Macau Business Daily, July 30, 2012 by Business Daily

I SSN 2226-8294

Anti-corruption unit must probe Alves: Chao New Macau Association chairman Jason Chao Teng Hei says there should be a criminal inquiry into Sands China Ltd external legal adviser Leonel Alves. Mr Chao states it’s necessary because of claims Mr Alves acted as go between for someone seeking a US$300 million commission to ‘fix’ issues for Las Vegas Sands Corp. Pages 4 & 5

Cotai casinos to get tables come 2015 T

hree Cotai casino resorts due to open in 2015 should get close to their required number of live dealer tables despite a city wide table cap, Business Daily has learned. The three schemes – Galaxy Macau Phase 2, Wynn Cotai and Melco Crown Entertainment’s majority-owned Studio City – will need up to 1,400 tables all in the same year. But table supply growth has been limited by the government to three percent annually from 2013 onwards from a start line of 5,500 tables. Now an industry source with direct knowledge of the table cap negotiations with the government has told Business Daily the policy is to be implemented on an industry needs basis, not on an incremental basis. “As long as the growth in table numbers between

2013 and 2023 averages out at three percent annually in relation to the 5,500 cap, it doesn’t matter what year the growth comes,” the person told us. There had been rumours the cap was to be abolished entirely. That was the wish of some in the industry said the source. “There was very heavy pressure on the government to get rid of the table cap,” they stated. That was deemed not to be a viable option added the source. Earmarking 1,400 tables for 2015 might however leave only another 500 tables to be shared by three more Cotai resorts expected between 2015 and 2023 – those of Sands China Ltd’s Lot 3, MGM China Holdings Ltd and SJM Holdings Ltd.

HANG SENG INDEX 19315

19265

19215

19165

July 27

HSI - Movers

More on page 2

Name

Slowdown hits wages, jobless rate Residents’ wages dropped year-on-year in the second quarter – the first contraction in salaries since 2008. Unemployment also rose slightly in April–June, to 2.1 percent from 2.0 percent in the previous quarter. The news comes only a week after Francis Tam Pak Yuen, Secretary for Economy and Finance, warned lower economic growth might hit wages and the jobless rate.

%Day

CHINA RES ENTERP

6.32

CHINA RES LAND

4.58

CHINA MERCHANT

4.39

HENGAN INTL

3.93

SANDS CHINA LTD

3.55

CHINA RES POWER

1.00

WANT WANT CHINA

0.87

WHARF HLDG

0.58

HONG KG CHINA GS

0.57

AIA GROUP LTD

-0.19

Source: Bloomberg

Page 3

MOP1 billion gas network by 2017 The city is to get a new distribution network for natural gas domestic supply. The system will cover the whole community in five years at a cost of one billion patacas (US$125 million). The selling price to consumers will be about 10 patacas per cubic metre the energy regulator said after the signing of a distribution deal with Companhia de Gás Natural Nam Kwong, Ltda.

2012-7-30

2012-7-31

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News where it matters

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www.macaubusinessdaily.com

Year I - Number 86 Monday July 30, 2012 Editor-in-chief: Tiago Azevedo Deputy editor-in-chief: José I. Duarte MOP 6.00

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business daily July 30, 2012

macau

Govt clarifies casino table cap policy Ensures Cotai venues opening in 2015 should get what they need Associate Editor

he Macau government has made an important clarification to the gaming operators about the way it intends to administer a cap on the growth of live dealer tables in their casinos, Business Daily has learned. The original policy – for a 5,500-table limit until an unspecified date in 2013 – was outlined in 2010 by Francis Tam Pak Yuen, Secretary for Economy and Finance. That was added to in 2011 when he announced three percent growth per year on top of the 5,500 figure, for a period of 10 years. The industry and analysts had initially assumed this would mean equal instalments of three percent per year. But it quickly became clear that if implemented on an incremental basis there would not be enough tables to satisfy the lumpy demand of up to three new Cotai resorts opening in a single year – 2015. Each will require at least 400 tables to provide the desired returns for debt and equity investors on multi-billion U.S. dollar resorts. It’s been hard even for the authorities to sustain the 5,500 cap into 2013. At the end of the second quarter, the market already had 5,498 tables according to government data. Las Vegas Sands Corp., parent of Sands China Ltd, said in an earnings call last week that its latest property Sands Cotai Central “would need to take tables from elsewhere” to get up to 200 tables for its phase two opening on September 20. An industry source with knowledge of negotiations with the government over table cap issues says the officials’ aim is to make it possible for those new Cotai venues due to open in 2015 – Galaxy Macau Phase 2, Wynn Cotai and possibly the majority Melco Crown Entertainment-owned Studio City – to get the number of tables their managements and investors would like.

Lumpy demand “As long as the growth in table numbers between 2013 and 2023 averages out at three percent

available until 2023. Even this interpretation of the cap would not give the industry enough tables relative to expansion already proposed. It would leave just under 500 tables to be allotted to other concessionaires between 2015 and 2023. And there are three other Cotai schemes planned. They include Sands China’s Lot 3, which the company said in a Hong Kong filing last week would break ground in November. That suggests the firm would also like a 2015 opening. There’s also one Cotai resort each from MGM China Holdings Ltd and SJM Holdings Ltd. Sands is still to announce whether the government has approved its project details although the firm already has its land concession. MGM China and SJM are still awaiting respectively land concession and project approval. The source told Business Daily: “We have basically been told by the government that a lot can happen in ten years. The message we picked up is that in future there may be some actual relaxation of the table cap, not just rescheduling of its implementation.” With Tiago Azevedo

Cap fits? Even flexible interpretation of table cap policy may bring problems down the line

annually in relation to the 5,500 cap, it doesn’t matter what year the growth comes,” the person told us. A number of analysts had already assumed this would be the case. Someone with direct knowledge of the situation has now confirmed it publicly to us. Business Daily understands the Macau government has been under “very strong” pressure from the industry to lift the table cap completely, but that was deemed not to be a viable course of action. Annual compound growth averaging three percent per year between 2013 and 2023 would deliver an extra 1,891 tables relative to the 2013 cap – enough for around five new Cotai resorts of 400 tables each. If Galaxy Macau Phase 2, Wynn Cotai and Studio City do all open in 2015, they actually want

collectively 1,400 new tables according to the concessionaires’ previous statements. Galaxy Entertainment Group said in a filing to the Hong Kong Stock Exchange on April 26 its extension would add “up to 500” tables. Wynn Macau has not mentioned specific table numbers in its Hong Kong filings regarding Wynn Cotai. But the company has mentioned a figure of 500 tables to analysts. In June last year Lawrence Ho Yau Lung said at a press conference that Studio City would open with “300 to 400” gaming tables.

Still short A total of 1,400 new tables in one year would be equivalent to 25 percent growth relative to the 5,500 cap, leaving approximately a further nine percent growth

KEY POINTS Three percent per year table growth to be applied on industry needs basis not purely incrementally Policy will allow around 1,900 new tables between 2013 and 2023 Industry needs up to 1,400 tables in 2015 alone Policy still leaves only 500 tables for three Cotai openings after 2015 Govt hints actual relaxation of cap may be possible some time after 2013

Tourism could profit from China slowdown

Longer stays might encourage tourism growth outside of the gambling sector, insider says

lowing growth in the mainland and declining revenues from the casino tax here could present “a good opportunity for local tourism”, according to Travel Industry Council president Andy Wu Keng Kuong. Despite falling revenues from the tax on gambling, Mr Wu said there was a good opportunity for the tourism industry to reinvent itself. “I believe Macau’s tourism industry won’t be much affected by the mainland’s economic slowdown,” Mr Wu told public broadcaster TDM. He said retail sales may also be dragged down as mainland tourists cut back on purchases, especially luxury items. It was time for the industry to entice visitors to stay longer in the city, he added. At present, the average stay for a visitor is one day and longer stays might encourage growth outside of the gambling sector. Gross domestic product in the mainland grew at an annual rate of 7.6 percent in the second quarter, the slowest pace in three years. Tourist arrivals continue to rise, reaching more than 8.1 million in the first half of the year, a 8.5 percent increase over the same time last year. D.R.

July 30, 2012 business daily | 3

MACAU editorial

Progressive China, meek Macau Associate Editor

f quality of life in a community is determined by how willing citizens are to get involved in decision making, it’s difficult to escape the conclusion the People’s Republic of China is now a more progressive society than Macau. Yes, that’s ‘Red China’ as Western politicians used to dub it; the China of the Cultural Revolution when medical doctors were forced to work in stone quarries and where millions died in a man made famine triggered by bad agricultural policies. How could China possibly be a more progressive society than Macau, you might ask? Macau has a tradition of European administration, the rule of law and independent courts that can exercise some restraining influence on the power of the chief executive and his advisory council. Mainland China has no courts independent in any meaningful sense from the Communist Party of China; and a legal system where a precedent set in one court in one province is not necessarily followed even in another court in that same province, never mind a neighbouring province.

Most of the almost 1,400 new jobs created last month were in the gaming industry

Residents’ income shrinks for first time in 4 years Survey finds average monthly income falls, as casinos tighten their grip on the labour market Vítor Quintã

vitorquinta@macaubusinessdaily.com

he earnings of residents fell in the second quarter for the first time since 2008, according to data released by the Statistics and Census Service on Friday. The average monthly pay of residents dropped to 12,500 patacas (US$1,560) in the second quarter after reaching a record 13,000 patacas in the first three months. The last time the earnings of residents dropped was in the second quarter of 2008, when the average fell to 9,000 patacas as the city started to feel the effects of the global financial crisis. However, residents still make more money than expatriate workers. There are no data available on the pay of non-resident labour but the median monthly pay for all employees, resident or otherwise, was stable at 11,000 patacas in the second quarter. The data were released one week after Secretary for Economy and Finance Francis Tam Pak Yuen said slower economic growth might curb pay rises and increase unemployment. The Monetary Authority of Macau said last Wednesday that the

economy would grow at a “highsingle-digit” rate this year, having grown at an annual rate of 18.4 percent in the first quarter.

Mixed picture Just as Mr Tam warned, unemployment increased in the second quarter for the first time in

KEY POINTS The earnings of residents fall; as a group they earn more than non-residents Unemployment increases for the first time in a year Casinos, hotels and restaurants are still hiring Non-residents now account for 30 percent of workers

a year, the rate rising to 2.1 percent from 2 percent in the first quarter. The Statistics and Census Service said the increase was due to more people looking for temporary work during the summer holidays. The number of unemployed increased by 300 to about 7,200, and one in 10 was a youngster searching for his or her first job. The workforce increased by 1,500 people to about 345,700 last month, having shrunk in the preceding two months. Almost 1,400 jobs were created, taking the number of people in employment to about 338,600. More than 30 percent, almost 103,600 workers, were nonresident employees. Most of the new jobs were in the casino industry. Recreational, cultural and gambling services employed 26.3 percent of workers, the biggest proportion since the government began collecting data, in 2005. Hotels and restaurants employed 15.4 percent, also the biggest proportion since records began. The underemployment rate – the percentage of the workforce doing jobs that they are overqualified for, or who can find only part-time work – rose by 0.2 percentage point to 1 percent.

