFL ENTERTAINME

17.95

-1.047409

23.7931

18.57

12.35

304450

SJM HOLDINGS LTD

2.35

-2.083333

3.178059

2.9481

1.7255

2977

126.14

-0.03170074

12.13441

144.99

84.4902

601348

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

WYNN RESORTS LTD

AUD HKD

USD

14 14

July 5, 2013 April 19, 2013

Opinion

Democracy loses in Egypt and beyond Noah Feldman

Law professor at Harvard University and a Bloomberg View columnist

he framers of the U.S. Constitution feared that democracy could devolve into rule of the mob. Events in Egypt are a reminder of why that concern was justified. Essentially the same prodemocracy activists who enabled Hosni Mubarak to be removed from power in February 2011 have now done the same to his democratically elected successor, Mohamed Mursi. In both cases it was the protesters who made the government vulnerable. And in both cases it was the army that delivered the coup de grace in the form of a coup d’etat. Even acknowledging that Mursi and his Muslim Brotherhood-backed party did a poor job over their year in power, failing to win over opponents or broaden their base of support, the latest coup is a tragic setback for democracy, constitutionalism and the rule of law. The first protests of the Arab Spring were calls to replace a dictator who had no democratic right to govern. The protests were inspiring not just because they said “enough” to a bad system, but also because the protesters aspired to replace that bad system with democracy. Many of the original protesters were themselves secular or wanted a secular government. But by calling for free elections, they opened themselves to the possibility that the majority of Egyptians wouldn’t agree with them. That, in essence, is democracy: The majority gets to choose the government it wishes, subject to the guarantee of minority rights.

the constitutional process were caused in no small part by Mursi’s justified fear that the constitutional court would trigger a military coup by declaring the assembly unlawful. Over time, however, Egyptians who never liked Mursi became impatient. In an astonishing show of bravado, they announced, with plenty of warning, that they were going to begin huge protests on June 30 – essentially advertising their plans to shut down the country and asking the army to intervene. The protests did their work, producing a constitutional crisis that opened the door for the military to declare that Mursi was no longer president and replace him on an interim basis with the head of the constitutional court, whose institution had been in cahoots with the military all along. You might think that replacing an unpopular, Islamist leader with a secular judge is a victory for democracy. It isn’t. In a functioning democracy, there is an orderly constitutional process for protesting and removing a leader. When someone is elected for a

term of years, he should serve them out unless he resigns or is impeached. The popularity ratings of U.S. presidents regularly sink below 50 percent – George W. Bush’s fell into the 20s – but that doesn’t mean they should be removed from office. The president needs a majority only when elected, not at every subsequent moment. This applies to a president who is doing a bad job and even to

a president who is violating the constitution. (Who then, by the way, should be removed by a constitutional process if at all possible.) What distinguishes constitutional democracy from mob rule is that orderly processes are followed. And what distinguishes it from autocracy is that the military doesn’t get to choose who rules. The Egyptian people as a whole are not getting rid of Mursi. The army is, with cover provided by the protesters who lost at the ballot box.

Expect autocracy

The Egyptian people as a whole are not getting rid of Mursi. The army is, with cover provided by the protesters who lost at the ballot box

What will happen next is sadly easy to foresee. A caretaker government will continue to have the strings pulled by the military. Don’t expect elections soon, because it’s entirely possible that the Islamists would win those elections. If there are elections, don’t be surprised if the Islamists are banned from running. Like Iran, Egypt will be an autocracy with elections. Should we expect the Brotherhood to fight back and ignite a civil war? Probably not.

The group has a long history of avoiding violent clashes with the military; it prefers to bide its time and build public support. Still, it’s a sign of Egypt’s newfound volatility that the possibility lands within the realm of reality. Today, the loser is not just democracy in Egypt but democracy itself. Other nations that choose to rise up against illegitimate leaders may want to forgo elections altogether, opting for the guardianship of an army or some other revolutionary vanguard. Or they may embrace the Chinese model, finding its calm, order and authoritarianism more appealing than the wild ride of democratic elections. America’s choice of democracy – a choice we’re in the midst of celebrating – was considered bizarre and unwise by many in its time. Only our Constitution, with its checks on the mob, consolidated democracy and allowed it to become popular worldwide. Today the anti-democrats, past and present, are doubtless feeling self-satisfied with their newly won appeal. Let’s hope the glory is fleeting in Egypt and the world over. Bloomberg View

