MOP 6.00 Vitor Quintã Deputy editor-in-chief Editor-in-chief Tiago Azevedo Tuesday July 9, 2013
Factories-to-homes plan is thwarted E
Subsidised flat applicants must wait 3 more years
very owner of every floor needs to give consent before old industrial buildings can be converted to ease Macau’s chronic demand for reasonably-priced small flats. That’s proving an impossible barrier for a government scheme to promote such conversions. The real estate industry wants the approval threshold to be reduced to 80 percent of owners. “There are cases where some owners are missing and have gone abroad, so it is difficult to track them down,” Franco Liu Pui Lam, managing director of Savills (Macau) Ltd, told Business Daily. The government said two years ago the scheme could provide 12,000 flats if all 90 industrial buildings eligible were converted. More on page 2
Page 3
Home price woes dampen consumer confidence Page 4
Bend it like Bollywood – Indian tourism in Macau
Year II
Number 322
1
April 19, 2013
Page 6
www.macaubusinessdaily.com
I SSN 2226-8294
Unfinished homes push sales value to 2-year high
Hang Seng Index
The value of homes sold in May was the highest monthly tally since the government first took measures to cool the housing market two years ago. Developers of unfinished high-end housing trying to beat the pre-sales law, which came into effect in June, fuelled the increase. The market for industrial units continued to heat up, with the average price of each property reaching 20.55 million patacas (US$2.57 million).
20660
20588
20516
Page 3 20444
20372
20300
July 8
HSI - Movers Name
Residents lack trust in Florinda Chan: survey
Tax burning holes in smokers’ wallets
Residents’ trust in Secretary for Administration and Justice Florinda Chan has fallen into negative territory, says a public opinion survey released yesterday. The official, under fire over a perpetual lease of burial plots – a process criticised by the Commission Against Corruption – is the least popular among all the government secretaries. Residents had ‘slightly above average’ trust in the administration and Chief Executive Fernando Chui Sai On.
Tobacco imports have almost halved since the tax on tobacco was increased to half a pataca (6 US cents) in 2011. But Legislative Assembly member Ng Kuok Cheong called for a further hike, stressing that the tax is still much lower than in Hong Kong and lower than what the World Health Organization recommends. The Financial Services Bureau promised to study the issue.
Page 4
Page 5
%Day
KUNLUN ENERGY CO
1.65
LENOVO GROUP LTD
1.32
CNOOC LTD
0.46
CHINA RES POWER
0.42
HUTCHISON WHAMPO
0.06
CHINA SHENHUA-H
-2.54
COSCO PAC LTD
-2.71
SWIRE PACIFIC-A
-2.96
SINO LAND CO
-3.22
HANG LUNG PROPER
-3.77
Source: Bloomberg
Brought to you by
2013-07-09
2013-07-10
2013-07-11
26˚ 32˚
26˚ 32˚
27˚ 33˚
2
July 9, 2013
Macau Guia Hill, ZAPE link works starts The three-stage construction works linking the ZAPE district to the Guia Hill including a pedestrian bridge and elevators have already started, the Land, Public Works and Transport Bureau said in a press statement yesterday. The new elevators could be ready by the third quarter of next year while the establishment of a 30-metre pedestrian bridge would be done in the first half of 2014. The bureau adds the tender for the third stage would open later this year. The authorities expect the link to “significantly reduce” the time it takes from ZAPE to Guia Hill.
Factories-to-homes plan thwarted by difficulties It is hard to get permission from the owners to turn industrial space into housing Tony Lai
tony.lai@macaubusinessdaily.com
T
he response to the scheme to convert industrial buildings into residential buildings has been unenthusiastic, because it is difficult for a redeveloper to get consent for conversion from all the owners of space in a building, critics of the scheme say. Property developer Tommy Lau Veng Seng told Business Daily that the delay in passing the bill on the renovation of old districts also hindered the two-year-old scheme. Mr Lau is president of the Macau Association of Building Contractors and Developers and a member of the Legislative Assembly. The government has said it will commission an independent study of the matter. The managing director of Savills (Macau) Ltd, Franco Liu Pui Lam, said: “Since the start of this redevelopment scheme, we have been involved in two projects, but
neither worked out in the end as we got approval from only about 80 percent of the owners.” Mr Liu said the scheme’s requirement that all the owners of space in a building should give their permission for conversion “lacks flexibility”. He said most industrial buildings had many owners, making it even more difficult to get permission. The government said two years ago that it hoped the scheme would provide 12,000 flats if all 90 industrial buildings eligible for conversion were converted. Secretary for Public Works and Transport Lau Si Io admitted on Friday that the scheme was “not so effective”. Mr Lau told reporters that the government would learn from experience and adjust the scheme accordingly. The Land, Public Works and
Transport Bureau said in an email to Business Daily that the government intended to commission an academic institution to carry out a study.
Legally impossible The bureau said the institution would “compile and analyse data on industrial buildings, look into the experiences of other regions, and analyse the impact on industry and community development”. It said the scheme had already been renewed for another year, until April 2014. The government has received nine applications to convert industrial buildings, but none of the applicants has yet come up with a conversion plan. Mr Liu thinks the government should follow in Hong Kong’s footsteps and change the rules to allow conversion if 80 percent of a building’s owners
The government hoped the conversion of industrial buildings would provide 12,000 flats (Photo: Manuel Cardoso)
give their permission. “There are cases where some owners are missing and have gone abroad, so it is difficult to track them down,” he said. He said some owners were unwilling to sell their space as they were still using it for manufacturing. Tommy Lau said reducing the proportion of owners that had to give permission for conversion was impossible until the necessary legislation was enacted. The bill on the renovation of old districts is still going through the Legislative Assembly. The bill would allow the conversion of old buildings if at least 80 percent of the owners gave their permission. Members of the assembly have asked the government to withdraw the bill because they have no time left to pass it. Pending bills will lapse when the assembly is dissolved for elections in September. They must then begin the legislative process from scratch when the new assembly convenes in October. Tommy Lau applauds the government’s willingness to adjust the scheme. Mr Liu said the government had been less active in promoting the scheme than the government in Hong Kong had been in promoting a similar scheme there, and that this was one of the reasons for the unenthusiastic response here.
Riskier investment “Hong Kong has the Urban Renewal Authority, which is responsible for the process of getting the owners’ agreement for the developers,” he said. “The developers here have to do it all by themselves.” The Urban Renewal Authority can use public money for a conversion or act as intermediary in conversions by private redevelopers. Macau Real Estate Association chairman Chong Sio Kin thinks the increase in the price of industrial space in the past few years is another obstacle to conversions. “The owners expect higher returns on their property once they know the government intends to convert their buildings,” Mr Chong told Business Daily. Resales of industrial space are exempt from the special stamp duty. The special stamp duty is a levy of 20 percent on the sale of property if it is sold within a year of being purchased, or of 10 percent if it is sold between one and two years after being purchased. The average price of industrial space rose to 2,300 patacas (US$287.50) per square foot in the first quarter, Centaline (Macau) Property Agency Ltd said in April. Mr Liu said this pushed up costs and meant investment in conversion of industrial buildings into flats was riskier. “The selling price for such flats could reach 5,000 patacas to 6,000 patacas per square foot,” he said. “But is it viable, as the project is in an industrial district?”
33
July 2013 April9,19, 2013
Macau Visitor passport stamps end tomorrow Visitors to Macau will no longer have their passports stamped by border control officers from tomorrow, the Public Security Police announced. Instead they will receive a printed arrival card at all border checkpoints. There will also be no stamping upon departure. The card will carry the visitor’s name, travel document number, arrival date and the date the visitor permitted to remain until. Each card will carry a two-dimensional security label. With the new policy, “immigration clearance will be simplified, inspection accuracy increased and immigration clearance time will be shortened,” the police said.
Home sales hit two-year high Decade-long Developers push through pre-sales in anticipation of new rules Vítor Quintã
vitorquinta@macaubusinessdaily.com
Over 1,000 new or unfinished flats were sold in May, 100 more than in April
T
he combined value of homes sold in May was the highest since the government first took measures to cool the housing market over two years ago. The homes sold in May together fetched 10.6 billion patacas (US$1.3 billion), 4.3 percent more than those sold in April, the Financial Services Bureau said on Friday. This is the highest total since April 2011, just before the government took steps to rein in the housing market. Sales amounted to 19.2 billion patacas in April 2011 as buyers snapped up homes before the property market curbs came into force. The chief executive of Midland Realty (Macau) Ltd, Ronald Cheung Yat Fai, told Business Daily that the increase was due to a buying spree as developers of unfinished high-end housing made “a final push to clear their stock”. They were trying to avoid the requirement, which came into effect in June, that a developer must complete the foundations of a housing development and register it before selling the flats it contains. The numbers back Mr Cheung’s assertion. The May figure for the value of homes sold was driven up by sales of new or unfinished homes, which
amounted to 8.6 billion patacas, 12.4 percent more than in April. Over 1,000 new or unfinished flats were sold in May, 100 more than in April and the most in any month for two years.
Industrial growth In the first five months of this year the value of homes sold reached 40.67 billion patacas, over two-thirds more than in the equivalent period of last year. Macau residents bought most of the real estate that changed hands in May. Non-resident investors bought
MOP20.55 mln Average price of industrial properties sold in May
just 80 of the 2,380 properties sold: 26 flats, 14 shops or offices, and 40 parking spaces or industrial premises. The combined value of industrial space sold rose by 22.1 percent to 842.5 million patacas. The number of industrial premises sold fell to 41 from 56, increasing the average price of each property sold to 20.55 million patacas. The market for industrial space is not covered by the latest curbs on the property market, so demand has grown as investors step in. In October the government expanded the special stamp duty on re-sales of homes to cover offices, shops and car parking spaces, but not industrial space. The special stamp duty is a levy of 20 percent on the sale of a property if it is sold within a year of being purchased, or 10 percent if it is sold between one and two years after being purchased. In March, over 34,000 square feet of industrial space in the Ocean Industrial Centre in Areia Preta was sold for 85.7 million patacas – an average price per square foot of 2,500 patacas, according to Centaline (Macau) Property Agency Ltd. Centaline said rents for industrial space had risen to 6 patacas per square foot from 5 patacas per square foot.
wait for public homes T
he remaining households that applied for subsidised housing in 2005 can finally secure a flat in a new sales round next month but they still have to wait at least three more years for the project completion. The Housing Bureau will put out the complex Edifício do Bairro da Ilha Verde for pre-sales in August 5, providing 2,011 units with either two bedrooms or three bedrooms. “According to the figures we have right now, we evaluate that this subsidised housing project is enough to satisfy the households in the existing list,” said Kuoc Vai Han, acting bureau director, in a press conference yesterday. The bureau data show there were still 2,386 applicants in the waiting list for subisidised homes in or before 2005. Ms Kuoc said that in average only some 70 percent of the applicants turned up to buy the flats in previous sales. The applicants will have to keep waiting before moving in as the project in the northern district of Macau would only be ready by mid-2016. This is the first project launched after the 19,000-public-home plan implemented by former chief executive Edmund Ho Hau Wah. The flats in the five blocks will be sold between 780,400 patacas (US$97,550) and over 1.36 million patacas. The average price will be 1,392 patacas a foot, about 3.13 percent higher than for previous projects, as the income cap for applicants has been raised, the bureau explained. Ms Kuoc also pledged that the government would accept new applications for subsidised homes in the fourth quarter of 2013. T.L.
Over 2,000 affordable units will be built in Ilha Verde until 2015
4
July 9, 2013
Macau Heavy metal hits city’s water supply A main tributary of Xijiang River, Macau’s most important water source, has been tainted by heavy metal, government authorities of Fengkai county in Guangdong province said on Sunday. An initial investigation suggests that the pollutants found in Hejiang River came from upstream, in Guangxi region, said a statement quoted by state news agency Xinhua. The Guangxi government has started an emergency response to ensure safe water supply along the river and its downstream regions. The Macau Maritime Administration told media that drinking water here has not been affected by the pollution.