Ilha Verde housing complex priced at MOP1.73 billion

new public housing project in Ilha Verde will cost at least 1.73 billion patacas (US$216 million) and be ready by 2016. Fourteen companies have bid to build the housing complex, the latest project announced by the government to help support lowincome families. The 1.73-billion pataca bid was the lowest among the proposals opened on Friday. The Infrastructure

Development Office said in a statement the highest bid was 2.26 billion patacas. Construction work will last between 1,370 days and 1,460 days. About 900 jobs will be created by the project. Secretary for Transport and Public Works Lau Si Io told the media in May he wanted construction to start within a year. There will be 2,356 units in five buildings, across an area of 15,000 square metres.

Plans also include about 2,800 parking spaces, commercial and community facilities. The mix of affordable and social housing flats has not been defined. The Ilha Verde project is the first public housing complex announced by the government since it pledged to build 19,000 flats by the end of this year. The government says it is on track to meet its target. T.L.

It surely cannot be right that in a Category Nine typhoon such as we had last week, young men and women are forced to venture outside – in some cases on pain of dismissal – in order to get to work But it’s precisely this lack of safeguards for Chinese citizens’ rights that so motivates them to struggle for what they see as justice – even in the face of intimidation by local party goons or at the risk of their lives. At the moment in China a lot of this citizen activism revolves around single-issue politics. And that’s probably how the Party likes things. It’s much easier to salve popular discontent by ruling against a new and allegedly polluting waste pipe for a paper mill than it is to answer the 64,000-yuan question of why the plan got that far in the first place. But it seems an increasing number of Chinese people – especially in the world of micro blogging – are beginning to join the dots and see the big picture.

Passionate campaigning Even on single-issue politics, there’s a passion and engagement on the mainland that seems lacking in Macau – aside from a few local examples such as the mainlandborn parents campaigning for the right of their children to join them in Macau. There is surely a long list of other things that Macau’s people should be standing up for and speaking about. One is the fact that 24-hour opening of the city’s casinos is a condition of the operators’ concessions – with no exceptions mentioned for extreme bad weather. This loophole might exist simply because no one has had the time, inclination or even realisation to close it. But it surely cannot be right that in a Category Nine typhoon such as we had last week, young men and women are forced to venture outside – in some cases on pain of dismissal – in order to get to work. No casino company chairman or gaming industry investor would expect their son or daughter to walk the streets or drive in those conditions – when pieces of roofing, fencing and metal grilles are flying through the air. So why should the sons and daughters of the people helping to create this wealth be forced to do so? If such a policy were attempted in China, there would be trouble on the streets. That’s why China, for all its shortcomings, is a more progressive society than Macau.

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business daily July 30, 2012

macau Brought to you by

HOSPITALITY Change of pace The number of tourist arrivals last month was down by 3.4 percent compared to the same time last year. It is not a remarkable decrease. In absolute values, it means about 74,800 visitors less than in June last year – about 2,500 a day. There are two features that deserve attention.

Pan-democrat chief wants Alves inquiry The president of New Macau Association, Jason Chao Teng Hei, believes there should be a criminal investigation of lawyer and legislator Leonel Alves. Mr Chao talked about some the most controversial issues of the year, and the battles he expects his association to fight in the future. In an interview with Business Daily, he also says that a few local interest groups “are harming the interests of the public” and “the development of Macau”. Luciana Leitão leitao.luciana@macaubusiness.com

Photo by Manuel Cardoso

Visitors, June 2011

% y-o-y 10

-10

-20

-30

China

Hong Kong

Taiwan

RoA

RoW

The decrease in arrivals would have been even bigger if not for a 1.8-percent increase in visitor numbers from the mainland. This was the only major source of visitors to see an increase. Arrivals from the other two major source markets, Hong Kong and Taiwan, fell by 9.8 and 22 percent. Visitor numbers from the rest of Asia declined by 5.1 percent and the rest of the world by 1.7 percent. The latter figure, in particular, is of little significance. Arrivals from the rest of the world last month amounted to less than a quarter of the average daily arrivals from the mainland.

Visitors, by mode of arrival, June 2011 %, y-o-y % sea

% land

% air

-15

-30 China

Hong Kong

Taiwan

RoA

RoW

Arrival patterns by sea, land and air also show some interesting features. More mainland tourists are arriving by sea and air. The increase is noticeable, by more than 20 percent in both cases. Arrivals by land, the dominant mode, decreased slightly. That may point to an emerging trend and a slight decrease in Macau’s dependence on arrivals from Guangdong. For all other visitors there have been falls across the board. Most interesting, though, is the significant fall in arrivals from Taiwan. That result partially reflects the diminishing importance of airports in Hong Kong and Macau for Taiwanese tourists seeking to travel to the mainland. J.I.D.

You said you wanted more legislators representing the New Macau Association in the Legislative Assembly. What will be your strategy for next year’s election? The goal is not to have more legislators in the Legislative Assembly. The goal is a mere means to promote democracy. We always want more voices in the Legislative Assembly and next year there will be an election. We will try our best to get as many seats as we can. We have reached no consensus in our organisation, but we keep watching the overall popular support to the New Macau Association. It will depend how we can maximise the votes we can get and how we can maximise the seats we can get out of our share. What are the main battles the New Macau Association will fight? Political reform. Although it has been fixed that the law will be two plus two plus one-hundred, we will keep fighting for universal suffrage in 2019. The battle has not ended. Also, some legislators are considering raising the bar for a hearing and they suggested raising the bar from two to five legislators. It will severely limit the power of the Legislative Assembly. Our legislators will, of course, fight against the motion, but it’s not optimistic because it has enough support in the Legislative Assembly. Do you think the motion will pass? Most likely. They have enough support. In the past years, the legislators of the New Macau Association moved for hearings nine times and these have created enough embarrassments for the pro-establishment legislators. You were critical about the series of public consultations on political reform. What were the main problems? The people who are harming the interests of the public are the people who are harming the development of Macau. These are the local interest groups. In October last year I had heard they were doing internal consultation about the two plus two plus one-

hundred plan. Clearly they worked with the government closely to promote their own plan. They didn’t honestly consult the general public. The interest groups were afraid of losing their own interest and the government worked as a coalition to secure their power and positions. The local interest groups are from the inside, like the Macau Federation of Workers Union and the General Union of Neighbourhoods Association.

Learning to vote Is it possible to have universal suffrage in Macau? You can’t learn to swim without going into the water. Those opinion leaders are telling the public that ‘you didn’t finish the swimming class outside the swimming pool, so you can’t get into the swimming pool’. It doesn’t make sense. The democratic political system is a learning process for the leaders and also for the citizens. The citizens should learn what is the best way to form a government and what is the way of selecting the best candidates to form a government. If you look at the corruption at the elections in 2005, we saw a sharp decline in the corruption allegations [in 2009]. People are learning to select the candidates who work for the best of their interests. Macau people are ready. It will be possible. You see the chaos in Hong Kong, following the chief executive election. It has created sufficient pressure for the Hong Kong government to change. I think Macau people will be benefitted by the changes in the political system in Hong Kong. It will push the Macau government to change as well. This legislative session is nearing its end. In your opinion, what were the major developments? What made me uncomfortable was the passing of the CCTV legislation. I believe it will severely infringe citizens’ privacy. I don’t trust the Macau government. I believe it will authorise the Macau government to do something bad. You have no knowledge of their equipment and the capability of their equipment. You have no idea how far their equipment can go.

I don’t trust the Macau government, especially the police forces. One of the most polemic issues has been the La Scala case. What do you think about secretary for Transport and Public Works Lau Si Io’s role in the process? When I think of La Scala, I think of Seac Pai Van. It is more corrupt. In Seac Pai Van, the person of interest was a member of the Executive Council. Liu Chak Wan knew very early, in 2009, about the development of the housing apartments. Subsequently, he acquired the rights of the land [allotted] to the public housing apartments. It was an obvious corruption case. The process was not honest and truthful. As for the La Scala case, I think Lau Si Io faced pressure to give more land to the developers. The case showed corruption and a continuation of Ao Man Long’s bribery. The general public is not convinced that no officials gained anything with the approval. Lau Si Io denied knowing about the investigation pursued by the Commission against Corruption. What’s your take on that? The whole thing doesn’t add up. It was unbelievable that Lau Si Io had no idea which pieces of land were under investigation. He succeeded the work of Ao Man Long and he should have learned what pieces of land are in trouble. Those should have been on Lau Si Io’s file and he had no excuse for approving. It wasn’t just a piece of land inherited from Ao Man Long’s era. He approved more pieces of land for the La Scala project. Recently, there was a controversy involving legislator Leonel Alves and one of his clients, Sands China Ltd. The case made headlines not only here but also in the United States. Should there be an investigation? [The Commission against Corruption] should step in to investigate Alves. The emails made quite obvious that he got messages from high-ranking officials or businessmen asking for money. The Act for Prevention [and Suppression of Corruption] in the Private Sector is in force, so the graft buster should step in. We

July 30, 2012 business daily | 5

MACAU in to create a better life for imported workers. Considering your ideas about the restriction of imported workers, some people accuse you of going against the democratic values of your association. What’s your response? Can you name one government of a developed country that entitles non-residents to the same rights as their citizens? I can’t name one. It’s right for the Macau government to prioritise its resources for residents. If the Macau government can’t take care of its own citizens, how can it go further? While we welcome them for contributing to Macau’s economy, it is a matter of law and citizenship. That’s why they are not entitled to all the benefits as citizens. hope it will happen, but we need more people with a sense of justice to speak up and hand the evidence to [the commission]. Otherwise, the issue will stay untouched. Alves responded that he had reported to Fernando Chui Sai On what happened, but under Macau’s legislation it wouldn’t make his acts legitimate.

Offshore chief One of the main battles of the New Macau Association has been the restriction of foreign labour. Considering more vacancies have been created, do you maintain your position? We have different views. For the gaming and hospitality industry, residents should be promoted to senior positions to replace important

senior managers. They should hire more people from Macau. For medium-size enterprises, they should be entitled to hire more imported workers. I received complaints that they couldn’t hire enough manpower to get the business to work. [From a wider perspective] it is an unbalanced development of industry. [Imported labour] should be regulated. It should be controlled, but I don’t want to say restricted. If you can allocate appropriate resources for small and medium-size enterprises, it will make things good. If you limit imported workers, you will force gaming operators to train people from Macau and promote them to medium- or high-level ranking. Regarding non-skilled workers, should the government

provide them with better living conditions? It is a conflict between lifestyles with local people. Filipino workers love to play in the garden, such as Tap Seac Square, and many local people feel uncomfortable with their noise. The government didn’t tackle the problem. We should have more recreational facilities dedicated to imported workers. In addition to the public places, there has also been a clash of cultures. Many Indonesians or Filipinos build their own churches in residential apartments and at their church sessions they sing and play musical instruments. Many of the neighbours don’t like it because of the noise it makes. There are many places the government should step

Looking at the work being done by Chui Sai On’s government, how do you classify it, particularly in comparison with the previous one? Edmund Ho [Hau Wah] acted like a boss and people listened to him, but Fernando Chui Sai On is weaker. When Chui Sai On took office, Ng Kuok Cheong asked about the queues for public housing. Fernando Chui Sai On answered they should have a clear queuing time for the applicants. After two years, we have asked many times for it but Lau Si Io could still not release the queuing time. Chui Sai On couldn’t act. His officials don’t even listen to him. He doesn’t have real authority. Also, he is an offshore chief executive, because he travels all the time.

