Macau Business Daily, 16 July, 2012 by Business Daily

www.macaubusinessdaily.com

Year I - Number 76 Monday July 16, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

ICBC strikes first in Hengqin With Hengqin business opportunities up for grabs, the Macau branch of Industrial and Commercial Bank of China (ICBC Macau) seems set to be the first one to hit the ground. But the Macau Association of Banks expects more than three banks to enter the island next year and expand their business in cross-border yuan settlement and syndicated credits. Page 6

Millions frozen in bus hike stop T

he proposed 23-percent subsidy increase to the city’s bus companies would have cost the government billions of patacas, starting with an extra 900 million patacas (US$112.6 million) this year alone, legislator Ng Kuok Cheong said. The hike was suspended, with the government demanding that bus operators improve the punctuality, safety

and management of their services and the equipment they use. After a meeting with legislators, the Secretary for Transport and Public Works, Lau Si Io, admitted that the administration had “shortcomings, mainly lack of transparency,” during the botched process. He pledged to introduce a mechanism to

assess the quality of bus services next year and also said the contracts signed by the government and bus operators last year could be revised. Legislators criticised the increase in payment and Mr Ng called for a permanent dialogue between the government and the assembly “to analyse the important issues related to

public utilities, tariffs and contracts”. Meanwhile it was revealed that stateowned Nam Kwong Group now owns 80 percent of public bus operator Sociedade de Transportes Colectivos de Macau (TCM). TCM is still waiting for the government’s final approval to start running 20 buses using natural gas. More on page 2

New border talks take Chui to Beijing

HANG SENG INDEX 19165

The chief executive is in Beijing until tomorrow to discuss the new border crossing with mainland Chinese officials. But Fernando Chui Sai On will also negotiate a possible expansion in the sources of imported food to tackle rising inflation. But he did not confirm whether the cash handout scheme would continue next year.

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North West ferry closer to return

July 13

HSI - Movers

One of the two ferries owned by North West Express Limited that were docked for security reasons has already been repaired and will be inspected by maritime authorities from Macau and Hong Kong today. But there is still no date for when the operator could restart sails between Tuen Mun pier in Hong Kong and Macau.

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Interview – Theodore Tozer

Learning from mistakes The lessons learned from the 2008 financial crisis will help prevent a similar financial meltdown, says Theodore Tozer, president of the U.S. Government National Mortgage Association, better know as Ginnie Mae. “There were so many people losing so much money… so much damage occurred, that I don’t think we’ll ever go back,” Mr Tozer says in an interview with Business Daily. The financial crisis may have led to the collapse of some big-name financial institutions but Ginnie Mae escaped the worst. Pages 4 & 5

%Day

BELLE INTERNATIO

3.97

CHINA COAL ENE-H

3.57

CATHAY PAC AIR

2.37

ALUM INUM CORP-H

1.96

SINO LAND CO

1.94

COSCO PAC LTD

-1.11

HONG KONG EXCHNG

-1.54

HENGAN INTL

-1.63

CITIC PACIFIC

-1.70

Source: Bloomberg

2012-7-16

2012-7-17

2012-7-18

28˚ 32˚

27˚ 32˚

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InBrief New director for Chinese Estates Chinese Estates Holdings Ltd has announced Yvonne Lui Lai Kwan as an executive director of the company. Ms Lui will work with chief executive Joseph Lau Luen Hung, who faces corruption charges. Mr Lau is accused of bribing Ao Man Long, the former secretary for Transport and Public Works, to secure land for upmarket housing.

Moore fined HK$500,000 The Macau Jockey Club fined champion trainer Gary Moore HK$500,000 (US$65,000) on Friday after one of his horses tested positive for the banned drug atenolol in April. In a departure from its usual practice, the club chose to fine Mr Moore rather than both fine and suspend him. Mr Moore’s brother, who gave evidence at the inquiry, said it was a case of accidental contamination.

Bus firms stood to gain an extra 900m patacas The government admits that its dealings with the bus companies have not been open enough

Thieving lawyer made bankrupt

Xi Chen

xi@macaubusinessdaily.com

uspending the 23-percent subsidy increase to the city’s bus companies has saved the government up to 900 million patacas (US$112.6 million) this year, according to Legislative Assembly member Ng Kuok Cheong. Mr Ng, who belongs to the New Macau Association, said so on Friday after legislators and government officials met in a closed-door meeting. The government officials included the secretary for transport and public works, Lau Si Io, and the director of the Transport Bureau, Wong Wan. The government sets bus fares, which the bus operators collect and turn over to the government in exchange for a set amount per kilometre of bus route. The subsidy paid by the government has not been disclosed but the 2009 public tender programme released last week shows that authorities were willing to pay as much as 15.30-36.60 patacas per kilometre. The government withdrew a decision to pay the bus operators 23 percent more, saying it would pay the increase only if they improved services. Mr Lau said the decision to pay the bus operators more without making clear how it had arrived at the decision had been unfair to the public. He pledged to make his department’s decision-making more open.

“We have had our shortcomings, mainly lack of transparency and releasing information when discussing the fare adjustment mechanism. The next step, in the coming year, we will focus on quality improvement, such as the service assessment mechanism. And we really need experience on that,” he said. Mr Lau said he would speed up the introduction of a method of assessing the bus operators’ services. He also said the contracts signed by the government and bus operators last year could be revised.

Veiled warning Since suspending the subsidy increase, the government has asked bus operators for service improvement plans. It accepted the plans from Transportes Urbanos de Macau SARL and Sociedade de Transportes Colectivos de Macau SARL. But it has twice rejected Reolian Public Transport Co Ltd’s plan and the company has one month to submit a revised proposal. The Transport Bureau says the bus operators should improve the punctuality, safety and management of their services and the equipment they use. The bureau reminded operators they can be penalised up to 500,000 patacas for poor performance.

If a bus operator accumulates more than 1 million patacas in penalties, the government can scrap its contract without compensation. Legislative Assembly member Kwan Tsui Hang said 11 members had spoken at Friday’s closeddoor meeting. Mr Ng said he was opposed to the increase in payment because it was unreasonable for bus operators to expect another increase when last year’s contracts included an increase of 60 percent. He called for a permanent dialogue between the government and the assembly “to analyse the important issues related to public utilities, tariffs and contracts”. The pan-democrats and Ms Kwan also said that the Legislative Assembly would try to have more meetings in public to improve transparency. Mr Lau said the government was open to suggestions. Members of the New Macau Association led a march yesterday from Praça da Amizade to the Transport Bureau, where they delivered a petition with more than 5,000 signatures calling for the government to cancel the increase in subsidies. In an inquiry made public last week, Legislative Assembly member Chan Meng Kam criticised the Transport Bureau for fining Reolian just 50,000 patacas for substandard service.

Nam Kwong clinches TCM deal

acau-based state-owned Nam Kwong (Group) Co Ltd owns 80 percent of public bus operator Sociedade de Transportes Colectivos de Macau SARL (TCM) through its subsidiary China Travel Service (Macau) Ltd. TCM general manager Daniel Fang Liqun said last week the remainder of the stake was held by Ng Fok Group. Mr Fang said Nam Kwong had held shares since January 1, last

year, and every procedure was “in accordance with the laws”. He said a stalled government proposal to increase subsidies paid to public bus operators by 23 percent could boost TCM’s monthly income by up to 1.8 million patacas (US$212,800). If the increase did not go through, the operator would lose several hundred thousand patacas each month. TCM wants to introduce 55 news buses to Macau – 20 using natural

A Hong Kong Court declared bankrupt on Friday a former partner of international law firm K&L Gates who allegedly embezzled money from clients to gamble in Macau. The South China Morning Post reported that lawyer Navin Kumar Aggarwal owed about HK$4.6 million to Melco Crown Gaming (Macau) Ltd. K&L Gates is suing Melco Crown Gaming for damages, alleging that the casino operator knew Mr Aggarwal had stolen the money.

Illegal gambling suspect resigns Agricultural Bank of China Ltd executive director Yang Kun has resigned because of “personal circumstances”, the bank said. Mainland authorities detained Mr Yang more than one month ago. An unidentified source told Hong Kong’s South China Morning Post newspaper that Mr Yang was suspected of gambling in Macau and that he may have gambled funds misappropriated from customers’ accounts.

Forecasts cut for casino stocks

gas and 35 qualified for the Euro 5 emission standards. The company plans to spend HK$18 million (US$2.25 million) on the natural gas buses and about 23 million yuan (US$3.6 million) on the Euro 5 vehicles. He said the plan for natural gas buses is waiting for the government’s final approval and the company plans to introduce the new buses by the end of the year. T.L.

Sterne, Agee & Leach Inc has lowered its forecasts for casino operators Las Vegas Sands Corp, Wynn Resorts Ltd and Melco Crown Entertainment Ltd because, it says, revenue in Macau is slowing and their operating expenses are slightly higher. Analyst David Bain expects investors to consider gaming shares favourably as gaming revenue growth picks up this month and that the rebound will continue until September.

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MACAU

Chui in Beijing for border, food talks editorial The chief executive is in Beijing for talks on a new border crossing and food supply

Hard truths, tough decisions

Tony Lai

tony.lai@macaubusinessdaily.co

Guangdong agreed to a new border checkpoint to ease the pressure on the Border Gate exerted by the growing number of tourists. The new crossing is planned for the site of the Nam Yuet wholesale market. It would be open around the clock and have the capacity to handle about 250,000 people a day. Mr Chui will also meet officials of the Ministry of Commerce to discuss increasing the sources of food that Macau imports with a view to stabilising food supply and the prices charged for it. Mr Chui declined to say whether the cash handout scheme to help

residents cope with high inflation would continue next year. He said only that it depended on the government’s budget. He said the cash handout and medical voucher schemes had been “favoured widely by the public” and that the government would keep listening to the demands of the public. On the sidelines of a conference on Friday, Secretary for the Economy and Finance Francis Tam Pak Yuen said inflation would remain high and the government had to increase food suppliers. Consumer price inflation was 6.76 percent in the year ended May. Photo by Manuel Cardoso

hief Executive Fernando Chui Sai On has begun a three-day visit to Beijing to formally ask mainland authorities to permit a new border crossing into Macau. Mr Chui told reporters at the airport before his departure that he and his delegation would discuss the new crossing with officials of the Ministry of Public Security, the General Administration of Customs and the General Administration of Quality Supervision, Inspection and Quarantine. At their annual conference in May, the governments of Macau and

The new crossing is planned for the site of the Nam Yuet wholesale market and it would be open around the clock

North West readies for return to sea Inspectors are due to cast an eye over one of North West Express’s ferries today Tony Lai

tony.lai@macaubusinessdaily.com

he maritime authorities in Macau and Hong Kong will today inspect one of the vessels belonging to North West Express Ltd – the first step toward the ferry operator resuming its services. The Macau Maritime Administration told the Chinese-language Macau Daily News that one of the two North West vessels had been repaired and would undergo a seaworthiness trial. The administration said the company’s second vessel would not be repaired anytime soon. It is still unclear when the operator will resume its services between Tuen Mun pier in Hong Kong and Macau. The administration said only that the company could resume services after it had passed the safety review and met other requirements. North West was unavailable for comment yesterday. The company suspended its services on July 1 because of unspecified technical problems with its vessels. North West’s chief operations officer Koji Chan told reporters this

North West Express Ltd suspended its services on July 1

month that the company hoped to be sailing again within 14 days. The Maritime Administration told reporters last week that North West had already submitted a report on its service suspension but had yet to tell the government whether the high rent it paid to use Tuen Mun pier would impair its operations. Mr Chan has said the monthly rent

of HK$2.32 million (US$300,000) was imposing “much financial pressure on the company”. The government has said there are still about 60 passengers that have not asked for a refund on their tickets. North West sold more than 1,300 tickets that it could not honour because of the service suspension.