Legitimate votes When the Islamists were elected by clear majorities in legislative and presidential elections, the secularists didn’t much like it – but at first they accepted the results as legitimate. The constitutional drafting process that followed was truncated and in many ways inadequate, but the constitution that emerged was approved by the public in yet a third demonstration that a majority (if not a large one) accepted the government as democratically legitimate. And indeed, the flaws in

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July 2013 April5,19, 2013

Opinion Business

wires

The resource hope

Leading reports from Asia’s best business newspapers

Straits Times Singapore factories kept bucking the regional trend last month as production ticked up to a two-year high instead of falling. The Purchasing Managers’ Index (PMI), an early indicator of factory activity, rose to 51.7 in June, the highest since April 2011, official data showed. But the latest data also hinted at emerging spots of concern, such as lower new factory orders and rising levels of unsold stock. Manufacturers’ hiring plans also surged to a 12-year high, strengthening expectations that the past three months have seen stronger economic growth.

Times of India Reserve Bank of India governor D Subbarao said that the decision to allow lender to apply for new licences was taken after much debate. “We debated extensively on the matter and the decision to allow corporates to apply for bank licences was done in the national interest,” Mr Subbarao said. “As Indian banks go out and open branches abroad and foreign banks come and set up operations inside the country, there is no way we cannot implement Basel III,” the governor said on the need to implement global norms.

Thanh Nien Daily The Vietnam Steel Association said that the country lost over 3.56 trillion dong (US$167.98 million) to illegal export of iron ore to China in the last two years, but the government has said it cannot confirm the claim. “There is no basis to identify if the information is correct,” the Ministry of Industry and Trade said. According to the ministry, the association calculated the figures based on the discrepancies between iron ore trading figures reported by Vietnamese and Chinese customs in 2011 and 2012.

Jakarta Globe Indonesian car producers are bracing for weaker sales for the rest of the year as the low interest rates and aggressive marketing campaigns that supported double-digit growth in domestic car sales so far this year begin to wane. Domestic car sales rose 12 percent to 601,200 units in the first half this year, according to preliminary data from the Indonesian Automotive Industry Association. Despite recent data, total car sales are expected to remain steady in 2013, matching the result last year, when sales reached an alltime record of 1.1 million units.

Raimund Bleischwitz

Resident Fellow at AICGS/Johns Hopkins University in Washington, DC, Co-Director of the Research Group on Material Flows and Resource Management

at Germany’s Wuppertal Institute

hen a country quadruples its tax revenues in a single year, it is time to take notice. That is the scale of the revenue increase that Ghana achieved from 2010 to 2011, owing to receipts from its extractive industries. Ghana is not alone. Resource-rich developing countries’ rising tax revenues reflect not only higher commodity prices, but also international rules that have improved financial transparency in the oil, gas, and mining industries, reducing opportunities for tax evasion significantly. Such rules also featured high on the agenda of the recent G-8 Summit in Northern Ireland. It is important to appreciate these efforts – and to demand more. International commodity markets are under stress. Since 2000, prices have been on an upward trajectory, with soaring demand only briefly interrupted by the 2008 financial crisis. One apparent consequence is extreme price volatility. Simultaneously, incentives to enter illegal markets are becoming stronger: roughly 20 percent of the world market in coltan – a precious metal used in mobile communications – is illegally traded. More financial transparency is an important step toward better markets and good governance in resource-rich countries, because it means less corruption, fraud, and tax evasion, as well as greater public participation and stronger democratic institutions. Moreover, fair contracts can stabilise income for producer countries. Indeed, a robust extractive industry and investment in sustainable development would boost economic prospects for

the 100 or so resource-rich developing countries and their roughly 3.5 billion people.