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business daily July 30, 2012

macau

Govt says piped gas to be cheaper

Brought to you by

The city will have access to piped gas within five years that will cost less than bottled gas, the government says

Inflation and interest The debate about inflation and its effect on purchasing power is long running. It is a worthy subject, occupying much of the public arena. Far less attention has been paid to inflation’s potential effects on financial markets, particularly those which are most relevant for consumers and firms. Interest rates for deposits and loans have an impact on behaviour and income. This analysis uses interest rates for three-month time deposits and Macau’s interbank offered rate or MAIBOR but any other interest rates would illustrate the same point.

Nominal deposit, loan and inflation rates

% 8 7 6 5 4

Nam Kwong has signed a government contract to distribute natural gas

3 2 1 0

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Jun-12

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% 1 0 -1 -2 -3 -4 -5 -6

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Jun-12

dep_real

vitorquinta@macaubusinessdaily.com

-1

The most striking feature is the disconnect between the level of nominal rates for inflation, deposits and loans. Interest rates are not sensitive to increasing prices. That is one outcome of the pataca’s peg to the Hong Kong dollar and, indirectly, to the United States dollar. There is little flexibility in setting rates and as dictated by the health of the international economy, and the US in particular, these rates are low – almost zero for deposits. The inflation rate, measured by the consumer price index, has risen by 6 percentage points in the period shown.

Real deposit and loan rates

Vítor Quintã

-7

maibor_real

As a consequence, real interest rates have been negative for more than two years and their levels are not trivial. Rates have been below minus 4 percent since the beginning of last year and oscillated between minus 5.3 percent and minus 6.4 percent for the past twelve months. The consequences include a spur for consumption, including durable goods and over–investment in real estate. Excessive consumption also fuels inflation which cannot be countered by altering interest rates. J.I.D.

hen natural gas is piped into homes it should cost about 10 patacas (US$1.25) a cubic metre, the Office for the Development of the Energy Sector said on Friday after the signing of a gas distribution concession contract with stateowned Companhia de Gás Natural Nam Kwong Ltda. The head of the office, Arnaldo Ernesto dos Santos, said this assumed a supply price of about 3 patacas. Nam Kwong deputy general manager Wang Bo said the other 7 patacas would go to his company so it can recoup the 1 billion patacas it is investing in a network of pipes which he expects to reach every corner of the city in five years. Nam Kwong has its concession in the bag even though it has yet to propose a price for the gas it will sell. Mr Santos said the price would certainly be less than the 13.10 patacas per cubic metre now charged for bottled gas. Mr Santos said the government would consult companies and associations representing households, among others, before setting a price. The price may be affected by natural gas supplier Sinosky Energy Holdings Co Ltd, which has accumulated losses of 92.5 million patacas, including a loss of 43.5 million patacas last year. Gas supplies have been suspended

since mainland authorities began blasting work on roads on Hengqin Island, but Mr Santos expects the supply to resume “as soon as possible”.

Natural monopolies The government is considering a request by Sinosky to increase by 60 percent the price it is allowed to charge for the gas it supplies. Nam Kwong deputy general manager Tang Chao Hui said

MOP 1 billion Investment in the natural gas network

the company would accept the government’s ruling on how much the supplier can charge. Nam Kwong’s contract guarantees it a profit margin of 9 percent. If the margin is wider, 60 percent of the extra profit it makes must be used to lower the prices it charges. “The money will be moved to an account and when it hits 1.5 million [patacas] it will be used to reduce tariffs, during the third quarter of each year,” said a senior official from the Office for the Development of the Energy Sector, Pang Chi Iong. Mr Tang expects Nam Kwong to recoup its investment in 15 years. The company’s concession lasts until 2037 and its contract cannot be altered for the first 10 years. It can ask the government to for permission to adjust the prices it charges every three years. Mr Santos said the government would never allow any increase above the rate of consumer price inflation. Nam Kwong has begun building a regulating station on Coloane, which will begin operating this year. The company has nine months to lay pipes in Cotai. Two years after that its natural gas pipe network should cover all of Taipa and Coloane and the new University of Macau campus on Hengqin. After five years the network should cover the peninsula.

Weather Beijing 32/23o C Changchun 22/18o C

Harbin 22/18o C

Xian 37/27o C Shanghai 35/28o C Chengdu 31/24o C Kunming 25/17o C Haikou 32/26o C Sanya 31/27o C

Guangzhou 35/24o C

MACAU (30 July-4 August) Day

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Shenzhen 31/25o C

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Hong Kong 31/25o C

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Future Bright’s past bright, too InBrief Company prepares to announce sparkling first-half earnings on the strength of sales increases in Macau

(US$4 million). Future Bright’s managing director is Chan Chak Mo, the president of the Macau Catering Industry Merchants General Association and a member of the Legislative Assembly. The company’s main businesses are selling food and drink and property investment. It has 31 restaurants here and in the mainland, including branches of the Edo Japanese restaurant and Pacific Coffee Company. The Chinese-language Macao Daily News reported that Fu-

ture Bright’s trading subsidiary signed on Saturday contracts with nine Japanese companies which will allow it to expand its business of distributing Japanese food. The contracts cover beef, fruit and vegetables, fresh fish, sake and sauces. The company was quoted as saying this would help diversify the city’s sources of food. The newspaper said Future Bright was strengthening its relationships with food suppliers in Japan’s southern Kansai region. V.Q, X.C.

Photo by Manuel Cardoso

estaurant operator Future Bright Holdings Ltd has announced it will post a “remarkable increase in profit” for the first half of this year. The company told the Hong Kong stock exchange on Thursday the increase was due mainly to “increases in turnover and operating profits with the group’s expanded food and beverage business in Macau”. It said its results for the first half of this year should be released next month. Its first-half profit last year was 32.1 million patacas

Windsor Arch on sale in HK Space in Star River-Windsor Arch, the upmarket housing development overlooking the racecourse in Taipa, went on sale in Hong Kong on Friday. The developer offered Hong Kong buyers 35 homes, including four duplexes and one sky villa, with the cheapest home costing HK$11.44 million (US$1.48 million). The price of the 5,432 square foot sky villa was HK$135.8 million or HK$25,000 per square foot. Prices were similar to those when the development went on the market in May.

Emissions of gas result in big fine

Future Bright runs branches of the Pacific Coffee chain here

The Environmental Protection Bureau detected two abnormal emissions of gas from the city’s refuse incinerator during its periodic inspections last year. The bureau accepted the operator’s explanation for one of the emissions but fined the operator 87,500 patacas (US$10,951) for the other. The bureau said the emissions had been slightly higher than normal and had been unlikely to harm the environment or health. It said it had engaged an independent investigator to find out whether the incinerator operator had submitted false data on emissions last year.

8 |

business daily July 30, 2012

Greater china China’s big industrial companies have played a big role in its expansion in recent years

Chinese industrial firms see profits dip Raising hopes that economy may be stabilising

hinese industrial companies’ profits fell for a third month in June, a government report showed on Friday, as decelerating growth in the world’s second-biggest economy hurt corporate earnings. Income fell 1.7 percent last month

from a year earlier, while earnings in the first six months declined 2.2 percent to 2.31 trillion yuan (US$362 billion), the National Bureau of Statistics said. The data underscore the impact on company profits of an economic

slowdown that may extend into a seventh quarter, increasing pressure on Premier Wen Jiabao to roll out additional stimulus. The government will “appropriately” intensify policy fine-tuning as the momentum for rebound isn’t yet in place, Mr Wen said this month. “Slower activity and tighter margins are clearly impacting” profit growth, said Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong. “This trend is likely to remain negative over the next months as growth continues to moderate and margins are squeezed.” The drop in June profit compares with a 5.3 percent decline in May and 2.2 percent drop in April. The first-half decrease was after a 2.4 percent slide in the first five months and 28.7 percent gain in the same period in 2011.

Increase pressure Profit declines for hundreds of Chinese companies in the first half may increase pressure on the government to step up efforts to stem the economy’s slowdown. Net income declined from a year earlier for more than half of 760 companies

listed in China to report results so far, worse than in the first six months of 2009, Societe Generale SA said in a note last week. “Corporates seem to be bearing most of the burden of the cyclical and structural slowdown,” Yao Wei, a Hong Kong-based economist with the bank wrote. “We see Beijing under great pressure to make the decision whether to use more investment and credit to save the short-term cycle or concentrate more on reforms to win back corporates’ confidence,” she said. But it also raises hopes that the economy may be stabilising as policy stimulus gains traction. “The decline of industrial profits slowed in June, sending out a positive message that the economy is in the process of stabilising,” Zhang Zhiwei, chief China economist at Nomura in Hong Kong told Reuters. “The pace of economic recovery largely hinges on further policies to be taken by the government in the coming months.” Mr Zhang expects industrial profits to pick up in the second half and could show growth in some month in the third quarter, partly due to falling commodity prices that help

China slowdown to weigh on automakers Auto sales grew just 2.9 percent in first half

puttering growth in China, the world’s largest auto market, is clouding the outlook for Asian car brands and will weigh on results due for release in coming weeks. Auto sales in China grew just 2.9 percent in the first half of 2012 after posting anaemic growth of 2.5 percent in 2011, setting the country up for its slowest back-to-back years of growth since the market took off in the late 1990s. In 2010, growth had been a blistering 32 percent.

Nissan, which has a relatively high exposure to the China market compared to its Asian peers, is expected to report a fall in profit for the April to June quarter. Domestic rivals, including Toyota and Hyundai are expected to report rises in profits despite the sharp slowdown in growth in the Chinese auto market. Nissan relies on China for 30 percent of its global sales – a relatively high share on a par with Volkswagen and General Motors. According to six analysts surveyed by Thomson Reuters I/B/E/S, Japan’s No. 2 automaker will post a 4-percent drop in quarterly net profit when it reports its figures on Thursday. A major factor in the decline is a

July 30, 2012 business daily | 9

greater china reduce corporate costs. Sales by industrial companies in the first six months increased 11.3 percent to 42.6 trillion yuan, according to Friday’s statement, down from an 11.9 percent gain in the first five months. Among 41 industries covered in the report, 27 reported profit growth while 13 saw a decline and one sector – oil refining, coking and nuclear fuel processing – fell into a loss, the statistics bureau said.

Qidong halts plant’s waste project After pollution protestors clash with police

Property crackdown Profits at overseas-funded companies fell 13.4 percent in the first half to 522 billion yuan while earnings at state-owned and state-controlled businesses dropped 10.9 percent to 690.5 billion, the report showed. Income at private industrial companies rose 16.5 percent to 694.7 billion yuan.