Tiago Azevedo Editor-in-Chief

do not know which is worse: a government that talks about transparency and out of the blue announces a hike in the subsidy it pays to bus operators, or one that makes its decision and chooses not to go through with it as soon as it strikes criticism. The government’s decision to freeze the pay rise for the public bus operators highlights shaky leadership. It should have better explained its decision to increase the subsidy. Any increase in subsidies should have been matched by an improvement in service standards. It is hard to understand why the government did not build that caveat into the provision that gives operators the right to apply for an increase every year. If it thought the subsidy needed to be increased, the government should have worked with the companies to find a compromise, rather than making a public show out of it in an appeal to populism. Unfortunately, playing to the audience seems to be the ideology of the day. But we might ask if the treatment of the bus operators is fair, based on some recent examples. Flag fall for metered taxis increased on July 1. Have services improved? Not at all. Vang Iek Radio-Taxi Co Ltd, the company behind the city’s yellow cabs, had a long argument with the government when its contract ended last August. The government said the company had to improve service standards before it got a new contract. Yet, no improvements were made and, after operating for almost three weeks without a licence, the company’s contract was extended for 18 months without the government opening a tender for the job. Vang Iek’s service targets have not been made public. It raises a question: what standards does the government use to ensure these industries are well run? Their behaviour suggests it has different standards for each company and sector. From an investors’ perspective, it is difficult to understand how that is equitable. I can understand why the public is not satisfied with services provided by the bus companies. Reolian Public Transport Co Ltd has been in the headlines consistently for a series of accidents. But they are not the only party at fault. Looking back, the current situation was shaped by another attack of populism: preventing companies to employ expatriate drivers. Several legislators, who claimed to be protecting residents’ jobs, inflamed the situation. Under pressure, the government had no choice but to restrict the number of workers the companies could employ from overseas. The result is the poor service the city endures, where drivers have no experience and the number of accidents piles up. The chain of events was put in motion long ago. Without experienced drivers, service standards could not improve. Transport companies were forced to raise salaries to keep the staff they had, which, of course, hit their profits. It was not impossible to predict what was going to happen ahead of the launch of the new bus system last year. The government must realise that making the less-popular decision can sometimes work out best in the long term. Transparency and public participation is needed. But there is a delicate balance. Sometimes leaders listen to so many voices that they become trapped by public opinion. Even a harmonious society – a slogan often used by the government – needs strong leadership.

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Lessons learned

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HOSPITALITY Staying the night There has been a 12.7-percent increase in the number of guests staying at a hotel or guest house in the first five months of the year over the same time last year. That represents an increase of about 420,000 guests to a total of about 3.7 million guests. About half of all guests stayed in a fivestar hotel and 29 percent lodged in a fourstar hotel. Together they represent about 80 percent of all overnight guests. Twostar and guesthouses accounted for just 7 percent of all guests in the first five months of the year.

The chart shows the daily average of guests in each accommodation category in the same period. The data has been corrected to account for this year’s leap year. The most significant growth in absolute terms is in the five-star category, an increase of 2,340 guests a day, that is an increase by 21.4 percent over the same time last year. In relative terms, the improvement in numbers at the city’s guest houses is greatest, 26.7 percent, but represents only 430 guests a day.

The financial crisis may have led to the collapse of some big-name financial institutions but the United States Government National Mortgage Association – better known as Ginnie Mae – escaped the worst. Ginnie Mae president Theodore Tozer attended the Global Chinese Real Estate Congress and took time to explain to Business Daily why Ginnie Mae survived the crisis without a bailout. Mr Tozer said the lessons learned would help prevent a similar financial meltdown. Luciana Leitão

leitao.luciana@macaubusiness.com

What sparked the financial crisis in the United States in 2008? I think the biggest crisis happened because the credit got so loose that people had mortgages when they really couldn’t sustain them. It was rampant. People buying multiple properties were trying to speculate on them, people who never had any real estate before, but since credit was so easy, they were able to get financing for those types of properties. Because of that, developers overdeveloped areas, built houses with no intent to occupy and there was buying for speculation. They bought apartments with no intention of moving in. We had a tremendous oversupply. So, when the whole housing market fell apart, we were not only dealing with foreclosures but also the demand side, because they were so over built. Ginnie Mae managed to escape the effects of the crisis. How did you do it? Ginnie Mae’s programme supports

the US government programmes, such as Federal Housing Administration and the Veterans Administration. During the 2000s, financial programmes went into privatelabel securities, so they bypassed all the government programmes. So, actually, Ginnie Mae’s market share during the height of the housing bubble dropped to probably 3 or 4 percent in the market. It almost became non-existent. When all the loans went bad, Ginnie Mae wasn’t involved in that. It was all dealt by privatelabel securities. Ginnie Mae began this flight back to government programmes because they allow people to put minimal down payments. The loans were getting there on very strong and good quality credit. However, Fanny Mae and Freddie Mac were really affected. What was the main difference? Fanny Mae and Freddie Mac still did a lot of business during the credit crisis and it wasn’t so

much the fact that the loans were questionable. They did loans for people with decent down payments and good quality borrowers. But the problem was that even if subprime, and those programmes were just a few percentage points, whenever those loans went bad, all the home prices fell. So people with big down payments found that their down payments had disappeared. Fannie Mae and Freddie Mac got caught up in the whole housing downturn, even though their loans themselves were actually pretty good. But, again, people lost their jobs when the home prices fell because of the subprime and private-label securities. They lost their jobs and had mortgage payments. So, there were people with plenty of income, large down payments, but then they lost their jobs and couldn’t make the mortgage payments. So, Fannie and Freddie got caught up in the whole economic downturn. The U.S. economy shows signs of recovering, albeit slowly. Is it nationwide or only at state level? I think we’re starting to see the recovery now. The problem with the US is we’re very regionalised. There are areas of major speculation down in the southern parts of the country, like Arizona, California, Florida, where the bubble occurred. That’s where the house prices have fallen more. Other parts of the country never saw the big bubble, so they really didn’t lose much in value. Because of that, in 2009, there was recovery from the more stable parts of the country, but California, Arizona, Florida are just now starting to stabilise. They are the ones that had the major overhang of excess supply. How do you see Washington’s intervention during the crisis? I think the stimulus packages that

An interesting trend is the relative decline in the number of guests that book their accommodation through a travel agency. Their figures have increased only marginally, in spite of the significant the rising trends in visitors and hotel guests, by just some 4700 guests – that is, just about 0.2 percent of their total. Five-star hotels see their numbers increase in absolute value but their share decreases by 5.7 percentage points. Bookings for accommodation in the lesser grades show increases in both absolute terms and relative share. These trends are possibly associated to an increasing universe of repeat visitors, making their own arrangements, and raising numbers of independent travellers from the mainland. J.I.D.

There were so many people losing so much money, and there was so much money, so much damage occurred, that I don’t think we’ll ever go back

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MACAU were put together early in 2009 were creditable. The amount of GDP that was taken out of the economy through the housing bubble was catastrophic and without the stimulus coming in for that first year or so from the Obama administration, I think we would have very easily tipped over to the national depression versus recession, because of the amount of GDP that had disappeared. So, the US$800 billion or so of stimulus was actually low, because now they’re saying there was actually US$2 trillion worth of value taken out of the GDP, so the stimulus didn’t even replace the loss of productivity. It was critical, as well as the Federal Reserve low interest rates, critical to keep the US and possibly the whole world from tipping into a depression, similar to what we had back in the 1930s. Did Ginnie Mae take any precautions or preventive measures from what it learned from this crisis? Yes. The people who we are protecting are the lenders. The people who actually issued the securities are obligated to us. We have been very good, as far as

analysing the credit risk of our issuers and making sure that the lenders would be there, to make sure that their obligations to cover for payments for the borrowers so that the government will not have to step in, to make the monthly payments to the bond investors of their loans. We’ve done a good job doing that. Plus we’ve hired a bunch of people so that we can do a better job of actually having day-to-day contact with our lenders. We hired people because of the fact that a lot of our lenders are never in contact with Ginnie Mae staff, because unless you were in problems we didn’t even have staff to call you. Now we do ongoing dialogues. So, in that way, when the problems occur we can deal with them at early stages of the problem, versus the point that it’s too late to fix. So, by increasing the staff we’ve also been able to be more prompt to some of our dealings with the lenders. Is there a risk of another crisis in the United States? No, I don’t think so. This is something that is a fundamental issue that occurred to a point

that it almost took us back to the 1930s. There were so many people losing so much money, and there was so much money, so much damage occurred, that I don’t think we’ll ever go back. What happened was mainly through the private-label securities work. People trusted the rating

Theodore Tozer Theodore Tozer has been the president of Ginnie Mae since 2010. He was previously the senior vice-president of capital markets of National City Mortgage Co and vice-president and investment operations manager of Bancohio National Bank. From 1986 to 1989 he was vicepresident and chief financial officer of Bancohio, transforming it from an originate-and-hold lender to an originate-and-sell lender. Mr Tozer has also served since 2008 as a charter member of the national lender advisory board of Fannie Mae.

Package tour arrivals in May outstrip gaming growth A 12 pct rise in escorted visits versus 7.3 pct rise in gambling rev Associate Editor

isitor arrivals via escorted package tours – rather than independent travel – rose nearly 12 percent year-onyear in May according to figures released by the city’s Statistics and Census Service on Friday. Gaming revenue that month rose only 7.3 percent according to other figures from the Gaming Inspection and Coordination Bureau. Among the 669,460 package tour visitors in May, nearly 70 percent (465,923) were from mainland China. Just under 36 percent of those PRC visitors on packages (166,292 of them) were from Guangdong, the province next door to Macau. In the first five months of 2012, visitors on package tours totalled 3.4 million, up by 30 percent year-on-year. Government data suggest package tour visitors tend to be poorer and spend less while here than their independently travelling counterparts. In addition, the latest edition of the Macao Visitor Study by the University of Macau published recently and based on interviews at mass-market departure points – including the Gongbei border gate next door to Zhuhai and the Macau Outer Harbour Ferry Terminal – found that 15 percent of survey respondents earned the equivalent of only 999 patacas (US$125) per month or lower. A further 8.5 percent earned fewer than 2,999 patacas per month. With minimum bets on mass-market live dealer baccarat tables in Macau casinos commonly set at HK$200 or above, it’s unlikely many of that 23.5 percent of visitors polled in the sample will be economically eligible to gamble. Despite the slowdown in the growth of VIP gambling seen particularly in May and June, a relatively small

number of high rollers are still contributing the majority of the city’s gross gaming revenue.

Rising mass Nonetheless the mass market has been over performing compared to previous years. Anil Daswani of financial services group Citi said in a note last week that mass-market casino revenue has grown 36 percent year-to-date. During 2007-08 when individual visit scheme visas were being rationed by China in order to reduce the number of times per year that PRC citizens could cross into Macau, there were anecdotal reports that more affluent middle class visitors – those likely to be solid mass-market players – were applying to join escorted tours. Travel agents say there are fewer restrictions on frequency of visits for members of escorted tours compared to independent travellers. It’s hard to be sure whether middle class tour goers back in 2007 were motivated by a desire to gamble. Visitors consistently under report gambling as a factor when asked about the reasons for their visit. The University of Macau study found only 16.5 percent of respondents gave gambling as the motive for their trip. The fact this must be an under reporting is revealed by answers to another part of the survey. Nearly 47 percent of those sampled said they had participated in casino gambling during their stay.

KEY POINTS Package tour visitors up 12 pct y-o-y in May Gaming rev up only 7.3 pct in May Nearly 70 pct of package visitors from mainland China Hotel rooms up 12.1 pct y-o-y in May Average hotel occupancy 78.6 pct

Repeat visitors The study also found that in the preceding 12 months, respondents had visited Macau

agencies. Now I think people are not going to trust any rating agency. They’re going to do their own risk analysis on securities buy. For that reason, there was a call for transparency on securities. So, because of that, people have learned a lesson. I don’t think we’ll ever go back to a time when no one checked anything out.

Package tourists are less likely to gamble

on average 3.9 times although among the 7,314 people interviewed, nearly half (48.2 percent) were on their first visit. The study also found that the more often people came to Macau, the more likely they were to rely on individual arrangements, and the more often they visited, the more likely they were to gamble – tending to support the suggestion that package tour visitors are less likely to be casino players. The Statistics and Census Service also found that in May there were 24,117 guest rooms available at the 97 hotels and guesthouses recorded that month. That was an increase of 2,599 rooms (up 12.1 percent) year-on-year; thanks chiefly to the opening of phase one of Sands Cotai Central on April 11. Five-star hotels accounted for 61.1 percent of all rooms. Hotels and guesthouses received 754,375 guests in May said Sands Cotai Central, an increase of 9.4 percent year-on-year, although the average length of stay decreased by 0.11 night to 1.4 nights. The average occupancy rate of hotels and guesthouses was 78.1 percent, down by 3.8 percentage points year-on-year while the average occupancy rate of the hotels was 78.6 percent, with four-star properties leading at 81.3 percent. The number of guests increased by 12.7 percent year-on-year to 3,702,740 in the first five months of 2012.