Residents lack trust in Florinda Chan Trust in embattled secretary falls to a failing level last month, survey says Tony Lai
tony.lai@macaubusinessdaily.com
M
acau residents have “slightly above average trust” in the government and in most top officials, with the exception of secretary Florinda Chan, a survey claims. In the poll conducted by the Macau Polling Research Association the administration scored an average 60 out of 100 points in average while Chief Executive Fernando Chui Sai On got 59.1 points. The association said in a press statement yesterday that 73.2 percent of the respondents said they trusted the government while 67.9 percent had faith in Mr Chui. Such scores, compiled by calling
Consumer confidence takes housing hit China’s worsening economic data shakes confidence in employment here Stephanie Lai
sw.lai@macaubusinessdaily.com
M
acau residents are still wary of making a move to buy a house or splurge in the retail market, as consumer confidence remains far from positive, an index says. According to a report released by the Macau University of Science and Technology yesterday, the overall consumer confidence index was at 87.9 out of 200 points in the second quarter. Scores above 100 points suggest a positive outlook. The index was 3.25 percent higher than a year before, though the figure also shows a slight quarterly drop of 0.33 percent. The university said it conducted interviews with 1,033 residents and takes on the city’s economy, employment status, price level, quality of life, home purchase and stock purchase. Confidence in home purchase remains the lowest and continued
to drag down the overall index in the second quarter, noted Chan Lai Kow, director of the Institute for Sustainable Development and the index’s leading researcher. The confidence index in home purchase reached 49 points in the second quarter, down by 2 percent from the previous three months. In the same period similar studies carried out in mainland China and Hong Kong have shown a quarterly rebound by about 3 percent in home purchase confidence.
“But it is still a major factor dragging down the overall consumer confidence index.” Year-on-year inflation fell to 4.84 percent in May, the lowest in 27 months, official data show. Employment status continued to set the highest confidence level but
up residents during the JanuaryJune period, were “slightly above average”, said the association. Trust in the government and in the chief executive also rose from the same period of last year, when it was at 69.3 percent and 62.9 percent respectively. The association did not disclose how many residents it interviewed. The poll results also show Ms Chan, Secretary for Administration and Justice, only scored an average of 50 points in the past six months. Her marks even plunged to 46 points last month, the lowest since the association began to compile data for the city’s five secretaries in November. Ms Chan has been under fire due to her ties to the perpetual lease of burial plots that the Commission Against Corruption said seemed “tailormade” for an advisor of Ms Chan. The issue prompted a 200-people march on June 30 asking for her resignation. Secretary for Transport and Public Works Lau Si Io had the second lowest score with 54.5 points while Secretary for Social Affairs and Culture Cheong U had the highest at 62.2 points. The association said residents were “confident” over the city’s growth as the economic confident index mostly stayed above 60 points in the past six months.
it fell by 2.6 percent, for the first time in a year, to 123 points in the second quarter. “China’s slower economic growth in the second quarter has a slight influence contributing to the drop in employment index as people perceived it might affect business here,” said Mr Chan. “But the employment index still remained at a very high level in Macau and it is less buoyed by seasonal factors than in neighbouring regions,” he added. The consumer confidence has also seen a more “cautious outlook” with a slight quarterly drop of 1.7 percent to 112.7 points in the second quarter. Macau residents are more wary of investing in the stock markets, with the stock purchase index seeing a slight quarterly drop of 0.5 percent to 85.1 points In the same period the mainland experienced a much more dramatic quarterly drop of 11.3 percent to only 65.3 points.
Slower economy Price level was the second lowest confidence index but it rebounded by 4.4 percent to 59.3 points in the second quarter this year. This rebound “has shown that consumers expected the inflation pressure has somewhat alleviated a bit in the second quarter,” said Mr Chan.
Residents believe inflation has eased in the second quarter, said Chan Lai Kow (right)
5
July 9, 2013
Macau
Higher tax halves cigarette imports A Legislative Assembly member says the tax is still not high enough Stephanie Lai
sw.lai@macaubusinessdaily.com
T
obacco imports have tumbled since the tax on tobacco was increased in 2011, the Financial Services Bureau has said. “After the imposition of the adjusted tobacco tax in late 2011, 705 million cigarettes were imported into Macau in 2012,” Financial Services Bureau director Vitória da Conceição said in reply to a written inquiry by Legislative Assembly member Ng Kuok Cheong. “The figure was almost half the amount imported in 2011, when 1.37 billion cigarettes were imported into Macau,” Ms Conceição said. “The amount of cigars imported into Macau in 2012 was 18,000 kg, a drastic drop from the 61,000 kg imported in 2011.” From 1986 to May 2009, the tobacco tax was just 5 avos (0.6 U.S. cent) per cigarette, or about 6 percent of the retail price at the time, Health Bureau data show. The tax was then raised to 20 avos. Since December 2011 it has been 50 avos. In his inquiry, Mr Ng said the tax rate was still too low. “Macau’s tobacco tax level is still lagging far behind Hong Kong’s,” he said.
In Hong Kong the tobacco tax is HK$1.70 per cigarette. “Macau’s tax rate is not even 30 percent of Hong Kong’s,” Mr Ng said. The World Health Organisation recommends that tax should account for at least two-thirds of the retail price of tobacco products. In Macau, tax accounts for 40 percent of the retail price. Ms Conceição did not say when the tobacco tax might be raised. “Macau Economic Services will keep a close watch on imports and sales of tobacco,” she said. “They will also continue the dialogue on the tax rate issue with the Health Bureau,” she said. “We will review when and by how much the tobacco tax should be raised in order to help curb smoking.” Tobacco wholesalers and retailers told Business Daily in February that the tax increase had made smokers turn to cheaper cigarettes sold on the black market in mainland China. Macau Customs seized more than 810,000 cigarettes that people were trying to smuggle in through the border crossings last year. They seized 440,000 in 2011. In May customs seized the largest
The tobacco tax was last raised in 2011, to 50 avos per cigarette (Photo: Manuel Cardoso)
amount of smuggled tobacco they had found since the handover. They found over 4,300 kilograms of shredded tobacco worth over 3 million patacas in a container of food
aboard a boat. The government estimated that this was enough to make 4.9 million cigarettes, which could have brought in tax revenue of 2.4 million patacas.
66
July 9, 2013 April 19, 2013
Macau Medical Council set up today Starting today Macau has created a Medical Council, which will oversee the accreditation of the qualifications of health professionals and outside doctors seeking to open a private practice. The creation of this body – originally slated for the end of 2011 – was published in yesterday’s Official Gazette. The council will include 43 members, namely Western medicine practitioners, dentists, traditional Chinese medicine doctors, pharmacists, senior health technicians, diagnosis and therapy technicians and nurses. The government said the council could also prepare an ethics code for healthcare services in the future.
Bend it like Bollywood
HSBC bets further on the mainland T
The Indian film industry’s second jamboree at The Venetian Macao could benefit both sides Michael Grimes
michael.grimes@macaubusinessdaily.com
he Hongkong and Shanghai Banking Corporation (HSBC) is increasing strategic focus on mainland China and its effort to tap the developing offshore yuan market, Fitch Ratings said. The agency warned however that the bank’s exposure to riskier Chinese assets and to Hong Kong’s volatile housing sector could become an issue. HSBC recently issued yuandenominated debt for the first time in Singapore, as well as bonds in Japan. Fitch gave this debt a rating of ‘AA-’, the agency’s fourth-best rating. In a statement released yesterday, Fitch said the decision to issue 500 million yuan (650.6 million patacas) notes in Singapore “underlines” HSBC’s bet on the Chinese currency. “The bank’s concentrations on [mainland] China and its exposure to Hong Kong’s cyclical property market” could become weaknesses, the agency warned. “A stronger-than-expected impact from China’s economic slowdown” would lead to a “worsethan-cyclical” drop in the value of HSBC’s assets, Fitch wrote. On the other hand the bank has enough strengths to counterbalance these risks, namely its “robust liquidity, strong franchise and prudent risk control,” the statement added. HSBC also has operations in Macau, whose profits rose 29 percent last year to 319.3 million patacas (US$40 million), the branch said in late May. However, the group said in April it is disposing of its general insurance business in Macau. It will be acquired by QBE Insurance (International) Ltd, a unit of Australian insurer QBE Insurance Group Ltd. V.Q.
HSBC’s Macau branch saw its profits rise by 29 percent last year
Indian actor Shahid Kapoor at the IIFA 2013 in Macau
I
f the story of the Indian tourism market to Macau were turned into a Bollywood film it would still be searching for a happy ending in the third act. The opening two acts were impressive. Indian traveller numbers to Macau rose from only 10,000 in 2003 to 170,000 in 2011 according to Macau Government Tourist Office. But last year the trade seemed to hit a wall. Numbers dipped to just under 151,000; an 11 percent contraction year-on-year according to government data. Raja Natesan, chief operating officer of TUI India, a firm specialising in outbound package tours for Indian customers, said: “The leisure outbound travel market took a double hit in 2012 with the depreciating rupee and rising air fares. There was a combined hit to the pocket of anywhere between 18 percent and 40 percent when compared with 2011.” Since 2012 economic conditions in India have eased, and Air India – which last year stopped flying to Hong Kong – has also made something of a comeback. From June 25 it returned to the market with new, fuel efficient, Boeing 787 aircraft and a four times weekly Delhi-Hong Kong-Seoul service and back, and from June 26 a three times weekly Delhi-Hong Kong-Osaka run and back.
In the January to May period this year, the slide in Indian arrivals to Macau had slowed, with the year-onyear contraction down to 1.3 percent, and a cumulative total for the year of 62,233. Last week MGTO identified Kolkata in the east of the country as a new target market for Macau. There are currently no direct flights from India to Macau, although SpiceJet Ltd, India’s third-largest airline by market share, said in November it had been granted permission in principle to fly between New Delhi and Macau.
Diversifying markets It’s against all this background that The Venetian Macao welcomed back the International Indian Film Academy at the weekend for its 14th annual awards ceremony. There’s evidence it benefits both sides. Bollywood is looking to sell more tickets and digital products to overseas fans, and Macau wants to diversify its market beyond day tripping mainland Chinese visitors. A report by the Confederation of Indian Industry and financial services firm PwC last year, suggested overseas revenues for the Indian film industry could grow by 65 percent from 8.5 billion rupees (US$140 million) to 13.8 billion rupees annually by 2016. The last time the IIFA was a guest
of Sands China Ltd in June 2009, the Macau government didn’t keep separate data on Indian visitors, instead consolidating them under the heading ‘South Asia’. There was however a 31.2 percent year-onyear spike in South Asia visitors for June 2009, while every other visitor nationality showed a contraction – mostly in double digits, because of the global financial crisis. “Before IIFA, not many [Indian] people knew about Macau,” says Aruna Jha, owner of the Aruna Maharaja Indian Curry restaurant chain in Macau. Indian visitors spoken to by Business Daily at The Venetian yesterday cited family holidays rather than Bollywood glamour as the reason for visiting; but the presence of stars was a bonus. “This is our first time visiting Macau and we like The Venetian very much,” said Elesh, a businessman in his 30s from Delhi visiting with his wife Arti and their two children. “We like the fact there’s everything under one roof; the hotel, the shopping, things for the children. We haven’t been anywhere else yet.” None of the Indian tourists we spoke to cited gambling as a draw. But consultancy firm KPMG estimated that US$60 billion was wagered in the country in 2010 – mostly on unregulated sports betting.
77
July 2013 April9,19, 2013
Macau Galaxy grants share options One fifth of new share options announced by casino operator Galaxy Entertainment Group Ltd are going to three members of the family that founded the business. Of the 2,436,000 share options granted, 486,000 are to be divided between the chairman Lui Che Woo, his son the vice chairman Francis Lui Yiu Tung, and his daughter executive director Paddy Tang Lui Wai Yu, according to a Hong Kong filing. The shares have an exercise price of HK$37.45 (US$4.83). The options are valid until July 4, 2019, and will be vested in three tranches.