KEY POINTS June factory profits down 1.7 pct y/y vs 5.3 pct drop in May Offers signs of stabilising in economy H1 industrial profits down 2.2 pct y/y China’s gross domestic product expanded 7.6 percent in the second quarter from a year earlier, the least in three years, as Europe’s debt crisis crimped exports and a campaign to cool property speculation curbed domestic demand. Nomura Holdings Inc. estimates a rebound to 8.1 percent in the third quarter, while Song Guoqing, a central bank adviser, said last week growth may slow to 7.4 percent because of “problems on the export side”. The government has accelerated approvals for investment projects, encouraged the development of so-called strategic industries and boosted spending on social housing. Local governments have also started announcing investment programmes. The central Chinese city of Changsha this week unveiled a plan to spend 829.2 billion yuan on projects including an airport expansion and subway lines, joining the cities of Xian, Nanjing and Ningbo in outlining measures to spur growth. Bloomberg/Reuters

Protests are increasing in China amid concerns that the rapid economic growth is damaging the environment

uthorities in eastern China scrapped plans to build a waste pipeline from a paper mill run by Japan’s Oji Paper Co. after opposition from local residents mounted and a protest turned violent. Thousands of people gathered in Qidong, a coastal city of more than 1 million people across the Yangtze River from Shanghai, to renew protests against a project they say will pollute the sea, the official Xinhua News Agency reported. The protestors overturned two cars and ransacked local government offices. They dispersed after the mayor of Nantong, a city that administers Qidong, announced in a live televised broadcast that the project would be permanently halted, Xinhua said. The demonstration is the latest in a series of confrontations between local governments and residents over pollution concerns linked to industrial projects. Thousands of people in the southwestern city of Shifang protested for three days earlier this month over the construction of a molybdenum copper plant, and demonstrators in northeast China’s Dalian last year succeeded in getting a chemical factory shuttered on environmental grounds, according to reports by state media.

The Qidong protests “demonstrate that ordinary people’s awareness of their rights has increased and they are more willing to assert their rights,” Willy Wo Lap Lam, an adjunct professor of history at the Chinese University of Hong Kong, said yesterday. “It also demonstrates more sophistication on the part of the authorities in handling protests.”

Strike a deal Cases interpreted by the authorities as potentially “anti- party or antigovernment” would lead to a crackdown “mercilessly and with a lot of force,” Mr Lam said. “But if a protest is regarded as basically economic and environmental in nature, they are more willing to strike a deal.” In a speech to leaders and officials of the ruling Communist Party published by Xinhua last week, President Hu Jintao noted that people’s demands for a better life and expectations for prompt solutions to prominent social problems were increasing. About 10,000 Qidong residents joined Saturday’s protest, in which computers, desks and chairs in a government building were damaged. Opponents gathered even after Qidong’s vice mayor, Zhang Jianxin,

stronger year-earlier performance. Nissan bounced back more quickly than its domestic rivals from the supply disruptions that followed the Japan’s earthquake and tsunami in March 2011.

Bloomberg/AFP

2.3m

Key factor But China will be a key factor in the company’s sales performance in the rest of the year given its heavier reliance on demand in the top market. “Nissan’s exposure to China is high, and with changes underway in growth rates and the competitive environment there, Nissan faces greater downside risk for earnings,” J.P. Morgan analyst Kohei Takahashi said in a report. Many analysts expect the Chinese auto market to pick up in the latter half of this year, but much will depend on the impact of the euro area debt crisis on the global economy. “It’s not easy for any car maker,” said

announced the previous day that the project was suspended and pledged to listen to residents’ concerns. “In the face of people’s suggestions and opinions” the government is “conducting further evaluation and suspending construction of the discharge pipeline,” Mr Zhang said in a letter to residents that he read out in a video posted on the government’s website last Friday. Residents had petitioned against construction of the pipeline on the grounds that it would pollute a nearby fishery. The waste discharge pipeline targeted by the protesters was linked to a paper mill operated by an Oji Paper venture. The plant, in the Nantong Economic and Technological Development Zone, involved total investment of US$1.95 billion, and was the group’s largest overseas investment, according to Xinhua. The pipeline is an auxiliary project of the plant and is not carried out by Oji Paper’s joint venture, the Tokyobased company said in a statement on its Chinese-language website on Friday. The Qidong plant has a “very strict” management system in which water is treated inside the facility before being discharged, the company said.

The Chinese auto market is expected to pick up in the second half of the year

Koichi Sugimoto, a senior analyst at BNP Paribas in Tokyo. “There is no effective remedy for this kind of macroeconomic woe.” Nissan Chief Executive Carlos Ghosn has set an ambitious target of nearly doubling annual sales to 2.3 million vehicles by 2015. In April, Mr Ghosn predicted the China auto market would grow by up to 6 percent in 2012 and said its long-term growth prospects

remained strong. Hyundai Motor is expected to post on Thursday a net profit of 2.52 trillion Korean won (US$2.21 billion) for the second quarter, up 9 percent from a year earlier, a Reuters poll of 14 auto analysts shows. For Toyota Motor Corp. and Honda Motor Corp., much of an expected bounce back in the past quarter reflects the comparison with dismal

Vehicle sales Nissan aims to achieve by 2015 year-earlier results because of the earthquake, analysts say. Toyota, due to report on August 3, is expected to report a net profit of 243 billion yen, compared to the 1 billion yen it posted a year earlier. Honda, Japan’s No.3 automaker, is likely to post a net profit of 144.8 billion yen, nearly five times its yearearlier result. It reports on July 31. Reuters

10 |

business daily July 30, 2012

asia

Stocks post weekly decline Euro concern, china growth drag down shares

sian stocks fell, with the regional benchmark index paring the previous week’s gains, amid concern Greece may not meet bailout targets and after the International Monetary Fund said China’s economy faces significant downside risks. Hutchison Whampoa Ltd, an operator of ports and retail chains that gets 55 percent of its revenue in Europe, fell 3.8 percent in Hong Kong. Gome Electrical Appliances Holding Ltd, China’s secondbiggest electronics retailer, plunged 23 percent to an all-time low after forecasting a first-half loss. Hon Hai Precision Industry Co., the assembler of Apple Inc.’s iPhones and iPads, sank 6.8 percent in Taipei after Apple posted earnings that missed estimates. The MSCI Asia Pacific Index dropped 0.6 percent to 115.92 last week. The gauge has fallen more than 10 percent since this year’s high on February 29 amid concern the global economic slowdown is deepening and after Greek leaders failed to agree on an 11.5 billion euro (US$14 billion) package of budget cuts pledged to get bailout funds, adding to signs Europe’s debt crisis is worsening. Greece’s politicians will meet again today. “Signals coming out of Greece are not positive in terms of implementing agreements, and so Europe is going to remain a key negative for markets for quite some time to come,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management. “The outlook remains very difficult for major economies and therefore for equity markets.”

the euro and were prepared to intervene in bond markets as yields surged in Spain and Italy. Japan’s Nikkei 225 Stock Average declined 1.2 percent. Hong Kong’s Hang Seng Index retreated 1.9 percent. The Shanghai Composite Index decreased 1.8 percent. Australia’s S&P/ASX 200 Index and South Korea’s Kospi Index both added 0.3 percent. The losses in the MSCI Asia Pacific Index dragged the value

of shares on the regional gauge to 11.8 times estimated earnings, compared with 13.5 times for the Standard & Poor’s 500 Index and 11.0 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg. Of the 1,007 companies on the MSCI Asia Pacific Index, about 35 percent have priceto-book ratios of less than one, according to data compiled by Bloomberg. Those companies

include Hutchison Whampoa, Japan’s Toyota Motor Corp. and Australia’s Qantas Airways Ltd. A value below one means a company can be bought for less than the value of its assets.

‘Investors run’ “Investors continue to run away from Europe,” said Goya Nakao, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co. “Stocks and sectors that are highly dependent on external demand just keep falling. Sentiment has deteriorated so much that investors are ignoring cheap valuations and selling to cut their losses.” Companies that rely on Europe fell

Stocks and sectors that are highly dependent on external demand just keep falling. Sentiment has deteriorated so much that investors are ignoring cheap valuations and selling to cut their losses Goya Nakao, Sompo Japan Nipponkoa Asset Management Co.

Market intervention Stocks advanced on Friday after European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve

Hutchison Whampoa, which operates ‘3’ mobile phone stores, slid 3.8 percent to HK$68.60

AIA’s profit rises 10 percent First half net income beats analyst estimates

Under chief executive Mark Tucker, value of AIA’s new business increased 28 percent to a record US$512 million

IA Group Ltd, the thirdlargest Asia-based insurer by market value, posted a higher-than-expected 10 percent increase in first-half profit from a record new business performance. Net income of the Hong Kongbased company climbed to US$1.44 billion in the six months to May 31, or 12 cents a share, from US$1.31 billion, or 11 cents a share, a year earlier, it said in a statement to the city’s stock exchange on Friday. The number compared with the average estimate of US$1.29 billion by five analysts surveyed by Bloomberg. Value of new business, a gauge of projected future profitability of new policies, which has been a focus of chief executive Mark Tucker, increased 28 percent to a record US$512 million, according to the statement. AIA’s Hong Kongquoted shares ended at HK$26.75 on Friday, down by 0.18 percent. Mr Tucker is being watched for his ability to continue to boost new business profitability after seven straight quarters of improvements to the end of November 2011. Since joining AIA in July 2010, Tucker has been on a mission to rejuvenate the company, which had lost share of new business during the global financial crisis because of woes at its one-time parent American

July 30, 2012 business daily | 11

asia as investors awaited the outcome of today’s talks between Greek Prime Minister Antonis Samaras and his coalition partners to determine the savings needed to receive the funds pledged under two bailout packages totalling 240 billion euros. Hutchison Whampoa slid 3.8 percent to HK$68.60. HSBC Holdings Plc, Europe’s biggest lender by market value, declined 4.1 percent to HK$64.15. Canon Inc. sank 12 percent to 2,518 yen in Tokyo. The company on July 25 announced it was cutting its full-year profit forecast because of the strong yen and expectations for weaker global growth. Bloomberg/Reuters

Japan consumer prices fall Shows sign of deflation struggle Toru Fujioka

apan’s consumer prices declined, evidence that the nation is struggling to defeat deflation. Consumer prices excluding fresh food fell 0.2 percent in June from a year earlier, the statistics bureau said on Friday. The median estimate of 29 economists surveyed by Bloomberg News was for no change. A slowing global economy is clouding Japan’s growth prospects by weakening overseas demand for goods from cars to televisions just as a strengthening the yen reduces profits. BOJ board member Takahide Kiuchi last week highlighted uncertainty about whether the BOJ can achieve its 1 percent inflation goal, and indicated more monetary stimulus may be needed.

139.6 yen Gasoline price per litre “A strong yen is complicating Japan’s fight against deflation by threating the recovery,” Tsuyoshi Ueno, a senior economist at NLI Research Institute in Tokyo, said before the report. “There will probably be more doubts about the feasibility of BOJ’s inflation goal and that will result in calls for further policy action.” A decline in oil prices is the largest drag on the consumer-price index, Kyohei Morita, chief economist at Barclays Plc in Tokyo, wrote in a report before Friday’s data were released. Oil has dropped about 20 percent from this year’s peak

International Group Inc. “These have also been delivered at a time of capital market volatility and global economic uncertainty,” which may continue for some time, Mr Tucker said on a conference call. “We have substantial opportunities given the size of the protection gap” in Asia, he said. Regional trends such as low insurer ownership among the populations, increasing urbanisation, growing savings and emerging middle class remain in place, he added.