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ICBC first to plant flag on Hengqin Island

Eurotrends The euro has, in the last days, fallen to levels not seen since the late 2005, early 2006 times. It was quoting, on the last Friday, at 9.74 patacas. Continuous instability in the Eurozone has translated into some uncommon volatility in the currency, but that value is still noticeably above the lower rates prevailing from late 2000 and early 2002. In fact, it is still above the level at the beginning of 1999, when it started a relatively long period of weakness. Only in the second half of 2003 did the currency manage to trade at rates higher than the initial one..

As the chart above - made using the average monthly exchange rate, note - makes clear, there was an initial period of devaluation. It was followed by a steady strengthening after early 2002. That rising trend lasted, with the occasional oscillations, until 2008, that is, until the financial crisis blew up. From the lowest point by mid-2001, at 6.72 patacas to the euro, to the highest by mid-2008, at 12.70, the exchange rate against the pataca has risen by almost 90 percent. The recent devaluation, on continuing uncertainty in Europe, has to be understood in this context. For all the period, the simple average rate can be estimated at 9.69 patacas to the euro.

Branch is set to be the first of the city’s banks to do business on Hengqin Tony Lai

tony.lai@macaubusinessdaily.com

Photo by Manuel Cardoso

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The Monetary Authority of Macau has given ICBC Macau permission to set up shop on Hengqin island

T Using the values for all the period since January 1999 until the also Friday, we can estimate that the band of exchange rates within one standard deviation of the average is bound by the values 8.14 and 11.25. In that sense, the current rate is well within the ‘normal’ band of variation for the rate of exchange of the two currencies. The extreme points are well outside that band, but were registered in well-defined periods. The euro traded below 8.14 in a single period of three consecutive years, from November 1999 to November 2002. It traded above 11.25 in three instances: for one year, from September 2007 to September 2008; from May to December 2009; and from March to August 2011. That is, the period of the financial crisis has been one of over-valuation of the currency. J.I.D.

he Macau branch of Industrial and Commercial Bank of China Ltd (ICBC) is set to be the first bank from the city to gain a foothold on Hengqin Island. At a conference about finance and commerce on Hengqin held on Friday, the Chinese-language Macau Daily News quoted officials from the Administrative Committee of Hengqin New Area as saying that ICBC Macau had applied to Guangdong officials to set up an office on the island. The report said the Monetary Authority of Macau had given its approval. An ICBC subsidiary in Hong Kong, ICBC International Holdings Ltd, had formed 15 equity investment partnerships on Hengqin. Several banks based in Macau or Hong Kong had shown interest in setting up on the island. Macau and the mainland signed a supplement to their Closer Economic Partnership Agreement

(CEPA) earlier this month that lowers the minimum assets Macau banks are required to have to set up on Hengqin to US$4 billion (32 billion patacas) from US$6 billion. The Macau government said three Macau banks were qualified to open branches on the island but did not identify them. The Macau Association of Bank told Business Daily that lowering the cap will be of “great help” for local banks to explore service areas such as “securities and futures margin” in the mainland market. The association said it would not be surprised if more than three Macau banks will be eligible to enter the Hengqin market when the new CEPA supplement is in effect in the beginning of next year.

New highlights Zhuhai mayor He Ningka told the conference that a revised plan

for the financial development of Hengqin would being finalised. Mr He said one priority was to help financial institutions from Macau and Hong Kong to establish themselves on Hengqin, as a complement to their existing markets. The Macau Bank Association said the local banking industry is looking forward to strengthen its cooperation with the mainland and Hong Kong through CEPA and the new financial zone in Hengqin. The association expects crossborder yuan settlement and syndicated credits to become “new business highlights” for Macau banks when their scopes expand to outside markets. Cross-border trade settlement in yuan was 3.45 billion yuan in the first five months of this year, more than all of last year, officials from the Administrative Committee of Hengqin New Area said. Six banking institutions and more than 40 equity funds with a combined capital of more than 10 billion yuan (12.5 billion patacas) had been approved to operate on Hengqin. The committee also said the first three currency exchange companies allowed to operate on the island by the State Administration of Foreign Exchange were from Macau. Macau Daily News reported yesterday that construction of the first phase of the Hengqin financial complex would be completed this month. It would be ready for use later in the year. The first phase has nine buildings with offices for 15 to 20 businesses, including ICBC Macau and the four biggest mainland banks: Agricultural Bank of China Ltd, Bank of China Ltd, China Construction Bank Corp and ICBC. The second phase of 11 buildings will be finished next year. The entire complex will cost 300 million yuan and is expected to house between 50 and 100 businesses.

Weather Beijing 34/23o C Changchun 30/17o C

Harbin 32/18o C

Xian 33/21o C Shanghai 29/24o C Chengdu 27/22o C Kunming 24/18o C Haikou 36/25o C Sanya 32/28o C

Guangzhou 33/27o C

MACAU (16 July-21 July) Day

Temperature

Humidity

07/16

28/32o C

55/95 %

07/17

28/32o C

55/95 %

07/18

27/32o C

55/90 %

07/19

27/32o C

55/90 %

07/20

27/33o C

50/90 %

07/21

27/33o C

50/90 %

Shenzhen 33/27o C

ASIA (today)

Hong Kong 33/26o C

Manila

TOKYO

Jakarta

32/26o C

30/25o C

32/25o C

31/24o C

Macau 32/28o C

Bangkok

SEOUL

K. lumpur

34/26o C

SINGAPORE

27/21o C

32/24o C

taipei

36/28o C

July 16, 2012 business daily | 7

MACAU

Price probe to take its time Brand Fair falls flat on debut

espite pressing concerns about costlier food, the task force investigating the city’s supply chain and how prices are set does not expect to come up with any results anytime soon. Secretary for Finance and the Economy Francis Tam Pak Yuen told TDM News a report from the task force would be published only late this year. Mr Tam said the report would include ways to improve the supply chain and establish a mechanism for setting food prices. Food prices have continued to rise despite the slowing of inflation in the mainland and the slowing of the yuan’s appreciation. This has raised suspicions that prices are being fixed. Announcing the creation of the task force three weeks ago, the government said food prices here were rising although mainland food prices and the yuan’s appreciation had slowed. The task force will look for “potential illicit practices”, irregular weight standards, monopolies and “unreasonable price fixing”. The consumer price index rose by 6.76 percent in the year ended May.

Small, start-up trade events face a tough future in a city driven by tourism Xi Chen

xi@macaubusinessdaily.com

Rising food prices in Macau have continued despite the easing of both inflation and yuan appreciation in the mainland

The prices of food and nonalcoholic drinks, on which Macau households spend almost one-third of their budgets, rose by 9.9 percent. The task force comprises

representatives of the Economic Services Bureau, the Civil and Municipal Affairs Bureau and the Consumer Council. D.R.

Sands ‘willing to pay’ for Four Seasons deal

he former chief executive of Sands China Ltd, Steve Jacobs, was willing to pay up to US$500,000 (4 million patacas) to a businessman to settle the Four Seasons apartments dispute, according to Sands’ legal adviser Leonel Alves. In an interview with Rádio Macau, Mr Alves said a Macau businessman had proposed a payment of US$300 million to settle Sands China’s legal dispute with former business partner Asian American Entertainment Corp Ltd of Taiwan. He said Mr Jacobs had rejected any deal with Asian American Entertainment. Mr Alves said the businessman also had said he could help with the sale of the Four Seasons flats. Mr Alves said Mr Jacobs had been willing to pay “the normal consultancy fee” of up to US$500,000, but the businessman, a “widely known” devel-

oper, refused the offer. Sands China fired Mr Jacobs in July 2010 and Mr Jacobs sued Sands China for wrongful dismissal. Mr Alves said Mr Jacobs was using the media to throw mud at Sands China. “I think he purposely engineered a scenario involving myself, distorting the truth, tarnishing myself and my client for purely personal goals,” he said. The Wall Street Journal reported three weeks ago that “someone high-ranking in Beijing” had asked for a US$300 million bribe from Sands China, quoting a 2009 email exchange between Mr Alves and Mr Jacobs. Sands China has been waiting for more than two years for government approval of its application to sell the Four Seasons flats as a cooperative investment. Mr Alves said the government had not rejected the application. V.Q.

here were few visitors at the first Macau Brand Fair over the weekend but the event’s organiser expects things could improve. Planned by the Association of Macau Branding, the fourday Macau Brand Fair at The Venetian Macao-ResortHotel closed yesterday. The event combined an exhibition, forums, contests and a pageant to capture attention, said Association of Macau Branding president Sunny Lai. Mr Lai said the event had a similar strategy to the Hong Kong Brands and Products Expo Fair. The Macau Brand Fair drew 68 merchants from Hong Kong, Macau, Taiwan and the mainland, with companies from Hong Kong and Macau accounting for about twothirds and 28 percent of exhibitors. Few of the participants were well known and Mr Lai said it was these companies that needed further marketing. Despite the low turnout, he said the fair’s first edition had met his expectations. The event was not subsidised by sponsorships but paid for by brands buying floor space, which meant many wellestablished brands were unwilling to pay to join the event. Large-scale MICE events – or meetings, incentives, conferences, and exhibitions – would continue to struggle because participants were residents. Aside from the hurdles, Mr Lai said the events industry needed promotion and more entrepreneurs were needed.

8 |

business daily July 16, 2012

Greater china

China GDP data soothes growth worry Growth slowdown shows Wen may step up easing

hina’s growth slowed for a sixth quarter to the weakest pace since the global financial crisis, putting pressure on Premier Wen Jiabao to boost stimulus to secure a second-half economic rebound. Gross domestic product expanded 7.6 percent last quarter from a year earlier, the National Bureau of Statistics said on Friday, in line with expectations and slightly above the government’s target, soothing concerns about slowing growth in the world’s second largest economy. The pace, a three-year low, compares with an 8.1 percent gain in the previous period and the 7.7 percent median forecast of economists. Industrial production increased at a slower pace in June while retail sales growth decelerated. The data painted a mixed picture from a pickup in fixed-asset investment that could signal the economy is stabilising to the warning sign that electricity output failed to increase in June from a year earlier. China’s slowdown could undermine a global recovery already threatened by Europe’s debt crisis and limited U.S. job growth. “The fact that the data shows persistent weakness – rather than a precipitous plunge – means policy makers are likely to continue incremental monetary accommodation but not embrace a more aggressive fiscal stimulus policy response in the immediate term,” said Ramin Toloui,

Singapore-based global co-head of emerging-markets portfolio management at Pacific Investment Management Co.

statement. The remarks may signal public investment is likely to rise in the coming months, Nomura Holdings Inc. said.

Export slowdown

Growth target

China’s export growth in the first half cooled to 9.2 percent, down from 24 percent in the first six months of 2011, as Europe’s austerity measures and government debt burdens capped shipments. Also dragging on demand is a crackdown on housing-market speculation. China can’t relax the property curbs, which have reigned in speculation and investment in real estate, Sheng Laiyun, spokesman for the National Bureau of Statistics, said at a briefing. The economic slowdown is partly the result of a decline in China’s potential growth rate after more than 30 years of high-speed expansion, Mr Sheng said. He said bearish views on the economy are unfounded and that industrialisation and urbanisation will help. Retail sales expanded 13.7 percent from a year earlier to 1.65 trillion yuan (US$261 billion) last month, almost flat with the pace of 13.8 percent in May. Data earlier this week showed that imports rose less than estimated in June while export growth slowed and new yuan loans topped predictions. Promoting investment growth is key to stabilising the economic expansion, Mr Wen said during meetings with economists and company executives last week, according to a government

First-half expansion was 7.8 percent, the statistics bureau said. Premier Wen Jiabao in March set a 7.5 percent growth target for this year, down from an 8 percent goal in place since 2005. The People’s Bank of China on July 5 announced the second interestrate cut in a month, adding to the first since 2008. The central bank also widened the discount available to most borrowers to 30 percent from 20 percent off the benchmark rate. Authorities have lowered banks’ reserve requirements three times starting in November to spur

KEY POINTS GDP expands 7.6 pct in the three months to June Industrial production slows down in second quarter Export growth cooled to 9.2 pct in first half ‘China needs structural reforms’ – analyst

Retail sales expanded from a year earlier to 1.65 trillio

lending and support growth. Mr Wen pledged to intensify finetuning of policies as downward pressure on the economy remains “relatively large,” according to a July 8 report by the official Xinhua news agency. At the same time, the premier said authorities will “unswervingly” sustain property controls and prevent a rebound in prices, Xinhua said. “The question is not how deep