Challenges ahead Early milestones in this effort have been impressive. For example, the Extractive Industries Transparency Initiative recently improved its global standard by requiring disclosure of corporate payments and government revenues. Currently, 23 countries are EITI-compliant, including Azerbaijan, Ghana, Iraq, Nigeria and Norway; non-compliant countries’ memberships have been suspended. The reported payments total around US$1 trillion. Likewise, Section 1504 of the United States’ 2010 DoddFrank Act contains rules on transparency in the extractive industry. Companies engaged in the commercial

More financial transparency is an important step toward better markets and good governance in resource-rich countries

development of oil, natural gas, or minerals must submit annual reports to the U.S. Securities and Exchange Commission (SEC) disclosing payments to governments. More recently, the European Parliament earlier this month approved ambitious new transparency rules for the extractive industry (including the forestry sector). With the OECD and the International Monetary Fund, along with many NGOs and voluntary companies, supporting such rules, opponents – such as the American Petroleum Institute, which has filed a lawsuit against the SEC – are unlikely to succeed. In fact, transparency in the resource sector should exceed mere disclosure of payments. Of course, non-compliance remains a significant challenge. It is encouraging that Russia has signed the G-8’s Lough Erne Declaration on transparency in extractiveindustry payments; but major emerging economies’ global market power could continue to hamper international coordination. More important, achieving good governance in emerging economies and developing countries demands a properly functioning fiscal system, legislation that supports a sustainable mining industry, and “inclusive” institutions that promote transparency, participation, and equitable development. Regarding resource use, the challenges lie primarily in the global resource nexus – that is, the interaction between the various resources required to produce fuel and energy feedstock, industrial inputs, and food. The much-discussed energy-water-food nexus applies to mineral resources

and land use as well, forcing extractive industries to address it. According to the G-8 declaration, land transactions should be transparent and respect local communities’ rights, which include water and food security.

Global effort Stronger coordination and leadership on financial transparency and resource use are required, supported by the prospect of reducing dependence on development aid and increasing revenues in resource-rich developing countries. In particular, all financial transactions related to upstream activities in the value chain should be disclosed, including those carried out by state-owned companies and sovereign wealth funds. Downstream, the international markets for recycling and disposal should be included. This would also help to increase resource efficiency. The next step would be to extend transparency to related contracts and public budgets, as well as coordinated efforts to reach out to emerging economies. As for sustainable resource management, the EITI’s stakeholder process could become a powerful tool for promoting national action plans. Similarly, an open, international data portal on resource use should be established to compile core data collected by geological agencies and organisations such as the United Nations Food and Agriculture Organisation and the International Energy Agency, as well as data on environmental pressures from resource use and coefficients for resourceintensive areas of production. Moreover, resource-rich developing countries could introduce extraction taxes and support new fiscal systems that promote high labour standards, poverty reduction, education, research, and innovation. Key flanking initiatives at the international level could include a multi-stakeholder forum for sustainable resource use and an international metal covenant to promote recycling and material-flow management with industry involvement. Over the longer term, the aim should be to conclude an international agreement on resource management. Notwithstanding resourcerich developing countries’ positive prospects, the sustainable management of natural resources, like efforts to promote financial transparency, requires global coordination. © Project Syndicate

July 5, 2013

Closing Egypt new president promises early elections Court deals blow to Turkish state The top judge of Egypt’s Constitutional Court, Adly Mahmud Mansour (pictured), has been sworn in as interim leader, hours after the army ousted President Mohammed Morsi and put him under house arrest. Mr Mansour said fresh elections were “the only way” forward, but gave no indication of when they would be held. Mr Morsi, Egypt’s first freely elected leader, is under house arrest after what he says was a military coup. The army said he had “failed to meet the demands of the people”. The upheaval comes after days of mass rallies against the Islamist president.

A Turkish court has ruled against an Istanbul construction project that triggered nationwide unrest, it has been revealed. The plan to redevelop Taksim Square was blocked by the court in a ruling made on June 8 – as anti-government protests raged. It is unclear why the ruling has only now been released. Mass protests began in late May and continued for much of June. In its verdict, the administrative court said the government’s plan to get rid of Gezi Park – close to Taksim Square – and replace it with a replica of an Ottoman-era military barracks would not serve the public.