Market growth AIA’s annualised new premium, a measure of new business sales, rose 9 percent to US$1.2 billion. New business margin, or the value of new business as a percentage of annualised new premium, expanded by 6.6 percentage points to 42.6 percent in the six months, another record, according to Mr Tucker. Consensus estimates of analysts earlier put AIA’s first-half value of new business growth at 25 percent, according to Credit Suisse Group AG’s Arjan van Veen. AIA’s better-than-expected profit also reflected stronger investment income and outperformance in Thailand, Mr van Veen said. Stocks in the major markets that

AIA operates in, including Hong Kong, Thailand, China, Singapore, Malaysia and South Korea, gained 5.5 percent in the first half, Mr van Veen and colleague Frances Feng wrote in a July 23 note. AIA’s net income dropped 41 percent last year with stock investment losses trumping gains in new business sales and profitability as the European debt crisis and spectre of global economic recession damped markets. It recognises all fair-value changes of its equity investments in the profit and loss account. AIA’s embedded value, an actuarial estimate of the economic value of life insurers, gained 6 percent from November to US$28.8 billion in May. The solvency ratio, which measures the actual capital against the minimum regulatory capital requirement, climbed 10 percentage points since November to 456 percent at the end of May. It gave AIA excess capital of $3.8 billion, Mr van Veen said. “What is strong enough in this environment is a very good question,” Mr Tucker said. Calling capital “a rare commodity” amid the uncertainties, he added that the cash will be used to invest in new business and give it flexibility to pursue possible acquisitions. Bloomberg

Consumer prices dropped 0.2 percent in June from a year earlier

of US$109.62 a barrel. Japan’s gasoline prices fell 12 percent to 139.6 yen per litre last week from the 2012 high, according to government data. Europe’s deepening sovereign-debt crisis has fuelled the yen’s appeal as a haven asset, causing it to advance to an 11-year high against the euro this week. The yen has risen more than 6 percent against the dollar since mid-March, hurting profits of exporters, the driving force for the world’s third-largest economy,

NLI’s Mr Ueno said. BOJ Deputy Governor Hirohide Yamaguchi said last week that the bank will probably add stimulus if it judges a strong yen is a big risk after examining the currency’s effect on the economy. A panel charged with outlining the Japanese government’s growth strategy has updated a final draft plan with a pledge to work with the central bank to combat deflation and the strong yen. Bloomberg