HK property tycoons get graft charges Anti-graft agency charges Sun Hung Kai’s Kwoks and former government official

homas and Raymond Kwok, the billionaire co-chairmen of Sun Hung Kai Properties Ltd, and Rafael Hui, Hong Kong’s former No.2 public official, were charged on Friday in a bribery investigation surrounding Asia’s largest developer. The Sun Hung Kai probe, Hong Kong’s biggest corruption case since its antigraft agency was formed nearly 40 years ago, involves one of Asia’s most powerful families and the world’s second-largest property company with a market capitalisation of US$32 billion. The charges involve payments and unsecured loans of more than US$4 million and come amid other investigations of government officials and a turbulent political transition that has set off waves of protests from Hong Kong citizens angry about a host of issues including cronyism and cosy ties between government officials and the city’s tycoons. Friday’s charges came a day after the anti-graft agency arrested Hong Kong’s development secretary on suspicion of corruption, dealing a fresh blow to the city’s new leader, Leung Chun Ying. Two others have also been charged in the Sun Hung Kai case. Thomas Chan, the Sun Hung Kai board member in charge of land purchases,

and Francis Kwan, a former banker, were charged by the city’s Independent Commission Against Corruption. Mr Kwan is a former chief operation officer of the Hong Kong Futures Exchange. A total of eight charges were filed against the five men, who appeared before a Hong Kong judge on Friday and said they understood the charges, including conspiracy to offer advantages to a public servant and misconduct in public office. Mr Hui, who was calm throughout the half-hour proceeding, was named in each of the eight charges in connection with alleged payments and unsecured loans totalling about HK$34 million (US$4.38 million). Raymond Kwok delivered a statement on the courthouse steps, saying “I firmly believe I haven’t done anything wrong. The Hong Kong judicial system is very fair. I will do my best to defend myself against those accusations. My goal is to prove my innocence.” Thomas Kwok declined to comment and Thomas Chan also declined comment.

October Hearing The magistrate hearing the case ordered Mr Hui and Mr Kwan to

Sun Hung Kai Properties Ltd executives, Raymond Kwok (left) and Thomas Kwok were charged with bribery and public misconduct

July 16, 2012 business daily | 9

greater china 1.27 trillion yuan China’s fiscal spending in June, up 17.7 percent yearon-year, as the government stepped up efforts to bolster the slowing economy. Fiscal expenditures last month consisted of 1.085

trillion yuan by local governments and 187.3 billion yuan by the central government, the Ministry of Finance said. Fiscal revenues rose 9.8 percent in June from the same month last year to 1.1 trillion yuan, the ministry said. The growth rate slowed from the annual pace of 13.1 percent in May.

Investment to pick up, lending to remain strong

on yuan

the economy falls, but how long it will stay low,” said Dong Tao, Credit Suisse Group AG’s Hong Kong-based chief China economist. “China needs structural reforms, not just monetary or fiscal expansion.” China’s industrial production expanded 9.5 percent in June from a year earlier, the statistics bureau said. Fixed-asset investment excluding rural households increased 20.4 percent in the first six months from a

14%

Sun Hung Kai Properties Ltd has fallen in the Hong Kong stock exchange since the March arrests surrender their travel documents and remain in Hong Kong. Public prosecutor Kevin Zervos said Mr Kwan was “a flight risk”. All five were released on bail and ordered not to contact a list of prosecution witnesses given to the court. The case was then adjourned until October 12. The ICAC said the alleged offences took place between 2000 and 2009, with six linked to Mr Hui’s tenure as Hong Kong’s chief secretary. Mr Hui faces two misconduct charges alleging he accepted rent-free use of two flats while head of Hong Kong’s retirement authority and two unsecured loans. He is also alleged to have accepted payments to “wilfully misconduct himself” to be “favourably disposed” to Raymond and Thomas Kwok and their interests and to Thomas Chan, according to the charges. Mr Hui and Thomas Kwok face a joint charge of conspiracy to commit misconduct in public office, while

year earlier, the data showed, versus 20.1 percent in the first five months. “The Chinese economy has slowed, but it is not collapsing as many fear,” said Shane Oliver, Sydneybased head of investment strategy at AMP Capital Investors Ltd. “Past policy easing plus more to come suggests that growth will pick up to around an 8 percent pace over the second half.” Bloomberg

Mr Hui and Raymond Kwok faces a similar charge. Mr Hui, Thomas Kwok, Mr Chan and Mr Kwan are also charged with one count of conspiracy to commit misconduct in public office, alleging they conspired together for Mr Hui to receive a series of payments from Thomas Kwok, Mr Chan and Mr Kwan. Shares of Sun Hung Kai, Asia’s most widely held property stock, fell 0.7 percent at the open, but were up 0.5 percent when trading was suspended. The shares have slumped 14 percent since the March arrests. Trading in Sun Hung Kai units SmarTone Telecommunications Holdings Ltd and SUNeVision Holdings Ltd, was also suspended on Thursday. Sun Hung Kai has applied for permission to restart trading today. Moody’s Investors Service maintained a negative outlook on Sun Hung Kai on Friday, saying “the latest development is credit negative for SHKP, as its reputation is now further at risk,” according to a statement. The Kwoks, valued by Forbes magazine at US$18.3 billion before their arrests, have remained in their roles at Sun Hung Kai. The company has repeatedly said it has contingency plans in place should the co-chairmen be unable to continue with their duties. The company said late on Friday that it has named its head of residential sales, Victor Lui, and its head of project management, Mike Wong, as deputy managing directors, to assist Raymond and Thomas Kwok in discharging their duties. It also named Thomas’s son, Adam, 29, and Raymond’s son Edward, 31, as alternate board members to their fathers. Reuters

China’s weakest expansion in three years masked a surge in home sales and a jump in investment that show lower interest rates and banks’ reserve requirements may be starting to stabilise growth in its economy. China’s economy advanced 7.6 percent in the second quarter from a year earlier while accelerating to a 1.8 percent gain from the previous three months. The value of home sales rose 41 percent in June from May and first-half fixed-asset investment rose 20.4 percent, topping analyst estimates. “The hard-landing risk has fallen,” said Dong Tao, Credit Suisse AG Group’s Hong Kong-based head of Asia economics excluding Japan. At the same time, “we do not see much of a catalyst to drive the economy,” he said. Nomura Holdings Inc. yesterday cut its China growth forecast for this year to 8.2 percent from 8.4 percent and 2013 prediction to 7.9 percent from 8.2 percent, even as the bank projected a rebound in fourth-quarter 2012 expansion to 8.8 percent. “Policy makers are still worried about growth slowing down and getting close to their threshold of 7.5 percent,” said Zhang Zhiwei, Hong Kong-based chief China economist at Nomura. “They will push investment up through bank lending so for the next several months new loans will continue to be pretty strong and infrastructure investment will pick up.”

China reduced interest rates in June and July and has lowered banks’ reserve requirements three times since November. Tim Condon, chief Asia economist at ING Financial Markets in Singapore, sees the central bank cutting the benchmark one-year lending rate again this quarter while making two 50 basis-point cuts in the reserve ratio. The yuan had the biggest weekly loss in six weeks, extending the decline this year to 1.3 percent against the US dollar following a 4.7 percent gain in 2011. The benchmark Shanghai Composite Index was little changed on Friday and closed down 1.7 percent for the week, the fourth straight decline.

Taiwan opens Dim Sum debt to US$1.5 tln savings Regulator allows direct sales by domestic companies

aiwan’s financial companies, seeking higher returns on more than US$1.5 trillion in assets, plan to buy more Dim Sum bonds after regulators allowed direct sales by local companies. Manulife Asset Management (Taiwan) Co., HSBC Global Asset Management (Taiwan) Ltd and SinoPac Securities Corp., all based in Taipei, said they prefer investing in businesses incorporated locally that have debt ratings. Five unrated overseas units of the island’s companies sold 2.6 billion yuan (US$408 million) of yuan-denominated bonds in Hong Kong in the past three years in six offerings, less than the 27 by South Korean corporations and 13 from Singapore, Bloomberg data show. The Financial Supervisory Commission lifted the issuance ban last week and the central bank is in talks to allow yuan settlement of foreign trade, as President Ma Ying-jeou abandons his predecessor’s pro-independence stance in favour of closer economic ties with China. The yield premium for sovereign Dim Sum bonds over Taiwan’s government debt has doubled to a record in the past 11 weeks as expectations for yuan appreciation fade. “Investors are very much interested in this debt as they have more knowledge of the balance sheets of

the parent companies, and they will provide much better returns than local issuance,” said Penny Chen, at Manulife in Taipei. “Taiwanese firms have constant need for yuan.” Taiwan has the largest trade surplus globally with China, supplying machinery and components to the world’s biggest exporter. Foreign direct investment by Taiwanese companies, including Hon Hai Precision Industry Co. and UniPresident Enterprises Corp., jumped 11 percent to US$13 billion in 2011. While the yuan’s 1 percent decline in the past three months has eroded Dim Sum returns, its relative stability still attracts investors, according to Steven Huang, a Taipei-based fund manager at HSBC Global. “Although the yuan’s appreciation has slowed, investors’ interests in offshore yuan bonds have been steadily increasing,” said Mr Huang. “Taiwanese people will have more faith in the debt if it’s issued by companies they’re familiar with.” Taiwan has US$1.1 trillion cash and savings in the banking system, and mutual funds manage more than US$60 billion, according to Bloomberg data. Life insurers had US$405 billion of assets as of 2010, according to the Life Insurance Association of the Republic of China. Bloomberg

10 |

business daily July 16, 2012

asia Commodities boosted Most commodity prices rose last Friday, with oil up a third straight day and copper hitting a one-week high, on investor relief that the economy China, a major raw materials consumer, did not slow more than expected in the second quarter.

London’s North Sea Brent

crude finished up US$1.33, or 1.3 percent, at US$102.40. It gained 4.3 percent on the week

Copper closed up nearly 2 percent higher in London. The benchmark three-month copper ended the day up US$145 at US$7,700

Gold rallied too as the dollar

fell. The spot price of bullion rose more than 1 percent to above US$1,587 an ounce

Stocks fall on growth concern Raw-material and information technology shares post the largest declines

sian stocks fell, with the regional benchmark posting its largest weekly retreat since May, amid concern a slowdown in economies from China and Korea to Australia will hurt corporate profits. BHP Billiton Ltd, the world’s largest mining company, and Samsung Electronics Co., the biggest maker of televisions and mobile phones, were the main drags on the MSCI Asia Pacific Index as investors sold shares with earnings closely tied to economic growth. Whitehaven Coal Ltd slumped 20 percent as takeover optimism for the Australia coal producer dissipated. The MSCI Asia Pacific Index slid 2.8 percent, the largest weekly decline since the third week in May, to 115.28. Data this week showed China’s economy expanded at the slowest rate in three years and Singapore’s gross domestic product shrank last quarter as South Korea and Taiwan cut full-year forecasts, adding to concern that global growth is faltering. “The global economy is deteriorating faster than central banks can ease

policy,” said Tomomi Yamashita, a senior fund manager in Tokyo at Shinkin Asset Management Co. “Your best bet is to hold on to cash right now.” Central banks in China, Europe, Taiwan, South Korea and Brazil have cut interest rates in the past fortnight to bolster economies against the impacts of Europe’s debt crisis and the faltering recovery in the U.S. The MSCI Asia Pacific Index fell almost 11 percent from this year’s high on February 29 through Friday, as the deepening crisis in Europe weighed on growth and corporate earnings. Shares in the measure are valued at 11.75 times estimated earnings on average, compared with 13.06 times for the Standard & Poor’s 500 Index and 10.73 times for the Stoxx Europe 600 Index.