MGM China outperforming: analysts On ‘fair share’ relative to equipment, single peninsula venue is ahead in revenue race Michael Grimes
michael.grimes@macaubusinessdaily.com
M
GM Macau is outperforming in VIP and mass-market gaming table revenue and also slots, based on a ‘fair share’ analysis, says a note from Union Gaming Research Macau. The research house says that according to its own data – and figures from the government and the operator MGM China Holdings Ltd – in the first quarter MGM Macau had 218 VIP tables out of a market total of 2,360 VIP tables. That is 9.2 percent of Macau’s VIP tables. But the revenue the casino generated from those tables – HK$5.51 billion (US$710.50 million) – was actually 9.8 percent of the market’s total of HK$56.13 billion for the quarter. In other
words MGM Macau’s VIP segment generated a 60 basis points premium to its fair share of tables, says Union Gaming. In the mass-market live dealer segments, MGM Macau had 6.2 percent of the market’s tables estimates Union Gaming, but seven percent of the market revenue, an 80 bps premium relative to its fair share, suggests the research house. In the slots segment, MGM Macau – a single property on the peninsula – had a fair share premium even bigger, at 930 bps. That’s based on 7.6 percent of the market’s slot machines versus a 16.9 percent share of Macau’s slot revenue. Union Gaming adds that with no new casino capacity expected in
the market for at least 18 months, that could create in effect a buyer’s market for the casinos in general and MGM Macau in particular when it comes to negotiating deals with junket operators and boosting yield. Union Gaming states: “MGM Macau is in a position to adjust its portfolio of junket operators given ongoing demand from junket operators looking for space (new or incremental) at the property. This should put MGM Macau in a position to implement certain thresholds (e.g. minimum expected rolling chip volumes) that allow it to achieve gaming volumes that are at least inline with our expectations.” Karen Tang of Deutsche Bank said in a note last week: “By now,
it is widely recognised that MPEL’s [Melco Crown Entertainment Ltd’s] City of Dreams had surpassed Wynn [Macau] in mass table yield since 4Q, thanks to the former’s focus on premium mass. But we think the market has yet to realise that, in 2Q13, even MGM and Galaxy Macau had seen their mass table yield surpassing Wynn.”
88
July 9, 2013 April 19, 2013
Greater China Zoomlion expects profit to rise Zoomlion Heavy Industry Science & Technology Co, China’s second-largest maker of construction gear, expects to increase profit this year as it boosts sales of environmental machinery and equipment. Zoomlion plans to increase revenue from environmental machinery and equipment to as much as 4 billion yuan (US$652 million) annually from more than 1 billion yuan at present after it opens an industrial park in the second half of the year, vice president Sun Changjun said.
Leaders focused on slower but better-quality growth
HTC falls after missing estimates HTC Corp, the Taiwanese smartphone maker, posted second-quarter profit that missed analyst estimates as the release of its flagship One handset failed to reverse a slide in sales. Net income fell to NT$1.25 billion (US$42 million) in the three months ended June, the company said. That’s down 83 percent from a year earlier. The stock dropped as much as 6.90 percent to NT$189 in Taipei yesterday, the lowest since November 2005.
Ex-rail chief given suspended death sentence China’s former railway minister was given a suspended death sentence for abuse of power and taking bribes, becoming one of the highest-level officials to be punished amid a Communist Party crackdown on graft. Liu Zhijun, 60, will be deprived of political rights for life and have all of his personal property confiscated, the official Xinhua News Agency said yesterday. Mr Liu was accused of accepting bribes totalling over 64 million yuan (US$10 million) over 25 years.
GDP data to test resilience for weaker growth Growth slowing as weak demand dents output and investment, analysts say Langi Chiang and Koh Gui Qing
C
hina’s resolve to revamp its economy for the long-term good will be tested this month when a slew of data show growth is grinding towards a 23-year low, with no recovery in sight. The median forecast of 21 economists polled by Reuters show China’s economy likely grew 7.5 percent between April and June from a year ago, slowing from the previous three months as weak demand dented factory output and investment growth. Growth prospects for the rest of the year look even grimmer if last month’s unprecedented money market crunch, which saw short-term interest rates spike to record highs, eventually feeds into the real economy through higher lending rates.
Firms burdened by higher borrowing costs could shed jobs in coming months, analysts say, lifting unemployment that is a decisive factor in Chinese policymaking. Chinese leaders, President Xi Jinping and Premier Li Keqiang, have flagged for some time that the rapid GDP growth of the past three decades needs to shift down a gear as the economy moves towards consumer-led expansion. Beijing has consequently resisted so far taking policy action to boost the economy, opting instead for slower but better-quality growth not reliant on extravagant investment funded by debt. But things could change, especially as China’s labour market betrays signs of its first crack.
“As China sticks to reform, the downward pressure on the economy will increase,” said Jianguang Shen, chief China economist with Mizuho Securities Asia in Hong Kong.
KEY POINTS China Q2 GDP seen down to 7.5 pct June factory output seen at 9.1 pct Growth in exports, imports seen picking up
Yuan drop seen by top forecaster China’s yuan will weaken in the remainder of 2013, after a world-beating run in the past five years, as a slowing economy damps demand for the nation’s stocks and bonds, according to the most-accurate forecaster. The currency will slip 0.02 percent to 6.14 per dollar, according to Westpac Banking Corp, which had the best estimates for the last four quarters as measured by Bloomberg Rankings. The yuan has rallied 12 percent in the past five years, the most among 31 major currencies.
New bribery allegations hit GSK China-based staff of GlaxoSmithKline Plc allegedly handed doctors with cash and other rewards for prescribing Botox, according to the Wall Street Journal, in the latest scandal to hit the British drugmaker which is under investigation for economic crimes. “We are investigating these new claims. However, our inquiries to date have found no evidence of bribery or corruption in relation to our sales and marketing of therapeutic Botox in China,” the WSJ quoted a company spokesman as saying.
Credit growth may be drained of 750 bln yuan Beijing seen blowing Vietnam-sized hole in 2013 credit
C
hina’s money-market cash squeeze is likely to reduce credit growth this year by 750 billion yuan (US$122 billion), an amount equivalent to the size of Vietnam’s economy, according to a Bloomberg News survey. The number is the median estimate of 15 analysts, whose projections last week ranged from cuts of 20 billion yuan to 3 trillion yuan. The majority of respondents also said they approve of the government’s handling of the credit crunch and said the episode reinforces their expectations for policy reforms such as loosening controls on interest rates. June credit data due as soon as this week will give investors clues to how much the cash squeeze, which sent
interbank borrowing costs soaring to records last month, is affecting the economy. Whether a slowdown extends into the second half may hinge on how effectively Premier Li Keqiang can redirect funding after his clampdown on speculation. “The liquidity crunch has increased downside risks,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong, who estimates it will reduce aggregate credit by 1.8 trillion yuan this year. “As long as policymakers cushion the impact through fiscal and exchange-rate measures, the damage to the economy could be quite modest.” The effects of the cash crunch may be evident in June data from the
People’s Bank of China. Estimates of eight analysts for aggregate financing, the government’s broadest measure of new credit that includes bond sales, entrusted loans and bankers’ acceptance bills, range from 1 trillion yuan to 1.6 trillion yuan, compared with 1.78 trillion yuan a year ago. New local-currency loans probably fell to 800 billion yuan, according to the median projection of 36 economists, from 919.8 billion yuan in June 2012. Mr Kuijs forecasts full-year aggregate financing of 20.3 trillion yuan, after last year’s 15.8 trillion yuan. Companies and local governments at the financial system’s “margin” will find it more difficult and expensive to
99
July 2013 April9,19, 2013
Greater China “Rising unemployment and bad loans will be inevitable.” The world’s No. 2 economy grew 7.7 percent in the first three months, and Beijing hopes 2013 growth could hit 7.5 percent, the slowest in 23 years for China. The gross domestic product report, due on July 15, will be preceded by trade and inflation data, with the latter, today, likely to show lacklustre demand capping price pressures. Consumer inflation is expected to quicken to 2.5 percent in June, well below the central bank’s 3.5 percent target for 2013, and also below benchmark one-year deposit rates of 3 percent. Inflation had ran at 2.1 percent in May. In a sign of the tough times ahead for firms, producer prices are forecast to drop for the 16th consecutive month, falling 2.7 percent in June, compared with May’s 2.9 percent drop.
Too optimistic China’s factories have been hammered in the past year by poor demand and excess capacity, especially among solar makers, ship builders and steel makers. Analysts say some have resorted to cutting prices to raise sales, but with little success. Trade data, due tomorrow, is forecast to show an improvement in both imports and exports compared with May, but in a feeble rebound not expected to herald a solid revival. Exports are projected to have grown 4.0 percent in June from a year earlier, while imports are seen rising 8.0 percent. A labour sub-index in a government survey of factories also showed employment contracted for the 13th straight month in June, although other official data showed job supply in cities still outstripped demand in the first quarter. “Just a month ago, we were still expecting a mild recovery this year,” said Xu Gao, an economist with Everbright Securities in Beijing. “But the key assumption that the government will increase investment to stabilise growth has proven to be wrong. Just where is the government’s tolerance for slower growth? We still need to watch for that.” Initial predictions that China’s
As long as policymakers cushion the impact through fiscal and exchange-rate measures, the damage to the economy could be quite modest Louis Kuijs, chief China economist, Royal Bank of Scotland
Release of PMI details suspended Beijing suspended the release of industry-specific data from a monthly survey of manufacturing purchasing managers, with an official saying there’s limited time to analyse the large volume of responses. “We now have 3,000 samples in the survey, and from a technical point of view, time is very limited – there are many industries, you know,” Cai Jin, vice president of the China Federation of Logistics & Purchasing, which compiles the data with the National Bureau of Statistics, told reporters. The disappearance of data on industries including steel adds to issues hampering analysis of the world’s second-biggest economy, after fake invoices inflated trade numbers this year. Neither the federation’s nor the statistics bureau’s statement on the manufacturing Purchasing Managers’ Index last week gave readings on export orders, imports and finished-goods inventories or an explanation for the omissions. “Suspension of the monthly data, without prior notice, makes the research work difficult for us,” Xu Xiangchun, a steel researcher and chief analyst at Mysteel.com, said by phone from Beijing. “The random absence of official data is disorienting.”