12 |

business daily July 30, 2012

MARKETS Hang SENG INDEX NAME

PRICE

Day %

VOLUME

26.75

-0.1865672

29837833

ALUMINUM CORP-H

3.09

1.980198

7237623

BANK OF CHINA-H

2.91

2.105263

303802480

BANK OF COMMUN-H

4.99

3.312629

26699798

AIA GROUP LTD

BANK EAST ASIA

26.5

2.514507

963970

BELLE INTERNATIO

13.36

2.453988

7933516

BOC HONG KONG HO

23.55

1.727862

11556910

CATHAY PAC AIR

12.88

1.577287

1173720

CHEUNG KONG

100.5

2.446483

3206732

6.62

2.954899

16911248

CHINA COAL ENE-H

4.94

2.066116

305009649

CHINA LIFE INS-H

CHINA CONST BA-H

21.15

1.438849

32176131

CHINA MERCHANT

23.8

4.385965

2523256

CHINA MOBILE CHINA OVERSEAS

NAME CHINA UNICOM HON CITIC PACIFIC

PRICE

Day %

VOLUME

11.5

2.313167

34259076

10.94

1.862197

4778636

CLP HLDGS LTD

65.75

1.153846

1644104

CNOOC LTD

15.24

2.834008

56232892

COSCO PAC LTD

10.42

2.559055

9288849

9.11

1.560758

7165567

HANG LUNG PROPER

25.95

1.764706

HANG SENG BK

106.9

1.42315

ESPRIT HLDGS

HENDERSON LAND D

PRICE

Day %

POWER ASSETS HOL

59.9

1.011804

1850312

SANDS CHINA LTD

21.9

3.546099

31497960

SINO LAND CO

12.66

1.932367

4701893

95.05

1.117021

3407039

SWIRE PACIFIC-A

90.6

1.455767

1381754

TENCENT HOLDINGS

229

2.782765

3965226

4471372

TINGYI HLDG CO

19.4

1.997897

3732490

1313947

WANT WANT CHINA

9.26

0.8714597

10191003

WHARF HLDG

43.05

0.5841121

3885215

43.6

1.988304

2641690

3.928571

3163726

HONG KG CHINA GS

17.62

0.5707763

3014931

HONG KONG EXCHNG

101.8

1.495513

3192951

HSBC HLDGS PLC

64.15

2.64

22968902

88.9

1.310541

14350993

HUTCHISON WHAMPO

68.6

2.694611

5971736

17.96

2.745995

28820996

IND & COMM BK-H

4.24

2.663438

354498935

MOVERS

14.76

2.642559

17632356

HIGH

19315.91

26.8

1.323251

1010773

LOW

18744.98

12345234

NEW WORLD DEV

9.68

1.680672

12698137

1.002506

7970533

52W (H) 22808.33

PETROCHINA CO-H

9.5

1.279318

48495971

3.460838

17076513

PING AN INSURA-H

60.05

2.12585

7645892

(L) 16170.35

6.8

1.949025

67560541

CHINA RES ENTERP

20.35

6.321839

6836876

CHINA RES LAND

15.54

4.576043

CHINA RES POWER

16.12

CHINA SHENHUA-H

28.4

LI & FUNG LTD

0 19320

INDEX 19274.96

MTR CORP

CHINA PETROLEU-H

VOLUME

SUN HUNG KAI PRO

72.75

HENGAN INTL

NAME

18740

25-Jul

27-Jul

Hang SENG CHINA ENTErPRISE INDEX NAME

PRICE

DAY %

VOLUME

24.9

-0.2004008

12142876

YANZHOU COAL-H

6.8

1.949025

67560541

CHINA RAIL CN-H

6.75

-2.877698

CHINA RAIL GR-H

3.35

303802480

CHINA SHENHUA-H

28.4

PRICE

DAY %

VOLUME

AGRICULTURAL-H

3.07

2.675585

145778949

AIR CHINA LTD-H

5.52

2.033272

20155652

ALUMINUM CORP-H

3.09

1.980198

7237623

ANHUI CONCH-H

20.05

3.88601

9087672

BANK OF CHINA-H

2.91

2.105263

NAME CHINA PACIFIC-H CHINA PETROLEU-H

PRICE

DAY %

VOLUME

11.24

1.811594

10582512

ZIJIN MINING-H

2.41

2.991453

34265832

10615500

ZOOMLION HEAVY-H

8.59

2.261905

29574009

-0.297619

26465507

ZTE CORP-H

10.3

0.3898635

5850707

3.460838

17076513

4.99

3.312629

26699798

CHINA TELECOM-H

3.98

1.790281

61988240

13.08

0.770416

1967450

DONGFENG MOTOR-H

10.1

-0.9803922

14921461

CHINA CITIC BK-H

3.75

2.739726

23946153

GUANGZHOU AUTO-H

5.67

3.467153

2631452

CHINA COAL ENE-H

6.62

2.954899

16911248

HUANENG POWER-H

5.64

2.359347

18625219

CHINA COM CONS-H

6.82

1.488095

16201219

IND & COMM BK-H

4.24

2.663438

354498935

CHINA CONST BA-H

4.94

2.066116

305009649

JIANGXI COPPER-H

16.9

1.440576

7349433

CHINA COSCO HO-H

3.29

1.230769

9648374

PETROCHINA CO-H

9.5

1.279318

48495971

PICC PROPERTY &

BANK OF COMMUN-H BYD CO LTD-H

21.15

1.438849

32176131

8.64

1.886792

22846749

CHINA LONGYUAN-H

4.75

1.06383

5551719

PING AN INSURA-H

60.05

2.12585

7645892

CHINA MERCH BK-H

13.92

2.503682

16597439

SHANDONG WEIG-H

8.47

0.9535161

3131899

CHINA LIFE INS-H

CHINA MINSHENG-H

6.9

2.678571

24220640

SINOPHARM-H

20.9

2.200489

3785732

CHINA NATL BDG-H

7.38

3.651685

36929798

TSINGTAO BREW-H

44.05

0.1136364

2838314

11.82

0.1694915

5192058

WEICHAI POWER-H

22.6

5.361305

2180682

CHINA OILFIELD-H

NAME

MOVERS

0 9450

INDEX 9398.85 HIGH

9448.59

LOW

9128.49

52W (H) 12639.66016 9120

(L) 8058.58 25-Jul

27-Jul

Shanghai Shenzhen CSI 300 NAME

PRICE

DAY %

VOLUME

PRICE

DAY %

VOLUME

AGRICULTURAL-A

2.48

1.22449

39118738

NAME DAQIN RAILWAY -A

5.95

-0.8333333

33200654

AIR CHINA LTD-A

1.351351

6845163

DATANG INTL PO-A

4.91

-2.191235

ALUMINUM CORP-A

6.05

0.6655574

5418054

DONGFANG ELECT-A

ANHUI CONCH-A

14.4

1.337087

7710143

EVERBRIG SEC -A

BANK OF BEIJIN-A

7.41

1.229508

13629652

BANK OF CHINA-A

2.72

1.115242

BANK OF COMMUN-A

4.22

BANK OF NINGBO-A BAOSHAN IRON & S

NAME

PRICE

DAY %

VOLUME

SAIC MOTOR-A

12.83

0.234375

18837812

3024959

SANY HEAVY INDUS

11.69

0.8628128

17794535

0.7556675

5130061

SHANDONG GOLD-MI

33.39

2.172583

10004106

13.45

7842587

SHANG PHARM -A

10.93

-2.49777

14665928

GD MIDEA HOLDING

9.37

-0.7415254

12161116

SHANG PUDONG-A

7.49

1.216216

58500797

14352962

GD POWER DEVEL-A

2.64

-1.123596

30105257

SHANGHAI ELECT-A

4.28

0.7058824

2216026

0.9569378

35501683

GF SECURITIES-A

14.72

-1.735648

14322257

SHANXI LU'AN -A

20.63

1.077903

8195934

10.02

2.874743

28747606

GREE ELECTRIC

20.98

-1.084394

6654593

SHANXI XINGHUA-A

34.4

-3.043968

4509801

4.17

0.2403846

12147640

GUANGHUI ENERG-A

13.15

0.5351682

6475049

SHANXI XISHAN-A

14.67

0.617284

7317548

16.98

2.350814

7053884

SHENZ DVLP BK-A

14.75

0.6825939

10966060

15.13

-1.111111

8236170

GUIZHOU PANJIA-A

CHINA CITIC BK-A

3.86

1.578947

14849750

HAITONG SECURI-A

9.44

-1.666667

40967186

SHENZEN OVERSE-A

5.87

0.3418803

23052741

CHINA CNR CORP-A

3.66

13071259

HANGZHOU HIKVI-A

27.8

-2.831178

2857778

SUNING APPLIAN-A

6.34

-1.092044

55777595

CHINA COAL ENE-A

7.57

1.203209

6684143

2.6

14454654

TSINGTAO BREW-A

35.95

-0.02780868

2013450

CHINA CONST BA-A

3.93

1.550388

15914035

61.3

-0.937298

1365568

WEICHAI POWER-A

0.7446343

4214697

BYD CO LTD -A

HEBEI IRON-A HENAN SHUAN-A

CHINA COSCO HO-A

4.4

0.456621

6058689

HONG YUAN SEC-A

18.22

0.220022

17514789

WULIANGYE YIBIN

35.5

0.4811775

28162446

CHINA CSSC HOL-A

22.02

-0.1813237

2395335

HUATAI SECURIT-A

9.49

-3.850051

39135831

YANGQUAN COAL -A

15.48

2.178218

13291009

CHINA EAST AIR-A

4.14

0.729927

3688964

HUAXIA BANK CO

8.46

1.075269

21539788

YANTAI CHANGYU-A

62.26

1.367633

955155

CHINA EVERBRIG-A

2.74

1.107011

33470561

IND & COMM BK-A

3.72

1.362398

29330635

YANTAI WANHUA-A

12.96

-0.1540832

4803053

CHINA LIFE INS-A

18.9

-3.027193

11979369

INDUSTRIAL BAN-A

12.18

2.352941

68048965

YANZHOU COAL-A

18.69

1.300813

3170226

CHINA MERCH BK-A

9.75

1.668405

53176024

INNER MONG BAO-A

37.89

-2.219355

30750974

YUNNAN BAIYAO-A

58.8

-2.906209

3020141

CHINA MERCHANT-A

11.16

-1.933216

9200796

INNER MONG YIL-A

19.28

0.7841087

6379926

ZHONGJIN GOLD

21.45

1.274788

7055495

CHINA MERCHANT-A

22.65

1.296959

3952187

INNER MONGOLIA-A

5.11

-0.3898635

47265853

ZIJIN MINING-A

3.74

0.2680965

25997644

28.64

-4.278075

8108093

ZOOMLION HEAVY-A

9.39

2.510917

33220943

11.48

1.234568

11006096

CHINA MINSHENG-A

5.85

1.386482

79837953

JIANGSU HENGRU-A

CHINA NATIONAL-A

5.95

1.883562

15224420

JIANGSU YANGHE-A

142.9

-0.4874652

822276

CHINA OILFIELD-A

16.3

-4.678363

14034352

JIANGXI COPPER-A

21.83

0.9713228

5998876

CHINA PACIFIC-A

22.12

-3.363914

22732927

JINDUICHENG -A

12.49

1.462226

3996943

CHINA PETROLEU-A

6.11

0.6589786

20577593

JIZHONG ENERGY-A

14.58

1.039501

8781758

CHINA RAILWAY-A

4.79

0.209205

21817684

KANGMEI PHARMA-A

14.99

-2.026144

15772875

CHINA RAILWAY-A

2.61

16657438

KWEICHOW MOUTA-A

249.45

-0.3953043

1842165

CHINA SHENHUA-A

21.71

0.2308403

11547120

LUZHOU LAOJIAO-A

40.1

-1.425762

5641230

30162492

METALLURGICAL-A

2.3

0.4366812

12553657

ZTE CORP-A

MOVERS

164

127

9 2380

INDEX 2349.108

CHINA SHIPBUIL-A

4.86

0.2061856

CHINA SOUTHERN-A

4.35

0.2304147

8362215

NINGBO PORT CO-A

2.5

0.4016064

6388810

CHINA STATE -A

3.14

-1.257862

93482912

PANGANG GROUP -A

3.74

-0.5319149

46112688

HIGH

2378.14

CHINA UNITED-A

3.72

0.5405405

53037362

PETROCHINA CO-A

8.89

0.7936508

8793825

LOW

2344.25

CHINA VANKE CO-A

8.98

0.7856341

29959677

PING AN INSURA-A

44.49

-0.4697987

24719249

CHINA YANGTZE-A

6.55

1.080247

7499329

POLY REAL ESTA-A

10.9

1.679104

34153324

CITIC SECURITI-A

12.21

-0.08183306

48369111

QINGDAO HAIER-A

10.96

0.7352941

5740528

CSR CORP LTD -A

4.2

0.2386635

10335803

QINGHAI SALT-A

-1.185771

7805161

52W (H) 2995.974 (L) 2254.567

2340

25-Jul

27-Jul

FTSE TAIWAN 50 INDEX NAME ACER INC

PRICE DAY %

Volume

NAME

26.35

0.5725191

22657192

FORMOSA PLASTIC

ADVANCED SEMICON

22.8

2.702703

32512251

FOXCONN TECHNOLO

PRICE DAY %

Volume

NAME

3.717949

7706704

TAIWAN MOBILE CO

106.5

5.970149

16419335

TPK HOLDING CO L

ASIA CEMENT CORP

36.8

1.939058

4901653

FUBON FINANCIAL

31.2

1.960784

13199215

TSMC

ASUSTEK COMPUTER

280

3.896104

4579111

HON HAI PRECISIO

83.5

3.726708

37455949

UNI-PRESIDENT

AU OPTRONICS COR

9.07

0.2209945

75221106

HOTAI MOTOR CO

193

2.116402

470384

162.5 -0.9146341

40752365

HTC CORP

290

3.942652

10120540

CATCHER TECH

PRICE DAY %

80.9

Volume

96.5

0.2076843

4798196

326.5

1.24031

4022846

79.3

3.931848

73460029

49.25

1.025641

10122214

UNITED MICROELEC

12.4

1.639344

22813934

WISTRON CORP

32.1

1.26183

17307643

CATHAY FINANCIAL

29.3

1.736111

16980583

HUA NAN FINANCIA

16.75

1.208459

9661580

YUANTA FINANCIAL

13.75

4.961832

26286180

CHANG HWA BANK

16.1

1.898734

9271827

LARGAN PRECISION

611

2.345059

1807740

YULON MOTOR CO

49.6

1.431493

2564863

CHENG SHIN RUBBE

79.3

1.40665

8376970

LITE-ON TECHNOLO

37.85

3.69863

2903204

CHIMEI INNOLUX C CHINA DEVELOPMEN CHINA STEEL CORP CHINATRUST FINAN CHUNGHWA TELECOM COMPAL ELECTRON DELTA ELECT INC

9.1

2.477477

36704575

MEDIATEK INC

240

1.479915

9346514

6.99

1.304348

36066355

MEGA FINANCIAL H

23.4

1.518438

23497901

1.761252

21100629

NAN YA PLASTICS

55.1

2.607076

3928295

17.5

2.339181

18866964

PRESIDENT CHAIN

156.5

0.9677419

1196689

88.1 -0.2265006

11888184

QUANTA COMPUTER

3.305785

8042704

27.55

3.183521

6564874

SILICONWARE PREC

29.9

4.363002

11298059

98.6

3.571429

11652002

SINOPAC FINANCIA

12.45

3.75

39864051

FAR EASTERN NEW

32.35

2.373418

6350422

SYNNEX TECH INTL

64.5

2.380952

3892019

FAR EASTONE TELE

69.9

4.484305

12131607

TAIWAN CEMENT

34.85

3.566122

7962338

TAIWAN COOPERATI

17.95

1.126761

7974497

0.877193

5875828

27.4

2.048417

1489815

1.123596

17971134

FORMOSA CHEM & F

FIRST FINANCIAL

77.4

2.925532

3702232

TAIWAN FERTILIZE

FORMOSA PETROCHE

84.3

2.804878

1243552

TAIWAN GLASS IND

MOVERS

0 4880

INDEX 4870.55 HIGH

4870.55

LOW

4741.66

52W (H) 5902.58 4740

(L) 4643.05 25-Jul

27-Jul

July 30, 2012 business daily | 13

MARKETS GAMING STOCKS - DAILY PERFORMANCE (Hong Kong Stock Exchange) galaXy entertainMent

Melco crown entertainMent

MgM china holdingS 25.1

18.2 18.1

24.9 24.8

18.0

average 18.0925

Min 17.82

last 18.2

17.8

SandS china ltd

10.2

24.7

17.9

Max 18.2

10.3

25.0

24.6 Max 25

average 24.664

Min 24.55

24.5

last 25

Max 10.24

SjM holdingS ltd

average 10.175

Min 10.1

last 10.14

10.1

wynn Macau ltd

22.1

13.7

21.9

13.6

21.7

13.5

16.1 15.9 15.7 15.5 15.3

average 21.914

Max 22.05

Min 21.5

last 21.9

21.5

13.4 Max 13.62

average 13.553

Min 13.48

Commodities PRICE

DAY %

YTD %

(H) 52W

(L) 52W

WTI CRUDE FUTURE Sep12

90.13

0.827833091

-8.839890766

110.8699951

77.69999695

BRENT CRUDE FUTR Sep12

106.47

1.149534486

1.47731605

124.1999969

88.90999603

GASOLINE RBOB FUT Aug12

288.78

2.629895515

7.473018236

326.7099857

243.0099964

GAS OIL FUT (ICE) Sep12

910.25

0.580110497

1.279554937

1046.5

798.5

3.015

-2.427184466

-8.163265306

4.749000072

2.221999884

NATURAL GAS FUTR Sep12

METALS

HEATING OIL FUTR Aug12

288.95

0.732089942

1.610577768

332.949996

250.8399963

Gold Spot $/Oz

1623.2

0.3723

3.7248

1921.18

1522.75

Silver Spot $/Oz

27.7488

0.2486

-0.3097

44.2175

26.085

Platinum Spot $/Oz

1410.7

-0.1345

1.1617

1915.75

1339.25

Palladium Spot $/Oz

578.75

1.2562

-11.4384

848.37

537.54

LME ALUMINUM 3MO ($)

1895

0.905218317

-6.188118812

2675.25

1832.25

LME COPPER 3MO ($)

7565

1.271753681

-0.460526316

9905

6635

LME ZINC

1859

2.36784141

0.758807588

2539.5

1718.5

15880

0.031496063

-15.12560128

25195

15450

15.6

1.430429129

3.79241517

13.95499992

793.25

2.190016103

35.30916844

800

499

3MO ($)

LME NICKEL 3MO ($) AGRICULTURE ROUGH RICE (CBOT) Sep12 CORN FUTURE

Max 15.94

average 15.636

last 15.92

Min 15.1

CURRENCY EXCHANGE RATES

NAME ENERGY

15.1

last 13.54

Dec12

WHEAT FUTURE(CBT) Sep12 SOYBEAN FUTURE Nov12 COFFEE 'C' FUTURE Sep12

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 %

1.0483 1.5748 0.9749 1.2322 78.46 7.9896 7.7573 6.3807 55.3413 31.52 1.2475 30.071 41.97 9494 82.269 1.20118 0.78244 7.8263 9.8356 96.67 1.03

YTD %

0.9145 0.0572 0.7898 0.8099 -0.2931 0.0038 0 0.0533 0.3139 0.2855 0.2725 0.1463 0.4289 0.0948 -0.8472 -0.0175 -0.0371 -1.0554 -0.6914 -0.5483 0