Tech slide Japan’s Nikkei 225 Stock Average lost 3.3 percent, snapping five weeks of gains, as the Bank of Japan altered its stimulus programme

without adding extra money. The bank expanded its asset-purchase fund to 45 trillion yen (US$564 billion) from 40 trillion yen, while paring a loan programme by 5 trillion yen. South Korea’s Kospi Index fell 2.4 percent as an unexpected interest rate cut from the Bank of Korea failed to alleviate investors’ concern that the central bank can spur growth. The MSCI Emerging Markets Index slid 2.1 percent this week. Australia’s S&P/ASX 200 Index slid 1.8 percent after employers in the Pacific nation unexpectedly reduced payrolls in June and the jobless rate rose. Hong Kong’s Hang Seng Index dropped 3.6 percent, the most since May, and China’s Shanghai Composite Index lost 1.7 percent as China’s growth slowed for a sixth quarter. Raw-material shares and information technology stocks posted the largest declines on the regional Asian benchmark this past week. BHP Billiton fell 5 percent to A$30.48 (US$31.2). Rio Tinto Group, the world’s third

Eurozone woes hit Singapore GDP Sequential contraction in manufacturing shows city-state facing the chill from troubles in the world’s biggest economies

ingapore’s trade-dependent economy shrank 1.1 percent in the second quarter on an annualised and seasonally adjusted basis, reversing a strong JanuaryMarch performance in another sign that weakness in Western countries has begun to affect Asia. The wealthy Southeast Asian city-state, a major financial and business centre whose trade is more than three times its gross domestic product, is regarded as a leading indicator for Asia because of its open economy. The surprise contraction in Singapore’s GDP prompted at least three banks to cut their full-year forecast and signalled the central bank may ease monetary policy when it issues its next half yearly policy statement in October. “We are downgrading our Singapore GDP growth forecast to 1.9 percent in 2012 and 3 percent in 2013,” said Bank of America Merrill Lynch economist Chua Hak Bin. “The risk of a technical recession has increased... [and] MAS (Monetary Authority of Singapore) may ease back to a modest and gradual

Singapore dollar appreciation at the October policy meeting from the current slightly steeper stance.” Merrill had previously predicted Singapore’s GDP would expand by 2.5 percent this year and 3.3 percent in 2013. Citigroup cut its 2012 GDP growth outlook to 2.6 percent from 3.6 percent, lowering it to within the official 1-3 percent forecast, while Oversea-Chinese Banking Corp (OCBC) reduced its forecast to 2.3 percent from 2.7 percent. United Overseas Bank economist Chow Penn Nee said the disappointing advance economic data did not bode well for China and the rest of Asia as Singapore is usually the first in the region to feel the impact of a weakening global environment.

Manufacturing down Singapore’s Ministry of Trade and Industry said the city-state’s GDP shrank in the second quarter due to a 6 percent quarter-on-quarter contraction in manufacturing, which was in turn the result of a

drop in biomedical production. The ministry also revised the expansion in the first three months of 2012, trimming it to 9.4 percent on a seasonally adjusted and annualised basis from the growth of 10 percent it previously reported. Singapore’s services sector grew 0.4 percent in the second quarter from the first three months of the year at an annualised and seasonally adjusted pace, as growth in tourism offset a contraction in trade and financial services.

KEY POINTS Q2 GDP fell an annualised 1.1 pct Manufacturing, trade, financial services contracted Citi, Merrill, OCBC cut S’pore 2012 GDP forecast

Economists said that contraction in trade and financial services pointed to weakness across the region. In contrast, Singapore’s pharmaceutical industry tends to be highly choppy. Singapore manages monetary policy by allowing its dollar to rise or fall against a basket of currencies. In April, the Monetary Authority of Singapore raised its inflation forecast and said it will let the local dollar appreciate at a slightly faster pace. Singapore’s inflation, while high by historical standards, slowed to 5.0 percent year-on-year in May from 5.4 percent in April as authorities cited moderating price pressures from wages and other business costs. “Inflation appears to be stabilising and downside growth risks may be renewing. If a technical recession does materialize, expect market speculation of a monetary policy easing in October to gain some traction,” OCBC’s head of treasury research Selena Ling said. Reuters

July 16, 2012 business daily | 11

asia largest mining company, slid 6.4 percent to A$54.08. Cnooc Ltd, China’s largest offshore oil producer, declined 3.1 percent to HK$15.02 (US$1.9). Samsung Electronics slid 1.9 percent to 1.139 million won (US$991.5). ZTE Corp., China’s second-biggest

The global economy is deteriorating faster than central banks can ease policy’ Tomomi Yamashita, Shinkin Asset

Currencies on downtrend in July

Bloomberg

File photo

Management Co.

maker of telecommunications equipment, fell 16 percent to HK$12.50 amid concerns slower economic growth and a possible probe into European Union subsidies may threaten exports. Whitehaven tumbled 20 percent to A$3.45 in Sydney amid speculation an improved takeover bid by Tinkler Group Pty., controlled by billionaire Nathan Tinkler, won’t materialise. Whitehaven said on June 13 it rejected a “conditional and incomplete” proposal from the mining magnate. In Japan, Dentsu Inc. fell 9 percent to 2,145 yen (US$27) after agreeing to buy Britain’s Aegis Group Plc for 3.16 billion pounds (US$4.9 billion), a record acquisition by the 111-year-old Japanese advertising company and one of the biggest in the industry’s history.

Hong Kong’s Hang Seng Index dropped 3.6 percent last week, the most since May

sian currencies fell for a second week as Chinese data added to signs the global economy is slowing. The won weakened 1.1 percent since July 6 to 1,150.20 per dollar in Seoul, according to data compiled by Bloomberg. South Korea’s currency snapped a sixweek winning streak after the central bank cut interest rates. The yuan fell 0.23 percent to 6.3789 per dollar, the most since the five days ended June 1, according to the China Foreign Exchange Trade System. The Philippine peso fell 0.5 percent to 41.98, Indonesia’s rupiah lost 0.5 percent to 9,448 and Thailand’s baht declined 0.1 percent to 31.66. India’s rupee strengthened the

most since July 3, on speculation the central bank will join policy makers worldwide in taking steps to spur growth. The rupee climbed 0.6 percent last week to 55.1450 per dollar, buoyed by a 1.4 percent rally on Friday. Taiwan’s dollar depreciated 0.3 percent to NT$30.015 against its U.S. counterpart and Malaysia’s ringgit lost 0.2 percent to 3.1858. The Vietnamese dong was little changed at 20,865. “There has been growing concern over the global economic slowdown and that makes it hard for investors to take riskier positions,” said Kozo Hasegawa, a Bangkok-based currency trader at Sumitomo Mitsui Banking Corp. “Sentiment is rather weak.”

mate, suggesting weakening exports are beginning to erode domestic demand and there won’t be a quick fix,” said Park Sang Hyun, chief economist at HI Investment & Securities Co. in Seoul. “The BOK may cut interest rates again as early as August and sometime in the fourth quarter as growth momentum is losing steam quite fast while prices are pretty stable.” South Korea’s central bank is more pessimistic than the Finance Ministry, which cut its GDP forecast for this year to 3.3 percent on June 28 from a 3.7 percent estimate made in December.

Next year, economic growth will likely accelerate to 3.8 percent while inflation will accelerate to 2.9 percent, the central bank said. Core prices, excluding oil and agricultural products, will rise 2.2 percent this year and 2.7 percent next year. “Korea is entering a period of subpotential GDP growth through 2013,” said Kwon Young Sun, a Hong Kongbased economist at Nomura Holdings Inc. “We expect one more 25-basispoint rate cut in October to 2.75 percent and the BOK to stay at 2.75 percent through 2013.”

Bank of Korea trims growth forecast Expects economy to expand 3 percent this year

he Bank of Korea reduced its 2012 economic-growth forecast for the second time this year, a day after it unexpectedly cut interest rates and signalled it would act preemptively to protect against slowing global growth. South Korea’s economy will expand 3 percent this year, the central bank said on Friday in a statement, an estimate lowered from a 3.5 percent prediction made in April and 3.7 percent in De-

cember. Consumer prices are expected to rise 2.7 percent, down from an earlier forecast of a 3.2 percent price gain. Bank of Korea Governor Kim Choong Soo said on Thursday the board lowered its benchmark rate a quarter percentage point in response to “deteriorating external conditions”. The outlook for weaker growth and slower inflation boosted speculation policy makers will make further reductions. “It’s quite a big cut to the growth esti-