economy was set for a gentle recovery in 2013 have proven wildly optimistic. After slashing their forecasts, some analysts now believe China could miss its official growth target for the first time ever in 2013. A Reuters poll showed growth in factory output probably slipped to 9.1 percent in June from May’s 9.2 percent, while fixed-asset investment slowed to 20.2 percent in the first half of the year, from a rise of 20.4 percent in the first five months. “Despite recent signs of bottoming out in domestic activity, the growth outlook remains fragile,” said UBS AG chief China economist Wang Tao in a note to clients. Reuters
get credit, said Mr Kuijs, previously a World Bank economist in Beijing. Local government investment projects and small companies “are going to be the hardest hit by a clampdown on financial activity,” he said. Yao Wei, China economist at Societe Generale SA in Hong Kong, projected the biggest impact on credit, cutting her estimate for the year to 19 trillion yuan from a presqueeze 22 trillion yuan. “Credit growth has been accelerating without much GDP, so it could also be the case that 3 trillion yuan may not mean much in terms of real growth if it’s just cutting speculative lending,” Ms Yao said. The cash squeeze has eased since interbank borrowing costs reached records on June 20, with China’s money-market rate declining for a second week on speculation the PBOC injected funds into select banks. The sevenday repurchase rate dropped 236 basis points, or 2.36 percentage points, to 3.81 percent. Bloomberg News
Rongsheng too big to fail, experts say Company could be largest casualty amid a global shipping downturn
A
n appeal for government financial support from China’s biggest private shipbuilder presents authorities with some stark choices between protecting a big employer and its jobs or letting the firm go under to ease pressure on a sector suffering from overcapacity and sharply falling new orders. Since Beijing appears intent on telling investors it is serious about changing the investment-led growth model of the world’s second-biggest economy and controlling a credit splurge, it may seem like the writing is on the wall for China Rongsheng Heavy Industries Group. Yet analysts say the government is more likely than not to judge that Rongsheng, which employs around 20,000 workers and has received state patronage, is too big and well connected to fail. Supporting Rongsheng will not mean economic reform plans are derailed, they say. Instead, it will mean reforms will be gradual and the government will cherry-pick firms it wants to support, which will exclude the small, private shipbuilders that have been folding in waves. “Rongsheng is a flagship in the industry,” said Lawrence Li, an analyst with UOB Kay Hian in Shanghai. “The government will definitely provide assistance if companies like this are in trouble.” Analysts say Rongsheng is possibly the largest casualty of a sector that has grown over the past decade into the world’s biggest shipbuilding industry by construction capacity. Amid a global shipping downturn, new orders for Chinese builders fell by half last year. In Rongsheng’s case, it won orders worth US$55.6 million last year, compared with a target of US$1.8 billion. Rongsheng appealed for government aid on Friday, saying it was cutting its workforce and delaying payments to suppliers to
deal with tightened cash flow. It also called on its shareholders for financial help and said it was in talks with banks and other financial institutions to renew existing credit lines. Its 2012 annual report shows its short-term borrowings were about eight times bigger than its cash and cash equivalents. It flagged losses for the first half of 2013, having posted an annual net loss in 2012 of 572.6 million yuan (US$93.47 million), its worst on record. Annual reports show that Rongsheng has received state subsidies since 2010, when it listed in Hong Kong. The company said it got state funds of 830 million yuan in 2010, 1.25 billion yuan in 2011, and 1.3 billion yuan in 2012. Experts say Rongsheng’s strong networks suggest the local governments will not let it fail, even if Beijing does not approve of a bailout. After all, local government coffers will suffer the biggest blow if Rongsheng goes bust. The firm had 168 million yuan of deferred income taxes in 2012. Reuters
US$55.6 mln
Value of Rongsheng’s orders last year
Cash squeeze has eased since the June 20 record
10 10
July 9, 2013 April 19, 2013
Asia Asiana slumps after plane crash Asiana Airlines Inc, South Korea’s second-biggest carrier, slumped the most in almost 19 months in Seoul trading after its worst plane crash in two decades. The carrier dropped 5.8 percent, the most since December 19, 2011, to close at 4,825 won after falling to a three-year low. The stock has declined 22 percent this year, compared with a 9 percent decline in the benchmark Kospi index. Two people died and more than 300 escaped, some sliding down emergency exits, before a fire swept through Asiana’s Boeing Co. 777 plane while landing in San Francisco on Saturday.
S&P cuts SoftBank rating to junk SoftBank Corp, led by billionaire Masayoshi Son, had its credit rating cut to junk by Standard & Poor’s after winning approval from the U.S. Federal Communications Commission for its US$21.6 billion bid to buy Sprint Nextel Corp. The rating was cut to BB+, the highest non-investment grade, from BBB, with a stable outlook, S&P said in a statement yesterday. “Sprint Nextel’s exposure to intense competition in the U.S. market is unlikely to subside substantially in the next two to three years,” S&P said in the statement. Still, “we expect its operating performance to improve gradually, in part reflecting cost reductions and other merger benefits.”
Nikon president eyes smartphone users Nikon Corp is looking at ways to tap smartphone growth as a slump in compact camera sales may lead to weaker-than-forecast earnings. Pointand-shoot camera sales across the industry dropped about a quarter in April and May from a year earlier, president Makoto Kimura said, citing third-party research. “The number of people taking snapshots is exploding by use of smartphones that sold 750 million or so last year and are still growing,” Mr Kimura said. “We’ve centralised our ideas around cameras but can change our approach to offer products to that bigger market.”
Tanaka gold sales may exceed buying Tanaka Kikinzoku Kogyo K.K., Japan’s biggest bullion retailer, said sales to local investors may exceed purchases this year for the first time since 2004 as lower prices and the yen’s weakness spur buying interest. “Japanese individuals are thinking of gold as an asset for their investment portfolio as well as insurance for the future,” said Kate Harada, general manager of the precious metals department at Tanaka Kikinzoku, a unit of Tanaka Holdings Co. “A growing number want to use gold partly to hedge against their yen-based assets such as stocks and properties.”
Japan mergers fall to nine-year low Acquisitions to recover as companies make adjustments to cope with weaker yen
Mitsubishi Corp announced the most deals in the first six months
J
apanese companies made the fewest acquisitions in a decade during the first half as the yen’s volatility climbed to a four-year high, cooling buying interest. The number of deals announced in the first half of 2013 was 997, with a total value of US$45.7 billion, according to data compiled by Bloomberg. That’s the lowest number of deals and value since the first six months of 2004. Total deal value is 47 percent lower from the first half of 2012. Since Prime Minister Shinzo Abe swept into power in December on promises to resurrect the economy by expanding stimulus measures and weakening the yen, the Japanese currency has whipsawed between 82.36 yen and 103.21 yen to the
dollar. The yen’s 100-day volatility rose to 14.81 points in July, the highest since August 2009, and more than double the 6.97 figure at the start of the year. “Companies had set their budgets for the year as of April-May under certain assumptions, but they’re not sure they will hold,” said Nobuhisa Ishizuka, a Tokyo-based partner specialising in mergers at Skadden, Arps, Slate, Meagher & Flom LLP. “This makes it difficult for a lot of them to pull the trigger.” Currency options show volatility in the yen is set to continue, which could force companies to cut the size of deals or delay them. JPMorgan Chase & Co.’s Group of Seven Volatility Index, based on currency-
US$45.7 bln
Total value of mergers announced in the first half of 2013
Rupee plunges to record low Indian currency likely to remain weak after U.S. jobs data
I
ndia’s rupee fell to a record after a U.S. jobs report showing companies hired more workers than economists forecast added to the case for the U.S. Federal Reserve to reduce monetary stimulus. The currency dropped the most in almost two weeks as U.S. payrolls rose by 195,000 workers for a second month in June, the Labor Department reported in Washington, exceeding the 165,000 median estimate in a Bloomberg survey. The Dollar Index, which tracks the greenback against six major trading partners, rose to the highest level since July 2010. Global funds have pulled US$7.6 billion from Indian bonds since holdings touched an all-time high on May 21. “The data could lead to outflows from all emerging markets,” said Vikas Babu, a trader at state-run Andhra Bank in Mumbai. “The
central bank could come in and intervene to protect key levels.” The rupee fell 1.2 percent to 60.965 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It dropped as low as 61.2125, passing the previous record of 60.7650 on June 26. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 61 basis points, or 0.61 percentage point, to 13.42 percent and touched 13.48 percent, the highest level since June last year. Fed chairman Ben S. Bernanke signalled last month that the central bank’s asset-buying programme could be tapered should the job market continue to improve. The unemployment rate held at 7.6 percent in June, near a four-year low. The rupee pared yesterday’s losses on speculation the central
bank sold dollars in the market to slow the local currency’s slide, two traders said, asking not to be identified as the information isn’t public. Any dollar sales by the Reserve Bank of India will be aimed at reducing market volatility, rather than supporting the exchange rate as the rupee’s slide is in line with losses in other currencies, according to Barclays Plc. Seventeen of 24 emerging-market currencies fell against the dollar yesterday, with the rupee leading declines. The yield premium on 10-year Indian sovereign bonds over similarmaturity U.S. Treasuries has slid 133 basis points from this year’s high of 622 on April 5. “The RBI is definitely concerned about rupee weakness,” said Nick Verdi, a strategist at Barclays in Singapore. “It will look to
11 11
July 2013 April9,19, 2013
Asia Current account surplus jumps in May Japan’s current account surplus rose 58.1 percent in May from a year earlier, Ministry of Finance data showed yesterday, in a sign that recovering exports and hefty gains from overseas investments helped the nation’s balance of payments. The rise compared with a median forecast by economists for a 77.9 percent increase. The surplus stood at 540.7 billion yen (US$5.36 billion), against a median forecast for 608.5 billion yen, and followed a 750 billion yen surplus in April.
option premiums, climbed to 11.96 percent on June 24, the highest since January 2012.
Smaller size
Indexes this year, tumbling 9 percent. Stoked by the yen’s stability and strength in recent years, companies across Japan’s industries had stepped up acquisitions overseas. The total number of domestic and overseas acquisitions announced by Japanese companies in the first six months of last year was 1,167, the data show. The total deal value was US$85.5 billion, according to the data. Overseas mergers and acquisitions by Japanese firms fell to US$10.6 billion this year from a record US$112 billion for all of 2012, the data showed. Mitsubishi Corp, the nation’s biggest trading house, announced the most deals in the first six months with 12, data show. The biggest transaction proposed was the US$3.25 billion merger of the thermal power units of Hitachi Ltd and Mitsubishi Heavy Industries Ltd. Japanese acquisitions abroad will recover in the second half as companies make adjustments to cope with the weaker yen, said Yuichi Jimbo, head of investment banking at Citigroup Global Markets Japan Inc in Tokyo. The bank has some deals that may be announced before year-end, he said in June. Bloomberg News/Reuters
Marubeni Corp, Japan’s sixthmost acquisitive company in the last five years, last month cut the size of its purchase to buy U.S. grain trader Gavilon Group LLC by US$1 billion from the US$3.6 billion announced in May 2012 by excluding the energy unit from the final agreement. The trader said July 6 that it paid US$2.7 billion for Gavilon in the end because of a “purchase price adjustment,” without providing details. Masami Iijima, chief executive of Mitsui & Co, Japan’s most acquisitive company in the last five years, said in May the trading house doesn’t plan any major acquisitions that are “significant in size”. The Tokyobased trader will focus on expanding existing assets as slowing Chinese economic growth cooled demand for commodities, Mr Iijima said. The yen has a 49 percent chance of strengthening to 95 and a 48 percent chance of weakening to 105 within the next three months, according to Bloomberg data based on options pricing. The yen was the worst performer among the 10 most-traded currencies in Bloomberg Correlated-Weighted
Bank lending hits 4-year high Bank lending in Japan marked its biggest annual increase in four years in June, suggesting the central bank’s aggressive monetary stimulus and brightening economic prospects are spurring fund demand for fresh investment. Outstanding loans held by Japanese banks rose 1.9 percent in June from a year earlier, Bank of Japan data showed yesterday, marking the 20th straight month of increase and posting the biggest gain since July 2009. “The recent increase in demand for funds is related to mortgage lending and the housing market,” said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
The data could lead to outflows from all emerging markets. The central bank could come in and intervene to protect key levels Vikas Babu, trader, Andhra Bank
combat this mostly through verbal intervention” and “moves to discourage speculation,” he said. The RBI, concerned about the fastest growth in currency
derivatives trading in more than three years, is asking overseas funds to prove they aren’t speculating on the rupee. Bloomberg News
South Korea to ease liquidity crunch S
outh Korea will provide as much as 6.4 trillion won (US$5.6 billion) of refinancing support for the nation’s corporate bond market as yields surge to the highest in more than 10 months and debt offerings dwindle. The nation will issue so-called primary-collateralised bond obligations to provide more liquidity in the market, the Financial Services Commission said in an e-mailed statement. The securities will be backed by an 850 billion won guarantee using funding from the government and central bank, it said. Benchmark yields for three-year AA-rated corporate notes surged 10 basis points to 3.51 percent today, the highest since August 20, according to data from the Korea Financial Investment Association. The interest rates climbed from a record-low 2.80 percent reached in March as the U.S. Federal Reserve signalled plans to dial back record stimulus, spurring a rout across global bond markets. “This is a pre-emptive measure in a bid to prevent a possible bond market crisis that may occur when the U.S. reduces liquidity and other countries see more economic and financial market volatility,” Jeong
Chan Woo, FSC vice chairman, told reporters in Seoul yesterday. The aid package seeks to bolster funding for companies facing a financing squeeze as growth in Asia’s fourth-biggest economy slows. Industries including construction, shipbuilding and shipping suffered liquidity problems this year, with investors wanting to redeem debt outnumbering those willing to buy it, according to the FSC. “The amount the government is offering seems to be enough to help the issuers with riskier bonds that may mature at the end of this year, and support struggling sectors,” said Park Cheong Ho, a credit analyst at Dongbu Securities Co in Seoul. The collateralised securities will be backed by 150 billion won of funding from the Korea Credit Guarantee Fund and 350 billion won each from the government and Korea Finance Corp, which will receive cheap loans from the Bank of Korea. South Korea spent 5 trillion won helping businesses fund themselves in the wake of the 2008 collapse of Lehman Brothers Holdings Inc, as officials sought to protect the nation from a global recession. Reuters
Hyundai Heavy to raise ship prices H
yundai Heavy Industries Co, the world’s biggest shipbuilder, plans to raise prices as demand for fuel-efficient vessels helps it skirt the global supply glut hurting Chinese yards. Orders may exceed this year’s target of US$11.3 billion, with about 60 percent of that already met, Ka Sam-hyun, executive vice president in charge of ship sales, said in an interview. The South Korean company plans to raise prices in the second half, he said. “The big focus right now is on fuel efficiency,” Mr Ka said. “At a time when prices have fallen so much, shipping lines seem to be willing to pay a bit more to get better performing ships on time. This is why the top-tier shipyards will benefit.” Hyundai Heavy’s optimism helped drive up shares of Korean shipbuilders yesterday and contrasts with gloom over Chinese shipbuilders. A third of China’s yards may shut down in about five years as they struggle to win orders, an industry group said last week. South Korean yards, which have dominated the construction of mega ships, are benefiting as lines including A.P. Moeller-Maersk A/S order bigger, fuel-efficient vessels. Hyundai Heavy climbed 3.36 percent to 184,500 in Seoul trading, paring this year’s drop to 23 percent. Hyundai Mipo Dockyard Co surged 4.90 percent. Samsung Heavy Industries Co and Daewoo Shipbuilding & Marine Engineering Co also rose. “News about ship prices rising is lifting shares of shipbuilders,” said Lee Jae Won, an analyst at Tongyang Securities Inc.