ECB holds rates as Euro crisis threatens to return Central bank left interest rates at an historic low level of 0.5 pct

he European Central Bank left interest rates unchanged yesterday and will try to reassure investors rattled by new turmoil in Europe and the U.S. Federal Reserve’s plans to begin winding up its stimulus. The ECB met against a backdrop of political crisis in Portugal that pushed its benchmark bond yields above 8 percent on Wednesday, a spike that stirred angst in financial markets already jittery after the Fed last month set out a plan to exit from its money-printing programme. The tensions there, and in Greece, risk sapping confidence a year after ECB President Mario Draghi imposed some calm by vowing to do “whatever it takes” to save the currency. Despite the tensions, the ECB left its main refinancing rate on hold at 0.5 percent and the deposit rate at zero, as was expected by economists in a Reuters poll. “This was widely expected,” UniCredit SpA economist Marco Valli said. “The focus will now be on Draghi’s words, there is very much a focus on the rhetoric.” An acceleration in euro zone

ECB reduced the main refinancing rate by a quarter point in May

inflation in June and stronger-thanexpected consumer spending in France and Germany reinforce the ECB’s projection for a slow euro zone recovery late this year, leaving it little grounds to justify a rate cut now. Instability in Italy’s ruling coalition and Greece’s scramble to convince its lenders to dole out another tranche of

aid add to the sense of turmoil ahead of the ECB meeting. But with the ECB’s bond-buying programme requiring a country to seek outside help from the euro rescue fund first and be issuing debt regularly on the bond market, none of the euro zone members in trouble qualify for that help, begging the

question what can the ECB do. Mr Draghi said in March that countries hoping to qualify for ECB bond buys through the programme, dubbed Outright Monetary Transactions (OMT), should first have full market access and be able to issue bonds in different maturities – rules which exclude Portugal from the plan for the foreseeable future. Last week, Mr Draghi said ECB policy would remain accommodative and that the bank stood ready to act again if needed. But he added that it has done “as much as it can to stabilise markets and support the economy”, pressing governments to reform. “The challenging balancing act is that he has to talk up the economy, he has to send a clear message to markets that the OMT [bond-buying] plan could still be used, giving financial markets confidence,” said ING Groep NV economist Carsten Brzeski. “At the same time, he has to keep up pressure on governments to continue their reforms. He cannot promise too much, he cannot be too confident because otherwise he would again lower the pressure on governments.” One of the tools the ECB is looking at is forward guidance – to reduce volatility by guiding markets where interest rates will be in future, especially once rates have reached their lowest limit. In his strongest form of guidance so far, Mr Draghi said last week an exit from the ECB’s ultra-loose policy stance was “still distant since inflation is low and unemployment high”. Reuters

Portugal battles to ease crisis Concerns over debt sustainability weigh on Portuguese bonds

n early rebound in Portuguese bonds, driven by government attempts to defuse its political crisis, was short-lived yesterday as investors fretted over the country’s ability to end its international bail out. Two-year Portuguese yields jumped 41 basis points to 5.9 percent as investors sold and five-year yields rose to the psychologically important 7 percent level. Ten-year yields rose 6 basis points to 7.59 percent. Financial market widely consider 7 percent to be unsustainably expensive if they remain for a period of time. Portugal is already subject to a European Union/International Monetary Fund bailout because raising money on regular markets became too pricey. The resignation of two ministers this week, triggering prospects of a new election being fought over continued budget austerity, saw Portugal’s 10-year sovereign yields spike on Wednesday above 8

percent, to near the levels at which it was forced to seek the bailout two years ago. Portugal’s prime minister faced a day of talks aimed at shoring up his coalition yesterday. Pedro Passos Coelho is anxious to keep his conservative partners on board, to defuse a political crisis and avoid the turmoil of an early election. Yesterday’s yield rise was greater in shorter-dated bonds, suggesting investors are concerned about the country’s ability to service its debt and, tentatively, about the potential losses to the private sector should Portugal have to restructure. “The market is very nervous. The rebound was very short-lived [and] the [July 4] U.S. holiday is killing volumes,” one trader said. “They [investors] are worried about political risk in Portugal and a risk of a PSI-type event,” he added, referring to so-called private sector involvement that forced losses on

holders of Greek debt last year. The turmoil in Portugal has dented investor appetite for other lower-rated debt, but Spain easily sold bonds albeit at a higher cost to the sovereign. Madrid raised 4 billion euros

(US$5.2 billion) – at the top end of the target. The new five-year bond attracted bids worth 1.7 times the amount on offer, while demand for a three-year bond was 3.5, higher than this year’s 2.56 average.

The government has faced a wave of street protests over austerity

Reuters