Bloomberg

12 |

business daily July 16, 2012

MARKETS Hang SENG INDEX NAME

PRICE

Day %

VOLUME

AIA GROUP LTD

27.2

0.5545287

11134463

ALUMINUM CORP-H

3.12

1.960784

8751251

BANK OF CHINA-H

2.79

0.7220217

152805034

BANK OF COMMUN-H

4.81

0.6276151

24306122

BANK EAST ASIA

26.5

0.56926

1371501

13.62

3.969466

27915920

BELLE INTERNATIO BOC HONG KONG HO CATHAY PAC AIR

NAME

PRICE

Day %

VOLUME

9.69

-0.308642

16911765

CITIC PACIFIC

11.58

-1.697793

CLP HLDGS LTD

64.85

CNOOC LTD

CHINA UNICOM HON

CHINA CONST BA-H

4.78

0.6315789

238357392

CHINA LIFE INS-H

20.7

1.222494

29336765

CHINA MERCHANT

23.85

0.4210526

1555009

CHINA MOBILE

85.45

0.8259587

11269274

CHINA OVERSEAS

18.28

0.660793

9301886

9894620

0.1544402

1655972

SINO LAND CO

12.58

1.944895

6932007 1122749

SUN HUNG KAI PRO

95.45

0.0524109

SWIRE PACIFIC-A

88.85

-0.6152125

1226938

ESPRIT HLDGS

9.51

1.062699

3173684

TENCENT HOLDINGS

223.6

1.451906

1827057

TINGYI HLDG CO

HANG SENG BK

1874696

0.4415011

4160191

HANG LUNG PROPER

42322422

22.75

26240726

4854126

3.571429

SANDS CHINA LTD

-1.107754

3090781

0.2613696

1794884

3434050

0.6702413

2.369668

95.9

VOLUME

0.08605852

9.82

0.2188184

6.67

Day %

58.15

15.02

22.9

CHEUNG KONG

PRICE

POWER ASSETS HOL

COSCO PAC LTD

12.96

CHINA COAL ENE-H

NAME

26.6

1.333333

4497207

105.8

680677

HENDERSON LAND D

44.25

0.3401361

3434709

HENGAN INTL

75.55

-1.627604

977508

HONG KG CHINA GS

17.36

0.8130081

4801983

HONG KONG EXCHNG

102.4

-1.538462

6392556

HSBC HLDGS PLC

66.55

-0.8196721

13622212

HUTCHISON WHAMPO

68.5

1.632047

3618670

IND & COMM BK-H

4.02

0.7518797

331550308

19.34

-0.9221311

4748626

WANT WANT CHINA

9.52

0.3161222

15279141

WHARF HLDG

42.5

0.591716

3740063

MOVERS

1 19430

INDEX 19092.63

CHINA PETROLEU-H

6.78

1.19403

79385167

LI & FUNG LTD

13.74

-1.716738

24637054

HIGH

19423.42

CHINA RES ENTERP

21.9

-0.2277904

2397162

MTR CORP

26.25

0.5747126

2018817

LOW

19009.58

CHINA RES LAND

15.44

0.1297017

7018728

NEW WORLD DEV

9.69

0.1033058

7011053

CHINA RES POWER

15.96

1.012658

6202665

52W (H) 22808.33

PETROCHINA CO-H

9.26

-0.1078749

75136028

CHINA SHENHUA-H

28.7

1.59292

16856414

PING AN INSURA-H

60.35

0.1659751

6993764

(L) 16170.35

19000

11-Jul

13-Jul

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

25.65

3.012048

13953859

YANZHOU COAL-H

CHINA PETROLEU-H

6.78

1.19403

79385167

8751251

CHINA RAIL CN-H

6.57

-0.755287

13741383

3.960396

13454994

CHINA RAIL GR-H

3.22

0.625

9676710

PRICE

DAY %

VOLUME

AGRICULTURAL-H

2.93

-0.3401361

157683799

AIR CHINA LTD-H

4.99

4.612159

38165129

ALUMINUM CORP-H

3.12

1.960784

ANHUI CONCH-H

NAME CHINA PACIFIC-H

BANK OF CHINA-H

2.79

0.7220217

152805034

CHINA SHENHUA-H

28.7

1.59292

16856414

BANK OF COMMUN-H

4.81

0.6276151

24306122

CHINA TELECOM-H

3.42

1.48368

25017902

13.48

-1.0279

2231532

DONGFENG MOTOR-H

10.42

1.361868

34783185

CHINA CITIC BK-H

3.66

2.234637

21073150

GUANGZHOU AUTO-H

5.49

-4.852686

9096047

CHINA COAL ENE-H

6.67

3.571429

42322422

HUANENG POWER-H

5.43

-2.162162

25109934

CHINA COM CONS-H

6.93

-0.5738881

11373878

IND & COMM BK-H

4.02

0.7518797

331550308

CHINA CONST BA-H

4.78

0.6315789

238357392

JIANGXI COPPER-H

17.2

1.295642

5052250

CHINA COSCO HO-H

3.44

-0.2898551

7016211

PETROCHINA CO-H

9.26

-0.1078749

75136028

CHINA LIFE INS-H

20.7

1.222494

29336765

PICC PROPERTY &

8.55

-0.5813953

23500006

CHINA LONGYUAN-H

5.04

0.8

2606513

PING AN INSURA-H

60.35

0.1659751

6993764

CHINA MERCH BK-H

13.38

11509709

SHANDONG WEIG-H

8.5

-0.1175088

2702515

BYD CO LTD-H

NAME

PRICE

DAY %

VOLUME

11.66

2.280702

21301545

ZIJIN MINING-H

2.51

0.4

15272643

ZOOMLION HEAVY-H

9.46

1.068376

9057654

ZTE CORP-H

12.5

1.461039

10282962

MOVERS

1 9380

INDEX 9237.04 HIGH

9373.95

LOW

9161.07

52W (H) 12651.92

CHINA MINSHENG-H

6.64

-0.3003003

47510517

SINOPHARM-H

-0.7092199

4041870

CHINA NATL BDG-H

8.15

2.002503

30716399

TSINGTAO BREW-H

45.95

1.771872

1056878

CHINA OILFIELD-H

11.6

0.5199307

3720371

WEICHAI POWER-H

26.75

1.904762

1998776

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

5.2

-1.140684

7598590

SANY HEAVY INDUS

12.91

0.938233

37496359

SHANDONG GOLD-MI

32.14

-0.2792429

4940204

(L) 8058.58

9160

11-Jul

13-Jul

Shanghai Shenzhen CSI 300 NAME

NAME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.47

0.4065041

35168221

DATANG INTL PO-A

AIR CHINA LTD-A

6.43

-0.4643963

14365449

DONGFANG ELECT-A

16.31

-2.393776

11758629

ALUMINUM CORP-A

6.24

-0.6369427

7069662

EVERBRIG SEC -A

13.16

-1.275319

8338530

SHANG PHARM -A

11.41

0.4401408

14599882

14.87

1.156463

23599314

GD MIDEA HOLDING

10.17

0.4940711

22871778

SHANG PUDONG-A

7.73

0.7822686

45202381

2.68

30718817

SHANGHAI ELECT-A

4.42

-0.896861

4681127

20.6

-1.293723

11477115

ANHUI CONCH-A

NAME

BANK OF BEIJIN-A

7.47

0.2684564

10439766

GD POWER DEVEL-A

BANK OF CHINA-A

2.77

0.3623188

10830553

GEMDALE CORP-A

6.89

36043426

SHANXI LU'AN -A

BANK OF COMMUN-A

4.35

0.4618938

33473986

GF SECURITIES-A

15.04

1.759134

28603183

SHANXI XINGHUA-A

40.31

-0.1486252

2717169

BANK OF NINGBO-A

9.79

1.031992

15788516

GREE ELECTRIC

22.11

2.598608

16061552

SHANXI XISHAN-A

15.27

-1.610825

12784667

BAOSHAN IRON & S

4.18

0.4807692

13488764

GUANGHUI ENERG-A

14.47

-0.1380262

13231615

SHENZ DVLP BK-A

14.98

0.672043

11070005

29.92

-0.3663004

7584431

SHENZEN OVERSE-A

7.02

-1.404494

41608763 42441346

19.05

-3.053435

9791356

GUIZHOU PANJIA-A

CHINA CITIC BK-A

3.94

0.5102041

12047691

HAITONG SECURI-A

9.75

-0.102459

47529543

SUNING APPLIAN-A

8.09

-0.3694581

CHINA CNR CORP-A

3.81

0.7936508

27151282

HANGZHOU HIKVI-A

27.86

-0.5

1768381

TSINGTAO BREW-A

38.41

-1.31038

3014889

CHINA COAL ENE-A

7.77

-0.7662835

9570763

HENAN SHUAN-A

65.19

-0.7006855

1954855

WEICHAI POWER-A

27.4

-0.8324285

3254025 49568030

BYD CO LTD -A

CHINA CONST BA-A

4.03

0.4987531

12971373

HONG YUAN SEC-A

17.29

-0.4032258

13156989

WULIANGYE YIBIN

38.38

1.026586

CHINA COSCO HO-A

4.65

10874259

HUATAI SECURIT-A

10.02

0.3003003

13518880

XIAMEN TUNGSTEN

44.63

-0.1789309

5598884

CHINA CSSC HOL-A

22.59

-0.9210526

3423837

HUAXIA BANK CO

8.84

0.4545455

15145613

YANGQUAN COAL -A

15.53

-1.459391

18252058 2294087

CHINA EAST AIR-A

4.41

-1.342282

13797639

IND & COMM BK-A

3.76

0.2666667

24603369

YANTAI CHANGYU-A

69.4

-1.74147

CHINA EVERBRIG-A

2.75

0.3649635

17376338

INDUSTRIAL BAN-A

12.4

-0.08058018

35437935

YANTAI WANHUA-A

13.48

0.1485884

5072672

CHINA LIFE INS-A

18.77

1.844818

14652509

INNER MONG BAO-A

41.45

-1.28602

35921738

YANZHOU COAL-A

19.22

-1.233299

5133400

CHINA MERCH BK-A

10.17

0.7928642

46206288

INNER MONG YIL-A

21.77

-0.4117109

11562611

YUNNAN BAIYAO-A

62.68

1.918699

2962038

CHINA MERCHANT-A

11.12

12475216

INNER MONGOLIA-A

5.15

0.7827789

63303076

ZHONGJIN GOLD

21.3

0.1410437

5043342

CHINA MERCHANT-A

26.14

1.239349

7062092

JIANGSU HENGRU-A

29.97

0.7733692

5085826

ZIJIN MINING-A

3.74

0.2680965

25266233

CHINA MINSHENG-A

5.97

1.358234

69005715

JIANGSU YANGHE-A

152.7

0.9253139

1505512

ZOOMLION HEAVY-A

10.34

1.871921

39688292

JIANGXI COPPER-A

23.26

-1.357082

7257717

ZTE CORP-A

13.02

-2.325581

16411906

INNER MONG YIL-A

21.7

0.2772643

18120731

CHINA OILFIELD-A

17.08

-0.8705746

5876118

CHINA PACIFIC-A

22.99

2.542373

31645079

JINDUICHENG -A

12.94

-0.4615385

3635072

CHINA PETROLEU-A

5.95

1.709402

41575997

JIZHONG ENERGY-A

15.24

-0.8458035

15846802

CHINA RAILWAY-A

4.58

1.103753

23731662

KANGMEI PHARMA-A

15.85

-1.552795

21605744

KWEICHOW MOUTA-A

262.7

2.593142

2954811

44.35

-3.397953

13167926

CHINA RAILWAY-A

2.6

0.7751938

18984644

CHINA SHENHUA-A

22.63

-0.832603

9555784

LUZHOU LAOJIAO-A

CHINA SHIPBUIL-A

4.66

-1.271186

21339098

METALLURGICAL-A

2.39

9922016

2.51

-0.3968254

5559700 99139624

CHINA SOUTHERN-A

4.63

-0.856531

22307481

NINGBO PORT CO-A

CHINA STATE -A

3.35

0.6006006

26749632

PANGANG GROUP -A

4.35

0.2304147

8.95

0.2239642

MOVERS

104

16 2470

INDEX 2450.633

CHINA UNITED-A

3.56

43039380

PETROCHINA CO-A

9677225

HIGH

2466.37

CHINA VANKE CO-A

9.86

2.38837

72265947

PING AN INSURA-A

-0.02221729

14877338

LOW

2402.18

CHINA YANGTZE-A

6.7

7576309

POLY REAL ESTA-A

12.8

-0.466563

22559946

CITIC SECURITI-A

12.66

-0.6279435

46775104

QINGDAO HAIER-A

11.14

0.3603604

4101417

CSR CORP LTD -A

4.4

0.2277904

23387950

QINGHAI SALT-A

34.9

8800393

6.71

0.9022556

31137019

SAIC MOTOR-A

12.49

-3.700848

33910013

DAQIN RAILWAY -A

180

52W (H) 3137.922 (L) 2254.567

2400

11-Jul

13-Jul

FTSE TAIWAN 50 INDEX NAME ACER INC ADVANCED SEMICON

PRICE DAY %

Volume

NAME

Volume

75 -0.2659574

5467056

-3.020134

23070638

FORMOSA PLASTIC

23.65

-2.070393

31965169

FOXCONN TECHNOLO

109.5

-3.524229

30.45

0.661157

7857030

87 -0.1148106

25431304

ASIA CEMENT CORP

37.9

0.397351

4281166

FUBON FINANCIAL

ASUSTEK COMPUTER

261.5

0.7707129

3484072

HON HAI PRECISIO

AU OPTRONICS COR

11.2

28430577

HOTAI MOTOR CO

CATCHER TECH

PRICE DAY %

28.9

185.5

11683141

-0.802139

545506

NAME

PRICE DAY %

Volume

TAIWAN MOBILE CO

94.5 -0.3164557

1997427

TPK HOLDING CO L

333

1.369863

4483813

TSMC

75.8

0.1321004

51651641

UNI-PRESIDENT

49.2 -0.2028398

3885606

12 -0.4149378

26058392

UNITED MICROELEC

178

0.8498584

13471472

HTC CORP

288

-4.318937

21195221

36.15 -0.1381215

5742435

CATHAY FINANCIAL

28.65

0.1748252

9166789

HUA NAN FINANCIA

16.5

0.9174312

4510896

YUANTA FINANCIAL

13.6 -0.3663004

8071555

CHANG HWA BANK

1.910828

17620239

LARGAN PRECISION

594

2.061856

2558667

YULON MOTOR CO

49.1 -0.6072874

4019219

CHENG SHIN RUBBE

77.1 -0.6443299

3782014

LITE-ON TECHNOLO

37.9

0.397351

2405265

CHIMEI INNOLUX C

11.5

-1.287554

14267372

MEDIATEK INC

248

-3.125

11001873

CHINA DEVELOPMEN

6.95 -0.1436782

14638833

MEGA FINANCIAL H

23.25

0.4319654

30880625

CHINA STEEL CORP

27.4 -0.7246377

29063305

NAN YA PLASTICS

51.5

3856160

CHINATRUST FINAN

17.6

19783509

PRESIDENT CHAIN

157.5

0.6389776

434767

CHUNGHWA TELECOM

93.8

0.2136752

10672848

QUANTA COMPUTER

76.5

6134965

COMPAL ELECTRON

27.2

0.7407407

3386542

SILICONWARE PREC

29.75

0.676819

9246527

DELTA ELECT INC

93.7

0.6444683

8703021

SINOPAC FINANCIA

11.5

-0.862069

20744987

FAR EASTERN NEW

32.15

1.259843

3015170

SYNNEX TECH INTL

69.9 -0.1428571

2580877

FAR EASTONE TELE

71.5

1.41844

8438860

TAIWAN CEMENT

36.25

0.1381215

FIRST FINANCIAL

17.7

0.2832861

10037621

TAIWAN COOPERATI

17.65

FORMOSA CHEM & F

73.8

2253685

FORMOSA PETROCHE

80.6

0.75

983598

7976263

0.5698006

1869998

TAIWAN FERTILIZE

65 -0.3067485

2225379

TAIWAN GLASS IND

4325808

0.3460208

WISTRON CORP

MOVERS

5 4950

INDEX 4832.3 HIGH

4945.13

LOW

4832.3

52W (H) 5960.61 (L) 4643.05

4830

11-Jul

13-Jul

July 16, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) GAlAXy ENtErtAINMENt