About 483 shipyards in China won US$10.5 billion worth of orders in the first six months of this year, while 94 builders in South Korea got US$18.5 billion, according to Clarkson Plc, the world’s biggest shipbroker. Chinese yards, which dominate bulk-carrier construction, won 21.2 million deadweight tons of orders in the first half compared with 16.6 million tons for Korean companies, according to Clarkson. The order book at Chinese shipbuilders fell 23 percent at the end of May from a year earlier, according to the China Association of National Shipbuilding Industry. One-third of the nation’s yards facing the danger of closing have failed to get orders “for a very long period of time,” Wang Jinlian, the group’s secretary general, said July 4. Hyundai Heavy, which had failed for eight years to win orders from China, signed a contract in May to deliver the world’s biggest container ship to China Shipping Container Lines Co. Hyundai Heavy beat Chinese builders for the US$683 million deal for five vessels that can each carry 18,400 20-foot boxes. The new ships will use an engine that can automatically control fuel consumption to suit speed and sea conditions, helping improve fuel efficiency while reducing emissions and noise. Delivery will start in the second half of next year. “We see more orders for bigger ships made by Korean companies,” said Sarah Wang, a Shanghai-based analyst at Masterlink Securities Corp. Shipping lines “require higher levels of technology and fuel efficiency to cut costs,” Ms Wang said. Bloomberg News
12 12
July 9, 2013 April 19, 2013
Markets Hang Seng Index NAME
PRICE
DAY %
VOLUME
32.65
-1.804511
20426023
CHINA UNICOM HON
ALUMINUM CORP-H
2.34
-3.305785
10303082
BANK OF CHINA-H
3.07
-2.229299
373202824
AIA GROUP LTD
BANK OF COMMUN-H
4.81
-1.836735
37335801
BANK EAST ASIA
27.65
-1.426025
2444408
BELLE INTERNATIO
10.72
-0.9242144
22761400
BOC HONG KONG HO
NAME
PRICE
DAY %
VOLUME
10.38
-1.142857
15749280
CITIC PACIFIC
8.11
-2.406739
5482251
SANDS CHINA LTD
CLP HLDGS LTD
62.4
-1.187648
3289164
SINO LAND CO
13.14
0.4587156
61421640
9.69
-2.710843
5120726
SWIRE PACIFIC-A
11.78
-0.8417508
2734705
TENCENT HOLDINGS
302.4
CNOOC LTD COSCO PAC LTD ESPRIT HLDGS
NAME
PRICE
DAY %
VOLUME
66.85
-2.122987
2237551
36.8
-1.208054
8532140
10.22
-3.219697
12688696
98.9
-1.297405
4772010
91.65
-2.964531
2205547
-1.945525
3889800
POWER ASSETS HOL
SUN HUNG KAI PRO
23.4
-1.886792
9832451
HANG LUNG PROPER
25.5
-3.773585
6370008
TINGYI HLDG CO
19.88
-0.6
4954900
CATHAY PAC AIR
13.16
-2.518519
2353202
HANG SENG BK
113.9
-2.147766
1298932
WANT WANT CHINA
10.5
-0.9433962
9700957
CHEUNG KONG
HENDERSON LAND D
46.45
-2.004219
5756896
WHARF HLDG
64.7
-2.043906
4578745
79.8
-1.965602
2138400
19.12
-2.04918
8063080
103.5
-1.61597
3588032
CHINA COAL ENE-H
4.11
-1.438849
38694913
CHINA CONST BA-H
5.25
-2.052239
285354822
CHINA LIFE INS-H
17.68
-1.55902
32118711
CHINA MERCHANT
22.95
-0.8639309
2558108
CHINA MOBILE
HENGAN INTL HONG KG CHINA GS HONG KONG EXCHNG
115.5
-1.282051
2812267
HSBC HLDGS PLC
82.85
-0.4804805
12062514
79.8
-1.053937
18912090
HUTCHISON WHAMPO
83.3
0.06006006
5152928
19.98
-0.3491272
22957388
IND & COMM BK-H
4.74
-1.659751
298170840
CHINA PETROLEU-H
5.25
-1.315789
104510967
LI & FUNG LTD
10.9
-1.446655
9790180
CHINA RES ENTERP
23.35
-1.476793
2424800
MTR CORP
28.35
-1.391304
1623536
CHINA RES LAND
20.35
-1.213592
7542047
NEW WORLD DEV
10.4
-2.439024
13631540
CHINA RES POWER
19.24
0.4175365
6906334
PETROCHINA CO-H
8.9
-0.780379
109171280
CHINA SHENHUA-H
19.98
-2.536585
28385063
PING AN INSURA-H
49.05
-1.801802
13965914
CHINA OVERSEAS
MOVERS
5
45
0 20860
INDEX 20582.19 HIGH
20854.67
LOW
20318.46
52W (H) 23944.74 (L) 18710.58984
20310
4-July
8-July
Hang Seng China Enterprise Index NAME
PRICE
DAY %
VOLUME
AGRICULTURAL-H
3.03
-1.623377
145695703
AIR CHINA LTD-H
5.24
-0.9451796
9052804
ALUMINUM CORP-H
2.34
-3.305785
ANHUI CONCH-H
20.5
-2.147971
BANK OF CHINA-H
3.07
-2.229299
373202824
BANK OF COMMUN-H
4.81
-1.836735
37335801
29
0.6944444
3950116
CHINA CITIC BK-H
3.42
-1.724138
CHINA COAL ENE-H
4.11
-1.438849
CHINA COM CONS-H
5.36
CHINA CONST BA-H
5.25
BYD CO LTD-H
NAME
PRICE
DAY %
VOLUME
CHINA PACIFIC-H
23.8
-2.057613
9589619
CHINA PETROLEU-H
5.25
-1.315789
104510967
10303082
CHINA RAIL CN-H
6.06
-2.884615
5611642
16024022
CHINA RAIL GR-H
3.23
-1.823708
14872141
CHINA SHENHUA-H
19.98
-2.536585
28385063
CHINA TELECOM-H
3.68
-1.866667
37301407
DONGFENG MOTOR-H
9.71
-2.607823
15571200
41200481
GUANGZHOU AUTO-H
6.67
-2.911208
13150517
38694913
HUANENG POWER-H
7.51
-2.467532
21738200
-2.545455
18247151
IND & COMM BK-H
4.74
-1.659751
298170840
-2.052239
285354822
JIANGXI COPPER-H
12.18
-3.943218
19718083
3.29
0.9202454
7792283
PETROCHINA CO-H
8.9
-0.780379
109171280
17.68
-1.55902
32118711
PICC PROPERTY &
8.53
0.1173709
12304349
CHINA LONGYUAN-H
7.82
3.166227
16548000
PING AN INSURA-H
49.05
-1.801802
13965914
CHINA MERCH BK-H
12.72
-1.851852
21738297
SHANDONG WEIG-H
8.14
3.037975
5624000
CHINA MINSHENG-H
7.48
-1.058201
55936795
SINOPHARM-H
CHINA NATL BDG-H
6.31
-4.538578
59738809
TSINGTAO BREW-H
15.24
4.526749
8838729
WEICHAI POWER-H
CHINA COSCO HO-H CHINA LIFE INS-H
CHINA OILFIELD-H
18.44
-1.495726
5681200
56.4
0.8944544
1256896
22.6
-1.952278
NAME
PRICE
DAY %
YANZHOU COAL-H
5.37
-3.417266
24212900
ZIJIN MINING-H
1.47
-6.962025
173774631
5.08
-1.167315
12507505
11.68
-2.666667
4851665
ZOOMLION HEAVY-H ZTE CORP-H
MOVERS
5
35
VOLUME
0 9240
INDEX 9063.3 HIGH
9233.09
LOW
8940.32
52W (H) 12354.22 (L) 8640.85
8930
4-July
3406600
8-July
Shanghai Shenzhen CSI 300 PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
PRICE
DAY %
VOLUME
AGRICULTURAL-A
2.49
0.4032258
83033739
CHONGQING CHAN-A
8.77
-3.626374
22053555
QINGHAI SALT-A
17.1
-4.894327
8032694
AIR CHINA LTD-A
3.93
-3.91198
16119577
CITIC SECURITI-A
9.84
-2.477701
57876882
RISESUN REAL -A
14.82
-0.7367716
9369365
ALUMINUM CORP-A
3.09
-4.334365
13444247
CSR CORP LTD -A
3.34
-3.746398
30688720
SAIC MOTOR-A
13.06
-2.755026
18792494
ANHUI CONCH-A
13.24
-2.215657
19371989
DAQIN RAILWAY -A
5.63
-1.916376
20798315
SANAN OPTOELEC-A
17.87
-4.387373
14807413
BANK OF BEIJIN-A
7.42
-2.879581
17036845
DATANG INTL PO-A
5.37
1.129944
16400352
SANY HEAVY INDUS
6.82
-4.347826
25363262
BANK OF CHINA-A
2.61
-1.136364
18901978
EVERBRIG SEC -A
9.92
-2.169625
18762381
SHANDONG DONG-A
41.81
2.651608
8125767
BANK OF COMMUN-A
4.03
-0.982801
56358794
GD MIDEA HOLDI-A
12.51
-1.573564
9604138
SHANDONG GOLD-MI
21.41
-9.433164
34271749
NAME
NAME
NAME
3.87
-2.025316
22457296
GD POWER DEVEL-A
2.2
-2.654867
58235590
SHANG PHARM -A
10.73
-2.895928
6519540
BEIJING SL -A
59.22
0.4409769
2341328
GEMDALE CORP-A
7.1
-0.5602241
44835477
SHANG PUDONG-A
7.91
-2.466091
63977579
BEIJING TONGRE-A
22.01
-3.422554
6528069
GF SECURITIES-A
11.01
-2.82436
19909172
SHANGHAI ELECT-A
3.19
-5.059524
4991475
25.7
-0.1941748
7662957
SHENZEN OVERSE-A
5.12
1.587302
53290221
BAOSHAN IRON & S
BYD CO LTD -A
36.28
-2.183877
15152887
GREE ELECTRIC
CHINA AVIC ELE-A
23.3
-2.428811
7822486
GUANGHUI ENERG-A
10.69
-9.098639
56912711
SICHUAN KELUN-A
53.8
-4.745042
1317646
CHINA CITIC BK-A
3.56
-1.928375
14247206
HAITONG SECURI-A
9.34
-1.684211
96231328
SUNING COMMERC-A
4.97
-1.388889
40834827
CHINA CNR CORP-A
3.68
-3.664921
28082303
HANGZHOU HIKVI-A
36.77
-3.490814
5938199
TASLY PHARMAC-A
42.81
-0.6267409
4559507
41
-2.751423
3947617
TSINGTAO BREW-A
39.42
0.8184143
1727810
7.56
-4.665826
90214996
WANHUA CHEMIC-A
16.88
-1.974448
10126839
CHINA COAL ENE-A
4.71
-5.231388
13512718
HENAN SHUAN-A
CHINA CONST BA-A
4.4
-1.345291
24247302
HONG YUAN SEC-A
CHINA COSCO HO-A
2.89
-3.666667
10294481
HUATAI SECURIT-A
7.8
-3.465347
22356692
WEICHAI POWER-A
16.9
-3.868032
5477128
CHINA EAST AIR-A
2.43
-3.952569
10932349
HUAXIA BANK CO
8.59
-1.828571
18828915
WULIANGYE YIBIN
19.67
-2.236581
14040831
CHINA EVERBRIG-A
2.78
-0.3584229
55858805
IND & COMM BK-A
3.95
0
93260795
YANZHOU COAL-A
8.83
-6.06383
7312088
3992572
INDUSTRIAL BAN-A
9.09
-2.258065
76304356
YUNNAN BAIYAO-A
93.5
-0.4471891
1456171
CHINA INTERNAT-A
29.9
-0.7304117
9.91
-3.692906
5926818
INNER MONG BAO-A
21.01
-5.742485
39933278
ZHONGJIN GOLD
9.05
-5.136268
16333495
CHINA LIFE INS-A
12.98
-4.065041
12310908
INNER MONG YIL-A
34.92
-1.020408
14163499
ZIJIN MINING-A
2.56
-4.11985
88106005
CHINA MERCH BK-A
11.03
-2.129547
46495080
INNER MONGOLIA-A
3.87
-4.444444
48519957
ZOOMLION HEAVY-A
5.04
-4
48057535
CHINA MERCHANT-A
10.25
-0.3887269
17337336
JIANGSU HENGRU-A
27.98
-1.270289
4532858
12.81
-2.21374
51343584