(H) 52W

2.6839 1.3189 -3.7747 -4.9302 -1.9755 0.1252 0.1302 -1.3431 -4.1132 0.0952 3.9359 0.6917 4.4556 -4.4765 -4.664 1.2996 6.5117 3.9342 5.2503 3.093 0.0097

(L) 52W

1.1065 1.6618 0.9972 1.4549 84.18 8.0449 7.8113 6.4453 57.3275 32 1.3199 30.716 44.35 9662 88.637 1.24736 0.88861 9.2878 11.6793 114.18 1.0311

0.9388 1.5235 0.7071 1.2043 75.35 7.9823 7.7526 6.2769 44.0263 29.68 1.1999 28.773 41.57 8458 72.057 1.00749 0.77553 7.7018 9.6245 94.12 1.0288

MACAU RELATED STOCKS (H) 52W

(L) 52W

ARISTOCRAT LEISU

2.44

2.521008

10.90909

3.25

1.88

3403876

150.0999908

CROWN LTD

8.42

1.080432

4.079108

9.29

7.45

733465

898

1.583710407

27.96579979

947.25

606.75

1601.75

2.185007974

33.00809633

1691.5

1115.75

173.7

-0.20109164

-25.84845251

288.8500061

NAME

PRICE

DAY % YTD %

VOLUME CRNCY

SUGAR #11 (WORLD) Oct12

22.52

0.088888889

-1.357862462

26.03999901

19.23999977

AMAX HOLDINGS LT

0.061

-1.612903

-29.88506

0.119

0.055

7577000

COTTON NO.2 FUTR Dec12

71.45

0.084045385

-18.65892532

102.25

64.61000061

BOC HONG KONG HO

23.55

1.727862

27.98913

24.45

14.24

11556910

CENTURY LEGEND

0.234

1.739129

0.35

0.204

7.142859

3.95

2.3

5000

CHINA OVERSEAS

17.96

2.745995

38.36672

19.16

9.99

28820996

CHINESE ESTATES

8.98

-28.16

13.68

8.3

1000

CHOW TAI FOOK JE

8.62

1.411765

-38.07471

15.16

8.4

4729038

EMPEROR ENTERTAI

1.37

-0.7246377

23.42342

1.83

0.97

1255000

FUTURE BRIGHT

1.06

2.912621

152.381

1.1

0.3

9996000

GALAXY ENTERTAIN

18.2

3.762828

27.80899

24.95

8.69

12833887 1313947

CHEUK NANG HLDGS

World Stock MarketS - Indices NAME DOW JONES INDUS. AVG

COUNTRY

PRICE

DAY %

YTD %

(H) 52W

(L) 52W

13075.66

1.456634

7.023502

13338.66016

10404.49

NASDAQ COMPOSITE INDEX

2958.09

2.241078

13.54779

3134.17

2298.89

FTSE 100 INDEX

5627.21

0.9698268

0.9857756

5989.07

4791.01

DAX INDEX

6689.4

1.616902

13.41137

7282.01

4965.8

NIKKEI 225

8566.64

1.463207

1.316209

10255.15

8135.79

HANG SENG BK

106.9

1.42315

16.00651

124.3

84.4

HOPEWELL HLDGS

21.95

0.2283105

10.52366

24.903

18.56

542700

HSBC HLDGS PLC

64.15

2.64

8.728814

78.6

22968902

HUTCHISON TELE H

3.77

0.802139

26.08696

3.86

2.53

5767660

LUK FOOK HLDGS I

18.16

4.247991

-32.98893

46.15

14.7

5925000

MELCO INTL DEVEL

5.39

3.256705

-6.585788

10.76

4.3

1879000

MGM CHINA HOLDIN

10.16

0.5940594

5.919906

17.183

7.6

7053916

4.18

-0.4761905

5.714475

5.217

2.887

2674000

51.35135

0.205

0.08

18537500

HANG SENG INDEX

19274.96

2.022835

4.559794

22808.33

16170.35

CSI 300 INDEX

2349.108

0.06900994

0.1434926

2995.974

2254.567

TAIWAN TAIEX INDEX

7124.49

2.206381

0.7410855

8771.64

6609.11

MIDLAND HOLDINGS

KOSPI INDEX

1829.16

2.619399

0.1873237

2173.28

1644.11

NEPTUNE GROUP

0.168

S&P/ASX 200 INDEX

4209.77

1.495685

3.776832

4517.4

3765.9

NEW WORLD DEV

9.68

1.680672

54.63258

10.96

6.13

12698137

SANDS CHINA LTD

21.9

3.546099

-0.2277939

33.05

14.9

31497960

SHUN HO RESOURCE

1.13

1.32

0.82

SHUN TAK HOLDING

2.66

-0.3745318

3.941644

4.668

2.241

4748254 7600591

JAKARTA COMPOSITE INDEX

4084.212

1.983532

6.860819

4234.734

3217.951

1624.94

0.06342716

6.154577

1647.94

1310.53

NZX ALL INDEX

780.38

0.3075887

6.930624

806.015

700.441

SJM HOLDINGS LTD

13.54

0.8941878

8.272048

20.711

10.079

PHILIPPINES ALL SHARE IX

3463.3

0.8467716

13.73578

3527.48

2695.06

SMARTONE TELECOM

16.74

-0.1193317

24.55358

18.5

9.8

1709545

HSBC Dragon 300 Index Singapor

580.54

1.15

16.97

WYNN MACAU LTD

15.92

7.567568

-18.35897

27.385

14.62

11841740

1178.01

0.4339597

14.89194

1247.72

843.69

ASIA ENTERTAINME

2.97

-5.414013

-49.4898

10.8692

2.84

181644

413.16

-0.3953713

17.52525

492.44

332.28

BALLY TECHNOLOGI

44.32

2.450301

12.03235

49.32

24.74

342538

BOC HONG KONG HO

3.05

27.23244

3.15

1.81

17000

1003.33

11.54804

1072.89

876.33

GALAXY ENTERTAIN

2.3

2.222222

22.99465

3.24

1.08

2320

11.35

1.885099

-34.01163

19.15

11.1

11651800

FTSE Bursa Malaysia KLCI

STOCK EXCH OF THAI INDEX HO CHI MINH STOCK INDEX Laos Composite Index

INTL GAME TECH

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

JONES LANG LASAL

67.76

2.620021

10.61052

87.53

46.01

529221

LAS VEGAS SANDS

36.765

0.9750069

-13.95975

62.09

34.72

17287469

MELCO CROWN-ADR

10.3

6.185567

7.068608

16.15

7.05

5888816

MGM CHINA HOLDIN

1.47

23.3539

2.2131

1.0025

500

MGM RESORTS INTE

9.44

2.386117

-9.491853

15.74

7.4

10916311 550525

SHUFFLE MASTER

15.09

0.9027081

28.75426

18.77

7.35

SJM HOLDINGS LTD

1.75

-1.685393

8.859767

2.6037

1.2624

1000

WYNN RESORTS LTD

94.61

1.621912

-14.37234

154.7051

90.108

2010430

AUD HKD

USD

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business daily July 30, 2012

Opinion More billions for Greece are still a bargain for Europe Bloomberg editors

he prospect of Greece leaving the euro is infecting markets again like a recurring case of the Spanish flu. As Greece’s international creditors begin talks in Athens, a few deep breaths and some perspective are in order. Did anyone think Greece wasn’t still at risk of a euro departure? The election of a pro-euro government on June 17 did no more than avoid an instant Greek exit. The challenges that existed before the vote remain, and that was as clear in June as it is now. The latest hyperventilation was triggered by an article in the German magazine Der Spiegel and comments from Germany’s Vice Chancellor Philipp Roesler. The Spiegel piece said the International Monetary Fund was ready to cut off Greek aid. Roesler said the idea of Greece leaving the euro had “long since lost its horror.” Note that the comments came from Germany, just before the so-called troika – the IMF, officials from the euro area and the European Central Bank – went to Greece to press the new coalition government about its loan commitments. Note, too, that Germany’s ruling Christian Democratic Union on Tuesday disowned the overly sanguine comments by Roesler, the chairman of the Free Democratic Party, as Spanish bond yields soared and Moody’s Investors Service put German bonds on a negative outlook.

Athens talks So instead of fixating on prenegotiation posturing, let’s look at

the Athens talks. These will focus on the budget cuts worth 5.5 percent of gross domestic product that Greece must come up with for 2013-2014, in order to get the next tranche of aid. They’ll also try to figure out how to meet existing targets, given that months of political instability have blown Greece off course. Not that there has been no progress. Since labour market reforms were passed in February, the average wage set by newly signed contracts has fallen by 22 percent, according to Greece’s labour inspectorate. This is the kind of internal devaluation the IMF is trying to enforce to restore Greece to competitiveness. Greece has also reduced its deficit by about 6 percent of GDP since 2009, a big adjustment by any standards. The problem is that at 9.1 percent of GDP, the deficit is still far from meeting the troika’s plan to reduce Greece’s unsustainable debt pile, from a whopping 165 percent of GDP to 120 percent. Prime Minister Antonis Samaras and the coalition have helpfully laid out changes they want made to the troika agreement. Now, the EU and the IMF need to figure out whether to ease the requirements and timetable – or essentially force Greece out of the euro. Some of Samaras’s ideas make good sense. The Greeks want to create instalment payments, capped at 25 percent of income, for people who are hit with back tax claims. This seems logical – few people can pay their entire annual salary on demand, even if they want to. The government also wants to stir growth in tourism and agriculture by

The risk of contagion from a Greek exit remains high, and the damage to Europe’s political project would be lasting. Compared with those costs, 20 billion euros is a bargain

cutting the value-added tax on food catering services and farm supplies. And it wants to replace emergency property taxes collected on electricity bills with a more progressive regime.

Resolve and leeway These changes make sense, too, but not until the government has first pushed through Parliament an overhaul of the tax system. Tax evasion remains Greece’s most pressing debilitation; it’s politically impossible (and unreasonable) to ask Germans to fund Greek tax cuts while cheating goes unchecked.

Other requests by Samaras should be rejected, including one for flexibility to raise the minimum wage and restore collective bargaining. These changes would unravel essential labour market reforms adopted this year. Most controversial is the coalition’s promise of no new public sector dismissals, despite a signed commitment to the troika to reduce the public payroll by 150,000 people. Neither side can afford to concede much on this issue. Yet 150,000 is a big number, and there should be grounds for compromise. For the troika, as for the Greeks, there are no good outcomes here, only less bad ones. Samaras and the coalition are looking for at least two years of leeway to enact reforms and impose fiscal retrenchment gradually. According to analysts at EFG Eurobank Ergasias SA, that extra time would cost the troika 16 billion euros to 20 billion euros (US$19 billion to US$24 billion). It’s worth a good faith effort by the troika to pay the money to create an achievable amended program. Samaras, for his part, will have to demonstrate with actions that Greece will, at long last, put in place demanded reforms, including the rapid privatisation of state enterprises and the opening up of closed professions. Whatever German Vice Chancellor Roesler may think, the risk of contagion from a Greek exit remains high, and the damage to Europe’s political project would be lasting. Compared with those costs, 20 billion euros is a bargain. Bloomberg View

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July 30, 2012 business daily | 15

OPINION Business

wires Leading reports from Asia’s best business newspapers

How the West was re-won Dominique Moisi

Founder of the French Institute of International Affairs (IFRI) and a professor at Institute d’Etudes Politiques in Paris

Asahi Shimbun Amazon.com, the world’s leading online retailer, plans to make its e-book distribution service and Kindle reading device available for Japanese readers in late August or September. Sources said the U.S.-based firm has already reached a basic agreement with the Kadokawa Group that it will receive content from Kadokawa’s publishers for the service. The move by Amazon is expected to break open the e-book market in Japan. Earlier this month, Internet auction site operator Rakuten Inc. put its own e-reader on sale in Japan. Google Inc. and Apple Inc. are expected to open ebookstores for Japanese readers on the Internet on a full-fledged basis.