MElCo CrowN ENtErtAINMENt

MGM CHINA HolDINGS

19.1

28.0

19.0

27.8

18.9

27.6

11.3

11.2

Max 19.02

Average 18.92

Min 18.82

last 18.92

18.8

SANDS CHINA ltD

Max 27.9

Average 27.54

Min 27.45

last 27.9

27.4

Max 11.28

SjM HolDINGS ltD

Average

11.214

Min 11.06

last 11.22

11.1

wyNN MACAu ltD 14.650

22.8

16.9

22.7 16.7

22.6

14.625

22.5

16.5

22.4 Average 22.502

Max 22.75

Min 22.3

last 22.75

22.3

14.600 Max 14.64

Average 14.618

Min 14.6

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Aug12

87.1

1.184944238

-12.15330308

111.3799973

77.27999878

BRENT CRUDE FUTR Aug12

102.4

1.31591966

-2.763270345

124.6999969

88.48999786

GASOLINE RBOB FUT Aug12

281.61

0.35279025

4.804614812

326.7099857

243.0099964

GAS OIL FUT (ICE) Aug12

879.75

1.587759815

-2.141268076

1046.5

801

2.874

-12.27106227

4.921000004

2.174999952

NATURAL GAS FUTR Aug12

METALS

HEATING OIL FUTR Aug12

278.82

0.537266073

-1.951682667

332.949996

250.8399963

Gold Spot $/Oz

1589.6

1.6186

1.5777

1921.18

1522.75

Silver Spot $/Oz

27.325

2.3217

-1.8322

44.2175

26.085

Platinum Spot $/Oz

1430.5

1.3957

2.5816

1915.75

1339.25

Palladium Spot $/Oz

585.4

2.132

-10.4208

848.37

537.54

LME ALUMINUM 3MO ($)

1910

1.487778959

-5.445544554

2675.25

1832.25

LME COPPER 3MO ($)

7700

1.919258769

1.315789474

9905

6635

LME ZINC

1874

1.682040152

1.571815718

2539.5

1718.5

3MO ($)

LME NICKEL 3MO ($)

16155

2.408874802

-13.65579904

25195

15770

15.285

1.933977993

1.696606786

13.95499992

740.25

1.092523045

26.26865672

749

499

WHEAT FUTURE(CBT) Sep12

847.75

0.118098612

20.80513003

865.75

606.75

SOYBEAN FUTURE Nov12

1552.5

1.536952256

28.91841395

1575

1115.75

COFFEE 'C' FUTURE Sep12

186.1

2.224663554

-20.55496265

288.8500061

AGRICULTURE ROUGH RICE (CBOT) Sep12 CORN FUTURE

Max 16.86

Average 16.560

last 16.44

Min 16.34

CURRENCY EXCHANGE RATES

NAME ENERGY

16.3

last 0

Dec12

PRICE MAJORS

ASIA PACIFIC

CROSSES

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

DAY %

1.0226 1.5576 0.9804 1.2249 79.18 7.9897 7.7575 6.3793 55.145 31.57 1.2649 29.995 41.955 9448 80.966 1.20092 0.78647 7.7809 9.7507 96.98 1.03

YTD %

1.0674 0.796 0.4896 0.4922 0.1768 -0.0125 -0.0116 -0.0878 1.4145 0.7919 0.6087 0.02 0.286 0 -0.8831 0 0.2963 0.1054 -0.1333 -0.3093 -0.0097

(H) 52W

0.1665 0.2123 -4.3146 -5.4934 -2.8669 0.1239 0.1276 -1.3215 -3.7719 -0.0634 2.5061 0.9468 4.4929 -4.0114 -3.1297 1.3215 5.9659 4.5406 6.1667 2.7635 0.0097

(L) 52W

1.1081 1.6618 0.9873 1.4549 84.18 8.0449 7.8113 6.4694 57.3275 31.96 1.3199 30.716 44.35 9662 88.637 1.24736 0.88861 9.3616 11.6793 114.18 1.0311

0.9388 1.5235 0.7071 1.2163 75.35 7.9823 7.7526 6.2769 43.855 29.63 1.1992 28.764 41.575 8458 72.057 1.00749 0.7857 7.7719 9.7216 95.6 1.0288

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

NAME

PRICE 2.55

DAY % YTD % -1.162791

15.90909

3.25

1.88

VOLUME CRNCY 558653

150.0999908

CROWN LTD

8.54

-0.1169591

5.562421

9.29

7.45

3148340

SUGAR #11 (WORLD) Oct12

22.73

1.202137133

-0.438020149

26.03999901

19.23999977

AMAX HOLDINGS LT

0.063

-4.545455

-27.5862

0.119

0.06

6950000

COTTON NO.2 FUTR Dec12

72.66

3.903903904

-17.28142077

102.25

64.61000061

BOC HONG KONG HO

22.9

0.2188184

24.45652

24.45

14.24

4854126

0.242

5.217389

0.38

0.204

2.93

4.642859

3.99

2.3

CHINA OVERSEAS

18.28

0.660793

40.83205

19.16

9.99

9301886

CHINESE ESTATES

8.97

-28.24

13.68

8.3

23000

CHOW TAI FOOK JE

9.21

-2.539683

-33.83621

15.16

8.55

21737296

EMPEROR ENTERTAI

1.43

1.41844

28.82883

1.84

0.97

220000

FUTURE BRIGHT

1.01

4.123711

140.4762

1.09

0.3

4194000

GALAXY ENTERTAIN

18.92

-0.4210526

32.86517

24.95

8.69

4316320

HANG SENG BK

105.8

14.8128

124.3

84.4

680677

HOPEWELL HLDGS

22.3

-0.4464286

12.286

24.903

18.56

370292

HSBC HLDGS PLC

66.55

-0.8196721

12.79661

78.6

13622212

CENTURY LEGEND CHEUK NANG HLDGS

World Stock MarketS - Indices NAME

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

DOW JONES INDUS. AVG

12777.09

1.621058

4.579722

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2908.47

1.475129

11.6431

3134.17

2298.89

FTSE 100 INDEX

5666.13

1.032051

1.684232

5989.07

4791.01

DAX INDEX

6557.1

2.145856

11.16838

7382.8

4965.8

NIKKEI 225

8724.12

0.04713297

3.178704

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8135.79

HUTCHISON TELE H

3.7

-1.069519

23.74582

3.86

2.43

4242904

LUK FOOK HLDGS I

16.22

-1.815981

-40.1476

46.15

14.7

2536955

MELCO INTL DEVEL

5.64

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10.76

4.3

615756

11.22

16.9706

17.183

7.6

1411925 676000

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0.151

0.08

100000

S&P/ASX 200 INDEX

4082.246

0.350912

0.6331854

4612.2

3765.9

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9.69

0.1033058

54.79233

10.96

6.13

7011053

4019.673

0.8923677

5.172203

4234.734

3217.951

SANDS CHINA LTD

9894620

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1626.38

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1210.29

HO CHI MINH STOCK INDEX

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JAKARTA COMPOSITE INDEX

MGM CHINA HOLDIN

22.75

0.4415011

3.644643

33.05

14.9

SHUN HO RESOURCE

1.13

-0.877193

1.32

0.82

SHUN TAK HOLDING

2.7

0.3717472

5.504676

4.668

2.241

455410

700.441

SJM HOLDINGS LTD

14.64

-0.2724796

17.06815

20.711

10.079

3690300

3527.48

2695.06

SMARTONE TELECOM

15.9

-1.119403

18.30358

18.5

9.8

330419

13.6

16.44

-1.556886

-15.69231

27.48

14.807

4892067

1.438234

18.04023

1247.72

843.69

ASIA ENTERTAINME

3.83

-0.5194805

-34.86395

10.8692

3.66

57269

416.98

2.020943

18.61187

492.44

332.28

BALLY TECHNOLOGI

46.75

3.474989

18.17492

49.32

24.74

681358

BOC HONG KONG HO

2.87

19.72364

3.15

1.81

6113

1005.6

11.80041

1107.3

876.33

GALAXY ENTERTAIN

2.3925

27.94118

3.24

1.08

250

INTL GAME TECH

15.31

1.390728

-10.98838

19.15

13.12

2968490

JONES LANG LASAL

70.51

2.099624

15.09958

94.5

46.01

525600

LAS VEGAS SANDS

39.55

0.9443594

-7.442077

62.09

36.08

6660025

MELCO CROWN-ADR

10.35

2.071006

7.588359

16.15

7.05

2328070

MGM CHINA HOLDIN

1.46

22.51476

2.2131

1.0025

3000

MGM RESORTS INTE

9.8

0.5128205

-6.040271

16.05

7.4

9308303

15.26

1.530273

30.20478

18.77

7.35

664060

1.9

3.26087

18.1906

2.6037

1.2624

6000

96.22

-0.5478036

-12.91519

165.4931

95.1

2589541

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business daily July 16, 2012

Opinion

Always ask a banker to put the lie in writing Jonathan Weil

Bloomberg View columnist

f we take Bob Diamond and Paul Tucker at their word, part of the Libor scandal at Barclays can be chalked up to a series of comic misunderstandings, like a children’s game of telephone. It’s a bit much to swallow, but the spectacle sure has been fun to watch. Both men agree that on October 29, 2008, while the financial system was on the brink, Tucker, who is the Bank of England’s deputy governor, called Diamond on the phone. Diamond, who resigned last week as Barclays’s chief executive officer, was head of the company’s investmentbanking business at the time. In Diamond’s version, Tucker told him “he had received calls from a number of senior” U.K. government officials asking “why Barclays was always toward the top end of the Libor pricing,” according to a file note Diamond wrote that day. Tucker said “while he was certain we did not need advice, that it did not always need to be the case that we appeared as high as we have recently,” according to Diamond’s memo. Tucker, testifying before a U.K. parliamentary panel this week, said that last sentence of Diamond’s note “gives the wrong impression.” He wasn’t nudging Barclays to underreport its Libor submissions, he said. Rather, Tucker said he was expressing concern that Barclays was paying too much to borrow money – and sending signals to the markets that it was desperate for funding, at a time when Barclays was widely viewed as the next big U.K. bank to need a government bailout. Tucker said he didn’t make any record of the talk, in spite of the Bank of England’s policy to make notes of important phone calls. He said he was too busy.

Infamous rate Libor, or the London interbank offered rate, is the now-infamous interest-rate benchmark used in hundreds of trillions of dollars of transactions globally, from loans to derivative contracts. Each day, in surveys overseen by the British Bankers’ Association, major banks estimate their borrowing costs. It has been an open secret for years that banks routinely misstated their numbers. A Barclays Capital strategist, Tim Bond, even said so in a May 2008 interview. Last month, Barclays agreed to pay US$453 million to settle U.S. and U.K. claims that it manipulated its Libor submissions as far back as 2005 – years before the phone call in question. Sometimes the bank low-balled its costs to make itself look healthier. Other times,

meeting, said “it did not set alarm bells ringing.”

Not dishonest

it filed false rates to make trading positions more profitable. On some occasions, its traders colluded with other banks, Barclays admitted. Diamond told the same parliamentary panel last week that he didn’t interpret Tucker’s comments as an instruction to lower Barclays’s Libor submissions. Another top executive did perceive them that way, however, after receiving Diamond’s memo and passed down orders to that effect to the bank’s submitters. That person, Jerry del Missier, resigned as Barclays’s chief operating officer July 3. The supposed misunderstandings don’t end there. In his October 2008 file note, Diamond wrote that he asked Tucker “if he could relay the reality, that not all banks were providing quotes at the levels that represented real transactions.” Tucker told members of Parliament’s Treasury Committee that he didn’t take that statement to mean there was cheating going on. He said he thought it meant that “when they come to do real transactions, they will find they are paying a higher rate than they are judging they would need to pay.”

Tucker also was asked about a 2007 meeting with bankingindustry members of a Bank of England liaison group. Minutes show “several group members thought that Libor fixings had been lower than actual traded interbank rates.” Tucker, who chaired the

Many times over the past five years, in Europe and the U.S., bank regulators and other government officials have seemed to be in cahoots with the industry they oversee

“This doesn’t look good, Mr Tucker,” the committee’s chairman, Andrew Tyrie, said. “It doesn’t look good that we have in the minutes on the 15th of November 2007, what appears to any reasonable person to be a clear indication of low- balling, about which nothing was done.” Tucker replied: “We thought it was a malfunctioning market, not a dishonest market.” Diamond’s credibility doesn’t look any better. This week, Barclays’s departing chairman, Marcus Agius, released an April 10 letter from the chairman of the U.K.’s Financial Services Authority, Adair Turner, expressing doubts that Barclays could be trusted. At last week’s hearing, Diamond said the FSA had been happy with the bank’s “tone at the top.” He downplayed the FSA’s concerns as mere “cultural issues,” even when asked about the letter, which hadn’t been released publicly yet when he testified. It’s hard to know whom to believe less. There’s no mystery why Tucker’s 2008 phone call to Diamond is receiving so much attention. The notion that a central banker may have prodded a big bank to lie about its numbers rings true. Many times over the past five years, in Europe and the U.S., bank regulators and other government officials have seemed to be in cahoots with the industry they oversee. In May 2008, for example, the U.S. Office of Thrift Supervision let IndyMac Bancorp Inc. backdate a capital contribution so it would appear on its books in the prior quarter. IndyMac failed two months later, costing the Federal Deposit Insurance Corp. almost US$11 billion. When banks were teetering in 2008 and 2009, regulators and lawmakers in Europe and the U.S. browbeat accounting-standard setters into making emergency rule tweaks so banks could show smaller losses. After American International Group Inc.’s 2008 government bailout, officials at the Federal Reserve Bank of New York pressured AIG executives not to disclose details of how the company had paid its counterparties 100 cents on the dollar using taxpayer money. Now it turns out the New York Fed says it received “occasional anecdotal reports from Barclays of problems with Libor” in 2007, according to a statement it released July 10. The district bank wasn’t a party to Barclays’s settlement. Here’s one lesson that hopefully has been learned from all this: if you ever think someone in business is telling you to lie, ask that person to put it in writing. Bloomberg View

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July 16, 2012 business daily | 15

OPINION

China’s Afghan game plan wires Business Leading reports from Asia’s best business newspapers

Business Standard The total investment by foreign institutional investors (FIIs) in the Indian market in calendar year 2012 is set to touch the US$10-billion mark. The net FII inflow till date in 2012 stands at US$9.87 billion, compared with a net investment of US$2.01 billion in the corresponding period the previous year. The net outflow in the entire calendar year 2011 had stood at US$358 million. According to market experts, a change of guard at the finance ministry could have prompted foreign investors to re-look at India as an investment destination.