CHINA MERCHANT-A
25.5
0.6711409
19248624
JIANGSU YANGHE-A
50.89
-4.378053
4725317
CHINA MINSHENG-A
8.39
-1.177856
101154709
JIANGXI COPPER-A
15.44
-5.565749
10310858
CHINA NATIONAL-A
9.6
-4.950495
24497041
7.81
-5.447942
8559655
CHINA OILFIELD-A
13.67
-1.795977
4262637
KANGMEI PHARMA-A
20.74
1.46771
18390987
CHINA PACIFIC-A
15.43
-2.403542
16538896
KWEICHOW MOUTA-A
195.16
-0.9943182
2411390
CHINA PETROLEU-A
4.14
-1.193317
40966840
LUZHOU LAOJIAO-A
23.6
-1.25523
6520523
CHINA RAILWAY-A
3.96
-3.649635
17062471
METALLURGICAL-A
1.57
-3.08642
39251365
CHINA RAILWAY-A
2.33
-3.319502
20328807
NARI TECHNOLOG-A
13.75
-7.157326
26366005
6437890
NINGBO PORT CO-A
2.01
-1.95122
10291318
8.07
0.1240695
35566971
8.99
-4.055496
59500689
CHINA INTL MAR-A
CHINA RESOURCE-A
29.6
0
JINDUICHENG -A
15.67
-3.628536
9958492
PETROCHINA CO-A
CHINA STATE -A
3.12
-2.803738
64702245
PING AN BANK-A
CHINA UNITED-A
3.04
-1.935484
63658239
PING AN INSURA-A
33.97
-1.564764
25654448
10
-1.960784
84632748
POLY REAL ESTA-A
10.41
0
63495882
6.78
-2.305476
16772493
QINGDAO HAIER-A
PRICE DAY %
Volume
CHINA SHENHUA-A
CHINA VANKE CO-A CHINA YANGTZE-A
11.2
-2.69331
6094008
ZTE CORP-A
MOVERS
20
273
7 2260
INDEX 2163.619 HIGH
2251.24
LOW
2163.18
52W (H) 2791.303 (L) 2023.171
2160
4-July
8-July
FTSE Taiwan 50 Index NAME
NAME
PRICE DAY %
Volume
FORMOSA PLASTIC
70.5 -0.5641749
7552848
TAIWAN MOBILE CO
FOXCONN TECHNOLO
71.5
-1.785714
3389140
TPK HOLDING CO L
5153285
FUBON FINANCIAL
37.4
-0.795756
31682406
6975765
HON HAI PRECISIO
73.4
-1.608579
23807921
44545032
HOTAI MOTOR CO
340
-2.298851
951574
189
-6.896552
26435205
16.6
0.3021148
3862203
YUANTA FINANCIAL
15.15
-2.884615
19497669
YULON MOTOR CO
47.3
-2.272727
1671780
ACER INC
22.4
0
6683312
ADVANCED SEMICON
24.8
-2.745098
16559082
ASIA CEMENT CORP
35.8
0.8450704
ASUSTEK COMPUTER
259
-1.893939
AU OPTRONICS COR
10.35
-2.816901
CATCHER TECH
146.5
-3.618421
8489330
HTC CORP
40 -0.4975124
22009752
HUA NAN FINANCIA
CATHAY FINANCIAL CHANG HWA BANK
16.85
0.8982036
19267315
LARGAN PRECISION
920
-2.645503
2010992
CHENG SHIN RUBBE
94.7
0.5307856
6182070
LITE-ON TECHNOLO
51.7
-2.45283
3348664
CHIMEI INNOLUX C
14.7
-4.854369
55081058
MEDIATEK INC
349
1.013025
9490496
CHINA DEVELOPMEN
8.28
-1.779359
29022154
MEGA FINANCIAL H
23.15 -0.6437768
13269839
CHINA STEEL CORP
23.35
-1.268499
12894052
NAN YA PLASTICS
57.7
-2.698145
7429845
CHINATRUST FINAN
18.05 -0.2762431
41762244
PRESIDENT CHAIN
208.5
3.217822
2638616
CHUNGHWA TELECOM
98.7 -0.5040323
10676206
QUANTA COMPUTER
COMPAL ELECTRON
18.9
1.886792
24791933
SILICONWARE PREC
36.95
-2.248677
11177043
13.95
DELTA ELECT INC
144
1.052632
5103720
SINOPAC FINANCIA
FAR EASTERN NEW
31.6
-2.619414
3761159
SYNNEX TECH INTL
FAR EASTONE TELE
79.5
0
4574226
TAIWAN CEMENT
65.8 -0.3030303
4792017
0
9793421
38 -0.5235602
4041605
36.15 -0.6868132
4556525
FIRST FINANCIAL
17.4 -0.8547009
10571388
TAIWAN COOPERATI
16.4 -0.6060606
9657156
FORMOSA CHEM & F
70.5 -0.9831461
6440014
TAIWAN FERTILIZE
71.4 -0.9708738
1417478
FORMOSA PETROCHE
72.4
1628840
TAIWAN GLASS IND
-1.763908
27
-2.702703
867086
NAME
PRICE DAY % 111 -0.4484305
Volume 5369454
365.5
-6.641124
14207196
TSMC
105
-3.669725
32770668
UNI-PRESIDENT
58.1 -0.1718213
UNITED MICROELEC
14.1
WISTRON CORP
MOVERS
-2.083333
28 -0.5328597
9
38
4646958 117945438 6039605
3 5560
INDEX 5430.26 HIGH
5553.15
LOW
5429.78
52W (H) 5896.71 5420
(L) 4719.96 4-July
8-July
13 13
July 2013 April9,19, 2013
Markets Gaming Stocks - Daily Performance (Hong Kong Stock Exchange)
Max 37.15
average 36.8
Max 37.35
average 36.754
Min 36.55
Last 36.95
Min 36.3
37.2
58.5
37.0
58.1
36.8
57.7
36.6
57.3
36.4
20.8
Max 58.5
average 58.183
PRICE
Last 20.5
21.0
36.8
18.0
20.8
36.5
17.8
20.6
Max 18.38
average 18.064
DAY %
YTD %
(H) 52W
Min 17.8
Last 18.08
(L) 52W
9.812286689
104.1200027
86.29000092
BRENT CRUDE FUTR Aug13
107.15
-0.529149647
0.262000561
115.1699982
96.70999908
GASOLINE RBOB FUT Aug13
288.35
-0.459127313
3.655906248
311.8400097
244.7299957
GAS OIL FUT (ICE) Aug13
909.75
0.192731278
0.082508251
983.5
829.25
3.63
0.359413879
1.114206128
4.525000095
3.354000092
298.31
-0.220757936
-0.467118214
320.449996
272.6999998
NATURAL GAS FUTR Aug13 NY Harb ULSD Fut Aug13 Gold Spot $/Oz
1225.85
0.2216
-26.3515
1796.08
1180.57
Silver Spot $/Oz
18.956
0.1702
-37.0442
35.365
18.2208
Platinum Spot $/Oz
1335.74
0.7535
-11.9921
1742.8
1294.18
Palladium Spot $/Oz
680.63
-0.2959
-2.7199
786.5
553.75
1768
-2.428256071
-14.71297636
2200.199951
1758
LME ALUMINUM 3MO ($) LME COPPER 3MO ($) 3MO ($)
LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep13 Dec13
6789
-2.316546763
-14.39919304
8422
6602
1837.5
-1.209677419
-11.65865385
2230
1779
13305
-3.761301989
-22.010551
18920
13298
17.6
14.60000038
SOYBEAN FUTURE Nov13 COFFEE 'C' FUTURE Sep13 SUGAR #11 (WORLD) Oct13
ASIA PACIFIC
CROSSES
AUD GBP CHF EUR JPY MOP HKD CNY INR THB SGD TWD PHP IDR AUDJPY EURCHF EURGBP EURCNY EURMOP EURJPY HKDMOP
14.88
-0.501504514
-3.407984421
16.47500038
0.305343511
-17.84076699
665
489.5
661
0.151515152
-18.09169765
905.75
652.25
1233.25
0.407083249
-5.334868547
1409.75
1186.5
120.5
-0.618556701
-20.95769105
203.8499908
117.0999985
NAME
16.23999977
ARISTOCRAT LEISU
74.34999847
CROWN LTD
16.26
COTTON NO.2 FUTR Dec13
COUNTRY MAJOR
492.75
WHEAT FUTURE(CBT) Sep13
85.42
0 0.458661649
-18.94317049 8.483616967
22.8599987 89.55999756
World Stock Markets - Indices
Max 21.1
average 20.589
Min 20.45
Last 20.55
20.4
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
0.9065 1.4886 0.9651 1.2834 101.34 7.988 7.7551 6.1338 61.075 31.47 1.2835 30.157 43.725 9976 91.863 1.23862 0.86216 7.8723 10.2514 130.06 1.0301
-0.0221 -0.0269 -0.114 0.039 -0.1381 -0.0388 -0.0064 -0.0163 -1.3672 -0.572 -0.148 -0.3913 -0.8005 -0.3107 -0.1285 -0.1631 -0.0429 0.3989 0.358 -0.1845 -0.0097
-12.6518 -7.9748 -5.1497 -2.699 -15.0385 -0.0601 -0.058 1.5781 -9.955 -2.8281 -4.8383 -3.7272 -6.2207 -1.8344 -2.7606 -2.5141 -5.4213 4.385 2.7216 -12.6788 -0.0194
1.0625 1.6381 0.9972 1.3711 103.74 8.0111 7.7664 6.3964 61.2125 32 1.286 30.228 44.181 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 7.9818 7.7498 6.1203 51.3863 28.56 1.2152 28.913 40.54 9388 79.408 1.20054 0.77553 7.7018 9.6245 94.12 1.0289
Macau Related Stocks PRICE
DAY %
YTD %
(H) 52W
(L) 52W
4.24
-1.165501
34.60317
4.49
2.29
VOLUME CRNCY 1494756
12.49
-0.8730159
17.05717
13.75
8.28
1350178
AMAX HOLDINGS LT
1.08
-1.818182
-22.85714
1.72
0.75
886000
BOC HONG KONG HO
23.4
-1.886792
-2.904566
28
22.6
9832451
CENTURY LEGEND
0.33
0
24.52831
0.42
0.22
1500
5.4
1.886792
-9.849746
6.74
2.89
18000
CHINA OVERSEAS
19.98
-0.3491272
-13.50649
25.6
16.761
22957388
CHINESE ESTATES
13.8
-0.4329004
13.77297
14.12
8.031
7500
CHOW TAI FOOK JE
8.07
-1.22399
-35.12862
13.4
7.44
5283800
EMPEROR ENTERTAI
2.74
-1.438849
44.97355
3.07
1.34
695000
FUTURE BRIGHT
2.08
-3.255814
71.61346
2.76
0.944
1752000
CHEUK NANG HLDGS
COUNTRY
PRICE
DAY %
YTD %
(H) 52W
(L) 52W
DOW JONES INDUS. AVG
US
15135.84
0.9826834
15.50426
15542.4
12471.49
NASDAQ COMPOSITE INDEX
US
3479.38
1.036975
15.22981
3532.038
2810.8
GALAXY ENTERTAIN
36.95
-1.203209
21.74629
44.95
16.98
7848588
FTSE 100 INDEX
GB
6441.52
1.03521
9.218844
6875.62
5478.02
HANG SENG BK
113.9
-2.147766
-4.043805
132.8
104.2
1298932
DAX INDEX
GE
7920.45
1.46618
4.046824
8557.86
6324.53
HOPEWELL HLDGS
24.8
-0.6012024
-25.41353
35.3
20.727
678000
HSBC HLDGS PLC
82.85
-0.4804805
1.906515
90.7
61.1
12062514
HUTCHISON TELE H
4.18
-1.647059
17.41573
4.66
2.98
2344000
LUK FOOK HLDGS I
17.76
0
-27.21311
30.05
16.16
2601000
MELCO INTL DEVEL
13.58
-1.164483
50.72142
18.18
5.12
4543000
NIKKEI 225
JN
14109.34
-1.402029
35.72964
15942.6
8328.019531
HANG SENG INDEX
HK
20582.19
-1.306566
-9.15716
23944.74
18710.58984
CSI 300 INDEX
CH
2163.619
-2.839438
-14.24256
2791.303
2023.171
TAIWAN TAIEX INDEX
TA
7886.34
-1.443172
2.426649
8439.15
6922.73
MGM CHINA HOLDIN
20.5
-0.7263923
54.38747
21.6
9.509
1638178
KOSPI INDEX
SK
1816.85
-0.8978296
-9.023313
2042.48
1758.99
MIDLAND HOLDINGS
2.77
1.838235
-25.13514
5
2.68
6296000
S&P/ASX 200 INDEX
AU
4809.53
-0.6654208
3.454104
5249.6
4062.3
NEPTUNE GROUP
0.172
0
13.1579
0.23
0.085
8240000
NEW WORLD DEV
10.4
-2.439024
-13.47754
15.12
9.38
13631540
SANDS CHINA LTD
36.8
-1.208054
8.394696
43.7
20.65
8532140
SHUN HO RESOURCE
1.38
-2.816901
-1.42857
1.67
1.03
40000
-17.18377
4.65
2.62
2779000 7043265
JAKARTA COMPOSITE INDEX
20.4
18.2
-0.251889169
NAME
Min 20.45
37.1
102.96
CORN FUTURE
average 20.558
21.2
WTI CRUDE FUTURE Aug13
LME ZINC
Max 20.9
Currency Exchange Rates