Jakarta Globe Indonesian politicians and industry figures voiced their opposition on Friday to the government’s plan to suspend the 5 percent import tax on soybeans for four months starting on Wednesday. They also criticised the lack of a clear food policy and blamed commodity importers for the recent, sharp rise in prices. A drought in the United States, a major soybean exporter, has lowered yields there and sent prices soaring. Indonesia, the world’s fourthmost populous country, has been hit particularly hard. Prices have climbed more than 33 percent in the past three weeks, with soybeans now selling for Rp 8,000 (US$85 cents) per kilogram.

Bangkok Post Bank of Thailand governor Prasarn Trairatvorakul said exports could miss the 7 percent growth forecast it had announced earlier this year. “Exports would need to reach 22 billion baht (US$697.9 million) a month for the rest of the year, which would set a new record, to meet the 7 percent growth forecast,” he was quoted as saying. The projection is less than half of what the Commerce Ministry initially forecast. The central bank has cut the economic growth target this year to 5.7 percent from 6 percent, based on these lower export figures.

n 2005, at the Royal Academy of Arts in London, a prestigious exhibit sponsored by the Chinese Government, “The Three Emperors,” celebrated the greatness of Chinese art. The show’s central piece was a giant painting in the European (Jesuit) style depicting the envoys of the Western world lining up to pay respect to the Chinese emperor. The message could not have been more explicit: “China is back.” The West would have to pay tribute to China in the future the way it had kowtowed to it in the past. In 2012, China is on the verge of becoming the world’s largest economy and is by far the leading emerging power. Yet two simultaneous phenomena suggest that the West may have been buried prematurely by its own Cassandras and by Asian pundits who sometimes behave like “arrogant Westerners.” First, the West, particularly Europe, is slowly taking the measure of the Asian challenge. Second, it is doing so at the very moment that the emerging countries are starting to feel the consequences of a world economic crisis that has Europe as its epicentre. In other words, a new balance of strengths and weaknesses is emerging beneath the surface of events – and runs contrary to current mantras. Europe has awakened to the Asian challenge just as its own crisis exposes and intensifies the emerging coun-

tries’ economic, political, and social weaknesses.

Fading contrasts A few years ago, in my book The Geopolitics of Emotion, I stressed the differences that existed between a Western world dominated by fear and an Asia animated by hope. While the West accumulated debts, Asia had startled the world with its long economic boom. This continues to be the case, but nuances are appearing. There is more fear today in the West, but also a little less hope in Asia. Indeed, global investors are starting to hedge their bets, as if preparing themselves for a more genuinely balanced world spanning different continents and cultures. Asia may have caught up with the West; Latin America may be on track to do so; and Africa may be slowly positioning itself to grow. The Arab world, too, with its ongoing revolution, may also be joining the game, overcoming the humiliation that had been its peoples’ animating emotional force. The West, meanwhile, may be slowly adapting to the new realities of a world that it no longer dominates, but in which it still occupies an essential role, owing to values whose universalism is now formulated in a more restrained and coherent way. Indeed, to fear, hope, and humiliation, I would now add a fourth and decisive cultural mood: modesty. Today’s West is very different

Just imagine: a more virtuous Europe encountering a more ‘decadent’ China, whose venal elites are starting to turn on each other?

from the historical West. It is a reduced entity, increasingly aware that it can no longer be the centre of the world, if only because of its shrinking demographic weight. Europe accounted for 20 percent of the world’s population at the beginning of the eighteenth century; the population of the West as a whole will constitute slightly more than 10 percent in 2050.

Multipolar world The West is also fragmented: the American West is growing increasingly apart from the European West. The question is no longer one of shared interests or common security goals, but of culture, as the United States, in particular, increasingly looks to Asia and Latin America and attracts immigrants from those regions. As for the Asian West, Japan will continue to remain alone and unique. Given this, it might seem premature, to say the least, to announce the “return of the West,” especially at a time when the US economy remains fragile, Europe’s financial crisis is fuelling an existential funk, and Japan’s deep structural malaise continues. Still, across Europe, particularly in the south, one is witness-

ing a willingness to learn from others. There is a growing awareness, even in France – not known for its humility – that benchmarking is necessary, and that tough sacrifices will have to be made. In other words, Europeans are beginning to understand that they have lived well beyond their means materially, and well below their means intellectually, spiritually, and ethically – a process that might be described as the beginning of Europe’s “Montization,” to pay tribute to Italian Prime Minister Mario Monti’s embodiment of responsibility and courage. Just imagine: a more virtuous Europe encountering a more “decadent” China, whose venal elites are starting to turn on each other? What we may be witnessing is the consolidation of a truly multipolar world, in which the West no longer dominates, but is not about to be replaced by Asia or the emerging world in general. The West is not “striking back.” But a more modest West may stabilise its position with respect to China, particularly at a time when China has become both more arrogant and less confident in its own political and social system. © Project Syndicate

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business daily July 30, 2012

CLOSING HK protests against patriotic education U.S. economic growth slows Thousands of people marched on the streets of Hong Kong yesterday to protest the government’s plan to introduce Chinese national education at schools. The new curriculum, starting this September and to be compulsory within three years, aims to foster a sense of national identity in Hong Kong. The plan was hatched by the previous Tsang administration. A police officer quoted by Reuters estimated the crowd to be about 19,000. One textbook explains how the Communist Party is a progressive, united and effective ruler. There is no mention of the Cultural Revolution or the 1989 massacre in Tiananmen Square.

Growth in the U.S. economy slowed in the second quarter to an annualised pace of 1.5 percent, as consumer spending eased. But growth in the first three months of the year was revised up to 2 percent from a previous estimate of 1.9 percent, the Commerce Department said. The department said the slowdown reflected weaker consumer spending, which grew by 1.5 percent in the second quarter. It also cited an acceleration in imports for the slowdown in growth. Last month, the U.S. Federal Reserve cut its forecast for economic growth in 2012 to 2.4 percent.

Three banks seen central to Libor rigging Probe expands to bank traders – court documents

Traders from Barclays Plc, Royal Bank of Scotland and UBS AG are under investigation

ew details from court documents and sources close to the Libor scandal investigation suggest that groups of traders working at three major European banks were heavily involved in rigging global benchmark interest rates. Some of those traders, including one who used to work at Barclays Plc in New York, still have senior positions on Wall Street trading desks. Until now, most of the attention has involved traders at Barclays, which last month reached a US$453 million settlement with U.S. and U.K. authorities for its role in the manipulation of rates. Now, it is becoming clear that traders from at least two other banks – U.K.-based Royal Bank of Scotland Group Plc and Switzerland’s UBS AG – played

a central role. Among them, the three banks employed more than a dozen traders who sought to influence rates in either dollar, euro or yen. Some of the traders who are being probed have worked for several banks under scrutiny, raising the possibility that the rate fixing became more ingrained as traders changed jobs. The documents reviewed by Reuters in analysing the traders’ involvement included court filings by Canadian regulators who have been investigating potential antitrust issues; settlement documents with Barclays filed by the U.S. Department of Justice and the U.S. Commodity Futures Trading Commission in Washington and by the Financial Services Authority in the U.K.; and a private employment

Spanish economy ‘needs reform’ IMF doubles estimate for the depth of Spain’s slump in 2013

pain is in an “unprecedented” double-dip recession and the outlook for the country remains “very difficult” with “significant downside risks”, the International Monetary Fund has said. Spain’s economy may contract 1.2 percent in 2013, the Washingtonbased IMF said last Friday, compared with an estimate for a 0.6 percent slump published earlier this month. The economy will shrink 1.7 percent this year, more than the prior forecast of 1.5 percent, pushing unemployment to 24.9 percent. “The new fiscal package, regional government actions and structural measures are broadly in line with staff recommendations,” the IMF

said. The deficit squeeze will have a “significant impact on growth, especially in 2013.” The IMF’s annual report on the Spanish economy praised Madrid’s “decisive action on many fronts”, but warned further reforms were needed. Action to cut debt and push financial reform were “critical”, it said. Prime Minister Mariano Rajoy announced 65 billion euros (US$80 billion) of budget cuts on July 11, ditching election pledges as he raised value-added tax, reduced unemployment benefits and scrapped tax rebates. He is trying to stem a surge in borrowing costs to euro-era records and comply with conditions linked to a 100 billion-euro European bailout for

lawsuit filed by a former RBS trader in Singapore’s High Court. Time bomb The scandal, which began to come to light in 2008, has become a time bomb for regulators and a big focus for politicians on both sides of the Atlantic. At issue is the manipulation between at least 2005 and 2009 of rates that are used to determine the cost of trillions of dollars of borrowings, including everything from home loans to credit card rates. The dollar and euro rate-rigging appears to have begun in earnest in early 2005 in the dollar market, according to the documents reviewed by Reuters. By August of that year, Barclays traders were reaching out to traders at other big global banks to manipulate their rates

the nation’s banks. The prime minister is also battling unemployment that’s at the highest level in the country’s democratic history. Data on Friday showed that Spain’s jobless rate rose to 24.6 percent in the second quarter from 24.4 percent in the prior three months. “Directors underlined the urgency of additional progress in boosting competitiveness and jobs, given the high level of unemployment, in particular among the youth,” the IMF said.

to make them favourable to Barclays’ trading positions. Soon, the trading had crossed to the euro rate markets, according to the settlement documents filed in the Barclays investigation. And by 2007, traders at RBS and UBS were seeking to influence the yen rate market, according to documents filed in 2011 in Singapore’s High Court and in Canada’s Ontario Superior Court. Traders at Barclays are believed to have participated in manipulating the rate for the dollar and the rate for the euro known as Euribor, according to documents filed in the Barclays settlement last month. RBS and UBS traders are a focus of the global investigation because of their alleged involvement in seeking to influence yen-denominated rates. Reuters

It praised the terms of the bank rescue, saying they were “in line” with the fund’s recommendations. Still, it said the bailout will help push Spain’s sovereign debt burden to 97.3 percent of output in 2015 if European leaders don’t agree to lend rescue funds directly to banks. The fund also said that while the loan and agreements to strengthen the euro region made by leaders last month “mitigate short-term risks,” they may not be enough.

Spain’s jobless rate rose to 24.6 percent in the second quarter

Bloomberg