Jakarta Post PT Carrefour Indonesia, the arm of France’s retail giant Carrefour, may record sales growth of between 3 percent and 4 percent in the second semester of this year, a company’s executive said. The head of public affairs said on Friday that although the sales growth was not so high, the Indonesian unit, together with other Asian units, helped compensate the fall in sales in Europe. Group sales reached US$53.22 billion in the first half of the year, a slight 0.9 percent increase compared to a year earlier.

Business World Regulators in the Philippines blocked Delta Air Lines’ s application to impose higher surcharge fees, instead requesting for further justification amid falling jet fuel prices. Fuel surcharges are part of ticket prices that allow carriers to cover the cost of rising jet fuel prices, which account for the bulk of operating costs. Jet fuel prices have gone down by 10.9 percent compared to year-ago levels, data from IATA shows. Local carriers, Philippines Airlines, Cebu Pacific, Zest Airways, and Airphil Express, have slashed surcharge fees on domestic flights.

Bangkok Post The ongoing debt crisis in Europe has had no effect on the country’s tourism-related industries so far, says Tourism and Sports Minister. The number of foreign tourists from 11 European countries continued to increase from last year. The country was seeing also a healthy growth in arrivals from Korea, Japan and China. The number of foreign tourists visiting Thailand could reach 20 million this year, with total revenue of about 800 billion baht (US$25.3 billion).

Shlomo Ben Ami

Israeli former foreign minister, vice-president of the Toledo International Centre for Peace

n his latest book, On China, Henry Kissinger uses the traditional intellectual games favoured by China and the West – weiqi and chess – as a way to reveal their differing attitudes toward international power politics. Chess is about total victory, a Clausewitzian battle for the “centre of gravity” and the eventual elimination of the enemy, whereas weiqi is a quest for relative advantage through a strategy of encirclement that avoids direct conflict. This cultural contrast is a useful guide to the way that China manages its current competition with the West. China’s Afghan policy is a case in point, but it also is a formidable challenge to the weiqi way. As the United States prepares to withdraw its troops from the country, China must deal with an uncertain post-war scenario. Afghanistan is of vital strategic interest to China, yet it never crossed its leaders’ minds to defend those interests through war. A vital security zone to China’s west, Afghanistan is also an important corridor through which it can secure its interests in Pakistan (a traditional ally in China’s competition with India), and ensure its access to vital natural resources in the region. Moreover, China’s already restless Muslimmajority province of Xinjiang, which borders on Afghanistan, might be dangerously affected by a Taliban takeover there, or by the country’s dismemberment. The U.S. fought its longestever war in Afghanistan, at a cost (so far) of more than US$555 billion, not to mention tens of thousands of Afghan civilian casualties and close to 3,100 U.S. troops killed. But China’s strategy in the country was mostly focused on business development, and on satiating its vast appetite for energy and minerals.

Afghan moves The U.S. Defense Department has valued Afghanistan’s untapped mineral deposits at US$1 trillion. But it is China that is now poised to exploit much of these resources. Indeed, China’s development of the Aynak Copper Mine was the largest single foreign direct investment in Afghanistan’s history. China was also engaged in constructing a US$500 million electric plant and railway link between Tajikistan and Pakistan. Last December, China’s state-owned National Petroleum Corporation signed a deal with the Afghan authorities that would make it the first foreign company to exploit Afghanistan’s oil and naturalgas reserves.

Once China’s enormous economic and security interests in Afghanistan are left without America’s military shield, the Chinese are bound to play an even larger role there, one that Afghans hope will reach “strategic levels.” China would prefer to accomplish this the Chinese way – that is, essentially through a display of soft power – or, as the Chinese government put it on the occasion of Afghan President Hamid Karzai’s official visit to Beijing in early June, through “nontraditional security areas.” Judging by China’s behaviour in other parts of the world, any military cooperation is likely to be extremely modest and cautious. China has already made it clear it will not contribute to the US$4.1 billion multilateral fund to sustain Afghan national security forces. Rather, the two countries’ recently signed bilateral cooperation agreement is about “safeguarding Afghanistan’s national stability” through social and economic development. China is especially keen on combating drug trafficking, as Badakhshan, the Afghan province bordering on Xinjiang, has become the main transit route for Afghan opium. But preventing the spillover into Xinjiang of Taliban-inspired religious extremism remains a high priority as well. China went to great lengths to present the recent summit in Beijing of the Shanghai Cooperation Organization, which includes China, Russia, and major Central Asian countries, as an attempt to create a fair balance of interests among regional stakeholders. Moreover, the SCO sought a consensus on how, in Chinese President Hu Jintao’s words, to guard the region “against shocks from turbulence outside the region.”

Complex strategy Yet, however focused it is on soft-power projection

in Afghanistan, China will likely find it difficult not to be drawn into the role of policeman in an extremely complex and historically conflict-ridden region. China’s regional outreach, moreover, clashes with that of other regional powers, such as Russia and India. Nor is its own ally, Pakistan, particularly eager to confront terrorist groups that threaten the security of its neighbours, China among them. Pakistan might find it extremely difficult to reconcile the security of its Chinese ally with its de facto proxy

The task of defending its interests in Afghanistan after U.S. withdrawal is a truly formidable challenge for Chinese diplomacy

war with India. China might then be forced to bolster its military presence in Pakistan and in tribal areas along the Afghan border in order to counter terrorist groups such as the Pakistan-based East Turkestan Islamic Movement, which the Chinese believe is responsible for attacks in Xinjiang. The preferred Chinese way would be that of cooptation and dialogue. Indeed, Chinese diplomacy has been busy lately in trilateral talks with Pakistan and Afghanistan aimed at achieving reconciliation with the Taliban. Nor is China interested in stirring up the conflict between its Pakistani allies and its Indian rivals. On the contrary, China has argued for years that the main problem affecting Afghanistan’s stability is the India-Pakistan proxy fighting, and that peace in Kashmir is therefore the key to peace in Afghanistan. The task of defending its interests in Afghanistan after U.S. withdrawal is a truly formidable challenge for Chinese diplomacy. It is inconceivable, though, that the Chinese would enter into the kind of massive U.S.style military intervention to which the world has grown accustomed in recent years. For China, the Afghan contest will most likely turn out to be a very measured combination of chess and weiqi. © Project Syndicate

16 |

business daily July 16, 2012

CLOSING Libor criminal cases

GE opens for trade in Myanmar

The U.S. Justice Department is building criminal cases against several financial institutions and their employees related to the manipulation of interest rates, The New York Times reported on Saturday. Citing government officials who spoke on condition of anonymity, the Times said traders at Barclays were among the individuals against whom Justice was building cases. With the prospect of possible criminal charges, several financial institutions, including at least two European firms, are scrambling to arrange deals with the government, the Times reported, citing lawyers.

General Electric secured a medical equipment deal with two hospitals in Myanmar on Saturday, becoming the first U.S. company to restart business in the longisolated country since Washington eased sanctions this week. U.S. firms are wasting no time since U.S. President Barack Obama announced the issue of general licences last Wednesday to allow investment and financial services. GE was the first to move in, agreeing through its local dealer to provide X-ray machines to two private hospitals in Myanmar. The deal is valued at approximately US$2 million.

EU drugs agency to open archives to independent researchers Drugs data to be made available, blow to pharmaceutical industry

A potential trove of information on drugs and their effects

urope’s medicines regulator, criticised in the past for excessive secrecy, is opening its data vaults to systematic scrutiny in a move that will let independent researchers trawl through millions of pages of clinical trial information. The change is a landmark in transparency that puts Europe ahead of the United States, according to critics of the US$1 trillion-a-year global drugs industry, who have long argued for full access to trial data. Such information is a treasure trove for scientists wanting to test drug company claims and potentially

expose product deficiencies. As part of a process of opening up, the European Medicines Agency (EMA) plans to hold a conference in November to consider ways of making large data sets available rapidly and routinely to outside investigators. The shift chimes with a widespread push in many fields to treat scientific data as a public rather than a private resource as the world grapples with a growing flood of information. It is blow for the pharmaceutical industry, which guards its commercial secrets fiercely and has not before been required to share its

data with independent researchers or academics. Companies however have little choice in the matter since they must submit their data to the regulator to get drugs approved. “It’s a sea-change in attitude,” said EMA senior medical officer Hans-Georg Eichler, who admits regulators and drug companies have been tarnished by past scandals. The EMA, like the Food and Drug Administration (FDA) in the United States, was criticised for failing to spot problems with drugs such as Merck & Co’s now withdrawn painkiller Vioxx and GlaxoSmithKline’s diabetes pill Avandia.

Access to data was important in both cases. GSK’s failure to give the FDA safety information about Avandia was one factor behind its record US$3 billion healthcare fraud settlement in the United States on July 2. “This industry has certainly done a disservice to itself,” Mr Eichler said in an interview at the agency’s headquarters in east London. “I hope everybody will learn that daylight is the best disinfectant and this will be a contributing step in rebuilding trust in the regulator and in the industry.” The EMA’s change of heart has not been entirely voluntary. Its position used to be that data from clinical trials paid for by industry was commercially confidential, but it was jolted from that stance after the European Ombudsman ruled such confidentiality was not compatible with the public interest. In the last 18 months, the EMA has released around 1.5 million pages of clinical trial data – an increase of more than a hundred-fold compared to 2010 and 2009. Reuters

Endless austerity, social unrest on the horizon Spanish government takes measures to fill US$69 billion gap

he Spanish government’s most recent reforms will slash 56.4 billion euros (US$69 billion) from the public deficit in the next two and a half years, an official document showed on Saturday, leaving a gap to be filled by taxes on energy. Spanish Prime Minister Mariano Rajoy pledged 65 billion euros of savings from tax hikes and spending cuts on Wednesday in a painful package aimed at convincing the EU and investors his government is serious about reform. The 8.6 billion euro shortfall will be covered by other measures such as new energy and environmental taxes, according to a document for international investors posted on the Economy Ministry website. Of the 56.4 billion euros of measures laid out so far, about 34.4 billion euros will come from changes to tax rates and 22 billion from spending cuts until 2014. The government has said it will approve a new energy tax scheme

in July that will force utilities and consumers to share the burden of a 25 billion euro tariff deficit to energy companies. Spain needs to erase 65 billion euros from its public deficit in order to reach EU debt reduction targets by 2014. It must cut its public deficit of 8.9 percent of gross domestic product to 6.3 percent in 2012, 4.5 percent in 2013 and 2.8 percent the year after. But the most recent reforms have provoked protests from citizens tired of bearing the burden for an economic crisis they blame on bankers and politicians. Nearly one in four is unemployed in the country. Thousands of Spaniards have gathered in cities across Spain since the prime minister unveiled the measures on Wednesday. Spain’s two largest unions pledged widespread action in September to protest the measures but stopped short of saying whether the movement will be in the form of a general strike. The country’s public

workers have already called their own strike for September. Aside from sweeping tax reforms, including a 3 percentage point hike in value-added tax (VAT) rates,

civil servants will bear the brunt of the new austerity in the form of wage cuts, job reductions and the elimination of certain perks.

Prime Minister Mariano Rajoy - Trade unions promise a hot September

Reuters