NAME
METALS
56.9
Last 58.5
18.4
Commodities ENERGY
Min 56.9
20.6
37.4
36.2
Last 36.8
21.0
ID
4454.489
-3.222338
3.192304
5251.296
3963.469
FTSE Bursa Malaysia KLCI
MA
1764.8
-0.4214933
4.490962
1826.22
1590.67
NZX ALL INDEX
NZ
962.121
0.06635583
9.077458
998.487
767.748
SHUN TAK HOLDING
3.47
-0.5730659
PHILIPPINES ALL SHARE IX
PH
3874.56
-2.468642
4.746716
4571.4
3410.76
SJM HOLDINGS LTD
18.08
-0.4405286
1.872598
22.382
12.995
SMARTONE TELECOM
12.48
-0.4784689
-11.36364
17.38
12.3
356500
WYNN MACAU LTD
20.55
-2.606635
-1.909311
26.5
14.62
2812439
HSBC Dragon 300 Index Singapor
SI
597.56
0.04
-3.79
NA
NA
STOCK EXCH OF THAI INDEX
TH
1411.84
-2.046027
1.430382
1649.77
1172.92
HO CHI MINH STOCK INDEX
VN
482.77
-0.5950665
16.68721
533.15
372.39
ASIA ENTERTAINME
3.96
-3.414634
40.6908
4.7647
2.2076
61258
BALLY TECHNOLOGI
58.54
2.110588
30.93268
58.79
41.74
450161
Laos Composite Index
LO
1330.66
3.398009
9.540079
1455.82
987.62
BOC HONG KONG HO
3.09
1.644737
0.651468
3.6
2.85
6500
GALAXY ENTERTAIN
4.83
0.625
21.66247
5.77
2.25
4073
INTL GAME TECH
16.75
1.086301
18.20748
18.81
10.92
1150665
JONES LANG LASAL
92.14
-0.2705921
9.768879
101.46
61.39
140510
LAS VEGAS SANDS
52.44
1.255069
13.60485
60.54
32.6127
3338892
MELCO CROWN-ADR
22.51
2.597995
33.66983
25.2
9.13
1994841
MGM CHINA HOLDIN
2.55
0
37.83784
2.71
1.36
2700
MGM RESORTS INTE
15.37
2.947086
32.04467
15.95
8.83
9151261
SHFL ENTERTAINME
18.09
0.7799443
24.75862
18.57
12.35
660977
SJM HOLDINGS LTD
2.35
0
3.178059
2.9481
1.7255
2977
127.08
0.7452037
12.97004
144.99
84.4902
623068
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 9, 2013 April 19, 2013
Opinion
What Abe can learn from Japan Inc’s mavericks
vested interests. (That’s part of the reason Abe has been so vague about details in the runup to upper-house elections later this month.) Even within stodgy Japan Inc, though, several mavericks have shown that such challenges are possible.
Chasing mavericks William Pesek
Bloomberg View columnist
Tadashi Yanai
T
here’s no shortage of pundits eager to tell Shinzo Abe how to shake up Japan’s economy. Instead of looking to academics for advice, though, the prime minister should get into the trenches with some of the nation’s more unconventional corporate heads. Abe talks, for example, about wanting to make Japanese companies worldlier. For pointers, he should study what Tadashi Yanai has already accomplished at Fast Retailing Co Ltd, home of the Uniqlo brand. Yanai has become Japan’s richest man – and the only Japanese on Time magazine’s latest 100 most-influential list – largely because of his success at expanding abroad. At home, low-cost clothier Uniqlo smartly recognised that deflation was a secular, not cyclical, phenomenon. But going global, Yanai discovered, required two skills at which Japan Inc has traditionally failed to excel: taking risks and speaking English. Yanai shook up the company’s ranks by promoting on merit rather than seniority, and revamped its marketing with edgy ad campaigns. Equally important have been Uniqlo’s efforts to tap foreign talent and to hold
staff meetings in English, so that executives can perform better overseas. Abe has nodded toward some of these ideas, promising to bolster English education. But then, so have the last 10 prime ministers. Will Abe actually address what researcher C.H. Kwan dubbed the “Economics of Engrish” back in 2002? Abe could start by challenging Finance Minister Taro Aso, who has suggested that corporate Japan’s poor language skills are actually an asset. Japan escaped the worst of the 2008 financial meltdown, Aso has claimed, because its bankers were mystified by subprime loans: “Managers of Japanese banks hardly understood English, that’s why they didn’t buy.”
Top executives have proven how much change is possible, even within the claustrophobic constraints of Japanese society and business
Working women The prime minister also talks about drawing more women into a fast-ageing workforce. Neglecting half the population holds back growth and undercuts Japan’s competitiveness. Yet some of the same ideas that Abe is floating failed when tried by education company Benesse Holdings Inc. Its experiment with a three-year maternity-leave
programme similar to Abe’s backfired: Fewer women returned to work. Instead, companies as varied as Asahi Group Holdings Ltd, KDDI Corp and Sumitomo Mitsui Financial Group Inc have shown that intensifying diversity and recruitment efforts can substantially increase the number of female managers.
The rollout of Nissan Motor Co Ltd’s Note hatchback in February was a milestone. By setting specific targets, the company has put more women into executive jobs than any other Japanese automaker. Three of them were responsible for the rollout of new models, including the Note. Some Japanese companies have even figured out ways around issues that the prime minister is afraid to touch, such as immigration. It’s easy for outside experts to argue that Japan, with its greying population, needs an influx of new workers in order to keep its social-welfare model afloat. Yet, politically, the issue remains a third rail. The world’s second-biggest construction-equipment maker, Komatsu Ltd, has dealt with the labour shortage by rehiring 90 percent of its retirees; they were willing to accept a 40 percent cut in salaries in order to get their old jobs back. By offering tax incentives to other companies to tap highly skilled retirees, Abe could soothe bond markets, which see the risk of Japan’s pension obligations becoming financially unsustainable. The most effective reforms will inevitably be controversial: They will all challenge powerful
Defying a powerful nuclear lobby, for instance, SoftBank Corp president Masayoshi Son is investing 20 billion yen (US$199 million) in renewable-energy projects and promoting an Asia-wide “supergrid” to link cities from Mumbai to Tokyo. His US$21.6 billion bid for U.S. mobile giant Sprint Nextel Corp would let the creative destruction emphasised by economist Joseph Schumpeter play out with innovative pricing and network investments. Hiroshi Mikitani, the president of e-commerce giant Rakuten Inc, has proven even more daring. In mid-2011, Mikitani caused shockwaves when he left the main business lobby, Nippon Keidanren and started a rival association. He’s fighting to make corporate Japan nimbler and more entrepreneurial by creating space where longneglected small-to-midsize companies can brainstorm and make policy recommendations that are getting Abe’s attention (the prime minister met with the group in April). Mikitani loudly condemns the “Galapagos syndrome” that plagues too many Japanese industries, whose products are highly evolved but unable to survive beyond the water’s edge. Rather than coddle such industries, Abe, too, would do well to force them to adapt or die. All these executives remain outliers within Japan Inc, of course. Conservative forces still dominate, as illustrated by last week’s Olympus Corp ruling. For his role in a US$1.7 billion fraud that caused an 80 percent plunge in market value, former chairman Tsuyoshi Kikukawa received a suspended sentence. Contrast that with the fate of scrappy Internet entrepreneur Takafumi Horie of Livedoor Co. In 2007, Horie, then 35, was locked up for accounting irregularities. Many believe Horie’s real crime was speaking out against Japan Inc’s insular ways. Even so, enough top executives have successfully challenged the status quo for Abe to take note. They have proven how much change is possible, even within the claustrophobic constraints of Japanese society and business. Abe should absorb the lesson. Bloomberg View
editorial council Paulo A. Azevedo, Tiago Azevedo, José I. Duarte, Emanuel Graça, Mandy Kuok Founder & Publisher Paulo A. Azevedo | pazevedo@macaubusinessdaily.com Editor-in-Chief Tiago Azevedo DEputy Editor-in-Chief Vitor Quintã Associate editor Michael Grimes GROUP SENIOR ANALYST José I. Duarte Newsdesk Luciana Leitão, Stephanie Lai, Tony Lai EDITOR AT LARGE Alex Lee Creative Director José Manuel Cardoso WEB & IT Janne Louhikari Contributors James Chu, João Francisco Pinto, Larry So, Pedro Cortés, Ricardo Siu, Rose N. Lai, Zen Udani Photography Carmo Correia, Manuel Cardoso Assistant to the publisher Laurentina da Silva | ltinas@macaubusinessdaily.com office manager Elsa Vong | elsav@macaubusinessdaily.com Agencies Bloomberg, Reuters, AFP, Xinhua, Lusa, Project Syndicate Printed in Macau by Welfare Ltd.
Business Daily is a product of De Ficção – Multimedia Projects Address Block C, Floor 9, Flat H, Edf. Ind. Nam Fong Av. Dr. Francisco Vieira Machado, No. 679, Macau Tel. (853) 2833 1258 / 2870 5909 Fax (853) 2833 1487 Email newsdesk@macaubusinessdaily.com Advertising advertising@macaubusinessdaily.com Subscriptions sub@macaubusinessdaily.com
15 15
July 2013 April9,19, 2013
Opinion Business
wires
Leading reports from Asia’s best business newspapers
Inquirer Business The 10 member states of Asean are on track to complete the measures needed for the integration of their economies by 2015, according to the 20122013 annual report released by the regional economic and political bloc. In his annual report message, Asean secretary general Le Luong Minh noted that in the economic pillar, Asean has already implemented nearly 80 percent of the measures in the Asean Economic Community (AEC) Blueprint. By 2015, Asean envisions an economic community which will be defined by a single market and distribution base and a highly competitive economic region with equitable economic development.
Jakarta Globe Indonesia’s foreign-exchange reserves fell to a two-year low in June as Bank Indonesia intervened to support the rupiah, adding pressure for the central bank to raise interest rates. The country’s reserves fell to US$98.1 billion last month from US$105.15 billion in May, Bank Indonesia Governor Agus Martowardojo said in a press briefing in Jakarta. Bank Indonesia has trimmed its 2013 economic growth forecast and lifted its outlook for inflation to 7.2 percent-7.8 percent, Mr Martowardojo also said.
The Age The Australian dollar could well fall below 90 U.S. cents for the first time in almost three years as healthy U.S. jobs data boosts the greenback, prompting more economists to scale back their forecasts. The currency fell to a low of 90.49 US cents on Friday. ‘‘A better economy and less bond buying by the Fed both have the effect of pushing U.S. interest rates higher,’’ Imre Speizer, Westpac New Zealand senior market strategist, said. ‘‘If U.S. interest rates go up, relative to other countries’ interest rates, its currency should go up.’’
The Star Malaysia’s demand for gold has surged in the past few months with investors and consumers taking advantage of the price correction experienced by the precious metal. Tomei Consolidated Bhd group managing director Datuk Ng Yih Pyng said he had not experienced such strong demand during mid-April to mid-May period since being in the industry for more than 20 years. “For that period alone, we recorded close to 200 percent sales increase in terms of weightage. In terms of value, it would not be that much since prices had corrected downwards since April,” he said.
The rupee’s wake-up call Ashoka Mody
Former mission chief for Germany and Ireland at the International Monetary Fund, is currently Visiting Professor of International Economic Policy, Princeton University
S
uppose I offer you a simple gamble. Throw a dice: If you get a six, you win US$10; if not, you lose US$1. The loss is more likely; the win brings more money. Willing to play? The generally accepted way for deciding in such cases – developed originally by the French mathematician Blaise Pascal in the 17th century – is to think of probabilities. The outcome will always be a win or loss, but imagine playing millions of times. What will happen on average? Clearly, you’ll lose US$1 about five times out of six, and you’ll win US$10 about one time out of six. Over many gambles, this averages out to about 83 cents per try. Hence, the gamble has a positive “expected” payoff and is worth it, even if the gain is trifling. Play a million times and you’re sure to win big. But here’s something odd. Suppose I offer precisely the same gamble, only scaled up. Roll a six and you now win not US$10, but 10 times your total current wealth; if you roll anything else, you lose your entire wealth (including property, pensions and all possessions). Your expected profit is now far bigger – equal to 83 percent of your total current wealth. Still want to play? It turns out that most people won’t take the latter bet, even though it will, on average, pay off handsomely. Why not? For most of us, putting everything on the line seems too risky. Intuitively, we understand that getting wiped out carries a brutal finality, curtailing future options and possibilities.
‘Risk averse’ Economic theories generally ascribe such cautious behaviour to psychology. Humans are “risk averse,” some of us more than others. But there’s a fundamental error in this way of thinking that still remains largely unappreciated – even though it casts a long and distorting shadow over everything from portfolio theory to macroeconomics and financial regulation. Economics, in following Pascal, still hasn’t faced up honestly to the problem of time. Anyone who faces risky situations over time – and that’s essentially everyone – needs to handle those risks well, on average, over time, with one thing happening after the next. The seductive genius of the concept of probability is that it removes this history aspect, and estimates the average payoff by thinking of a single gamble alone, with two outcomes. It imagines the world splitting with specific probabilities into parallel universes, one thing
happening in each. The expected value doesn’t reflect an average over time, but over possible outcomes considered outside of time. This is so familiar that most of us take it as the obvious method of reasoning. That’s a mistake. As the physicist Ole Peters of the London Mathematical Laboratory has shown in several recent papers, averages through time and
on gambles (or projects), despite wildly positive expected payoffs. So what? Well, the assumption of the equality of these different averages – technically known as the assumption of “ergodicity” – is considered a given by most of contemporary economics. It makes the mathematics easier in the financial portfolio theory that influences countless investors and in frameworks for designing regulations to keep financial risks at acceptable levels. Unfortunately, this error systematically underestimates prevailing risks.
Confidence brake
Errors of analysis embedded within core theories can ultimately become errors of intuition for the millions of people educated in those theories
over probable outcomes aren’t the same, and the latter calculation offers a dangerously misleading guide to risky choices. Especially whenever downside risks get large, real outcomes averaged through time are much worse than the expected value would predict. Even in the absence of risk aversion, there can be sound mathematical reasons for being unwilling to take
It also may encourage overly optimistic ideas about the ability of an economy to recover from a crisis. For example, those who support policies of fiscal austerity believe that companies, in seeking to maximise their profits, will naturally drive an economy back to steady growth. The economy will spring back if companies and individuals have confidence that their investments will pay off. If that’s the case, why aren’t
businesses investing globally when interest rates are at historic lows. What’s holding them back? The fairly obvious answer is serious downside risk, which makes the reticence entirely sensible – if you live in the real world where time matters. Such behaviour is in fact sensible in this “balance-sheet recession” – the term coined by Nomura Research Institute chief economist Richard Koo to describe what happens after big asset bubbles burst, leaving companies mired in debt, their assets worth less than their liabilities. Low interest rates won’t encourage borrowing – even to finance positive-return investments – because companies need to pay down their debts, and fear going bust altogether. Unfortunately, errors of analysis embedded within core theories can ultimately become errors of intuition for the millions of people educated in those theories. It’s ironic – and a little alarming – that so much of our thinking remains founded on aspects of Pascal’s ideas that are still largely unexplored. Bloomberg View
16
July 9, 2013
Closing German exports in sharp fall
Olympus to raise money in overseas markets
German exports saw their sharpest fall since 2009 as demand in China eased off and euro zone exports fell by 9.6 percent. Germany exports around 40 percent of its goods to the 16 other countries that use the euro, many of which are in recession. Overall exports, according the Federal Statistics Office, were 2.4 percent lower in May, while imports rose by 1.7 percent as domestic demand remained steady. Exports to countries outside of Europe fell by 1.6 percent, with the slowdown in China affecting demand. German industrial production fell 1 percent from April, when it gained a revised 2 percent, the Economy Ministry in Berlin said yesterday.
Olympus Corp, the world’s biggest endoscope maker, plans to sell as much as 118 billion yen (US$1.2 billion) of shares, with almost half the funds raised going to research and development in its medical unit. The Tokyo-based company will sell new as well as existing stock in overseas markets including the U.S., according to a regulatory filing to Japan’s finance ministry yesterday. The funds raised will also be used for capital spending and to pay debt, Olympus said. Olympus dropped 1 percent to 3,095 yen as of the close in Tokyo trading yesterday. The announcement was made after the market’s close.
Bangladesh factories face tighter scrutiny Facilities used by European retailers to be probed
A
group of mainly European retailers has finalised a plan to conduct coordinated inspections of factories in Bangladesh in an attempt to prevent a repeat of the Rana Plaza disaster that killed 1,129 people in April. The collapse of Rana Plaza, a factory built on swampy ground outside Dhaka, on April 24 ranks among the world’s worst industrial accidents and has galvanised brands to look more closely at their suppliers. The new accord was launched by trade unions in May and signed by 70 brands, including the world’s two biggest fashion retailers, Inditex SA and H&M AB, which have agreed to accept legal responsibility for safety at their Bangladesh factories. But a number of U.S. chains, including Wal-Mart Stores Inc, Gap Inc, Macy’s Inc, Sears Holdings Corp and JC Penney Co Inc, have shunned the deal, saying that it gives labour unions too much control over ensuring workplace safety and have
proposed a non-binding initiative. The largely European plan, coordinated by Switzerland-based unions IndustriALL and UNI Global, involves the creation of a team of inspectors to evaluate fire, electrical, structural and worker safety in factories supplying signatory brands. In a report published yesterday, the implementation team said that all 70 signatory brands had to provide full details of the Bangladesh factories from which they source goods – the first time such data would be collected or shared in such a comprehensive way. Every factory will undergo an initial inspection within the next nine months, with repairs initiated where necessary and a process put in place to allow companies or workers to report problems with buildings that pose an immediate risk. About 3.6 million people work in Bangladesh’s clothing sector, making it the world’s second-largest apparel exporter behind China. The industry
About 3.6 million people work in Bangladesh’s clothing sector
employs mostly women, some of whom earn as little as US$38 a month. Bangladesh has pledged to improve safety, but it has not pledged new money to relocate dangerous buildings. “Brand signatories are responsible to ensure that sufficient funds are available to pay for renovations and other safety improvements,” yesterday’s report said. Tesco Plc, the world’s thirdlargest retailer and one of the accord signatories, last month said that it has stopped sourcing clothes from a Bangladesh site because of safety concerns.
EU transaction tax could hit FX users: report Costs could rise by 700 percent for businesses, association says
A
proposed EU financial transaction tax (FTT) could discourage use of the foreign exchange (FX) market by typically raising costs of doing business by up to 700 percent, according to a report released yesterday. The report by the Global Financial Markets Association (GFMA) said that due to the double-sided nature of the proposed tax, transaction costs for pension funds would increase by around 1,500 percent. And they could reach as high as 4,700 percent for some FX products such as those that involve short-dated swaps with a very low transaction cost. FX transactions are used for a variety of purposes, such as issuing a bond to international investors, purchasing raw materials abroad, e x p o r t ing goods overse as an d protecting the value of pension
Fear of drag on trade as Europe seeks to exit crisis
investments made in other currencies. There are concerns that an FTT levied across 11 EU member states might discourage European
businesses and funds from trading FX products. James Kemp, managing director of the GFMA’s Global FX Divison,
North American retailers and trade associations are believed to be putting the finishing touches on their own Bangladesh safety agreement. Jason Grumet, president of the Washington think-tank helping to coordinate the effort, last month said the process was on track to be completed this month. Tax concessions offered by Western countries and the low wages paid by the manufacturers have helped to turn Bangladesh’s garment exports into a US$19 billion a year industry, with 60 percent of clothes going to Europe. Reuters
said: “Given the need for Europe to kick-start economic growth, it is crucial to ensure that European companies of all sizes are able to compete internationally. FX products are central to their ability to do this.” “In addition, the proposed tax risks becoming a disincentive for businesses to hedge risk which could increase their earnings volatility and business risk,” he said. “We urge the European Commission and those countries involved to reconsider the scope of any proposal to proceed with the FTT and, on the basis of the work undertaken by the GFXD, its application to FX instruments.” Eleven EU states, led by Germany and France, agreed to push ahead with the tax last year after failing to convince all 27 EU member states to sign up to it. The tax aims to force banks to contribute to the cost of cleaning up after the financial crisis but doubts are growing among regulators about its efficacy. The European Commission recognised in 2011 that including FX spot transactions in the FTT would inhibit the free movement of capital under the Treaty on the Functioning of the European Union. It also raised concerns about including other products. Reuters